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SharperDingaan

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Posts posted by SharperDingaan

  1. 5 minutes ago, james22 said:

    I've no problem swinging at a fat pitch.

    How did you size your Bitcoin position in 2012? You must be up many millions, yeah?

    Have you held since then? Added?

    What percent of your portfolio is Bitcoin now?

     

    Nothing wrong with a fat pitch!

     

    The Satoshi Nakamoto paper came out in late 2008/early 2009; if you had a lot of BTC in 2012 it was because you were mining (& therefore knew a lot about BTC). Quite a few others (who read the paper) also saw value in BTC, and bought in their BTC at ridiculous prices (vs today). A lot of folks on this thread.

     

    BTC isn't a buy/hold, it's a trading sardine. Same as most everyone else we swing-traded and did very well, often making more on the down leg than on the up leg; but unlike most others (we're survivors from o/g), we also kept taking $ off the table, and repatriating. Simply 'cause once you have your first millions, the rest aren't particularly useful - so why incur the risk to get them. Very anti-capitalist!.

     

    By market value, we hold a lot more BTC than we would prefer; and if the price rise keeps up - will have to sell it down again to further repatriate capital this year. Ideally, the same as a market maker; we get to slowly accumulate by selling 4 of every 5 BTC we buy, and are funded entirely with house money.  

     

    Point here is that there are many roads to Rome; the fun is in the journey getting there, not the destination.

     

    SD

     

     

     

  2. Not to knock it, but this whole MSTR vs BTC thing is very funny ...

    No doubt MSTR has done very well, & continues to do so; power to them  ... but it's only a 25.84B market cap. Whereas BTC is currently at 1.37T; and if it makes the much touted 'next level' 100K/BTC by year end; it will finish the year at around 1.93T - amongst the top 5 market caps in the entire world. MSTR is the mouse pissing on the elephants leg!

     

    BTC is barely out the gate. At this point, pretty much every wealth management & sovereign fund in the entire world now needs to have at least 2-5% of AUM in BTC. Every pension fund, large corporate, and state treasury around the world now also needs to have at least a 5-25% weighting to BTC within its cash equivalents allocation. And it isn't going to take years for adoption; it will only be as long as it takes for the various Investment Policy Statements to come up for renewal. And all this  ..... is just the institutional side 😀

     

    BTC is capped at 21M, but the number of BTC-ETF units is unlimited; hence as BTC rises, units simply get progressively split to keep the price around $20/unit, and BTC becomes the ubiquitous equivalent of a $20 bill; backed by BTC and not a central bank. With central banks quite happy, as BTC-ETF's can easily be restricted within national borders; whereas BTC itself is borderless.

     

    Longer term, BTC is like owning Standard Oil and US Steel when Rockefeller/Carnegie/Morgan were still running the show. The players change, but the game essentially remains the same; may we all do very well 😇

     

    SD 

     

     

     

  3. The actual FUD is 'everyday change'; framing it as Bitcoin is just gaming.

    'Everyday change is a highly volatile commodity with an extremely uncertain future. A prudent person should assume everyday change will fail, if for no other reason than that most new things fail'. 

     

    Folks just don't 'get' Bitcoin, don't trust it, etc., etc. ....  Excellent!, that's the norm with change, and why we can all still buy it cheap. But the reality is that when the years of accumulating evidence demonstrate that Bitcoin acceptance is increasingly becoming the norm, and Bitcoin continues to rise in value; it's simply prudent to go with the evidence. It doesn't mean you're a believer; but the less folks are able to change, the more violent the eventual change will be.

     

    It's also not new.

    Different context; change Bitcoin to Hitler, and folks to German citizens in Germany, in the early 1940's ....

     

    German citizens just don't 'get' Hitler, don't trust Hitler, etc., etc. ....  Excellent!, that's the norm with change, and why we can all still buy Hitler cheap. But the reality is that when the years of accumulating evidence demonstrate that Hitler acceptance is increasingly becoming the norm, and Hitler continues to rise in value; it's simply prudent to go with the evidence. It doesn't mean you're a believer [in Hitler]; but the less [that]German Citizens are able to change, the more violent the eventual change [to Hitler] will be.

