MrB

Does this pass the smell test? http://www.hkexnews.hk/listedco/listconews/sehk/20110909/LTN20110909546.pdf The jist BYD (1211 HK) owns 65.76% of BYDe (Byd Electronics 285 HK). BYD has been selling shares and debt to raise cash in order to fund growth; selling on forward PE of 11 and EV/NI of 14 BYDe on forward PE of 5.5 and EV/NI 2.2 On 9 Sep BYD announces borrowing RMB 1Bn from BYDe at 6.65% (3yr term loan rate for China) Guaranteed by 25% BYDe shares (RMB 1Bn value/last 5 trading days) Good: Independent shareholders have to vote (HKEX rule, not management initiative) Bad: Credible logic to lend money out at 6.65% if earning less than 1% at the bank. However, that would imply it is excess cash and since ALL the shareholders of BYDe is/should be the priority why not dividend it up? The 25% "reverse convertible" is a bit odd. A cynic would argue that you are sucking out the juice of the orange and giving the leftovers as collateral. a) Why not give BYD shares as collateral, making it a regular convertible bond or b) use fair market value? Using the current depressed market value of BYDe does not strike me as equitable. Also, Hang Seng current depressed PE is 9 (historical multi decade average closer to 14) and current “sector” valuation is depressed. Even on that basis BYD trades way out of line. Using EV/Rev (not necessarily the best method, but gets around temporary lumpy earnings) BYD 0.10 v averages for Casings 2.87 (Catcher, HIP and Tongda 7.6, 0.33, 0.69), Keypads 0.61 (Ichai) and Handset ODM 0.30 (Flextronics, Jabil and Foxconn 0.16, 0.28 and 0.46) I also note that in the press release BYD seems to indicate that the non-independent shareholders make up 65.76%, but Dragonfly owns another 7.47% and the beneficial owners are BYDe employees. However, I question the independence of these employees. Can they really choose to vote against their majority owner/employer? Any thoughts?

I do not follow BAC, but this is obviously a good deal for Buffett. Good yield in a company with an implicit government guarantee. So his downside is pretty much zero, because come hell or high water he will eveeeeeeeeeeentually get his money back and clip market equivalent returns (equity market); Plus significant upside if there are no significant bumps in the road. However, I don't interpret the deal as a good sign. If I told you I'm in good shape and don't need money and tell you the next day that I just raised some capital you might call me a liar or at least mark down by credibility buy a notch or two and definitely question my assessment of how swell things are going in my company. Why is this any different? The other point that stands out is that Buffett or at least the news reports of what he said makes it sound as if he called BAC and proposed this deal and what? BAC just said, "Yeah, great idea. Let's do it!". This smacks more of the kind of calls Buffett gets at 7am on a Sunday morning or at least somewhere in between the reported version of events and the Sunday morning calls. Great deal for Buffett, so-so deal for BAC and a question mark over the recovery. P.S. I have no opinion on the value of the equity of BAC

http://www.telegraph.co.uk/news/picturegalleries/uknews/8690375/London-riots-Police-battle-to-enforce-order-on-the-streets-of-London-for-a-third-night.html

"Anyone that tries to figure out the exact bottom to buy or the exact top to sell is a moron, because you really cannot do that" http://www.bloomberg.com/video/73685898/ At 6.05, but listen from 5.00

Will check on Fidelity. Is available on Schwab. Log into your online Schwab account. go to "Research" and enter one of the two tickers CHOEZ or CHOEX into the "Enter name or Symbol" box at the top left hand of the "Research" page. Alternatively copy one of the following links into the address bar of your browser after having logged in. https://investing.schwab.com/secure/cc/nn/gw/wsod?path=/retail/research/mutualfunds/summary.asp&symbol=CHOEZ https://investing.schwab.com/secure/cc/nn/gw/wsod?path=/retail/research/mutualfunds/summary.asp&symbol=CHOEX I have a Schwab account, so let me know if you run into trouble and I can speak to my account rep.

It's what a short squeeze looks like. I guess you need your shares if you want to participate in a rights issue.

Thanks for the posted info!

Tnx. I see I have to go through a sign up process to get access, which I've done, but I was hoping to look at it over the weekend. Any possibility of emailing it to me or just letting me know whether these are mainland or Hong Kong based banks, please?

