Saluki

added a few shares of JOE on the dip. I'd like to see a 3 in front of the price before I buy in size, but I don't have any new ideas, and among my existing holdings, I think even at a not-cheap price it will be higher in 5 years. I like FFH at these prices, but when I look at that (my 4th biggest holding) and add it to BRK (my biggest), I feel like I might be overweight on insurance/financials. Still, it's well run and management has integrity, so maybe I'm overthinking it.

This guy retired from the Board last year, I believe. I was very impressed with his track record. https://www.amazon.com/Corporate-Catalyst-Chronicle-Management-Canadian/dp/1118152867 If you read his book and put your self in his shoes in some these turnaround situations, you will quickly realize what a rarity it is to find a turnaround guy who can actually turn things around. Prem seems to have a knack for attracting competent and ethical people. His bond guys could easily have left to open a bond fund and eaten a lot of PIMCO's lunch.

I'm usually leery of books written by corporate insiders, like "Nuts" the Southwest Story, because they obviously don't have an unbiased view, but I was very curious about McKinsey, where Marvin Bower almost singlehandedly created the consulting industry that we know today. McKinsey had a Chicago office and a small NY office when the founder, McKinsey, died. Back then consultants tended to advise in a particular industry and hired experienced execs from that industry. Rather than rename McKinsey, which any other consulting shop would do, he kept the name because he didn't want people coming to the business because they wanted Martin Bower, he wanted the firm to be like a white shoe law firm that had a reputation for excellence that lived on past it's founders. Under his leadership, it became an international powerhouse with offices all around the globe. He started the practice of hiring newly minted MBAs and teaching them the firm's process rather than the accepted practice of hiring people with decades of industry experience who were knowledgeable but not good at thinking outside the box. He was also responsible for the remarkable culture there of putting the client first, and wanted McKinsey to be a profession, not a business. When they decided that no partner should own more than 5% of the firm, he sold his shares (40%?) for book value, passing up millions because he wanted to signal his commitment to the idea that they should be looking out for the future of the firm, not their own personal enrichment. The writing is just okay. The author is not going to be mentioned with names like Neil Gaiman, but she did access to and extensively quoted many people who worked closely with Bower and were aware of his thought process and ethics. It's an interesting read for a few reasons. Most importantly for the idea that a lot of organizations like Berkshire, Southwest Airlines, Apple etc, have a distinct and strong corporate culture that is traced to it's founder. That culture only survives if it's lived and constantly reinforced, not just reprinted in the marketing materials. The other fascinating this was Bower's ability to turn a weakness into a strength. When they expanded to London, they had no clients and no connections, but when the Bank of England needed someone to do work for them, but didn't want a British firm because they had ties to other banks, they went with McKinsey. Similarly, when Royal Dutch Shell needed a consultant, they didn't want someone who was partial to the British or Dutch factions, so McKinsey was a great choice. After a few things like that, they were a player on the continent. It's useful to read about strong cultures like this in industries that seemingly have no moat. I think Berkshire, and some other places with a strong culture have similar DNA. At McKinsey some of the older partners occasionally ask "is this how Marvin would have handled it?" and that's probably true at Apple or Disney too. I probably wouldn't have gone out and bought this book (my better half gets books on McKinsey for free from work and gave it to me), but it was there and I read a lot and if you are a voracious reader like me, it's worth a read.