     

    Nobody wants a repeat of the Hitler experience, but the contrast is very instructive. Overlay the increasing radicalisation of much of Europe, and the yin of Bitcoin to the yang of fiat currency; and the intrinsic value of Bitcoin becomes a lot more obvious. 

     

    SD

     

     

  4. Re crypto investment:

     

    To most people crypto investment is simply entertainment; mouthing off for kicks/glory, and gaming for a quick fortune over a few hours/days. It floats both the development and social media communities, and creates a market for the sale of sh1te coin. Not a lot different to venereal disease, it's just part of the environment.

     

    To many on the cocktail circuit, it's just an entertainment talking point. It's a scam!, that SBF crook!, that Reddit IPO - what a dog! Lot of gaming, trading of tips, and a lot of what's 'said' is often not what's actually done. But .... even if they had been tipped to buy Apple at $10/share, most would simply freeze in the headlight. Noise.

     

    Both the trading and the development community are all about the latest sardine; if you aren't trading it, or developing/marketing it, you aren't playing the game. Get rich by actually investing, and you're despised - as you've done squat, and are nothing but a HODLer. Of course .... they have to trade &/or develop, whereas you don't. Jealousy. 

     

    The reality is that crypto has no comparable, and its use in investment is rapidly evolving. Like it or not it is functionally BOTH an asset class; AND its main asset (BTC), is a cash equivalent; get over it. Recognise that every IPS that does not include BTC/CBDC in its cash/cash equivalents weighting is obsolete, and you immediately add a sizeable global demand to BTC.  

     

    It takes both courage and maturity to be able to think for yourself, and more still to act on your own conclusions. You get paid to recognise opportunity, take on the risk, and you do what you can to mitigate it. Do it well, and over time, you can expect to become very successful. And all those 'haters' ..... actually work for you ... at zero pay! 😄

     

    SD

  5. "But for me, hoping for 100-200% gains from this investment over the next 5-10 years, I would not sell because of a 10% move up or down. It is a lot easier for an investor to hang on if she knew a bit more about Fairfax, and was thus not scared off by the Muddy Waters allegations or fears about their impact."

     

    To each his own, and may it work out for you.

    We only point out that there is the buy/hold return on FFH itself, AND the swing trade returns from volatility. Global warming is generating bigger Super-Cat losses, and the FFH insurance business has a seasonality to it, that is just part of doing business; nothing wrong in that, but it will generate opportunities from time to time. If you able to make a success of them, you will get to your 200% a lot quicker 😇

     

    SD

  6. On 3/11/2024 at 12:46 PM, dartmonkey said:

    Sort of the archetype of weak hands. It looks like a good company, but who knows whether Muddy Waters is right or not? Might as well sell, even after the 10% drop, since I’m still above my September buy price. 

     

     

    You might want to rethink this; as we recently exited our swing trade at > CAD 1500, and typically swing trade around the dividend record date. We trade FFH because it's well run; but our trades themselves are just about being opportunistic, and acting on value when we see it. We act like insurance; additional buy side demand when the sh1te hits the fan, that quietly exits later when everybody is positive.

     

    SD

  7. 25-35% of cash equivalents at cost, highest when we enter the position.

     

    As we periodically repatriate capital we trim it down, as we swing trade we fine tune the weighting; cash gains/losses into Canada's. If we've done our job well; we will only have realised swing trade gains, and HODL on unrealised losses. BTC drops 25% next month; we sell down the Canada's, re-enter at the lower price, raise our cost base, and adjust our weighting. As total cash equivalents rise, so does the amount we can safely put into BTC 😀

     

    Do this long enough and eventually there will be a year-end with a lot of BTC at a high cost base, in a much lower priced market. Sell everything, buy it back >45+ days later, reset the cost base, and harvest the tax loss. 

     

    Not for everyone, but it does the job very well.

     

    SD    

     

  8. If you are are a young person, looking to build your retirement nest egg 35 years from now (age 70); it is extremely stupid NOT to have a significant weighting to an BTC-ETF. The only real question is how much of a weighting you should have, and whether it should be maintained at cost or market value; the lower your risk tolerance, and the shorter your investment horizon, the lower the weighting. At the institutional level; providing company sponsored pension plans, at a 2% weighting for now ... that will rise over time.