Can anyone kindly direct me to the copies of bank statements on Sino's website? Page 2 of http://www.sinoforest.com/Uploads/SF%20MW%20Press%20release%2006%2006%202011%20Final.pdf "Sino-Forest has released today on its website a summary schedule of cash and cash equivalent and short term deposits along with a detailed listing with copies of its bank statements confirming the cash held within the Company as at that date." Tnx.

No, one more and even slower to respond.

That sounds very similar to saying that when you push out the maturities on the Greek debt by 5 years and keep principal and interest payments the same you don't have a default. Let's not get bogged down in the details though. 14% of Aus GDP is made up of construction and related and 7% is mining. The former is clearly supported by extreme pricing (affordability ratios) and credit (household debt levels) and the latter by China. Behind all that you have significant issues; for the former, short term funding risk of the Aus banks and European banks being a main source of funding for the Aus banks which itself are in a precarious state and then for the latter (China), you have various red flags of which the most important is the signs of a property bubble in China where construction and related makes up at least 50% of GDP. Now in the midst of this you are prepared to wade in and take up the offer on an instrument with a 1% or 2% spread? No thank you. At the end of the day the answer lies in a question. If the current household debt levels and affordability ratios in Australia do not indicate that the housing market is in bubble territory then at what levels will it?

Someone asked for a global survey -- http://www.demographia.com/dhi.pdf Currently 30% of mortgages to owner occupiers are interest only with a further 10% being low doc loans. 50% of mortgages to “investors” are interest only with 10% low doc. Then you have the securitization machine at work too with AOFM (Australian Office of Financial Management) now buying RMBS directly from the banks. The program was extended from the current A$12Bn to another A$4Bn and it will leave A$3.5Bn of capacity under the current program. This is significant if you consider that by my estimate around A$50Bn of new mortgage debt was issued over the last 12 months. AOFM-I was not sure whether I should laugh or cry when I read this http://australiansecuritisation.com.au/docs/20110323_ASF_Treasury_Letter.pdf At the risk of seriously boring you, take a look at the highlighted sections of a very recent RMBS from one of the smaller banks below, of which AOFM took A5. Firstly loan seasoning averages under 4 years, which means in the context of the above these properties are overvalued. This then means the LTV ratios are out of whack, although it might look reasonable now. On average the LTV ratios are 64%, but the home is the denominator and if home values fall by 10% then the LTV jumps by 11%, if home value fall by 20% then LTV jumps by 25%, etc. 27% of loans are 10 year interest only loans. Also if you read the fine print then you will see that excess payments of A1-A2 cascades down (waterfall feature) to the lower tranches up to A4. If there is a shortfall then new notes is issued firstly at the A4 level to repay A1. The point being that if you read the fine print (actually it should be clear enough from the data below) then it is as clear as daylight that the last place you want to be is at the A5 level, because you are being pushed down in the capital structure the whole time. It boggles the mind when trying to understand why AOFM is buying in at this level, unless they are desperate to provide funding to the banks. Not a good sign. So you have government funding the banks and the latter is already in a precarious situation with at least 20% of wholesale funding coming from what looks to be mainly European banks. Funding is also short term in nature which a cursory glance at the debt maturity profile of the “big four” in Aus will confirm; all have the bulk of roll over under 5 years. ________________________ Class A1 (AAA) - $194m (matures December 2011)* Class A2 (AAA) - $112m (matures December 2012) Class A3 (AAA) - $100m (matures December 2013) Class A4 (AAA) - $0m Class A5 (AAA) - $306m Class AB (AAA) - $35m Class B1 (AA-) - $16m Class B2 (N/A) - $8m *Will split into two notes A1f and A1v. Loan Pool Profile Total no. of loans 4,420 Total value of loans (A$) 775,017,885 Current max. loan size (A$) 745,785 Avg. loan size (A$) 175,343 Max. current loan-to-value (LTV) (%) 94.0 Weighted-avg. current LTV (%) 64.9 Weighted-avg. loan seasoning (mos.) 43.5 Table 7 Loan Pool Characteristics Current loan size distribution (A$) Value of loans (%) Less than or equal to 100,000 8.8 Greater than 100,000 and less than or equal to 200,000 26.3 Greater than 200,000 and less than or equal to 300,000 30.9 Greater than 300,000 and less than or equal to 400,000 19.7 Greater than 400,000 and less than or equal to 500,000 7.8 Greater than 500,000 6.4 Current loan-to-value ratio distribution (%) Less than or equal to 50 17.7 Greater than 50 and less than or equal to 60 17.9 Greater than 60 and less than or equal to 70 20.9 Greater than 70 and less than or equal to 80 25.7 Greater than 80 and less than or equal to 90 17.6 Greater than 90 and less than or equal to 95 0.1 Geographic distribution (by state) New South Wales and Australian Capital Territory 24.0 Victoria 11.9 Queensland 17.1 Western Australia 8.9 South Australia 36.5 Tasmania and Northern Territory 1.6 Geographic distribution (metro/nonmetro) Inner city 0.4 Metropolitan 80.0 Nonmetropolitan 19.6 Seasoning Less than or equal to 6 months 1.1 6 months ? 1 year 13.4 1-2 yrs 12.9 2-3 yrs 18.7 3-4 yrs 20.0 4-5 yrs 16.6 Greater than 5 yrs 17.3 Principal amortization Fully amortizing 72.6 Interest-only for up to 10 yrs. 27.4 Loan documentation Income, savings fully verified 100.0 Partial verification of income savings or affordability 0.0 Mortgage insurers Genworth Financial Mortgage Insurance Pty Ltd. 61.2 QBE Lenders' Mortgage Insurance Ltd. 38.8 _______________________________

