smw397

I passed on FLIR in 2003 and 2004 - even though I was impressed enough with the company that I bought one of their products. Their numbers looked great but I made the assumption that too much of their revenue was dependent on Homeland Security and military orders and that those would not be sustainable. Oops.

Well it was reported today that two spin-offs from SAC were raided by the FBI today, so there's that. http://www.marketwatch.com/story/fbi-raids-two-hedge-funds-wsj-reports-2010-11-22

By the way, I could never live in a condo...but my wife does drive a Corolla ;)

I've never understood why a specific metric like $/sq ft isn't more commonly used when talking about real estate prices and trends. It sure would remove a lot of the noise from the discussion...how useful is it to talk about median home prices if we don't know the physical characteristics of this mythical median home? What I do know is that I currently rent very comfortably in a house that was new when I moved into it six years ago, it's on five acres close to town, and I'd have to find a comparable house selling for about $125/sq ft for the mortgage to compete with my rent. Granted, I'm not gaining equity, but I don't have to pay for the water heater when it goes out either. I'd still happily pay a premium if I could find a house just a bit bigger on a one acre lot for $150/sq ft, but I'm not seeing anything that even comes close. Most acceptable properties are still asking well over $200/sq ft ... not that they appear to be selling. I reckon I'll just write out the check for another month's rent and keep waiting.

I don't know that I can refute the numbers in that article but it sure seems to me like they did some cherry picking to try to paint the rosiest picture possible. They talk about the tax credits like they were such a good thing but fail to mention what most everybody acknowledges, which is that all the tax credits did was pull demand forward and now that they're over we're seeing prices plummet. I don't monitor the whole state but I have definitely seen a good number of houses in my market (far NorCal) fall significantly just in the last two months, like from $329K in July to $279K as of last week. I see more and more houses on the market all the time and I'm not detecting a whole lot of movement. Commenters at the end of the article indicate the same thing is happening in upscale coastal markets north of San Diego. The elephant in the room of course is the HELOCs, which got not even a mention in that article. With unemployment still hovering around 10% and the affordability index (ratio of house prices to annual incomes) at historic lows, who exactly is buying?

The difference is that in 2003 there was still a huge bubble waiting to be blown, and from 2003 to 2006 we saw real estate prices escalate on a scale never before seen. An awful lot of everything else that appeared good in the economy was just caught in the updraft, particularly consumer spending on the back of HELOCs. That ain't happening again. Employment numbers are down, wages are stagnant or falling, and the home equity ATM has long since disappeared in the rear view mirror. Demand was pulled forward for a while with cars by Cash for Clunkers but that's over and last month's auto sales were dismal. Demand was pulled forward for a while with houses by the first time home buyer tax credit but that's over too. Banks are sitting on huge and growing numbers of foreclosures and even bigger numbers of delinquencies they've not yet taken action on for fear of having to book the losses, and sooner or later that massive shadow inventory is going to hit the market dragging real estate down further. Maybe there's another bubble we can blow to make next year look like 2004 but I'm not seeing it.

I suppose it's a matter of opinion and personal preference. The food scene is pretty locally focused on the two main small cities in the middle of the region. Beyond them it gets pretty rural. But there's an incredible co-op with two large stores, and two other big natural food stores they compete with. All four of them together probably aren't much bigger than some Whole Foods units in bigger cities, but for an area like this they're incredibly well stocked. This is a real hippie haven so there are lots and lots of local producers of everything from fresh fruits and vegies to an amazing variety of boutique products, local organic beef and other meats, three working marinas so lots of seafood, etc. From what I've seen prices tend to be at least as good or maybe even a bit better than most Whole Foods types stuff. The whole value added ag thing is a primary component of the local economy, which isn't completely disconnected from the outside world but a lot of people believe if there were a global catastrophe that cut us off we'd be in pretty good shape up here. We have some good restaurants too, of course nothing like SF or NYC, but variety and quality are here in a lot greater proportion than other areas with such small population. The surf...well...it gets big and it's usually not too crowded. Obviously other regions have better conditions and warmer water but with so many people scrapping over waves it's not worth it to me. 50°F water temps are a pretty good gate keeper when it comes to crowd control. We still get our share of kooks but when it's firing out there you tend to not to run into so many people unequipped to handle it. To answer your last question would require a type of profanity I'm not sure Sanjeev would appreciate. I'm pretty bearish about the macro economy generally, and somebody here is always pointing out that mean reversion can be a bitch. I think California is long overdue for a big correction and I have no idea how it's going to shake out, only that it's going to hurt. Hopefully our isolation up here will shield us from that to a certain extent but you better believe I've got plenty of water and dry goods in storage and the means to protect our resources should all hell ever break loose.