     

    BTC is just a payment app that was created to demonstrate blockchain technology; if you think that blockchain technology is likely to materially change the world over the next 3-4 decades, it's hard to find a better vehicle than a regulated BTC-ETF. No need to predict who the winners/losers are; just a need to be in the game, and in a vehicle unlikely to sink. 35 years ago this might have been a Berkshire Hathaway share, and at a share price not much different to recent BTC prices.

     

    Most people (Joe Sixpack) just want to 'buy and forget'. A BTC-ETF is a fraction of the price of a BTC, and designed for those with zero experience/expertise in crypto; as far as 'Joe' is concerned, the PM is actually a value add and relatively cheap. Over time, the more 'Joe's' that add 2-5% weightings in their portfolios, the higher the demand for BTC goes, and the higher the price. Momentum, halving, etc. just taking price higher still. The adoption curve. 

     

    And as price goes higher ...  the more that FOMO kicks in; less than year ago BTC was at USD 32,000; today it's pushing USD 69,000. Not that long ago, we were being questioned for treating BTC as a portfolio 'cash equivalent' - as how could the value of a cash equivalent possibly rise by 50%+! Zero recognition that if you don't want a cash drag on your portfolio, some of that cash needs to be in BTC 😀 

     

    Back in the day cars not only replaced the horse and buggy, they replaced all the related infrastructure as well; at the time there was little idea as to how long this would take, similar disbelief prevailed, and then as now - few took up the opportunity. Same thing occurred when steam replaced sail, and wireless replaced landline. Inability to adapt to change.

     

    All good, and more for me!

     

    SD

     

     

         

  9. It's one thing to find methane leaks ... but expect anything that comes back from these satellites to 'disappear', near permanently.

     

    The overwhelming majority of methane emissions are natural; not from o/g, and agriculture. As permafrost melts it releases methane, and there have been multiple explosive methane releases all across the Arctic and Siberia, for quite some time. As long as the rotting biomass remained frozen, and the ice caps remained both thick/frozen (capping fossil methane egress) there wasn't a problem, but with the warmth of ice-melt, large quantities of methane have been bubbling through arctic lakes, and exploding through thinner ice-caps. Some of the releases have been continuous enough to catch fire, remain lit 24/7, and are visible at night. All of which has been going on for some time now.

     

    The Kyoto Accords were driven from climate models with predictability that have proven to be utter sh1te. While they were state-of-the-art models at the time, the implementation of corrective policy was badly botched; a common outcome when research is commercialised. The extent of record arctic methane releases, growing undersea fire-ice methane releases (warming China Sea), smoke from record global fire seasons, and geologic change/eruption was not adequately modelled; resulting in both significant and material understatement. https://theweek.com/environment/fire-ice-methane

     

    A good chunk of the 'new' economy is based on green energy, and polluter pay toll charging; plus redirection of new investment away from conventional o/g and into these 'new' areas. Materially undermine the Kyoto accords on which this is all based ..... and it all ends badly; so if you find things that burn the 'trust the data' playbook (i.e: the Kyoto models were junk), expect your findings to be suppressed (not talked about) 🤐

     

    The reality is that polluter pay is purely a rich mans problem, and that most of the world isn't rich. Coal burning power stations may be very dirty, but coal is widely available, and it enables the production of electricity that lets modernisation happen; even if for a few days/year there is a need to shut them down so that people can see/breathe again. Nations get around the problem by going directly to wind/solar; hence, there is a reason why China is so prominent in these industries.

     

    Most would expect o/g to remain the villain, and to asset strip to fund buybacks/dividends for many years to come. Polluter pay is not a bad thing, but ultimately the market will decide it over time. Today's younger generations have few issues with the principle, and in 10-15 years they will be running the place, whereas today's objecting older generations will all be in nursing homes.  

     

    SD 

     

     

       

     

     

  10. 5 hours ago, Spekulatius said:

    Nuclear power is much more expensive than NG power plants right now. I can’t imaging anything beating power generation at <$3 MCFE right now, not even coal.

     

    Costs more, and takes longer to build the modern nuke; but it's all base load, running 24/7, in quantity, and at a cost/MW that is pretty hard to beat. Only things that slow it down are national/local legislation, the hybrid/EV mix, and local charging from neighbourhood solar charged Tesla Walls.  

