JEast

HJ -- where did you get your numbers?? (most of the time CR is in the 80s, 110 this year?) My experience of watching the business for some time is much different. Given that the governmental reimbursement is where the money is made, I would like to see your source. I would very much like to be wrong in my assessment. Cheers JEast

I suspect that Odyssey's losses will indeed look similar and maybe worse depending on how they ceded. I am counting on a loss in the $50-$70M range given that they wrote nearly $700-$800M this year. El Nino is helping out the hurricane season, but most of this possible good fortune has gone to farmers instead. Looks like a flat year :( on the whole for Fairfax's underwriting as we need 95 or below. Cheers JEast

Though we have grown accustom to global markets being more correlated over the years, I found the following comparison interesting. Granted that the Shanghai Index was over valued, the widening disparity over the last 3 years is interesting. Is it telling us something? http://s18.postimage.org/hezmfub7t/Shanghai.png Cheers JEast

As we are over half thru the season, is El Nino doing the job this year? So far most have all been weak or been pushed outward and northernly as is prone in an El Nino year. Though the large caps are leading the way this year in the climb of the wall of worry, for the most part the P/C guys have not participated. Cheers JEast

O.K., the interviews were edited to show only the euphemistic "Yellow Dog Democrats" only. Yes, the right has their equivalents too. Therefore in the two party system, one is only trying to nudge the 5% that is not the core. After a lifetime of branding, it is hard to switch party affiliations. As we know from our investing efforts, Brand name recognition works. Cheers JEast

The video/interviews were good to be reminded of the the core voting public :) Cheers JEast

Both a business story and a sad story as we enter a 50 year tradition of the MDA Marathon in the US. For those that are unaware, the Muscular Dystrophy Association traditionally runs a donation marathon on the labor day weekend. However, last year they unceremoniously canned their star comedian Jerry Lewis with no explaination. This reminds me of the Coke vs. New Coke episode. Subsequently, donations are reported to be half of what they were with Jerry present. Now the CEO that canned Jerry is out, plus part of the staff. Another good business model gone bad after years of effort and hard work building a brand. http://www.showbiz411.com/2012/09/01/exclusive-without-jerry-lewis-mda-couldnt-collect-50-of-last-years-pledges Cheers JEast

When a reporter can only find (5) potential miscues for a politician in a major speech, that is the positive statement. We will see how the others match up, I would suspect much more stretching on others than that Ryan. I say others, but I have read that the powers that be will not even let Biden speak in Charlotte :) Cheers JEast

Our old friend TIG in the news again. Probably more hype than facts, but after nearly 10 years of trying to bury this thing -- it keeps on giving. http://www.bloomberg.com/news/2012-08-16/nfl-sues-insurance-companies-to-pay-for-head-injury-lawsuits.html?cmpid=yhoo Cheers JEast

Gosh, I love the GMO team and their commentary. But what is with all the gloom and doom from Grantham? O.K. I get that he is left of center and that is fine, but is he moving more towards Karl Marx too that capitalist are the problem? Some tongue-in-cheek here so don't take it too serious :P Cheers JEast

Most all us indeed grew up in a world where 'copying' was considered bad behavior. Copying in the sense of plagiarizing someone else's work. However, and specific to the investing world, I am of the belief that copying another investment idea is actually praise for the idea generator and also to some extent helps that person over the longer term. That is you are supporting the stock price by buying, or maybe even shorting. Does copying stifle creativity? I would take the opposite stance and say that 'legally' copying an idea stimulates creativity because via the simple fact that when someone starts copying -- it verifies the idea and both boosts your idea that stimulates others to make the idea better. Making something better is creativity. Cheers JEat

A second the go easy on the USPS. Though we are all capitalist (in the good sense) here, there are some things that are just good for society as a whole in the Benjamin Franklin theme. Cutting out Saturday delivery would be fine that would/could be picked up by the private sector. Otherwise, I do not hold the USPS to the same standards as a profit making entity because they are somewhat facilitators for other profit making entities. Cheers JEast

India is not unaccustomed to power blackouts, but this one was reported as over 300+ million effected. That is more than the US and Canada combined to put it in persepective. http://hosted2.ap.org/OHCAN/CREPnewswire/Article_2012-07-30-India-Power%20Outage/id-4891ee75eb1e417894a42b266bd3b1e2 Cheers JEast

It is my understanding that Calendar Year is January 1st whereas Accident Year may start April 1st since not all policies are signed on the company's calendar year. In the link is a very brief explaination: http://www.guycarp.com/portal/extranet/utility/glossary_a.html?vid=1, plus all the estimates for expenses, earned and unearned premiums, etcetera. Irrespective, over the years I have found the 'triangles' to be nearly useless in making an investment decision. Even so far as going to the Schedule Ps filed with the NAIC are not really helpful. The reason is all the numbers are what people think (estimates) and we know what happens with estimates. What can be helpful (slightly) is the paid claims because that is real monies going out the door and can be used for loss trends. However, when you get into multi-lines the paid trend line is useless which takes you back to the Schedule P to break it out. My 2¢. Cheers JEast