I'm in my mid-40's with three grown children so have hung onto my youth with a vengeance to make sure I still get to use it since I was working ridiculous hours at low-paying jobs just to survive through my 20's. Got to college late and didn't finish until 12 years ago, then spent a short time as an employee before starting my own consulting firm in the energy efficiency and machine reliability field. My main passion is surfing, which I did almost daily up until the last year but I'm currently trying to get over a nagging rotator cuff issue from years of intense paddling without doing much else to stay in shape. Just recently joined a gym for the first time and am enjoying yoga, gradually working my way into a weight program so I don't overdo it or burn out on it. Also do a good bit of wakeboarding and just got started with kiteboarding. Used to SCUBA dive quite a bit, not much lately but two of my kids are now more experienced divers than I am and I expect I'll dive a lot more when they're around. Beyond all the mostly water-related physical stuff, we're very into food and fortunate to live in a rural area where virtually any high quality ingredients you could ever want are readily available. Local organic produce, abundant fresh seafood, all manner of international cuisine - most big cities should have it so good and we get it without the crime and traffic. It's albacore tuna season right now and for the next month or six weeks I'll be buying 20 to 40 pounds of fish every weekend and freezing and canning like crazy so we've got enough to last the year, including some big feeds where we'll have a couple dozen people at the table. Sometimes I'm able to do work trades with commercial boat owners for large quantities of fish or dungeness crab. I'm a hack musician too, and love to accumulate and trade for all manner of sound equipment, especially guitars and vintage tube amps. If any board members have any such old gear collecting dust in the back of their closet or up in the attic let me know!

If one indicator of good humor is that you can't tell if somebody's serious or not, well then so far this thread delivers, a lot more than I thought it might.

Brilliant opinion piece by the Oracle of Onionha Read the whole thing at: http://www.theonion.com/content/opinion/if_i_see_a_shirt_i_like_ill

Just giving this thread a bump in hopes that it gets back on topic now that earnings will be upon us soon.

Too much caffiene?

Yahoo! Finance actually has a pretty good portfolio tracker. It doesn't do dividends explicitly, but you can enter them as interest income and it's treated more or less the same way. The only problem I've had with it is it tends to blow up when you have a stock that splits or changes symbols (FFH is a good example actually), but you can just go back and manually adjust your basis and other details to reconcile.

Brox, I'd be very interested in your thesis for SQM. I don't have any exposure to lithium but plenty to other storage media. My belief is that long term lithium isn't going to be sustainable for much other than small portable devices and that NiMH will never be quite as 'good' but will always be more viable economically for transportation. In the meantime though, everybody's talking about lithium for EV's and it's highly likely there will be a lot of pressure on supplies of the raw material.

TD Ameritrade listed the options with no changes yesterday. I was never able to find the Toronto listed US dominated ticker for Fairfax, but the pink sheet FRFHF was there right out of the gate, albeit with very low volume and a steep drop in price at first. There was a very interesting arbitrage opportunity that resulted. The first few hundred shares of FRFHF traded as low as 325. Consequently the 230 Jan 11 LEAP (one of which I'd bought on Tuesday for 131.20) could be had for as little as 120. Eventually the bid on the underlying came back up over 350, but it took nearly an hour before the ask on the LEAP followed suit.

Ditto that for TD Ameritrade. The options are still listed as always though.

Smazz, are you suggesting the number of shorts scrambling to cover will necessarily be greater than the number of US shareholders scrambling to sell due to issues with their brokerages and limits on foreign securities?

I have done very little trading with my FFH shares, just a little tweaking here and there when necessary. While your point is well taken, my complaint today is that by taking this action, FFH is ironically forcing me OUT of being an owner and limiting me to options if I want to participate at all.

Here is my advice: 1) Move to Interactive Brokers 2) Buy FFH puts to raise your margin borrowing capacity to a safer level (when they expire worthless you at least have a tax loss) Other ideas to further reduce your margin risk at Interactive Brokers: Sell your energy holdings (assuming no taxable gain): A) replace them with deep-in-the-money LEAPS on those same energy names (if available). OR B) replace them by writing deep-in-the-money puts on those same energy names (the money you get from writing the puts helps count towards your total margin equity, thus increasing margin borrowing capacity and thereby reducing margin risk). You also benefit by not actually borrowing any money, so no margin interest expenses, but you miss out on a dividend which will be partially if not completely (and then some) offset by the volatility premium in the put contract you write. I appreciate the advice. I have trouble with most of it though. First off, I called Interactive Brokers and was left unconvinced I can even do the transfer. It was a difficult conversation where I don't believe I ever got the rep to fully understand the nature of the move from NYSE, and couldn't get a clear statement as to whether I'd be eligible for margin there or not. More importantly, she said it could take up to two weeks to complete the transfer during which I'd be completely disconnected from my portfolio, leaving almost no time to do anything should there be a problem. Waaay too risky for my blood. That leaves the options strategies. Buying LEAPs means I pay gains tax now, I'm not really an owner, and I forego the dividend. Not to mention that if I don't go to IB, I can't roll over if I'm unable to exercise (no margin, remember?). So there's a drop dead date there. I guess at least if I buy the LEAPs now it won't matter so much if it takes a few weeks to work out the kinks at IB, and I would be buying something near enough to at the money that it would get me out of margin altogether, at least until it comes time to exercise or roll over, but still too much uncertainty. Your advice on the energy stocks probably makes the most sense, and it's something I've been trying to figure out how to do anyway....but I should have been more specific that they are all alternative energy stocks, namely solars, microturbines, and smart grid tech. Small and mid-caps, lots of volume, fairly volatile, but the options in them aren't very attractive, at least to my feeble and inexperienced mind. There's almost no money to be made selling any options that I'd want to sell and the premiums for the ones I'd want to own seem too high. I'd love to quit my day job and spend the next two weeks figuring this out but I don't really have that luxury. There's gonna be a lot of late nights this week...

