Xerxes
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Posts posted by Xerxes
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Perhaps I ought to post this in the book section. I bought this last year based on a suggestion on podcast. It goes over the 1970s but primarily looks at the Great Bull Market of 1982-1999 and the subsequent bust. It is really entertaining, looks at inflation, the 'sadistic' bear of the 1970s that keep despairing the investors, and has lots of good gems in it. Berkshire is there as well (how could it not be).
I have not finish it yet, but it is going fast.
Bull!: A History of the Boom and Bust, 1982-2004 eBook: Mahar, Maggie: Amazon.ca: Kindle Store
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So much for those hoping that FFH have some Grand plan on Resolute, involving restructuring, roll-up etc., and that we, mere mortals, just cannot see the masterpiece taking shape.
FFH has some great things going for it, but finding partners for business outsides its area of competencies ain't one of them.
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4 minutes ago, wachtwoord said:
I wasn't asking about the many great assets that BRK surely has that will retain long term value.
I'm asking (in isolation) why holding an asset rapidly losing purchasing power (his speculation) and increasing in supply has a positive expected return. Your argument is that there will be a large demand. My follow-up question is then: why will 3rd parties have a large demand for an asset rapidly losing purchasing power in the future?
Are you (and Buffet) preparing for another liquidity crisis, dispite the inflation?
My comment was just a general comment on the first post and not related to anything you had mentioned.
Unrelated but related = >
Jamie Dimon: JPMorgan is hoarding cash because 'very good chance' inflation here to stay (cnbc.com)
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I got no clue of any particular strategy, but as it happens to be, his portfolio has plenty of hard assets that will retain value. I know BRK has been borrowing by issuing long-dated bonds so that is good.
It is the lack of having cash and lots of liability that will retain your wealth in a bad inflationary environment and not an abundance of cash. I guess the surplus cash for BRK would be to take advantage of a collapsing equity markets as a consequence of anything (including inflation), but it is not a preparation for inflation, in of itself.
I would also distinguish between good inflation and bad inflation. The former (inflation with growth) is what you want and hope for and the latter (inflation with no growth) is what you don't want. If i am not mistaken the last time we had bad inflation in the 1970s, gold went up through a multi-fold monster bull market. That is the type of environment were gold does really well (when real wealth is being eroded).
In fact Tobias C., recently on one of his podcast, made the point that the yellow metal that Buffett doesn't care about matched his own returns in the 1970s.
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Good thread, I never understood what is the "core" holding in the spaghetti of "tracking" stocks.
Even a drunk sailor can safely identify Brookfield's vertebral column: BAM. No such luck with these Malone's entities.
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Torstar buyers set to book huge gain as VerticalScope goes public on TSX - The Globe and Mail
"VerticalScope Inc. is set to go public Tuesday on the Toronto Stock Exchange at $22 a share, giving the digital media company’s largest shareholder, NordStar Capital LP, a stake valued at $173-million.
That is almost three times the $60-million NordStar paid last year for Torstar Corp. (excluding unfunded pension liabilities), which owns the Toronto Star and 76 other daily and weekly newspapers across Ontario and which also included the stake in VerticalScope."
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A highly recommend episode on carbon credit (second half).
I had listened to Marin's last few episodes from 2018-19, found his views on commodities to be super interesting.
This is his fifth appearance on TIP.
The Best Performing Asset Is Not Bitcoin w/ Marin Katusa (theinvestorspodcast.com)
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Thanks
return of capital would be the non-taxable event. But would the adjustment on the equity base for the investor be any different ? vs. the taxable return on capital
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Anybody has experience with HSBC as a Canadian for foreign stock exchanges ?
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RFP is under equity accounting.
The special dividend would be (I think) return of capital therefore lowering its cost base.
From 2018 Annual Letter, when RFP last paid a special dividend of $1.5 per share. You see that the $46 million lowered the investment cost from $791 million to $745 million. If it was a regular dividend, would it be return on capital vs. return of capital. Is there an accounting difference in the treatment. I am not sure i know the answer.
EDIT: i just remembered an additional point (but i need to verify), the equity earning ought to remove the dividend, so as to not double count since you already have the dividend in the earning stream.
Resolute. We have invested $791 million in Resolute and received a special dividend of $46 million, for a net investment cost of $745 million. Our initial investment was a convertible bond purchased in 2008 for $347 million. We invested an additional $131 million prior to Resolute entering into creditor protection and most of the remainder during the period from December 2010 to 2013. Subsequent to write-downs and our share of profits and losses over time, at December 31, 2018 we held our 30.4 million Resolute shares in our books at $300 million ($9.87 per share). The current fair market value of these shares is $244 million ($8.03 per share). You can see that Resolute has been a very poor investment to date
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Thanks for the explanation DeepSouth.