With the proliferation of algorithmic trading, including some strategies that require super computers and fiber optic transmission lines to transmit orders that are millionths of a second faster than the competition, the short end of the execution curve is very crowded. Since any portfolio manager who underperforms for two years in a row will likely be fired, they use strategies that hug the index. Therefore, by inverting, if you can find things that aren't in the common indices and that are doing things now that will pay off in 3 years, then I think as an individual investor, you have a wide open field with not much between you and the goal post. The inefficiencies in the shorter end of the curve are probably easilly competed away unless you are focusing on names that are so small that a fund can't take a meaningful position. If you go 3 or 4 years out, even big names can pay off for you. I don't want to talk my book, but container ships were overordered during covid to compensate for supply disruptions. Since shipyards are building those, then in a year or two, container ship rates should suffer and the rates for drybulk, crude carriers, and product tankers should look good, unless we have a recession which destroys demand and will lessen the demand for those ships. I think part of Buffett's thesis on OXY and Chevron is that we've underinvested in oil for a decade and that prices may inflect back to triple digits based on supply constraints and how much oil is used in commerce (reminds me of his silver bet). Uranium may turn around one day too. Russian gas disruption forced the Germans to switch to Coal generation. Nuclear has some flaws, but its cleaner than Coal, and more consistent than solar and wind. And Uranium production and enrichment has not kept up with the rate at which stores are being used up. So if things don't change, then one day it will inflect. But I'm not smart enough to call it. The earth is entering a cyclical dry spell (I am told). In a few years, places with reliable water may be worth more than now. I don't know how to play it, but I'm sure other people do, and they aren't the quarter-to-quarter crowd.

My better half has a business trip to Stockholm and I am meeting her there afterwards and seeing a few places in Scandinavia. Planning to visit a few cities in Sweden and Norway, and see the place in Norway where her ancestors likely came from. Tickets booked for Stockholm, still figuring out the itinerary. I'm sure the countries will be beautiful, but I'll probably have reverse price shock after visiting Portugal last summer.

Added a little more JOE and Fairfax India. Put in a limit order for a few shares on a micro cap stock that I want to watch but it didn't get filled

i have a couple of those and if you are thinking 10 years out, I think FFXDF is cheap now and will get you a play on Asian growth (India) without the legal uncertainty of foreign ownership of stocks in China. If you think 20 years out, it's pretty hard to be sure about anything except something like Coca Cola, which may not grow much but will probably still be around 100 years from now. If I had to pick a 20 year one, i think SWBI will do okay. It's been around since the 1860s and has two things that have staying power: brand value and government contracts.

I trimmed a little VTS and bought some JOE. I put in a limit order for FFXDF at above the current price, but it never got filled

Sam giving his opinion on a Congressman: Sam telling off a journalist who talked down to him: Sam giving his opinion on an empty suit executive:

I saw him a podcast a few days ago. Sad to hear he passed. I really enjoyed his book and I always appreciate seeing a lawyer who did something besides work at a law firm and made it big. Norm Brodsky is another person who graduated law school and instantly realized that this law thing is for the birds, and looked at the clients with the nice suits and big houses and said "hey! how do I do what you guys are doing?" He was involved in some other things besides real estate, like manufacturing, and did well in pretty much everything he got involved with except when he bought a newspaper. It reminds me of that Buffett quote about when a great manager gets involved with a terrible business, it's usually the reputation of the business that remains intact. There's a YouTube video out there of him responding to a rude Tribune employee at an all hands meeting with the F bomb. He was everyone's wise grumpy uncle. RIP Sam

Added a little bit of FFXDF and NETI.

How often has the government waived the restriction on owning more than one bank? It looks like they made an exception in 2020 (when it looked like the world was going to end), but do you know how likely it would be now? Given the turmoil in the US and Germany from some big bank failures, maybe they would be open to a well-run firm with a good balance sheet taking them over, which may prevent a problem before it happens. But other than the incidence cited in the article, is this common or only done rarely? I'm still bullish on FFXDF either way. Other than the illiquidity (my broker makes me use two factor authentication and limit orders only for Fairfax India), I don't see how others don't see that this is undervalued. It's trading for ~2/3 book and you are buying it below the tender offer price last year, even though things are going better with the world reopening, which should make their biggest asset, BIAL, more valuable.

