SharperDingaan

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

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

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!

It's not just in the Permian. SD

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

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

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

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

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

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

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

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

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

Folks, the reality is that FFH is going to go a good bit lower before this is all over. Simply do a swing trade, buy your stock back later at the lower price, and take your cash difference off the table. MW drives the share price down; FFH does a share buyback at below book, and books both a gain on cancellation, and a higher EPS. SD

DOHA/SINGAPORE, Jan 15 (Reuters) - QatarEnergy, the world's second largest exporter of liquefied natural gas, has stopped sending tankers via the Red Sea although production continues, a senior source with direct knowledge of the matter told Reuters on Monday. https://www.reuters.com/world/middle-east/lng-tankers-held-up-over-weekend-following-us-uk-strikes-houthis-data-2024-01-15/ Old news ... however that round trip that used to take 40 days including on/off loading, now takes roughly 58 days inclusive. Hence, to move that same amount of LNG in the same 40 days now requires 45% more LNG tanker capacity (58/40 -1)... and it isn't available. Squeeze. The Houthis have been getting pounded for weeks now, yet the drones keep coming; Hamas has been pounded for months ... yet the rockets still fly. Have to think the interventions are not going according to 'plan', and that the US export decision is a precaution against a tanker sinking. Obviously, we hope for the best; but if Uncle Sam is taking precautions .... it would be foolish to ignore the message. SD

Great to see you back! SD

You might want to consider why the US wants the natty kept in the US. The Ukraine has successfully begun targeting the Russian oil facilities, there are chronic labour shortages in large parts of Russia, Chinese banking facilities are being restricted, and Russia has a lot of stranded oil in the pacific that they have been unable to move. Were someone to quietly give the Ukrainians the right weaponry to 'decommission' key parts of the Nordstrom gas collection network, there would be a lot of very happy people. Europe already has the gas in storage to manage the disruption, there's a surplus of the stuff, and the ME already has much of the new production coming on line. Most would react negatively were the US to ship whatever it could, versus keep it at home, and prices down because of it. Putin recently put feelers out to negotiate an end the war. https://ca.news.yahoo.com/putin-signals-washington-ready-talks-225000203.html SD

When you could get BB at its lowest price in 21 years, we're pretty sure it is a cigar butt! Just not the 'traditional' kind. SD

The 'generals' problem goes way back, and was the same problem whether you were a Byzantine or a Mongol; it was just 're-branded' by computer science and the 'solution' integrated into a programmable algorithm. Prior to that, the solution had essentially been one of becoming a 'master' at playing chess (ie: a human algorithm). The reality of course is that we see the 'obvious' every day, and may even recognise the logical outcome; but don't accept the conclusion. If others don't also see it (acceptance), we must be wrong, therefore move on; a well known anomaly than many a propagandist has exploited. Look through the Jan-Mar business newspaper in your community from 2 years ago. Pick a few of the negative articles (ie: Blackberry), and assume you had done the opposite of the spin being sold. Compare the price today (2yr), and the price a year ago (1yr), to what the price was when the article came out. Repeat the test on various other dates, going further back in time, and plot the results. You have essentially quantified how much this bias is costing you SD

Every cigar butt is different, there is no 'formula'. Bought a whack of Blackberry yesterday at a ridiculous price; which, according to the market .... is utter dogsh1te All that you really had to do, was realize that as soon as the convertible sold; most of the face value would immediately be shorted against the common .... poor sentiment, and the sudden rush of selling would do the rest. Blackberry isn't going under tomorrow - if it's at CAD 6 by Feb next year, we're up 50%+. Then add in that a lot of people will make a great deal of money if the proposed split happens ... and our catalyst is greed. To quote some iconic phrases from 'Wall Street' .... Greed is good! Greed works! Better than the standard cigar butt formula. SD

The original paper was published October 2008, and the Estonia Ministry of Justice was using it in 2012; have to think the authors went home, and that this "boating accident" was around 2012/2013. Now adults, with first kids arriving, it is entirely in keeping with it being a last nod to the cypherpunk ethos that created them. As it should be: unless you were there, or know those who were, there is no way of knowing whether it actually occurred or not. If it did, grand-pa has a hell of a story to tell the grand-kids. If it did not, it still remains a great story. I'd prefer to give it to grand-pa. SD

Only two people know the keys to a wallet; the owner, and whoever issued them the keys. It's straightforward to trace money flow to a wallet; 100% identification of the user requires more work. Over time, either the issuer gives up the keys (BK, takeover, persuasion, etc.), or the owner (collateral on a derivative/loan, persuasion, etc.). If the wallet has a lot of flow in/out you can get a pretty good idea as to the owner, but if its essentially dormant .. not so much. SD

The story goes that some folks went for an evening cruise on the Baltic. Supposedly the very early stage miners, BTC mining for them had just been the cool 'new' thing at the time; but they were now all moving on, and their wallets contained thousands of BTC. The US was closing down the silk road, was one of the largest holders of BTC, and there was a need for a graceful way 'out'. The various digital keys got put on USB sticks, and to the clink of champagne glasses, all the sticks were dropped into the sea; salt water ensuring non recovery of the keys, no matter the temptation. SD

In theory only the entity putting up the sh1tecoin, and Tether staking BTC against it ... know who is involved; the Tether/BTC leg of the stable coin has no idea. Additionally; should the need arise, it's a lot easier for Tether (and/or its principals) to experience an accident ... and for the staking records to conveniently 'disappear'. Most of this is also under Chinese control ... with very different rules, applied at different levels; the stealing is straight-forward, the living afterwards ... not so much. Macau is a small place. SD

There's the principal residence (where you live), and the vacation home. For most people, a principal residence of 1,300-1,800 square feet in an accessible location, is more than adequate; thereafter, its primarily lifestyle choice. The privileged, also have vacation homes that are primarily investments (yesterdays fishing shack on remote lakefront, rebuilt into today's mansion with dock/motorboat on a busier lakefront). The issue for many, is inability to separate 'residence' from 'investment'. The reality is that a residence is just shelter; safe, dry, well serviced/maintained, comfortable, and always there whether it be boom or bust. Paying the mortgage off before retirement is just shelter in a different form; ability to afford the house while in retirement, and afford the nursing home when the time comes (house sold to pay the bills). 'Investment' has nothing to do with it. Of course, nothing prevents housing from also being a rental income investment; a common retirement income practice all around the world. The big difference is that it is typically not your own residence, and while you're living in it; before AirBnB the widow renting rooms out in the family home, was called the 'rooming house' lady. That rental income investment is almost always another property, and those properties could be anywhere, with ownership in many forms. In most neighbourhoods, many a millionaire lives very modestly, and for all appearances is much like any other Joe. The difference is usually just a better neighbourhood, a better car (leased) that is never more than 'X' years old, a better maintained lawn/garden/driveway through summer/winter, and maybe a few more lights outside over festive seasons. Maybe a mansion, and a bigger garage, if multiple generations are living in it. In a better apartment building, maybe you'll just see them getting off at a different floor, or getting in/out of a better car. Different strokes. SD