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We own no BAC LEAPS...just common and the A warrants. Even though I believe that BAC should trade at tangible book, you have to be absolutely right on the timing buying LEAPS. We're far more comfortable with a six-year time horizon, $13 strike and adjustable strike price than buying two year, no-benefit LEAPS. It certainly took alot of balls for those guys to buy FFH LEAPS back then, but at the same time, they were using their own money. It would have been painful to lose that capital, but it would be harder to explain it to partners in a fund. We had no fund back in 2003, and I did buy quite a few LEAPS as well in my personal portfolio...not as many as Ericopoly, Uccmal or Indirect...but quite a bit. We only put a small amount of the portfolio in SNS LEAPS...about 6%...we made a killing in them. Anyone who bought OSTK LEAPS a couple of months ago would have done quite nicely too. But getting the timing right has a bit of luck involved, so you should be careful. Cheers!" Hi Sanjeev, I agree the timing has some luck involved but once the 2015 leaps come out in a couple of months, the only risk I see is the transactional cost of continuing to roll into longer leaps. If BAC isn't above 10 dollars a share in 2015 then the thesis was false in all likelihood for BAC, it seems to me.

It's possible the regulators only allow a modest buyback or dividend but not both. I sure hope Moynihan would buy back stock and not pay out a ten cent dividend. I'm sure by 2014 the regulators would allow a pretty substantial buyback and dividend by that time. Anyone worried Moynihan may go with the dividend if the regulators make him choose?

With the Europeans going on vacation in August, Soros' prediction of crisis coming to a head within 60 days, fiscal cliff and possible debt ceiling standoff in Nov, just curious what percentage everyone has in cash? Any comments on mr. Market becoming extremely bearish within next 60 days? I know a bit silly to predict such short term but I'll still pose the question.

Anyone know when Jan 2015 options are avail for JPM, BAC? I'm guessing within 2-4 weeks? Thanks

The wsj article quotes tilson as saying he will cut down on cnbc appearances and let performance speak for itself. I never understood why he regularly went on "Fast Money" that literally has positions for a day and has people argue to buy something because it went up. Why would he try and speak to that proile of investor? Wouldn't he want sticky capital?

I just lost my last post so this will be shorter. I'm trying to figure out why JPM is trading at 8x current earnings and 6.5 next year and trading less than tangible book while it has earned 15% return on tangible book past few years also I understand wells has less risk but I dont understand why it deserves a forward multiple at twice the level of JPM. Does anyone here have a strong argument why JPM should trade at this level besides the CIO division is a permanant concern and not transitory? Thanks

I freed up some cash to buy BAC and this week it has gone nothing but up, ugh. I'll continue to wait until it hits 7.40 or ideally below 7. Hopefully I won't be waiting like Godot.

Twacfa, Would you still make an investment in BAC (through b warrants or other equity tied component) if it dropped close to the price of Dec like you did last year? Or are you concerned enough about this potential capital raise to avoid BAC equity investment in the future? Or, stated another way, did you think about this in Dec but the probability was de minimus and thus you were still comfortable with the investment? Thanks for posting this thread. I think it is valuable to raise concerns for a popular i Security (at least on this board) Ericopoly, do you have any concerns on this issue? Thanks.

Ericopoly Thanks for your very informative posts on options. I have a basic options tax question, if someone buys 5 dollar calls12 months out and then exercises the options and continues to hold the stock, is that a taxable event? Is it different if the option is exercised less than 12 months? Thanks!

Ericopoly, Parsad, and any others, curious when you think BAC will receive approval from the fed to buyback shares? 10.7 billion shares, it would be great to start shrinking that number!

I'm surprised they sold at barely book value. In my opinion, they gave this company away. They should have gotten at least a 20% premium to book value. Anyway have any guesses for Sardar's next insurance target? I'm surprised he didn't have any cash to bid. Maybe he didn't want to own it outright. Or maybe we'll hear some ramblings for the low price the board received.

I just started buying BAC at $6.60 yesterday. I'm very aware it can drop further (and significantly so) but I don't see tangible book dropping more than $65 billion. BAC has $40 billion in loan loss reserves. They can write down another $70 billion to get to tangible equity of $65 billion. That is where the company is trading today. Normalized earnings is probably $2 a share. I think that can materialize by 2013. I know Wells is a better company but Wells isn't as cheap as BAC. I'm also not fond of management but I'm having a hard time of seeing how one doesn't make a lot of money if they buy at $6.50 and below. I'm thinking of buying a large chunk if it drops below $5. I understand they may have to issue stock to raise capital but they still have the China Construction asset plus dilution probably wouldn't lower the upside by much more than $2 a share. Feel free to disagree or argue any of the above isn't what will happen in a probable scenario.

