ERICOPOLY

I hold 50% in FFH for this reason. It will happen with or without a split. However, people are saying that splits encourage speculators. If that translates to a higher share price, then it may translate to higher IV per share if shares are sold at the higher price vs an otherwise lower price. Perhaps I was splitting hairs, but the mechanics of this fascinates me. Stock price does influence IV, depending on management action. If management does not act, then stock price does not influence IV. Soros mentions the impact of price in his relexivity idea... personally, I don't think reflexivity is especially earth shattering, I think it is common sense. But many don't believe it exists.

It might actually. Potentially. On a per share basis. To the extent that it encourages a dramatically higher P/B valuation, and they use the shares as a currency for acquisitions, then it does. If the acquisition were to happen anyhow, but the split allowed it to happen at a more favorable share price, then it increases IV per share. However, if it does not encourage a higher P/B valuation, then it doesn't.

1.35x for Berkshire is equal to a much smaller multiple for Fairfax. Fairfax at book value might mean that you are paying a large multiple of book. Use the look-through idea of book value (what is the weighted P/B of the shares in the Fairfax portfolio?). Berkshire has so many operating companies that are wholly owned and the book value reflects a much lower number than the market would value those businesses at if they traded as shares marked-to-market.

But the share price hasn't always been high. How did he manage to have business-partner like shareholders back when the stock was as low as it is now going to be once again? As long as he doesn't get into the forecasting game of managing earnings, then all should be well. FFH's stock price for example is only 10% of Berkshire B shares, does this mean that shareholders have only 10% of the long-term focus?

The first thing that article does is quote Thomas Sowell. This is the scholar they quote from: http://www.freerepublic.com/focus/f-news/1397106/posts I have read three of his books. To say the least, his ideas surprised me.

Food rationing might be necessary. I went to a buffet at Disneyland last night and there were all these 300lb people piling the plate high with fried chicken, mac&cheese, bread&butter, coke, cheesecake... then going back again and again. It was truly disgusting, and just imagine the costs to clean up this problem later on. Yet the food industry bears none of that cost... they privatise the profits of overfeeding people on unhealthy food while later we'll socialize the cost of fixing the patient. People get outraged about the financial bailouts but this doesn't look much different. The costs of cleaning up the mess are not born by the people making money as the mess is being made, and it's obvious to most of us that a mess is being made. Without food rationing, we'll just have to make unhealthy food much more expensive via taxes so that the free market will encourage people to make the right choices... otherwise the choice is bankrupting ourself on healthcare. When the junk food is the cheapest, the free market incentives encourage people to get fat. That isn't an efficient allocation as a society because later we all wind up paying for that.

The Blackfoot tribe (Montana) just used to leave their elders behind (to die of cold or be torn apart by beasts) when they could no longer move with the buffalo herd. Maybe we're just going full circle back to "savages".

I believe the socialists intervene and he gets treatment (we could let him die if we'd just let the free market work for once) :) It's like TARP, but for sick people (we choose to treat them in the emergency room at higher cost than preventive medicine).

$2,500 is not realistic in the US for bypass surgery. It's not even realistic for surgery on a pet. Two years ago I spent $5,000 getting a double knee operation for my dog (non emergency). It's not like malpractice risk is as high with a dog, it's just what they charge (those bastards). I can afford the operation, and I want to walk my dog. Dog is only 4 yrs old at the time... they have me over a barrel so I choose the dog over the money (I care more about the dog than the money). This same dog also slipped a disc a few years ago ($2,000), and 10 months later was attacked by another dog ($1,500). The dog cost $1,500 to purchase from the breeder... so thus far I'm sunk $10,000 on this dog in just 6 years.

Granted, I recognize that you were only providing an example... but I wonder whether the example is something that describes an untenable system altogether, or a good example of public coverage not completely crowding out the private sector... it's some meat left on the bone that private insurers can write coverage for. Is there some reason why the private sector isn't providing an insurance plan to cover people age 65 and older to get dialysis? I really don't know, but is it illegal to write any form of health insurance in the UK to cover the obvious holes?

I live in Washington state, and you are right... it is standard on employer policies. Law requires the insurers to provide it to employees of corporations, and that's why if I incorporate a lemonade stand in my front yard I can then be assured of getting such a policy. But if I don't pull that bullshit stunt, they won't offer it! Thus, without the law putting a gun to their head, one can see how the free market behaves... they refuse to offer prescriptive coverage to individuals for example. Do unemployed individuals have a higher rate of cancer than employees of lemonade stands? Can anyone enumerate the benefits we get as a society by having private health insurance? All the money they make from their float, we can keep it for ourselves... and that's an obvious gain. So what do we lose by getting rid of the private system?

The supposed free market profits are also illusory -- the P&L of the insurance industry does not include the cost of me fighting with the insurance company over a claim (my time and legal costs). It also does not include the public cost of a court system used to resolve these disputes. Make the private insurers bear these costs, and then we'll see how efficient it really is.

I told my agent that I had millions and can pay -- don't just offer me policies that you think I can afford, I want to know if there is an expensive policy out there that can pay for chemotherapy. She told me that no, it doesn't even exist! Hey free market ethusiasts, what do you have to say about that? She recommended that I form a corporation, make myself an employee, and then options are available to me that will cover cost of prescriptions (which is where chemotherapy falls into play). So I can incorporate a lemonade stand, or I can have chickens and sell eggs, or something else completely stupid just so I can get full coverage. What a joke. The free market works? Let's say I could get care... down the road they can deny my claims if they find out that I lied about a mental illness or a pre-existing heart condition... even if I'm filing for reimbursement on chemotherapy. Nice system folks.