     

    If JOE built out a new community where every rooftop was solar, with cheap green power fed into each unit first, then community Tesla Walls that powered resident EV's and golf carts at nominal cost/KW ... would you buy into it? 'Cause if you would ... this whole thing is a lot closer than you think ...... and it doesn't slow down nuclear, unless it takes off.

     

    Different take.

     

    SD

  11. The reality is that US shale are GAS fields, producing oil as byproduct; gas prices are local, with a floor price a little above the cost of distributing it. Higher prices the further away from tidewater you are, and most of it going to standby gas fired turbines when weather is cold.

     

    Gas is cheap but nukes are cheaper. Nukes will also increasingly supply both the growing hydro-electric shortfall (no rain), and base-load power requirement of growing numbers of EV. Gas will top up supply when its cold (for heating), when the wind ain't blowing, and when it's hot (PV less efficient).

     

    Not a lot of reason to love gas.

     

    SD    

  12. Just to throw it out there ..... 

    FFH might want to include an EV/Common Share valuation every quarter, starting with the AGM. First time out include the methodology, and drive it from the Statement of Cashflow (PAT approach). Provide the estimated maintenance capex, the WACC, and the growth rate. Refresh the estimates every 2nd quarter.

     

    Multiple of BV is just the dominant industry comparable; change the framing, and you change the valuation. Run the company as a business, versus an investment, and EV is a lot more relevant; as management makes the key decisions that influence cash flow activities, WACC, growth, maintenance capex, etc. Evaluate management on what they do.

     

    Nobody else does it .... yet. Put the EV/share out there and you'll get a lot of attention!, particularly when it is a lot higher than the multiple of BV valuation. Successfully defend it, and others will follow; the combined effort achieves critical mass, and the framing changes.

     

    It's risky .... not. If the EV/share is 20% higher than the BV multiple, to discredit the approach a naysayer has to consistently and persistently argue a discount to EV/share of  > 20%. Hard to do, and if only 50% successful, EV/share is now 10% higher than the BV multiple; and it gets near impossible to do ... if EV/share becomes the industry metric. Fear is the mind killer here, not the approach itself.

     

    The bulk of the industry is a handful of players, that all know each other. Should one trial it for a year, lets the market decide, and it works out; the 'impossible' could well occur a lot quicker than everyone thought! 

     

    To quote the renowned Trooper song 😄. " If you don't like what you got, why don't you change it? If your world is all screwed up, then rearrange it?" https://www.azlyrics.com/lyrics/trooper/raisealittlehell.html

     

    SD

     

      

  13. 22 hours ago, Ghost said:

     

    This situation that FFH is currently in (attack by short sellers) reminds me of the Gamestop saga, except of course FFH today is actually undervalued. 

     

    It's way more lethal when 'institutions' are mocking you. MW has erred badly, and it has entangled them in a growing tar baby. They have a weak hand, their network is reassessing them, time is ticking, and they need a way out (Reddit). There is a much higher risk adjusted payoff to simply staying put.

     

    The smart thing would be for MW to cut bait, and fold. Question is, does their network let them?

    Bought the popcorn, expecting a show.

     

    SD

  14. 2 hours ago, Crip1 said:

     

    I think two things are muting the reaction today.

     

    First, though I don't have data to support this, historically the reaction to positive earnings news has taken 2-3 trading days to materialize. No idea why this is, but it's happened on more than a few occasions.

     

    Second, the earnings report came in reasonably close to expectations with positive surprises (4 year run rate) offset by negative surprises (slowing premium growth), so much of this was already baked into the price. 

     

    All above in my humble opinion.

     

    -Crip

     

    Keep in mind that no buying doesn't mean no money waiting on the side-lines to come in. If MW round 2 doesn't happen soon it's not going to, so give them some time 😄 ; it's a small community, and the laughter is echoing. Their last success was a long time ago, and if this is the best that they can do now ...... well, the walls are closing. 

     

    Somebody lend them a few shares, to buy back cheaper!

     

    SD!

     

     

     

  15. 17 hours ago, Spekulatius said:

    Merger agreements are always an interesting read, since they explain the background of the merger - in this case between APA and CPE. Looks like there were a total of 7 different suitors for CPE /Company A - G in discussions from late 2021 until 2024.

