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KPO

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Apprentice

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  1. I don’t understand the BB hold at levels it got to early this year, but I kind of understand why a company heavily into property insurance might want to own companies that benefit from their claims. It’s like when BRK owned Axalta. How much does GEICO spend on auto paint each year? Might as well capture some of that margin in house.
  2. https://www.barrons.com/articles/canadian-steelmaker-stelco-is-a-low-cost-producer-and-has-an-investor-friendly-ceo-how-that-could-boost-the-stock-51633365262
  3. I think we’re generally aligned here in terms of this being a trade vs a buy and hold forever investment, but I’m not quite looking at Prem through the bad actor / Biglari scumbag lens. If I thought his MO was to screw shareholders I wouldn’t be here. BTW, I agree 100% on your strategic review point, but the IPOs are a form of that, so they’re moving in the right direction in that regard.
  4. I don’t know that these things are mutually exclusive. Sometimes I buy stocks that are just plain cheap and I’m willing to invest in the time it takes for mean reversion (Fairfax & T now, KMI, WMB, RDSB & BRK in March of 2020) and sometimes I buy things with an obvious catalyst (MRK is my most recent example), and sometimes you just buy things with a nice tailwind (APTS last fall). The objective is to maximize returns on a risk adjusted basis, so spreading bets makes sense to me as 100% catalyst-based investing doesn’t always work out.
  5. I agree 100%. It’s like Russian dolls. I’m of the opinion that when you account for the recent behaviors of the CCP, such as the “common prosperity fund” (AKA unforeseen tax), India represents a more interesting and predictable investment option than China. And from a book value perspective at ~$400USD you mathematically get a free rider on India in that the discount to book effectively writes Digit and Fairfax India to zero.
  6. That was my thought as well. I always throw lowball limit orders out late in the day when I see things like this cratering on no news. This has happened a few times recently with Fairfax.
  7. This has happened three or four times with Berkshire over the 23 years since I’ve followed it. I remember it being grossly undervalued in March of 2000 and up 50%+ a year or so later. Same around the time they bought BNSF in 2009 and then again for 12+ weeks in the first half last year. Fairfax isn’t quite of the same caliber as Berkshire, but the pattern is similar and they’ve done a nice job with the insurance operations during this time. Enjoy it and buy more. That’s what I did with Berkshire and that’s what I’m doing here.
  8. Same. Limit filled one minute before close.
  9. Thanks, Glider. That was my read as well.
  10. I hope #2 is off the table. Buying shares back would be great here, but I don’t like having the exposure of the counter party’s incentive structure of the TRS instrument. Given the trading volume it wouldn’t be difficult to force payment through well timed short sales. Besides, I thought they promised not to short and use instruments like this going forward. It’s like being married to a wealthy and successful doctor with a gambling problem on the side. Please just run the business, maximize free cash flow and manage the balance sheet the right way. This is one area where MKL is far superior.
  11. Viking, Thank you so much for your comprehensive write-up of the recent value creation. I guess I was lazily focused on the big chunks of value from Digit, ATCO, and insurance operations, so your many points add to this. I was fortunate to be able to add to my sub $300USD positions from last year at $405 on Monday. I plan to buy more if this divergence continues at the same rate. At minimum I’ll enjoy the 2.5% yield in 4 months! Thanks again for this and your many other helpful updates!
  12. Fair enough on the depreciating asset point (autos) vs appreciating (SFH), and this was a point I nearly called out because it’s an easy issue to raise, but my bigger issue is the brokerage business. I don’t see a path to a winner takes all consolidation of the business unless it occurs through M&A, at which point I suspect it looks a lot like the investment brokerage business. Of course this ended in zero commissions and left remaining participants scrambling for other profit centers (pay for order flow). Believe me in that I totally was where you are in terms of seeing it as a big opportunity, but I’ve more recently cashed out of this theme for much more boring ideas given the overall market frothiness (T < $27, BAYRY < $13.50). That said, I want to very much thank you for your fantastic ideas and write-ups on APTS & FRPH, which have done well and continue to be interesting opportunities.
  13. This is kind of my thinking as well, which is why I owned Redfin for a period of time. As I watched SoftBank Vision fund plow money into Opendoor, which now has a ~$12B valuation, then Compass ($5.5B), and read about EXP ($7B) and now several other venture stage companies I put it in the too hard pile. Definitely a great opportunity for disruption, but it seems like that’s well known, and can all these valuations be justified? Is it a winner takes all business or does it just become a more fragmented industry with slightly lower aggregate commissions? If the game is a race to the bottom on commissions, I don’t get the current valuations. I also don’t see Warren & the incumbents going down without a fight. BTW, on ibuying, this hasn’t worked well in autos yet, but I do appreciate Vroom buying a sports car from me after driving it for 14 months during the pandemic at almost 20% above what I paid for it.
  14. Long time follower of this great investment community, but first time post. I’ve owned Berkshire since ‘98 and have owned Fairfax off and on for 10 years or so, most recently getting back in during the March 2020 COVID downdraft. With that backdrop, I’m interested in what folks think about value today compared to when Prem purchased shares at ~$308 in June of 2020. The share price today is roughly $100 higher on an absolute basis, but Digit, Atlas and a generally favorable operating performance since has pushed book value up by $152 (giving full effect for Digit valuation markup) since his purchase. Is Fairfax “cheaper” than 15 months ago, is the Digit, Atlas, etc. driven book increase a mirage or something else? Appreciate your thoughts.
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