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mhdousa

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    Year-End Results

    in Fairfax Financial

    Posted

    In my simple mind, I am counting on Fairfax to hedge me against apocalypse (since I am not a goldbugs so I only plan against apocalypse lite).  But just out of curiosity for the experts in the forum, is there a better way (i.e. cheaper way) to hedge this.  As far as I can tell, fairfax looks to be a pretty cheap hedge (given you still have one of the best investor working for you on the long side).  So the way I think of it as a couple of percent goes to the hedge as a form of cheap insurance.  Is there another way I should be thinking about this?

     

    Not an expert by any means but I have tried buying puts (spy) a few times.  It has never worked very well.  The problem is that it inovolves many facets of market timing and there is no way to get to an estimate ofmintrinsic value.  It is much easier and cheaper to let FFH do it with their own hedges, or BRk do it via incoming cash. 

     

    The FFh hedge has allowed me to buy vast amounts of US financials, and not have to be overly worried about them in a catastrophe situation.  If things went totally in the dumper FFH may make hundreds of dollars per share, and have money to invest at the best time.  In the meatime we eat a $50 per share non-cash loss but FFh still makes money.

     

    Al, what's your FFH:financials ratio?

    Chou Associates 13-F

    in General Discussion

    Posted

    Francis has sold off about 80% of his BAC warrants, doubled down on DELL, added MBIA and eliminated Office Depot.  Cheers!

     

    http://www.sec.gov/Archives/edgar/data/1389403/000114420413008799/v335242_13fhr.txt

     

    Interesting.  In his US fund, he still owns quite a few BAC warrants.  Sanj, any thoughts as to why the difference?

     

    Top Holdings

     

    As of December 31, 2012

    Top 10 Holdings percentage of assets

    Overstock.com Inc. 30.4%

    Resolute Forest Products Inc. 15.8%

    MannKind Corp. 10.5%

    Sears Holdings Corp. 8.9%

    Bank of America warrants 8.7%

    UTStarcom Holdings 7.3%

    MBIA Inc. 5.7%

    JPMorgan Chase warrants 5.3%

    ASTA Funding Inc. 3.6%

    Wells Fargo warrants 1.9%

    getting into BAC/AIG without investing directly

    in General Discussion

    Posted

    Hi all -

     

    I have a very specific question. 

    My wife works for a certain large consulting company and has to declare her and her spouse's stock and fund holdings.  Because it's a large company there are a ton of entities that are considered "restricted", including BAC, AIG, and the Fairholme family of funds, the three of which make up a large % of our net worth.  As we all know, the big gains in these are yet to come and so it pains me to consider divesting them, but we have to.

    Can anyone think of any roundabout ways to invest in the warrants (preferable) or common without either buying stock directly or through holding Fairholme?

     

    Thanks.

    -M

    The Mother of All Easy Trades

    in General Discussion

    Posted

    Note the price action on BRK after hours.  BRK closed today a hair below the new repurchase level. Then, immediately after close, 500K shares traded, and the B shares popped up above the repurchase level. 

     

    We've been levering up with cheap in the money leaps.  There is no skew in the near the money BRK options. Mr Market doesn't have a clue about the asymmetry of the trade.  This is only one of many ways to take advantage of the opportunity.  The easy way is simply to buy BRK at the repurchase price.  As Yogi Berra says: "If it don't go down, it'll go up.  :)

     

    Being relatively new to options, I wondered if you wouldn't mind detailing exactly which LEAPs you're buying (i.e. strike and premium).

     

    Thanks!

     

    BRK vs MKL

    in Berkshire Hathaway

    Posted

    After being impressed by a couple interviews I saw with Gaynor, I was surprised when I looked at their equity portfolio and saw that it had over 100 names.  That strikes me as glorified index territory.

     

    Why are you a liberal?

    in General Discussion

    Posted

    Eric50,

     

    To your point about Romney's chances being low, I've been thinking the same thing recently due to A) the high correlation between a rising election-year market and the incumbent winning and B) the recent large spike in Obama's Intrade chances (recently 67% ish). However, a friend of mine is a huge political junkie and digs into all of the polls, and he is convinced that the polls are heavily skewing Obama's chances due to over polling of Democrats and not taking into account the likelihood of lower overall turnout. He pointed out today that the recent Gallup poll, which apparently is only registered voters, is now 47-47 Obama/Romney versus 50-43 last week. Then lastly he sent me this article today....

     

    http://www.wnd.com/2012/09/secret-retirement-plans-does-obama-expect-to-lose/

     

    VERY interesting to say the least. And this would in fact jive with what these two professors are saying about Romney's chances (see here: http://www.huffingtonpost.com/2012/08/22/university-of-colorado-pr_n_1822933.html) based on their analysis of economic data.

