JEast

As most on the board know, I have been a very-very long time shareholder. Maybe even the longest tenured shareholder on the board. With that said, this proposal is like changing the rules in the middle of the game. For all the talk over the years of shareholder value and not diluting the existing stakeholders, there has been only a miniscule of shares bought in the last 15 years, but a bunch issued. If I were Prem, maybe I would want to get back what I once had too. Nevertheless, a no vote was submitted and deemed in the best interest of all current and future shareholders.

Historical point - in early '99 things were expensive but not crazy expensive. It was not until the next 16-20 months passed until things got crazy. As I knew our board members would point out, there is always something to do (in pocket areas). I would also agree with Buffett (as all value investors should) that if rates stay at present levels then this discussion is a moot point. But Buffett kind of hints at my point -- are we bond investors or are we equity investors? Presently I guess he recommends that we be both, and that makes it hard with a potential binary outcome.

Casual observations, but in the sandbox that I play in – it is starting to fell like it is 1999 again. However, for you folks that had capital invested in the market during '99-'00 they were probably filled with great wonders and excitement. I on the other hand was filled with “you got to be kidding me” as for example I still recall that Juniper Networks went to 100x times sales (sales not earnings) at one point. We are surely not at that stage, but anecdotally the rhythm/rhyme of today’s market has that undertone. Some random observations: <blockquote>1. Ivy League graduates instead of wanting to go to Wall Street or consulting jobs are instead now more interested in starting their own business or entering VC. 2. The FED making market comments that they appear a little frothy. The last time that happened (e.g. irrational exuberance), the markets went on a tear. 3. Attended a VC conference a few months ago and there was actually some very good functional and operating tech (vs. two years ago of paper tech). However, no one wanted capital as they were holding out. Reminds me of holding out on the last dollar before the 2007 housing boom and broadcast shows like “Flip This House.” 4. Speaking of TV shows, does programs like “Shark Tank” at this pint hint at the possibility that VC has – jumped the shark (pun intended). 5. Much like the Business Week headline theme, is it time to sell the headline? 6. At my recent Toronto visit, and reason I like the many events during FFH week is that all the value investors attending are very open and we talk individual stocks. Unlike all my past years (9 years), not very many hardcore value folks had any stocks to talk about this year. 7. Headlines are starting to pop up that value investing has lost its luster. One recent headline indicated that Mark Mobius is a washed up value investor and sure more articles are in the works as the 5 and 10 numbers are starting to turn over.</blockquote> I am sure astute board members could find (and will) more anecdotal and cautionary tales. Sure, there is always something to do, and I am, but if any of this true, then we hardcore value investors probably have another 18 months or more of value pain. Cheers JEast

Yes, the 26% hurdle has finally been removed. However … see quote below: I spoke with the ICICI Lombard chief executive Bhargav Dasgupta in Toronto a few weeks ago, nothing new — steady as she goes. However, found this quote from a competitor interesting with respect to the Indian insurance industry (biased towards life though). Source: http://articles.economictimes.indiatimes.com/2015-04-15/news/61179993_1_insurance-industry-insurance-companies-insurance-regulator Maybe we don't want to go to 49% after all :( as their may be better uses of capital over the next several years.

Mark Spitznagel and Nassim Taleb have been partners for hedging in convex tail risk for a number of years.

Not unexpected and a little of an older story here, but it has been discussed that Google will launch their US auto insurance aggregator this quarter, or next. http://www.propertycasualty360.com/2015/01/12/google-is-launching-a-new-auto-insurance-site-are

Looks like a grey market is open for employees selling employee stock ownership plan shares. http://www.business-standard.com/article/markets/stocks-of-insurance-companies-gain-currency-in-gray-market-trades-115022300210_1.html

Nice article on the distortions of ZIRP with respect to value investors. http://www.bloomberg.com/news/articles/2015-02-24/wall-street-s-best-stock-pickers-pin-rut-on-warped-market Neuberger Berman’s paper “Is There Hope for Active Managers?” http://pa-pers.org/newweb/documents/Fall2013-NeubergerBerman-FullArticle.pdf Cheers JEast

Yes, it looks like Zion 3.0 was the ticket and has both survived and flourished. Hope to see and chat with many of you in April :) Cheers JEast

Though mentioned previously, thought the above deserved its own thread. http://bpp.mit.edu/usa/

My take is a little more nuanced in that maybe the FED has trimmed the premium off of the value camp because the FED has either intended, or unintended, to support businesses that would have surely cleared at lower prices then they have in the last 5 years. In the analogy the author's use, by not clearing at lower prices, collecting the value premium has been tough and maybe buying at the $35 price point was the correct move (a traditionally non-value like investment). Case in point presently, all those billions raised to buy distressed European debt is earning very little these days because they have not cleared yet. Cheers JEast

