Xerxes

Thanks Santayana, My concern is very simplistic, i know; it is just that FFH cannot have it both ways, being unable to capitalize on a bull and bear markets. In terms of liquidity. I think their constraint does play a part in some of the things they want to do but don't believe it is a liquidity crunch. The upcoming AGM meeting would be very useful for me to decide to if by back end of the year, I need to sell FFH or not. I hope not. Either way, I plan to keep FIH till 2030 at least. Have a look Bill Ackman who was able to change and become an activist against himself when he screwed up with the Valeant bet. He stepped back, reformed and came back. And most recently he was able to turn his long macro view a on dime and decide that coronavirus would a major problem for his long portfolio; he made a bet on CDS and made billions. That is pro-active hedging and a flexible mindset. In FFH, as early March 2020, in the letter to shareholders, Prem talk about his short duration bond portfolio not having any exposure to rising interest rate. How is rising interest rate was a concern in Feb./March in a world that was on the edge of getting toppled over by the compounding mathematics of COVID-19 ? it seems his macro point of view once solidified (through '16 Trump election) refuses to change. But then again, I could be completely wrong, ;-) we could all be pleasantly surprised, when at the AGM in a few weeks, they reveal their hidden CDS hedges (ala Ackman) and reveal that now they are sitting on a massive realized gain. Gains that they plow back on those insurances business and their own shares …. with enough leftover to buy the rest of RPF that they don't own. That would be acceptable.

If they couldn’t do well in a bull market and couldn’t do well in a bear market, than the mistake is mine to hold them.

From the blackberry call this evening: Analyst: given macro environment, how much do you need and what are your plans for the convert Chen: after paying the convert we $385m of cash/equivalent. we made some assumptions (guessing he means scenarios. We will pay back the convert, but saving $23m on interest, obviously cash balance will go down, we also assume the debt market is closed so assumed no financing ...…. quite comfortable that they liquidity

It may be obvious, but I would also add that do you want to have 500 CEOs reporting to you as a S&P500 owner, or just 1. Do you want 500 CEO zigging while the market is zigging also, … or do you want 1 CEO zagging while the market zigs. Think of BRK management as a "allocation valve" ensuring a contrarian zig-zag.

Letter to shareholder from Gerry S. https://ml.globenewswire.com/Resource/Download/4bdb91ff-7bb5-4f32-b5fb-f82d4a1e2de5

I think the real bargain had to be had when everything got thrown out. Good or bad. Now it will be more systematic

I am certainly guilty by being ignorant and thinking it will blow over. Certainly when it first reached Italy, I should have adjusted my view but failed to do so again and again. The fact is 70% of us economy is consumer. And that consumer is not spending now and won’t be after the wealth destruction that we saw in stock market. So there bound to be an economic downturn and I need to protect the long only portfolio. Certainly it is not directional bet like it was with dow at 28,000 a month ago, but I am not making a bet and just want to some insurance if the black bear turns into monster grizzley.

Thx I rather go with Canadian index to buy put against. It has less liquidity but don’t want to convert to USD now. And I think I am more bearish on Canada than the US

Hey guys Question for the collective you If I don’t trust the current rally what would you recommend as an downside protection tool against the whole market. Would you recommend puts on SPY or Dow. I think puts against Nasdaq is pointless as they would likely do well or less worse. 6 months period ? Sorry for the simplistic nature of the question. I am an optimist so hard to think like a bear.

Thx John for the link. Very informative and timely. My view is that Berkshire has no interest in buybacks in the short term (close to BV or not ) till they know which direction the event will take the US economy. Once certainty is established on the vector then perhaps it become 1 bird in the hand vs. 5 bird in the bush (as oppose to 2 bird in the bush) Woodstove I saw the very same interview. I think he was making up for his last interview where he said “hell is coming”. I am glad to see he is long and Optimistic

Is that calculation with the lower book value that will kick in ?

I guess my stupidly belongs to the category of jokes. Might as well drop it here. Bought BAC at round $15, about 5 years ago, enjoyed the dividend increases from nothing to what it became. Ride it all the way up to $35 and all the way down to $19 when I sold it this morning.

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