I think a better way of handling this would have been for Fairfax to give us all more time to arrange our affairs. Why the rush? I couldn't agree more. Talk about the Law of Unintended Consequences. I can't imagine they meant for these types of situations to arise, but how could they not have anticipated that they might? Surely these guys understand more about this stuff than 99% of retail investors - that's why I entrusted them to invest for me in the first place.

Ok. First off, it sucks to be you. You have found yourself in a complicated web of tax law, existing broker policy, willingness to change brokers, and your leveraging strategy. Obviously something's gotta give, and none of the options is exceptionally attractive. However, without wanting to seem like too much of a prick, that problem is an individual problem for which an individual must seek a solution. It is not an FFH problem, it is not FFH mismanagement, it is not FFH failing to optimize intrinsic value, it is not FFH expropriating shareholders' wealth. Ultimately, time will tell whether the de-listing is optimal for FFH (in terms of access to capital, talent, etc). However, I would not attribute this to FFH being a "bad partner." SJ I didn't explicitly refer to FFH as a "bad partner," though I can see how one might infer that. Given that this move may well benefit SOME shareholders while it clearly does not benefit me and, I would assume, many others in my position, I am having a bit of difficulty understanding how exactly this is supposed to be "fair and friendly." It was not my intention to go down this road. I was hoping for advice on what course of action to take, but I guess since I started by voicing my frustration I'll now have to settle for the value investing community wagging its finger at me and telling me I don't deserve to own FFH since I've been naughty and used leverage to do it. :-\

I'm pretty cheezed off about this whole thing at the moment. I just got off the phone with TD Ameritrade, after nearly an hour and transfers between four different departments trying to divine just exactly where I stand. Granted, I'm an idiot for ever allowing myself to get into using margin at all, but that I did, and unfortunately some time before the whole meltdown began last year. Some of my holdings have recovered, but some, in particular related to energy, have not. I still expect that they will, but not before we start to see some real movement in the real economy (read, energy consumption approaching pre-recession levels). I'm not anywhere near being in danger of a margin call at the moment, but since FFH makes up over half my portfolio, when the delisting occurs it will immediately put me into a large margin call situation. I couldn't even get the Ameritrade rep to give me assurances that I'd actually be given a chance to deal with it before they just start dumping stuff for me. So now I am forced to do something now. I either have to unload a large part of me FFH, pay the capital gains tax, and miss out on future growth in the stock, or else I have to realize significant losses in other equities for which nothing in my thesis has changed...again, missing out on any future opportunity. I only see two alternatives now. I either have to replace the long shares with deep in the money LEAPs (thus realizing gain and paying taxes now), or I have to move to Interactive Brokers - which frankly doesn't appeal to me given their policy of no margin calls. Not to mention the fact that IB tells me it could take up to two weeks to complete a transfer of my holdings from Ameritrade, during which time I'm completely locked out from executing any transactions, with no guarantee that I won't end up being denied, resulting in basically no time to do anything. Frankly, this sucks. Either way you slice it, I'm feeling like Fairfax isn't exactly treating me like a partner in ownership of this company right now. And in all likelihood there are a non-trivial number of others in my position who will be forced to do something along the same lines with increasing urgency between now and December 10. >:(

I just googled the hell out of him and I can't find any reference to John Gwynn dying, other than this article that appeared today. Loads of links to his firing last October and pretty much nothing at all since, other than a few references back to that time and his earlier interactions with Kynicos, SAC, and Third Point. In the days leading up the the Ken Lay and Jeff Skilling trials, I came to use "Baxter" as a verb. I agree with Sanjeev, I think ol' Gwynne went and got himself Baxtered. (Cliff Baxter was the Enron executive found in his car with a gunshot to the head. It was ruled a suicide but the more you read about it the easier it is to believe there was something else going on there).

That was my first concern as well. In the end I was a bit ambivalent about the ORH buyout but it was well timed for me and wasn't nearly as big as my FFH holding anyway. I would not want to have to find something else to do with my resources at this point, even if they bought us out for 1.25 BV.

Thanks, Sanj! It's easy to lose sight of how much you depend on a sane refuge until you lose access to it.