Unrelated, MSTR said on a SEC filing that its expects at least $284.5 million impairment on its position by close of June 30. Perhaps similar picture will unfold for Tesla, whereby providing an opportunity for those that are interested in Tesla and its actual business (that is if Elon Musk has not been purchasing more BTC through Tesla, after causing a price depression via his tweets)
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Amazingly BB has been holding up for almost a week now. LOL... This is unlike the short-term price spike in January.
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14 hours ago, JRM said:
The interview\debate with Michael Saylor reminded me a lot about the sentiment surrounding the railroad bubble and the internet bubble. During both time periods similar arguments were made about connecting the world and living in a new paradigm of unity and equality. Saylor even used a railroad analogy at one point. Its hard to blame people for comparing the analogs.
It seems like if it was such a great place to park your money then you wouldn't want to share your secret with the world. It comes across like a pyramid scheme when these guys buy up a huge position and then start promoting the hell out of it.
I thought Frank spent too much time attacking Michael and not enough support his arguments. Either way, it was an interesting debate.
I actually consider Saylor to be a visionary of a sort.
But considering the fact that his company had a flat stock price for 15 years and then boom, i need to also add that he is a very good marketer. But I believe he genuinely believes what he says, I guess that's what it takes to be maximalist.
During a Bloomberg interview last week, the host had to ask him twice "why should investors bet on a company' specific capital structure (i.e. MSTR) vs. buying a business that has a growing competitive business that compounds". He couldn't answer. He kept talking about his line about treasuries losing value 20% per year till infinite.
5 years from now, we will look back and see late 2020- early 2021 as "peak liquidity", when baseball cards, limited edition toys, crypto, SPACs all soar, with their proponent painting a future that is set in stone and that was unchangeable.
Bitcoin has a future, but in the short term, it is stuck with the "too much liquidity" narrative, and will behave as such. It needs to raise above that.
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Wouldn't a large 4X oversubscription push the 6% yield to something much lower ?
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19 minutes ago, Xerxes said:
If BTC was in up-trend, the news about US Gov recovering the stash from the fraudster would have been seen as positive, in some weird way and the media would be building a narrative around that as to why. In a down market, everything (good or bad) is seen as bad news or at best neutral. Bottom line the news-feed is irrelevant.
The maximalist are all in, they put their last major buy in 2020 and early 2021. Saylor is in with his $2B+ exposure, but going forward he can only contribute marginally ($10-15 million at a time ... and not billions). Therefore, that marginal demand that will pull BTC out of the hole has to be new fresh money. I am thinking this will take a good six months before working itself out of the hole.
On Mass Mutual, Paul Tudor Jones, Stanley Druckenmiller, etc., all I remember was Saylor pumping BTC back in the fall of 2020, keep using these names. I got so use to see his face on TV with that ship-model behind him. Druckenmiller had himself said on record that, his exposure to Bitcoin was taken out of context. If institutional investor brought legitimacy to bitcoin, they also brought with them trader-mentality en masse. Interestingly, it is the retail that is largely buy-and-hold with institutional investors being the "swing-trader". But no worries, I think, the "swing-trader" will be back in 2022.
Over the long term, this will be another test that i think Bitcoin will pass and re-bound higher from here.
A super interesting video to watch on YouTube is the debate between Saylor and a gold mining executive. It is on YouTube and is called Bitcoin vs. Gold. I highly recommend and was filmed at the height of Bitcoin peak. My respect for gold actually went up after watching it.
(2) Bitcoin vs Gold: The Great Debate with Michael Saylor and Frank Giustra - YouTube
My bad, Saylor just threw in $500 million more. He is putting in his last dollars now !
I am unsure if I am mixing the data, but it looks to be junk-bond +6% yield, while the big chunk of debt he issued early 2021, had a very low yield.
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If BTC was in up-trend, the news about US Gov recovering the stash from the fraudster would have been seen as positive, in some weird way and the media would be building a narrative around that as to why. In a down market, everything (good or bad) is seen as bad news or at best neutral. Bottom line the news-feed is irrelevant.
The maximalist are all in, they put their last major buy in 2020 and early 2021. Saylor is in with his $2B+ exposure, but going forward he can only contribute marginally ($10-15 million at a time ... and not billions). Therefore, that marginal demand that will pull BTC out of the hole has to be new fresh money. I am thinking this will take a good six months before working itself out of the hole.
On Mass Mutual, Paul Tudor Jones, Stanley Druckenmiller, etc., all I remember was Saylor pumping BTC back in the fall of 2020, keep using these names. I got so use to see his face on TV with that ship-model behind him. Druckenmiller had himself said on record that, his exposure to Bitcoin was taken out of context. If institutional investor brought legitimacy to bitcoin, they also brought with them trader-mentality en masse. Interestingly, it is the retail that is largely buy-and-hold with institutional investors being the "swing-trader". But no worries, I think, the "swing-trader" will be back in 2022.