Ragnar Thanks for the post. One question, on the 13d there are parenthesis around share numbers above 50 which denotes sales and they are removed below 50. Does this mean Biglari sold short above 50 and changed his mind and started buying around 48 (and lower)? Thanks!

"The biggest argument I can give you to why macro is irrelevant...Mohnish put in $100K into PIF I in 1999, and today his stake is worth $50M...that's after losing 70% in 2008 and 2009, and then rebounding from the lows in 2010. Macro doesn't matter to the degree many people are speculating. Find good businesses, invest in them at great prices and build them for the long-term. Cheers!" No offense Sanjeev, but I think Mohnish is not being truthful to you. The way you frame that statement is he didn't add to the account. If you plug those numbers in over an 11 year time frame 99-10, the average annualized return is 75.93% AFTER tax! Do you really believe Mohnish? If you can provide audited numbers, I stand corrected and I apologize for doubting him.

I sold RRGB a few weeks back and haven't kept up with it. I looked at the latest SEC filing and it says shares outstanding are a little over 17 million. That's a huge increase from a few weeks ago with 15.6 million roughly. Anyone know the reason? I know they released a poison pill but no one has triggered it.

Hi Sanjeev, This goes to anyone else that cares to comment that owns RRGB. I did my own research and found the cash flow to market price very compelling. Of course there are several reasons beyond that, multiple hedge funds, possibility of a sale, large margin improvement, still small enough for more restaurants down the road and others. If you don't mind Sanjeev, do you mind what if I ask what you average cost is? I bought at a relatively high price today of $17.92. Just wondering if I got in below the master? I intend to dollar cost average in my 401k for the foreseeable future if it remains around this price level.

http://www.sec.gov/Archives/edgar/data/93859/000092189510001261/form10q07428_07072010.htm BH reported 8.6 mil and SSS 7.5% with 176k gain from derivatives

Anyone think Biglari will be outvoted? CHICAGO--(BUSINESS WIRE)--As a 2.5% shareholder of Biglari Holdings (BH), formerly The Steak N Shake Company, Oak Street announced today that it intends to vote AGAINST approval of the Incentive Bonus Agreement between Biglari Holdings and Mr. Biglari, the company’s CEO, at the upcoming special shareholder meeting scheduled for August 24, 2010. Oak Street opposes this attempt to redistribute shareholder wealth to Mr. Biglari. Oak Street is concerned that the proposed incentive compensation scheme fails to align Mr. Biglari’s interests with the interests of company shareholders. Book value increases are not always tantamount to shareholder value creation. We believe shareholders would prefer that Mr. Biglari’s remuneration be directly tied to share price performance in order to ensure that shareholders and Mr. Biglari benefit in concert. An Oak Street spokesman stated “This unusual compensation scheme creates potential conflicts whereby Mr. Biglari could enrich himself at the expense of other shareholders. We are concerned that Mr. Biglari and the board are not acting in the best interest of all shareholders and we condemn the Board for this potential governance failure. We believe Mr. Biglari’s proposal has resulted in a significant loss of shareholder wealth already, as evidenced by the $100 share price decline since the compensation scheme was proposed on April 30, 2010. We intend to rigorously defend our interests as shareholders.”

Thanks Pirate for the correction. As for Western debt, he's made comments about flexibility cash affords, I doubt he'll pay off West for a couple of years. I guess we'll see. Also, it helps the performance of the Lion Fund (practically guaranteed 14%).

I read at the annual meeting he made an offer for a company with a market cap greater than $200 million but he was spurned. This is probably the company that spurned him. Once BH is trading at a high multiple to book value (when it was around $400 Sardar implied it was overvalued) he'll probably make another one but I doubt he'll do it with the stock undervalued. Also, he likes to hang on to his cash as evidenced in his 50% stock offer for Fremont even though the total cash outlay would have been less than $40 million. Finally, he still hasn't paid off Western's 14% debt. He made that offer for Fremont when the stock was cheap but it was such a small percentage of BH's market cap it would be a disaster if he made a stock tender offer with BH trading so low,especially after he spent over $20 million of his partners money in the last two weeks buying around $320 a share.