I have not followed these guys since the late '90s, but thought 12 straight quarters of equity redemptions interesting. Implications for the general public, or just flooding into bonds? http://www.bloomberg.com/news/2012-07-26/janus-profit-declines-44-in-12th-quarter-of-redemptions.html Cheers JEast

Welcome. Not quite San Francisco, but we have a growing value community that informally meets every other month for either breakfast, or lunch, to discuss our favorite topics. Cheers JEast

Given that Fairfax's investment board (group) thinks there is a very good possibility of deflation, 3% is way too high a cost of capital for this company. This is not a metric that I pay that much attention to, but the idea (metric) does bring up an important point in my view. I am under the impression that I am associated with above average folks with above average talents. As such and as a P/C company, we should have a cost in the 1% range (over the longer term). For 10-years now C&F has been a mediocre underwriter, at best. I suggest that they cap their policy count (not premiums) until they can prove underwriting discipline -- no more bolt on business. Prem always says we will not chase market share, but some underwriter's pens appear to chase policy count with not much results to account for. I am supportive of Doug Libby because of his fine work at Seneca, but C&F was a mess when we got it. If the next five years can average 100%, then Doug will have a winner. As follow-up to HJ's comment on that the 'USDA absorbing most of the risks' is a false premise. It is true that you can put some of the riskiest policies in a different pool, but that does not account for the policies you keep during a drought. This is the tricky part of crop insurance. You think you are laying off risk when you are actually taking on more risk. On top of that, we expanded our crop business this year as I was told at this year's meeting. Ouch. My intent is to be constructive, but understand the tone my be otherwise. As you might now suspect, I do not like the crop business or consistently underwritten losses. Cheers JEast

Not this quarter, but come next quarter expect some large losses on crop insurance. The crop business looks good as one only has losses 2 out of every 10 years. Of the two loss year, one is not too bad, but the second is usually a doosey. Looks like we are starting out our 10 years with major losses in year 3. Why we went into this business I do not understand and could not get an answer at the annual meeting this year as to why either. http://news.yahoo.com/worst-drought-since-1956-shrivels-corn-soy-crops-001346529.html Cheers JEast

Another Ponzi scheme bites the dust. Though the story is a little old, the futures brokerage PFGBest is finally being liquidated after stated assets of $225 million turns out to be only $5 million in their bank account. http://in.reuters.com/article/2012/07/10/broker-pfgbest-mfglobal-idINL2E8IA00120120710 Cheers JEat

Assuming that we now have excess cash with the recent sales of our long-term bonds in the 2nd quarter, the following is a short wish list to the team for long-term securities in the portfolio. Shipping – either tankers or container ships as we appear to be hitting a trough. Given the prices for new ships, it would be nice to order 10 vessels in the JV as the terms are the best in nearly 20 years. Little to no deposit required and 5% progress payments with build out time in 3 years. For containers, new hull designs with added fuel efficient 5,000+TEU will hold their value and time enough for the market to turn. TARP Warrants – though we have some, more would be preferred. Outside the unique reduced strike price feature, some also have a no cash exercise feature (equivalent shares at conversion). Take a look the HIG warrants as an example, but others as a basket seem prudent. KW – I am sure the team is watching, but additional commercial real estate in conjunction with KW in Europe over the next couple of years would go a long way. Sooner than later, the banks will start unloading some of their assets on the continent. RIMM – increase position 25-75% below $8. We would take some heat as we would look like we are idiots, but surely the patents are worth $5. At these prices, it is a long call option that the company just survives. FFH – nibble on our shares when the market allows. Cheers JEast

But this ghost town is not in China, but Africa. It would appear that Chinese companies are building ghost towns in Africa for oil. http://www.bbc.co.uk/news/world-africa-18646243 Cheers JEast

Noticed that a recent announcement by the HANJIN Heavy Industries yard will be building 5,000TEU container ships under $10k per/TEU. If this is the announcement, the numbers are probably less. Is this the trough? http://www.malaya.com.ph/index.php/business/shipping-and-transportation/160-news-flash/6766-450m-deal-ends-hanjins-order-drought Cheers JEast

I was present for each of the presentations mentioned. One just has to love both Jeremy Grantham's letters and presentations and his keynote speech was great. With respect to abnormal or not, can they both be right at the margins? For example -- larger corporations can keep the higher margins at some length whereas mid to smaller cap companies maybe can not. I am currently persuaded by both arguments and believe this is why larger caps have been performing so well of late. Irrespective, the point above about increased wages will occur over time, or maybe sooner than later as wages are said to be increasing in southeast Asia (i.e. Apple). Cheers JEast

An interview from WIRED on his new book. http://www.wired.com/business/2012/06/why-we-lie-cheat-go-to-prison-and-eat-chocolate-cake-10-questions-with-dan-ariely/ Cheers JEast

I have no dog in this fight, yet, but thought it interesting that Reuters has it in for Chesapeake. I say this as I was in Chicago for a Mason Hawkins talk. Afterwards, two Reuters' reporters were hounding him about his valuation of Chesapeake. I was right there and Mason repeated his stance three (3) times and the reporters still reported it wrong last monday. Now today, they release what they call a smoking gun. http://www.reuters.com/article/2012/06/25/us-chesapeake-land-deals-idUSBRE85O0EI20120625?type=companyNews Cheers JEast