I'd be curious to know if the teen deaths in Europe are similar to the US, since there is a huge difference in gun ownership in places like UK vs the US. I also think that the incidents of violence are worse than the numbers portray. There is a very controversial former Army Lt Colonel, Dave Grossman, who researched and wrote several books on things like school shootings. People get upset when they find out the police department spent money to hire a guy who wrote a book called "On Killing" to work with their officers. I haven't read the book but his YouTube videos make a lot of counter-intuitive points. He's got some shocking statistics to back up his theories. If we had vietnam era medical treatment for gunshot wounds, the murder rate from guns would be 4x higher than it is today. So just as we adjust housing prices for inflation, we should take trauma medicine into account when saying things like NYC violent crime is less than it was in the 1970s. It's higher. In the 70s, a place like Peoria Illinois probably never had a gunshot victim in the emergency room. Now they probably have see shooting victims weekly, but have better skill at treating them and having them live than NY doctors in the 70s. Curiously, he puts much of the blame on violent TV and video games. During WWI and WWII less than 1/4 of troops on the firing line would fire their weapons. The army switched the bootcamp training from firing at round bullseye's to human silhouettes and got it to 55% by the Korean War. They got it up to 95% in Vietnam with silhouettes that pop-up, you shoot them, and they go down: Skinner's operant conditioning. They also drilled into you things to desensitize you to violence, like the scene in Full Metal Jacket where they sleep with their rifles, or the chants during marches "what makes the grass grow? blood blood blood. What do marines do? Kill kill kill." The first person shooter games, specifically are desensitizing them to killing and the violent TV makes them less affected by human suffering, which is what the military did to get the kill rates up in War, but it's being done to teenagers who have little impulse control and access to guns. Scary stuff.

I've had BRK since 2010, but I don't mind occasionally selling some in my retirement account and repurchasing the same amount in my taxable account, so that I can still have the same percentage ownership of BRK, but put a (hopefully) faster grower in the retirement account to compound tax free. I also sold almost all the Fairfax in my retirement account and purchased Fairfax India there for the same reason. I think people don't think enough about after-tax money when they buy or sell. If I have something that pays a big dividend like VTS (10%), if it's in my ROTH IRA account, the tax on the dividend is zero. If it's in my taxable account, it's the qualified dividend rate, which is lower than my ordinary income rate but more than zero, but if it's in my Traditional IRA, it's tax only tax deferred. When I take it out eventually, it will be taxed at the highest rate as ordinary income. So that makes a difference when deciding where to hold it, as well as where I have idle cash.

I've read several good books about the great financial crisis. Too Big to Fail is becoming the default official story, but it's interesting to see someone else's take on it. Tim Geitner's book was good, but there was something about his version that didn't sit right with me, and I couldn't put my finger on it. The Bullies of Wall Street is a short, very readable book by Sheila Bair. I won't go so far as to say that she comes out swinging, as some in the press have suggested, but she definitely wanted to get her side out given the unflattering portrayal in the most popular accounts of the matter, mentioned above. Yes, Ken Lewis is referred to as a "country bumpkin", but if you read Too Big to Fail, you probably thought that in your head, even if you never said it aloud. In other tellings, she is the one who put the turd in the punch bowl by not going along with things that Geitner and Paulson had worked out because she didn't want to put the FDIC's money on the line. In her telling, she didn't have the authority to use the FDIC's funds for some of those schemes, and would be breaking the law if she did it. Since Congress quickly changed the Fed's authority to allow them to buy up assets that were not permitted under their original mandate, she wanted Congress to amend the FDIC laws to allow her to do what they were asking, because without that cover she would be breaking the law (committing a crime?). Geitner and Pandit come off looking particularly bad in her side of the story. Geitner had some kind of fan boy crush on Pandit and was favoring Citi's bid for a bank, which would require a lot of government money because Citi wasn't in great shape to begin with. She viewed Pandit as a failed hedge fund manager who fell up and up until he was given the big chair at Citi. Speed was of the essence in these deals (as we saw recently with SVB, and First Republic), so when Citi stalled and tried to get more concessions, she accepted an offer from Wells for more money (better for the target Banks' shareholders/creditors) with no government assistance, she jumped on it. Geitner was furious and felt like she had made him look bad in front of Pandit (so what?). There are three sides to every story, his side , her side, and the truth. This is obviously not from an unbiased source. She doesn't like some of the players and takes joy in retelling about a meeting in the White House when Geitner got a dressing down from Obama for trying to undermine her on something. Still, it's worth seeing things from multiple angles and coming to your own conclusions. This wasn't a long book because it only involved her and FDIC's role in the saga, which are only a few chapters in Too Big to Fail. But it's definitely worth a read.