A nice article composed by Kaleidoscope Capital on how the FED is the new value investor and its resultant demise to value investors in aggregate (e.g. demise of hedge funds and taking away the margin-of-safety). http://www.zerohedge.com/news/2015-01-30/fed-now-frontrunning-value-investors Article attached in pdf form. 2015Q1_FedValueInvestor.pdf

Big bet -- yes and no. The amounts quoted are 'notional' amounts just like the previous credit default swaps. The invested amount is but a fraction of the notional amounts reported which is roughly about $640m and worth about $110m at 3rd quarter. A big bet, yes, but also no, wrt notional amounts. I am hopeful that we at least get our money back with a possible option call on something more. As an FYI, looks like 30-year Bunds are now below 1% (repeat, 30-year government debt). Also, the Eurozone is starting to turn over as indicated below. http://i58.tinypic.com/288nlh1.jpg

It is still early, but I am hopeful that the Toronto office is now at least getting some calls on possible asking prices. http://i58.tinypic.com/t62c5z.jpg

US stockholders get the dividend the same day minus the 15% withholding taxes per the US/Canadian tax treaty. However, some lucky US Roth/IRA accounts get the full amount as some brokers forget to pull the tax out. I have seen over the years the same broker take the tax and other years forget the tax. Good Luck.

FYI on 5Y5Y expectations. Hopefully we at least get our capital back in 2015 and maybe a little extra in 2016. http://i61.tinypic.com/5cy8w1.jpg

The story continues: Owen Li, the founder of Canarsie Capital in New York, said Tuesday he had lost all but $200,000 of the firm's capital—down from the roughly $100 million it ran as of late March. -- That feat is really, really hard to do statistically without tossing the money out the window. The rest of the story: Li is a former trader at Raj Rajaratnam's Galleon Group, which collapsed amid insider trading charges. Rajaratnam is now in prison for the illegal activity, but Li was never accused of wrongdoing. The report indicates that he lost most of it just in the month of December 2014 alone!!

Don't tell/show Jeremy Grantham the data.

Possibly increasing Infoline stake to the 26% limit. http://articles.economictimes.indiatimes.com/2014-12-06/news/56779924_1_india-infoline-nbfc-prem-watsa

Some thought provoking comments from BoA. In addition, they not surprisingly see $50 oil. http://www.telegraph.co.uk/finance/oilprices/11283875/Bank-of-America-sees-50-oil-as-Opec-dies.html Cheers JEast

Well, that escalated rather quickly. As the ¥en moved above USD/JPY level of 120 are my fellow board members still in the camp of not to worry/care about the USD/JPY relationship. I am still in the camp that the rest of Asia will follow sooner rather than later (look at AUD as an example) and deportation on non-inflationary forces will continue. For USD investors, there should be some nice Asian value opportunities in 2015. Cheers JEast

This post can only be appreciated by long (very long) time stockholders. Today we touched a milestone of an all-time new high (in Canadian Dollars). It took nearly 15 years (hard to believe) to touch the high achieved back in February 1999. Much water has flowed under the bridge with many lessons we have hopefully both learned and earned over this timeframe and for the future. I often remind myself to remember Napoleon. After many successful battles, he thought he was invincible and decided to attack Russia to an ultimate result that was not in his calculations. Similarly after many successful purchases/mergers, FFH ran into difficulties as two purchases nearly resulted in disaster for the entire company. We do not know the future but this author has a strong belief that the building blocks are present for a strong one and here is to the next 10-15 years with always remembering Napoleon!, and leaving this milestone in the dust. Cheers JEast

[amazonsearch]Genghis Khan and the Making of the Modern World[/amazonsearch] Though published 10 years ago, the best book I came across this year. In the genre of 'How the Scots Invented the Modern World' Cheers JEast

Professor Bruce Greenwald makes a very astute observation that value investors have a narrative problem in just saying we buy cheap stuff. In conjunction with Professor Aswath Damodaran's recent presentation at the CFA Equity Valuation conference, he gave a lecture on this very point. Aswath Damodaran: Numbers and Narratives (starts around the 12m mark) - link to Part I below: http://new.livestream.com/livecfa/damodaran2014 Cheers JEast

A H/T to the GuruFocus guys as they have some info on market cap to GDP, plus global calculations. US Cap to GDP Some Global Cap to GDP However, as the large caps continue to rise some small caps are getting crushed around the globe.