     

    Holy crap, you really are linking to an article written by the guy who LITERALLY swiftboated John Kerry.  On a site that pushed the whole birther bullshit.

    http://en.wikipedia.org/wiki/Jerome_Corsi

    http://en.wikipedia.org/wiki/Worldnetdaily

     

    Why are you a liberal?

    in General Discussion

    Posted

    The vast majority of the people I meet in the hedge fund community are liberals (in the modern sense of the term; i.e., Democrats). Hedgies tend to be smart people who can act against the crowd if the facts warrant such a position. However, I am having a difficult time understanding why so many smart people (that no doubt understand the power of incentives) support social welfare programs and other freedom-limiting actions of the federal government. It seems like liberals (and I include establishment Republicans under this label) either have not thought through their positions or are operating on loose principles.

     

    Although I wholeheartedly disagree with his politics, I try to heed Charlie Munger's warning about falling into a specific ideology without thoroughly examining the counterpoints. If you have the inclination, I would appreciate a defense of modern liberalism and the reasons why we are better off living in a collectivist society rather than one that promotes freedom of the individual. Book recommendations in lieu of an argument are also appreciated.

     

    SouthernYankee, is that you!?!?  We missed you!

     

    I Miss This Guy!

    in General Discussion

    Posted

    I know this doesn't fit right in with this thread, and I generally try to avoid talking about politics on here, but one thing I've never really understood is the notion that republicans are better for business and the stock markets. I've read nonsense written by hedge fund managers (and other investors) supporting republican candidates implying this.

     

    S&P 500 stats since 1960 (though 2011):

     

    -Annualized return in years with a Republican president: 2.7%

    -Annualized return in years with a Democrat president: 11%

     

    Think that 51 year window is not a long enough time frame? If you go back to 1927 through today, the stats are even more heavily in favor of democrats, with the market averaging an annual loss of close to 2% in years with a republican president.

     

    ..just sayin'

     

    /ducks out of the thread.

     

    DCG -

    I'm as pro-Democrat as they come, but I hate this stat, because I think it's largely a matter of timing.

    At least in recent history, Clinton took office as the bear of 1990-1991 was receding.

    Bush took office as the tech bubble was bursting

    Obama took office right before the market bottomed in 3/09.

    Going back a little further, FDR took office right after the market bottomed in 1932.

     

    A request

    in General Discussion

    Posted

    This board has be incredibly valuable to my development as an investor.  I'm still nowhere near as good as most of you but I'm getting there.  I check it multiple times a day and have acted on many of the ideas so wonderfully discussed and debated on here.

     

    Where this board is not successful is when discussions of politics and personal ideology predominate.  I don't know of anyone who has ever been swayed to change their political views by reading a differing opinion on a message board. I don't presume to speak for Parsad, but I don't think political discussions are the mandate of this board.

     

    There's a non-trivial Supreme Court decision about to be handed down.  I'd love to not have every interesting investing discussion pushed off the Corner of Berkshire and Fairfax main page only to be replaced by tens of posts decrying "YAY OBAMACARE SUCKS" or "DUDE SCALIA IS A FAT IDIOT".

     

    Feel free to disagree.

    Many thanks.

    -M

     

    Just bumping my own thread and quoting my own post because, well...

    What if it is 1982 all over again?

    in Fairfax Financial

    Posted

    ERICOPOLY,

    I was wondering: any idea why Mr. Watsa is not investing in BAC or in AIG right now?

     

    They purchased large positions in US banks in 2008/2009.  They chose WFC and USB.  I think they paid about $20 for WFC.  Then in 2011 WFC went as low as $22 and they didn't purchase more, so I reason they are not interested in adding more to that sector yet (US banks).  They added Bank of Ireland last year.

     

    Mr. Watsa gave a speech a couple of years ago where he described valued investing as purchasing shares when companies run into a "temporary" problem.  Then the reiterated the word "temporary".  Okay, now I can see where BAC's problem is "temporary" (legacy loans + interest rates), I can see where AIG's problem is temporary (interest rates), but I can't see where RIM's problem is necessarily "temporary" (need to keep inventing in a very competitive space to survive).

     

    Eric, are you still close to 100% BAC, or have you branched out at all?

     

    Pabrai funds question

    in General Discussion

    Posted

    No, Mohnish wouldn't mind at all.  He's constantly telling people how he's a shameless clone of other's ideas.  He's too humble to admit alot of his thoughts are fresh and new in many ways. 

     

    But as I said, he won't mind quotes like that.  I don't think he'd want an entire PDF or something, but a small quote wouldn't bother him at all.  Cheers!

     

    So.....any idea to whom he's referring with the above quote?

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