     

    Seems like everyone is talking to everyone else about combining Permian assets.

    https://www.sec.gov/Archives/edgar/data/1841666/000119312524021134/d664038ds4.htm#toc664038_49

    It's not just in the Permian.

    SD

     

  16. 1 hour ago, Gregmal said:

    Again, the guy had an objective and it probably was already achieved. A 5 year old could quickly glance at what he was saying and see his objective if they had any previous familiarity with how he operates. Its magician level hand waiving. Look at this hand! he says, when what you want to be doing is paying attention to his other hand.

     

    He has a formula for this sort of smash and grab stuff, the "thesis" is just arbitrary and tangentially necessary to justify him doing it. Continuing to talk about it and analyze it just validates what is clearly nonsense. The P/B metric was necessary when operations were mediocre from 2010-2020....When you've stabilized operations and will be producing steady earnings of the magnitude that they will, you need to change the way you value the company. 

     

    This is why we have the plastic bag; ain't in the playbook, and nobody grabs a slashing wolverine without getting at least a few wounds. Targets are supposed to roll over, not slash your throat! Fellow 'peers' pull back to watch the show, and place their bets! .... against MW.

     

    SD  

  17. Thing is, there is little risk to it as the media assumes the bluff will not be called; and most of the time it will be right.

    Not going to change unless the media is systematically sued, every time it occurs.   

     

    SD

  18. Most management in o/g knows their sensitivities extremely well; they will generally hedge some production at X to guarantee the funds to pay for planned capex, lock in the occasional opportunistic gain, but everything thereafter is left at market. Simply because o/g investors WANT the market exposure, as it creates share price volatility to trade against. The reality of course being that investors recognise that the intangibles are significant value creators; hedge them away and you also remove most of the investment opportunity. 

     

    SD

     

  19. Under IFRS accounting (Canadian standard since 2010), only inventory available for sale is M2M, and it is re-marked to market every quarter. The quarterly change charged to other comprehensive income, and closed to equity.

     

    Only inventory not available for sale, or specific inventory assigned as a hedge against a specific liability is not M2M. If the hedging assets drop by 50% tomorrow it's no bother as there is no intent/need to sell until the liability actually comes due. Similarly, inventory not available for sale; covers all those long term investments bought at cents on the dollar, awaiting their future day in the sun. Of course, if it's actually not available for sale ... M2M valuation is meaningless.

     

    MW essentially argues that all inventory is available for sale at the the right price, and therefore should be at M2M. Here are all these 'omissions', they should be charged against equity! lowering book value! Maybe if the intent was to liquidate FFH tomorrow, but for normal course business IFRS accounting says otherwise. 

     

     MWs financial strength rests on ongoing ability to demonstrate that they know their business. Mock and vilify their 'incompetent' attack amongst their peers, and you jam a plastic bag over their head. They have to come after you hard, and as quickly as possible, before the air runs out; squeezing the orange 😅

     

    SD  

  20. 4 hours ago, Ghost said:

    I hate ask again...what options market for FFH?  Last time I checked no public options exist.  Buy the stock or short the stock...only "options" I see.  .

     

    Sadly it would seem that exchange traded options on FFH are no longer available; at one time, you could buy/sell them on the Montreal Exchange. The reality of course is that you can still do the same thing; but now its via ISDA agreement/private market, and without the premium and open interest information being visible to the open market.

    https://m-x.ca/en/markets/mx-indices/derivatives-indices

     

    Should MW go multiple rounds, one has to think it's only a matter of time until it reappears. The higher leverage of options vs the 50% margin maximum, and the greater transparency, reasonably assuring the prospective market maker of sufficient volume to make it worthwhile.

     

    SD 

  21. 7 hours ago, coc said:

     

    It's a conspiratorial post about Muddy Waters supposedly manipulating FFH's stock so he can buy call options and make money on the bounce. Written by James Joyce.

     

    Sadly, I'm nowhere near as eloquent as James Joyce!

     

    Just to throw some random numbers out ...

    Start at 1400 pre-announcement. Short 1,000  shares, long 10 out-of-the-money puts at 1300, publish report, media tour

    Drive the price < 1300 by expiry date. Have the 1,000 shares assigned, off exchange. Long 20 calls between 1300 and 1400.