This is from memory; OTPP bought CMOs back in 2007/2008, stripped out the AAA tranches and sold it off, thereby covering their cost of the original trade and kept the remaining tranches. This was right at the time when the market started to value the AAAs more and the lower tranches less.

Was asked whether an individual CDN investor pays taxes on realized and unrealized gains on an annual basis when invested in non CDN fund? Anyone wants to take a stab?

Sanjeev...just paying down my debt.. Misterstockwell...some feedback for you "...also thank Misterstockwell for letting us know that the call center response was not the right response. We have corrected that." Also found the Chou Income Opportunity Fund link http://www.bloomberg.com/apps/quote?ticker=CHOINOP:US Lastly, my personal comment on the fees are that I would not be concerned. I think FC has proven on several occasions that the collection of fees is the last thing on his mind and once again in my personal opinion he will go to great lengths to avoid so much as a hint to the contrary. You will recall the last occasion where he returned the fees for his European Fund while the fund was doing relatively well. However, because it was not satisfactory to him the fees were returned. According to my knowledge that was instigated by himself. He was not acting on anybody's suggestion or reacting to a complaint. Yet, it does say something about the way that he views the world, so in light of that the fees will not be a concern to me. Anyway, that's my two cents... Happy investing and watch that Muni market...it's getting interesting....

Some more info... You can go here for a quote http://www.bloomberg.com/apps/quote?ticker=CHOEQOP:US There are some progress on Schwab and the like to get it onto their platforms, but the due diligence process usually run for several months. Email me on the board if you are serious and I can look to get you in touch with F. I can understand that some of you are frustrated by the slow progress on ironing out all the details, but to be honest it is also quite typical of the man. Things will develop and grow in its own good time. There is no particular rush.... Anyway, as I said drop me a line and I will help where I can to move things along a bit. No promises though. Bloomberg screenshot below http://baobabglobalfund.com/Images/BB.gif

Misterstockwell, On the symbol, "...the Funds will be able to obtain a Ticker symbol once they meet the following criteria: 1 – If a Fund reaches 25 million in net assets or 1,000 shareholder accounts, it can apply for the Ticker immediately. (Fund level only) 2 – If the Trust reaches 10 million in total assets in both Funds by March 1 (which is 1 year from the date of the Trust filing), then both Funds can obtain a ticker...." Will post if there is any feedback on the rest..

According to Francis... ---------------------------- 1) The unit value of the two funds, Chou Equity Opportunity Fund and Chou Income Opportunity Fund, will be on Bloomberg by the end of this week. 2) We are trying to put it on the Schwab or Fidelity platform. 3) Investors can buy direct with no upfront fees. There is a link on ChouAmerica.com website for buying direct. 4) We are looking at the 12b-1 fees. Haven't reached any conclusion yet. 5) The Chou Equity Opportunity Fund is up about 21% from July 1, 2010 and Chou Income Opportunity Fund is up about 9% from July 1. This is as of today. ----------------------------

eggbriar, What if you manage a fund and the shares are not in your "personal" name?

I am planning to attend the AGM for this first time this year. Do you need to be an investor to attend? Anything I should know in terms of attending? Regards