I hadn't heard of Orla before, and I hate junior miners, but it's a big position, and I remember a few years back Prem bought a rights offering for a $100mm potash company and that went from $1 -$4 in a year, so it's worth digging into the annual report to see if you can figure out what he sees in it. Even if you pass on it, and just participate indirectly through FFH, it's a good learning exercise. Since ATCO is private now, I assume there will be some discussion of how it's valued going forward when the new ships are delivered and whether that nice fat dividend will still keep coming to FFH like it was to shareholders.

@LC I grew up in Brooklyn, but my dad was a contractor and he had an office for a while in the Bronx because he had a lot of work up there. When they remodeled Skyview on the Hudson in the 90s, we did a lot of the drywall and tile work in those buildings as a subcontractor. I left NYC after college to go to law school. I don't miss it. There are things I like about NY, but the things I dislike are much more irritating when you've been away for a while.

Yes, I agree, it make life easier for senior lawyers and miserable for new lawyers. I played around with it and asked it to draft a sample forum selection clause, and a sample material adverse change clause. Because those two are so common, I think it did pretty good job. Without any false modesty, I know that I could've done a better one when I was a junior attorney, but it wouldn't have been twice as good. If a lawyer (or client) has a choice of free and good enough or slightly better for a lot of money, I think they will go with the off-the-rack option vs the bespoke suit. Maybe senior lawyers will use this for a first cut? Or the type of client who uses RocketLawyer or LegalZoom will use this and take it to a lawyer for editing? Or maybe, like computer programmers, junior lawyers will use it and will just be pumping out much more product for the same salary? I asked a couple of specific legal questions about my current practice area and my prior one (both of which are not very common), and it gave an incorrect answer for both, but sounded very authoritative. Which is scary if a small landlord or mom and pop business owner will rely on it to prepare for a court case where they can't afford a lawyer. Without the foresight of a crystal ball, all I can say is that I'm glad I'm not graduating now, since the practice seems to get worse every year. I saw that in the 1960s, even the white shoe firms on Wall Street had a billable requirement of 1500 billable hours. Nowadays that would be considered part time, even at a smaller firm. So do you use the sample template the same way you would use a sample brief or prior contract and just follow the pattern to make sure that it includes everything it's supposed to, but edit everything so that it fits the specific facts? Since they charge for shepardizing cases, I would assume that Chat would have to have an agreement with Westlaw before that becomes an option.

A friend of mine has a bunch of those. Not because of your thesis, but because he had a bunch of the common that got wiped out in the bankruptcy and those out-of-the-money warrants were all that was left after the restructuring. I looked at the common when he had them and after the bankruptcy reorg and decided to pass since those floaters are the last things to turn in an oil price boom and the first to collapse. I hadn't thought about the warrants, though. I'll take a look. Thanks for the tip.

I don't think so, for the same reason that AI can't tell jokes, it doesn't understand nuance and can't make analogies. It has for years been getting better and better in some things like filtering through emails for discovery in litigation and flagging the ones that might be relevant, then having an actual attorney look at them. 20 years ago, when some of my friends graduated and still hadn't found a job, "document review" was like Uber/Lyft/TaskRabbit for lawyers. They would pay you a decent amount (no benefits) to cull through thousands of emails and documents in response to a discovery request, and you would be a room with 20 other underemployed recent grads, and after you made the first cut of the docs, the big lawyer would review them. That first step is gone now. The software is not only cheaper, but more accurate than most lawyers, and it doesn't get tired, it doesn't take days off, and it doesn't sue for things like a real employee. If you ask an AI program to explain Brown vs Board of Ed, it will find enough articles written on it to explain it. But giving it a set of facts and asking if it's legal or not, is probably way beyond it's abilities for now.