Over the long term, this will be another test that i think Bitcoin will pass and re-bound higher from here.
A super interesting video to watch on YouTube is the debate between Saylor and a gold mining executive. It is on YouTube and is called Bitcoin vs. Gold. I highly recommend and was filmed at the height of Bitcoin peak. My respect for gold actually went up after watching it.
(2) Bitcoin vs Gold: The Great Debate with Michael Saylor and Frank Giustra - YouTube
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hahaha
Cheers !
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Come one, Blackstone, give me a chance again, this time I promise I will buy !!
I will not be stupid this time around.
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All great points, however, it goes back to => "sell what you want to sell" vs. "sell what you can sell".
In an upmarket, one can do both. Sadly, in a down market, you can only sell what you can sell (best of breed), and wished you had sold what you wanted to sell (but the liquidity is gone now). I wouldn't be so pushy, if the portfolio was not so maxed out on the equity allocation.
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Agreed
Folks shouldn't be in FFH or for that matter any other "asset manager", if they expect the "asset allocator" to be on the same wave length as them.
If folks want a conglomerate-like entity with large exposure to large technology cap, the S&P500 fits the bill with a 25% exposure to those names and 75% exposure to 495 companies.
I own ONEX, and like them to do whatever they do, in their own weird way. Same as my ownership of IAC or FFH or BRK or BAM. The only one I am missing is BX.
I am ok with FFH changing their 'investment philosophy' but they have to get to that conclusion on their own, not because I wanted to be. For instance, i don't like Markel's broad equity exposure, so I am not in it.
That said, we allowed to be uber-critical. LOL
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4 hours ago, SharperDingaan said:
Simplify. Assume 100 shares purchased with 100% cash. Assets = 1000 (shares), Equity = 1000. Sell at 50, and you will receive 4000 after tax. Expressed at the gross level as Asset =5000, Liability = 1000, Equity = 4000.
What happened in substance? Your 1000 of equity at inception, got replaced with 1000 of deferred tax liability, leaving you with the 4000 of equity as expected. You have the tax liability because it is money that you will owe when you sell – but until then it is an interest free loan. Your initial equity financing was ‘re-financed’ with the money you will owe in taxes when you sell. Very WEB, and something only an accountant could love
SD
ok but I see it more as building leverage as you compound that initial seed money, with that leverage always being equal to 25% of the unrealized gain (i.e. yr tax rate on capital gain).
Same example, if you sell at 80, so 8,000 on the asset side, that means 2,000 deferred tax liability + the rest ($6,000) being equity; with the deferred tax liability now being 2x my initial seed money. That is all well and good, but how is knowing that is going to help me retire early or stop government from picking my pockets, in a more practical sense.
On a different note, I guess adding to the winners (i.e. raising average cost) is one way to lower tax, but maybe not, need to do the math.
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SD,
Can you elaborate on the bolden part a bit more, i lost it when i got to that part. Are you saying => it is good not to realize gain in a non-registered account as far as you can (by holding) vs. realizing gain and paying the taxman, if you have more/or/less than 5 bagger. I guess it depends all long term rate of return vs. alternative.
Not sure I follow ... i am not bright on Fridays
"In Canada, an individual currently pays tax on 50% of their gain; to simplify, assume a 50% tax rate. If you bought XYZ at CAD 10/share and sold for CAD 50/share, you would owe CAD 10/share in tax [(50-10)*.5*.5). Invert this - and you quickly realise that the CAD 10/share tax saved by NOT selling, is now financing your CAD 10 purchase at an interest rate of 0%. God bless our tax system!
However, you need a 5 bagger+. Sh1te coys, that were ideally just fallen 'angels' covered in mud!"
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Not sure how long is the blackout period and/if suppose to be a month long. Last year's Q1 results were released on June 24th. Assuming same date for this year, that is very long blackout.
Seems to be odd that insiders cannot trade the stock for full 4 month in a given year.
Fairfax India new issue
in Fairfax Financial
Posted
BYP did (IIRC) do a tender offer prior the formal offer from BAM some months later. Though that would be robbing FIH individual holders of its potential and should only be of last resort, after all the levers to close the spread has been pulled. In any case, I believe FFH structured its India entities for a specific reason the way it is now.
Bottom-line, for me, i have no intention of selling FIH anytime soon. Those who bought in all the fanfare of 2014-16, if they overpaid, than that sets their ROI for the long term. At the end of the day, emerging market is emerging market, if one is unwilling to stay course, why did one got in in the first place.