    AR is announced, squeeze the shorty! Price moves to 1500, sell the 20 calls at 1500, return the 1,000 shares to the lender.

     

    Buy today at 1260. Sell at 1500 post AR (240 profit), buy back at 1260 on MW round-2 (240 profit). MW eventually walks away, shares sold for 1500 (240 profit). Total gain of 720 on a 1260 investment is 57%. If you only capture 2/3 of this ... about a 38% return.

     

    Just one of many possibilities .....

     

    SD

     

  22. 2 hours ago, Viking said:


    @SharperDingaan I am not sure what the actual problem is for Fairfax. Pain in the ass? Yes. Problem? No.

     

    The short campaigns from 2003-2005 were successful because of Fairfax’s financial condition, especially in 2003, and also because of the NYSE listing. IMHO, there is almost zero comparison to the situation today. Fairfax was also caught flat-footed.
     

    Fairfax is in better than rock solid shape. They have top tier insurance operations. Their fixed income portfolio is likely positioned well (details to come next week). Their equity portfolio has never looked better (in terms of quality and prospects). They have record free cash flow locked in for years. And they have a great deal of experience with how to deal with short campaigns. 


    If the stock falls much below book value Fairfax will vacuum up shares. 
     

    Look at the last 4 years. When adversity hits, this team doesn’t ‘survive’ they thrive. I suspect it will be the same this time around.


    It’s like the shorts thought they were picking a fight in the schoolyard with that scrawny new kid from 20 years ago. But that scrawny kid has grown up - older, bigger, stronger, wiser. And he has a bunch of buddies who love to brawl. And how do you deal with a bully? You punch them right in the face. Next week will be interesting.

     

    PS: and as an aside, as a Fairfax shareholder, this will also perhaps be a timely lesson for the Fairfax team to not get too high on their horse in the coming years. They have the table set to do something truly special.

     

    Only things I would add:

     

    FFH does a lot of everyday sophisticated transactions, it does them within the complicated insurance wrapper, and it records all this using IFRS accounting. No big deal to understand for the CPA's, CFA's of the world with deep knowledge in both capital markets and insurance; but not so much for the lay person, or those new to 'investing'. When it seems like a black box, and most shareholders don't fully understand it, they are inherently vulnerable to negative 'manipulation'. 

     

    Quite agree; FFH is a power house today, and they've been to more than a few short selling rodeos. However it's also hard to imagine that MW wasn't aware that this would be a harder nut to crack; yet they still choose to try it? If they have miscalculated, all they can do is bluff through successive rounds; the only question is how much juice can be squeezed out of MW before they fold.

     

    Always hopeful!

     

    SD  

  23. 2 hours ago, lessthaniv said:

    Hedge by liquidating to cash based on a weakly supported argument ahead of what will likely be an exceptional looking annual report in 7 days? No thx. The last thing I want to do is lower my exposure here.

     

    I hear you; thing is, MW will still be there after the AR is released and now it'll just be a sale from a higher price. As did some others, we opened a very modest long position this morning after it became clear that round 1 of the MW attack was failing, ideally to resell after the AR release. Thereafter, hopefully MW isn't completely useless, and we get to buy those shares back again later at a lower price.

     

    FFH is a solid company, but the reality is that its complexity also makes it vulnerable to this. It survives these attacks primarily because this board exists; and the great many very experienced people who contribute to it in live time, quickly call BS when they see it. Were this a more 'normal' internet board, round 1 of this attack would probably have been more successful.   

     

    SD

     

     

  24. 5 minutes ago, Ghost said:

    Promises...promises. 

     

    Hopefully, a good $300+/share on the turn before any option/margin leverage!

     

    We would also be very surprised if MW didn't intend to exercise on existing options, as the mechanism by which to raise the shares to repay the short loans; plus accumulate some additional - offered for a buyback. We also expect them to have used the drop to lay in a stack of out-of-the-money calls; FFH buys in the stock at a price well < 1401, MW walks away, the price quickly returns > 1401 & all those calls go deep in the  money.

     

    .... Now of course, if an enterprising lad had learnt from ericopoly, and also knew how to work this trick!

    Interesting times 😇

     

    SD

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