How about 911 dispatcher? Shouldn't that be run for profit? Or how about police protection, shouldn't that be run for profit? And shouldn't the fire department be run for profit? That's why I can't stand this socialist country -- people don't deserve a police force unless they can afford security fences and armed private security guards. If a house doesn't have fire insurance, should a for-profit fire department be required to respond? And if the for-profit fire department responds to an uninsured fire and the owner can't pay for the cost of the fire fighting, who pays? The other policy holders? Isn't that basically what's going on today with health insurance? One could see states/counties eliminating their public police force and contracting with Blackwater USA to provide police protection. Does having a for-profit police force bring it's own set of moral hazards? Is it desirable to have a police force with a profit motive? Blackwater actually already has done this within the US -- providing police protection in the wake of Katrina.

Looks like they still plan on holding Wells Fargo for the long term :) “We like the stocks that we have such as Johnson & Johnson, Wells Fargo. Our thinking is that the stronger get stronger and good management will prevail. Look at the commercial/industrial mortgage problem. There are 100 regional banks in this and say they all go bankrupt. That means there’s opportunities for strong banks like Wells Fargo who can buy regional or smaller banks for nothing.”

I grew up with good healthcare as my father was an HP employee. Then I had great insurance through UCLA, then hired right out of college by Microsoft (the very best health insurance available). Now, I am not employed and I went on COBRA for my first few months. Then I didn't know which health insurance to get, so we went with a local business that acts as a broker and she found our insurance for us. This was an interesting process because I discovered that I can't find insurance to cover prescriptions... anywhere! Literally, it's just not available. So if one of us gets cancer, I'm fully on the hook for chemotherapy (which I hear is easily running people into six figure bills annually). So I frankly don't see how the government is going to crowd out the private sector, when the private sector isn't even offering the kind of insurance I want! I can pay for broken bones out of pocket... what I want insurance for is the "supercat" of health coverage... cancer treatment. There is a loophole though that I can exploit... I just have to create some phony corporation (any corporation) and then the insurance companies are required to offer me a plan that has prescriptive coverage (to cover cancer chemotherapy). How stupid can this be!!!

Would it be possible to shift the expenses to the balance sheets of the companies that sell the junk food, thereby incentivizing the production of healthier foods? The free market doesn't do a good job of ensuring that producers bear the true costs. There are these external costs that they aren't responsible for paying. From afar, the food industry may appear to be feeding America profitably, but what if that is only because many of the expenses show up elsewhere?

And if you want to be in the insurance business for the insurance business, there is MKL. But with MKL you are not getting the underwriting profit for free... you have to pay for it just like any business that isn't selling for free. It's a BV premium, and when paying that premium one needs to realize that it's just like anything else... you pay a multiple of earnings. You can start out with $1.35: A) Buy $1 of FFH Buy 0.35 of any other business that earns a profit B) Buy $1 of MKL book and pay an additional 0.35 for MKL underwriting profit (can't buy one without the other) Is it more complicated than this?

I can see that happening. However, even if that were to happen... where is the harm? Is the harm only done to the private equity holders of insurers, or do we all lose out somehow? This industry has been private for a long time. Normally, when we think of free enterprise and private competitiveness we think in terms of it's benefits: innovation. It is imperative that our industries remain innovative and competitive on the global stage. Does that matter for health insurance? Is there such a thing as innovation here? This is what I'm at a loss to explain -- why are so many people convinced that any benefit is derived from a private insurer vs a public one? Don't they just bring in premiums, collect interest on float, and settle claims? Will we lose any global competitiveness if the govt pushes out private insurers?

I asked myself how the public option would make health care cheaper. In order to get an answer, I first had to determine where exactly health insurers get the bulk of their profits. From my observation, it would seem that they make profit by getting premiums far in advance of claims, and investing this float in government bonds. Therefore, they are getting premiums essentially directly from taxpayers long before taypayers actually get sick and need to visit a doctor, and these taxpayers effectively are also on the hook for the interest payments on the government bonds. Now, I ask what would happen if a public "option" were simply forced upon America, and the private insurance industry was forced into runoff. Where does the cost savings come from I ask? Well, I think there is cost savings in that the government would be paying the claims in real time as they come due, thus eliminating a middle man "float". So the savings from the public option comes from the time value of money -- interest not paid to insurers on float.

This is the way to go. As you say, fire people for writing less business and the remaining staff will be certain to not repeat their mistake. This is an investment holding company with cheap leverage, as far as I'm concerned. No underwriting profit? Boo hoo. Leucadia doesn't have underwriting profit... shit, as long as you make a lot of money investing that's what counts most.

The premium shows up as an asset -- goodwill.

They only lost $21.1 on commutations in all three quarters combined of 2009 (all in Q3 actually). You are probably looking at the line where they talk of the $80m commutation at C&F -- but look at the date on that... 2008.

Why did "fair value" of equity accounted investments fall from $737.5m (Q2) to $570.1m (Q3)? Okay, I found it -- it was a decrease in "Fair Value" of ICICI Lombard. Hmmm... but why?

I remember MRH had impressive combined ratios until they lost 70% of equity from the hurricanes of 2005.