Xerxes

The only thing with ONEX is that they tend to put in a larger portion of their own capital in their funds vs. Third party, so they are more “on the hook” sort of speak. They are more of an investor than asset manager. I think Gleshkin deal was meant to help them be more fee based. Or taking step in that direction.

Thanks Xerxes Another recent and relevant podcast episode I liked: Invest like the Best (Patrick O'Shaughnessy), episode 163 "Investing through a Crisis with Dan Rasmussen" https://podcasts.apple.com/us/podcast/dan-rasmussen-investing-through-crisis-invest-like/id1154105909?i=1000468532281 thank you

There is a new episode for PV podcast. For those interested in Exor this could be interesting. As a Canadian the name is too illiquid for me. https://podcasts.apple.com/us/podcast/price-to-value-podcast-southeastern-asset-management/id1434613123

His earlier book The Prize finished in the 90s. He had a subsequent book called The Quest that I actually enjoyed less than The Prize. But in the past year, he has been hinting on Bloomberg TV that he is working on something. No title nor any release date. I imagine the news flow keeps adding to to that story.

For those of us who are uninitiated in the world corporate bond trading, is there an index based on European corporate bonds that can be bought to capitalize on the short-med term widening of credit spreads ?

i am not sure if that has been stated before, but i mention it anyways. Russia's oil industry has a ruble-based cost structure whereas Saudi's oil industry has a riyal-pegged-to-USD cost structure. What it means is that as the barrel drops in USD, the commodity-based currency ruble plunges and so does Russia's cost base, whereas for the Kingdom, they get fully crushed on their margin, because their production cost are all effectively USD. All this to say that Moscow has a built-in damper that helps it a bit when the barrel drops. Inversely as barrel shots up, ruble may appreciates too much and that would cap their gain as well. Coming out of this, i believe the US shale producers will be consolidating under the banner of non-shale Exxon and Chevron and some of the bigger player in the Permian basin. And that Moscow and Riyadh will be looking at a much stronger opponent down the road in the US. I own both Shell and Exxon and have seem them deteriorate. i hope they cut their CAPEX and focus on share buyback. But i think at this point with how low the barrel is, as new investor, a better directional play on the crude that doesn't involve the headaches of knowing the O&G company would be to go long on RUBLE - the currency itself. When i bought Exxon and Shell some years back in 2017-18, my objective was not capitalize on rising oil price, but on production increase of the super majors. My view has been that the 'risk premium' has long gone since almost 5-6 years ago, we just didn't know it at the time. My bet was that Exxon will become the mega super major through its $35B CAPEX annual spend in the Permian Basin that would expand its production. Whereas Shell would pivot toward the natural gas and in time renewables. I desperately looking for a Daniel Yergin's follow-on book when it comes out at some point. it has been fascinating journey.

I just hope that they are not shorting all the wrong names Einhorn-style (I.e. all FANG powerhouses listed in the Annual Letter)

The drop in equities and the rebound won’t help with their 7% investment return goal. The rebound would just undo what the drop did. Unless I am misunderstanding your point Agreed, and I won’t be selling here. But 3-4% positive might be quite an ask given what their equities have done ytd. Quite honestly, what's happened to their equities YTD is what gives me the confidence that they can do 3-4% on their investments. A simple 50% reversion back to what they were likely provides that. Given the blow out in spreads, the drop in equities, and the drop in FFH, it's the first time it's been attractive to me with a clear path to 15% annualized since my lapse in judgement in 2018 thinking interest rates might actually be sustainably rising.

Perhaps I can neutralize further downside by shorting the exact # of FFH I am currently long ;D

He bought Petrochina ahead of an era of unprecedented demand for oil. No such thing today

It should be a very interesting AGM next month. I don’t mind share drop. What I mind is them having exposure (through illiquidity of some of their holdings) when they advertise as otherwise.

Sold GILD (done care about vaccine speculation) Like to take the proceed to add to my AMZN or BRK or DIS or UTX or GOOG but cannot decide

I would say there has to be two-prong approach Quality in the current indiscriminate selling followed by your suggestion above some months later to pick up the smaller ones that had their intrinsic value wiped clean but somehow survived

I work from home and live in Canada. I don’t like it. Once in a while is ok (once a week) but cannot stand not seeing people. I don’t know Markel very well. I always thought it of as FFH with a better equity picks. That said I think Blackstone and Brookfield are the names that can go side by side with Berkshire as “picking up the pieces” winner. I actually believe AMZN customer-centered formulae will prove to be winner over merchant-centred Shopify due to what happened. Sure Shopify is expanding its platform to merchants but in a time of crisis AMZN can become like an utility something that Shopify cannot. I am long term believer of Uber and with $10 B in cash I think they can innovate. As a side note: US Gov spend trillions of dollars on its nuclear triad and military for defense, and here we had world greatest economy knocked out by a virus. There is bound to be ramification. Within aerospace sector, i believe in the newly created aero-Defense giant Raytheon Technologies and in time (given what happened b/c corona impact on aerospace industry) market will see the wisdom behind that diversification strategy.

Not to pile on Prem W. as I respect the man. But I would just note that in his annual letter he made a comment about high fliers tech companies and how expensive they are. Yet, the NASDAQ leadership “I.e FANGS” although down are no where near down as value is.

The situation must be concerning for ONEX that bought Westjet for $4B or so for its fund.

Was toying with the idea of buying puts on the VIX at 65 strike There got to be a temporary plunge down in VIX

My only hope is that as a natural bear, he smelled it few weeks before it hit the fan. And somehow increased his bearish stand. I vividly recall in the Q4 results from 2017, the number showed that he lost a certain amount because he shorted to early in Dec where the mini crash happened few months later in Feb 2018, when Trump went first against China on trade.

Even for the bet against the housing market 10 years back, I believe he was, in his word wrong, wrong, wrong and then right. But it was only a few years wait. This time he had to wait 10 years. And it must have been very hard to maintain the steady course whilst everyone telling you to join the party. In retrospect if you are a natural bear, perhaps you should have rolled your deflation hedges every five years starting fresh.

As a side note given Prem nose for bearishness (notwithstanding his 180 degree in 2017), it would be hard to imagine him not taking advantage of what the virus could mean for equities heading into late February. I am myself am too lazy and slow to buy put options on obvious things like airlines or related industries, but I hope he could squeeze a bit of juice through shorts and puts to add to BK

I added at 205, again at 195 and am glad to see I don’t need to add at 185 and go straight to 175

Just to understand what is being explained : Is the opportunity for FFH to liquidate it’s current bond portfolio with a capital gain as yield crater or is the opportunity for them locking at higher rate on corporate bonds due to widening spread ? Or both

Side question : How much of the $40B portfolio can they realistically deploy if they see good names ? With indiscriminate selling I would think they wouldn’t have to “try to hard” to find investing opportunities like in the past. I understand their need to buyback some of the minority positions, recap the insurance side to take advantage of the hard market and maybe buy back shares with left overs take priority; but all these are being funded through corporate earning. Correct ?

It would be the ultimate letdown if the deflation hedges don’t produce meaningful results.

Wasn’t able to catch it when it opened 22% down. But caught it I think as 10% down.