watsa_is_a_randian_hero

My calcs show $3.7 billion in equities. That doesn't include what they might own in asia, europe, south america

I think what is most surprising to me is to see partial sales of KFT & JNJ after he said in this years AR that those are two positions he would contemplate holding for the long term. He said the same thing about WFC - makes me wonder if he has done partial sales on that position too now that the value of the position is over $500mm.

Thats if you count ORH. By counting ORH you are double-counting. ORH gets its value from the investments it holds, and because FFH controls ORH, those investments show up here.

About $295 - $300, on an adjusted basis. This is an estimate taking their stated BV as of April 24, adding to this the difference between FV and equity value in equity investments (adjusted for tax/minority interest), and then finally calculating the value changes in their equity portfolio holdings. As a whole, the equity portfolio is slightly up since 4/24, but not too much. This estimated BV was over $300 before the S&P started declining significantly.

40% of their portfolio (of what shows up filed with the SEC, which is mainly US positions), is now in 4 stocks: WFC USB JNJ DELL

Major changes: Add 3 mm shares BCE Add 700k shares of BNI Sell 3mm shares Dell Sell 3mm shares FTR Sell 6.5 mm shares Gannett Sell 2mm GE, but buy corresponding position in Calls Sell 9mm INTC Buy 6 mm ICO Sell 1 mm JNJ Sell 1mm KG Sell 1mm KFT Buy 1mm LEUCADIA Sell 700k PFE Buy 15mm USB Buy 16.5 WFC

http://www.sec.gov/Archives/edgar/data/915191/000090956709000451/o55357e13fvhr.txt

I've seen this sentiment from so many people who have seen these stocks survive, seen them rally 100%+, and have just been saying, "I'm waiting for the next pullback to get in." For this this precise reason we will not see a severe pullback. There is still a ton of cash on the sidelines, people who saw the last rally and sat out with regret, and now are just waiting for a pullback.

ORH bought back about 1/3 of the total amount of series B preferreds outstanding over the last quarter. I think thats a better buy @ 13. As soon as interest rates start to climb back to normal levels, this will have a higher coupon, and will climb closer to par.

Neural Networks are used: http://en.wikipedia.org/wiki/Neural_network Real life applications The tasks to which artificial neural networks are applied tend to fall within the following broad categories: * Function approximation, or regression analysis, including time series prediction and modelling. * Classification, including pattern and sequence recognition, novelty detection and sequential decision making. * Data processing, including filtering, clustering, blind signal separation and compression. Application areas include system identification and control (vehicle control, process control), game-playing and decision making (backgammon, chess, racing), pattern recognition (radar systems, face identification, object recognition, etc.), sequence recognition (gesture, speech, handwritten text recognition), medical diagnosis, financial applications, data mining (or knowledge discovery in databases, "KDD"), visualization and e-mail spam filtering. Look familiar? I think I read somewhere Simons has hired almost all of IBM's speech recognition department away. He claimed "speech recognition is very similar to finance. In both fields you are trying to predict what happens next." A friend explained neural networks to to me, as if you are at the top of a mountain, and drop a bucket of water, creating a formula that predicts the most likely path of the water down the mountain.

Taking their BV, converting their equity accounted investments to FV, the BV as of 4/24 would have been approximately $300. Add to this approximately $8/share of gains after minority interest and taxes since 4/24 and you have an estimated MTM BV of well over $300. 1.3x book would be $400/ share right now.

I don't understand why shareholders are complaining about additional disclosure.

MTM bv is close to $284 now, thats all that matters. At 1.25x BV, my 2011 $300-$350 call spread is in the money.

Well you need to appreciate the MTM. For instance, FFH traded @ 220 this quarter. At that point in the quarter its MTM BV was probable near $235 due to the equity markets. However, if you turned a blind eye to the MTM accounting, you would think that the BV was still $278, and the company was selling at a substantial discount to BV. To quote Buffett, "Price is what you pay, value is what you get." While the value of the portfolio has not declined, the prices have. Therefore, as an investor comparing various market opportunities, I would want to know what FFH is currently trading at compared to where its portfolio is currently priced at, because, theoretically, I can recreate the same portfolio if I want (given the SEC filings). So if the company is trading at 0.5x MTM BV, I have no incentive to do so, but if the company is trading at 3X MTM BV, then I might as well sell FFH and just buy the underlying holdings equity directly. While I do agree that the MTM losses aren't a change in true value and therefore just noise for a long term investor, I don't think it is meaningless information to have.

http://www.fairfax.ca/Assets/Downloads/Press/fpr2009-04-30.pdf there it is

I pulled up a bunch of random Berkshire insured munis. They looked on average to be up 5% to 20% depending on duration. I'm guessing we might have made $400mm off the munis this q

class action against the United States Treasury? They deserve it.

Remember this thread? Pretty Interesting now that this letter from Coumo is out. http://online.wsj.com/article/SB124050588176348711.html#mod=testMod

The thing is, FFH was trading below its 12/31 stated book value, but on a mark-to-market basis its losses in equities at the time in Feb would have brought that BV much lower. I don't think FFH traded significantly below its MTM BV this quarter.

There is the ability for policy holders to surrender their policies for the cash value.

The current stock portfolio is not $20 B

Awesome.

"- Averaged down on US megacaps into the winter" Did he hint that he has bought more wells?

"I'm research associate for well-known middle bracket firm in midwest." Equity research? I'm in the midwest as well. I'm in a valuation group that does fairness opinions/solvency opinions/corporate valuations/structured finance valuations. I primarily work on the structured finance side but occasionally help out in other areas. Its not what I originally set out to do (I'd rather be in asset management), but as Nassim Taleb would say - luck and randomness is the huge determinant in success. About 6 months after I was hired the credit crunch took hold and the demand for valuation services for structured securities from hedge fund clients and corporates (for FAS 157) skyrocketed because they all became illiquid and holders needed valuations for their NAVs or 10-Qs.

There is a reason to pay employees more. Top employees in finance can leave, go work for other firms, or start their own firms, esp. boutiques. Say a top trader, or investment banker with a rolodex, brings in $100 million a year in value creation to your firm. Do you want that person leaving? I think the best analogy is sports. Think of the value Michael Jordon created for the Bulls. Now, I have no problem with the SIZE of comp paid, but I do take issue with how it is STRUCTURED. Esp for traders and management. I work for a boutique investment bank, and there is not much you can do to create large negative losses performing traditional functions such as M&A. However, for a trader, or for management in general, this can happen, and those taking on this type of risks should not be paid ANNUAL bonuses. Comp should be longer-term oriented, based on 5 year performance, and your bonus would vest. In order to attract employees to this pay structure, the size of the bonus would most likely need to be even higher though, because Ceteris paribus the employee is taking more risk they won't be paid anything at all.