I used to own shares of a land based oil rig driller called Patterson UTI, and the former CEO/founder was a thousand years old and very sharp. Reminded me of Munger. He said that the problem with the oil industry (the E&P guys) is that they like to drill holes more than they like making money, and that if you give them a dollar, they will drill you a hole, you give them another dollar and they drill you another hole, and that you run out dollars before they every tell you that it's a bad idea to drill another hole.

Well, I like to give credit where credit is due, but I can't remember who told me this pithy analysis. He said if you want to destroy a city, the only thing more effective than rent control is carpet bombing. In the poor areas of the city, where it's meant to help, it does the most harm. I grew up in NYC and the South Bronx had many blocks with buildings that looked like something from The Last of Us. When you aren't allowed to raise rents, you don't have money for repairs, and many landlords just borrowed as much as a bank was foolish enough to lend them, then collected the rent for as long as possible, and eventually just stopped paying the mortgage and the taxes and eventually just walked away from the property and let it be the bank or the city's problem. The problem is made worse by laws that make it incredibly expensive and time consuming to evict a "professional tenant" who knows how to work the system and probably has a free lawyer. In NYC if you own a property through an LLC or Corporation you have to hire an attorney to appear for you. How many mom and pop landlords can afford to do that for a year without rent coming in? Why don't they own it in their own name? Because they don't want someone to slip on a banana peel in front of the house and sue them into oblivion. I think the risk is less in high end buildings. New construction isn't subject to rent control in NYC if I'm not mistaken, and even in the older buildings, if you are charging market rent and verifying income, it's unlikely that someone put his nose to the grindstone to graduate at the top of his class, get a job at a top law firm or bank and then use that lifetime of work as part of some grift to rent a place and not pay. But at a lower income level, 9 months or a year of free rent might look like a great risk reward situation. You stop paying rent, after a year when they finally evict you, you rent a new place under your wife's name, then a year later under your elderly mother's name, then your kids, and eventually yourself again when enough time passes.

Just watched this. Great find, thanks for sharing.

After the Berkshire AGM (where Uncle Warren explained how AAPL is not a 35% position, b/c their investments include their operating businesses) I decided not to trim the big ones anymore, because as a percentage of my total assets, which include my work provided 401k and future pension, and my home in my city and condo in Florida, it's really not that big a position at all. And yes, some of the big ones that slowed down in the past (like Fairfax) and I didn't sell eventually came back strong and if I sold, knowing I still liked the future prospects, just to keep a certain allocation like 5% each for 20 companies, then the returns would be less lumpy, but they would be less overall too. As to the small positions, I do see your point and I didn't have a good answer. But in reading the Joel Tillinghast book, who outperformed the market for two decades and had 800+ positions in his fund, he explained it better than I could. Something can look really cheap, or have huge potential for growth, but it's not a sure thing, so putting a huge part of your net worth is not optimal. But a smaller position is a way to start to participate and you can add to it as the picture becomes clearer or your faith in management improves. Maybe researching the smaller positions keeps me busy and therefore I don't do something foolish like trim the big positions? Maybe the big positions aren't attractive except for brief periods every few years and I feel uncomfortable sitting on cash or buying my biggest conviction ideas at prices that are unattractive currently but will still do okay over time? Thinking of those small positions as a percentage of my total net worth/assets makes the allocation even more questionable in some ways though. Viewed through that lens, they are so small that they are basically just going to Vegas and playing the nickel slots. Just thinking out loud, but I appreciate the feedback.