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Have to double this take. Einhorn is saying all that fresh powder lying around doesn't want to make money because they don't seem to be interested in some of his stocks. Seems a lot more likely that he made some bad investments. (And some amazing ones) That said, he's picked it up a lot lately so his switch in approach, theory aside, has been a good one.

Akre is a great. I do wonder about his successors though. I'm not sure their decision making has been as sound.

Fairfax wasn't convicted of fraud but the substance of much of the accusation was true and solid. Fairfax has a history of being very aggressive. Had their CDS positions not worked out so well in 2008 this whole conversation could have been very different. And just because they were clear in 2005 doesn't mean they are clear now - this shouldn't have to be said. For the record, MW is only accusing Fairfax of being aggressive and that the stock is overvalued - I can't see why he's not allowed to make that accusation when bulls will make the mirror image case all day long, happy to push the stock up. But again, I repeat, short sellers are there as an alarm system to flag issues - holding them to the standard of "There are examples where they were incomplete or wrong and therefore they shouldn't exist and/or are a corrupt institution" is unbelievably false. That's Soviet style condemnation - find a few salient examples and condemn the entire system.

Here's a great example of an "enforcement action" - from the SEC website: Charges against Deloitte’s China-based affiliate for failing to comply with fundamental U.S. auditing requirements when auditing U.S. issuers and foreign companies listed on U.S. exchanges, allowing clients to select their own samples for testing, and having clients prepare their own audit documentation. You mean the stuff that short sellers have been calling out for ten f*ckin years?!

Hundreds per year?? Please show evidence. And they have caught no MAJOR public fraud I am aware of, that was not first highlighted by a market participant. Enforcement actions often (frequently) come after the house has already burned down, and most of those 760 are minor. An enforcement action is not = catching frauds as they operate. I am aware of some of the penny stock stuff and I'm glad they perform that service. When you say "short sellers are corrupt" you reveal that you dislike the entire concept (rather than "some" short-sellers). I'm sure some of them are. Also, the DOJ probe has gone nowhere 2 years later. I don't short at all and have no skin in that game but the anti-short thing on this board stemming from the 2005 FFH debacle needs to be pushed back on.

Longs make up utter bullsh*t all day long on CNBC and Twitter, and Prem has made up a whole bunch of his own, so this whole idea that short sellers are some unique demon is nonsense. Even if MW is incomplete, he's allowed to go out there and say, with a great deal of backup "Here's why I'm short". If he's wrong he'll eventually go out of business. But he's called out a LOT of bad actors in his time (no, he hasn't batted 1.000 - have you?) and Fairfax is not some innocent lamb. If shorts are out there getting "100 wrong for every 1 right" A. No one would trust them and B. They'd lose a lot of money fast. Chanos is a good example - he made a career out of calling out bad accounting and bad actors, but in the end the totality of his analysis wasn't good enough so he went out of business. Prem has been wrong again and again, and publicly so - why is Chanos the bad guy? Bulls don't get a monopoly on the microphone.

Practically every fraud is first caught by short sellers. This argument holds no weight. The SEC and Deloitte are sure as hell not out there calling out the Wirecards, Enrons, Valeants, Sino-Forests of the world.

It's a conspiratorial post about Muddy Waters supposedly manipulating FFH's stock so he can buy call options and make money on the bounce. Written by James Joyce.

Would you share the investments made in the last few years with this approach? Thanks in advance.

Interesting. I ask not to dredge up painful memories - just wondering that if the big drop was an indication that you'd been taking more risk than you thought in the Up Years - or simply a bump in the road. Sounds like the latter. Thanks again for the openness.

Thanks so much for sharing - very interesting strategy (and history!). Before I let you go, how did the portfolio down 50% end up recovering in the end?

I hear this a lot, but primarily from people who haven't tried it and aren't doing it. Thus the thread. But cigar butts =/= NCAV stocks. Wonderful job. Can I ask why you stopped for well over a decade if things were working so well? And how concentrated have you typically liked to be?

Fair enough. Have you been happy with your own returns pursuing it? (Not compared to WB - compared to your expectations.)

Did you land in this territory by design or by accident?

Yes good discussion. I think of a cigar butt as a business you don't love but the stock is an interesting trade based solely on valuation. One puff and gone. Truly the mirror image of the "Find quality and then pay a fair price" type attitude.

Kuppy blew up on junior gold miners in Canada. It wasn't like Munger where his Blue Chip (now BRK) got marked down in a massive bear market for small caps (-80%) and then became a legendarily good investment for the next 50 years. The money was gone at Praetorian. Then the MGG blowup. He's doing better now clearly.

One thing to remember about Abel is that he's *currently* in charge of all the operations he'll be in charge of when he's promoted at WB's death. Any changes you think he's gonna make, he'd presumably be making now.

Just curious. This is not a pissing contest on what's the "best" way to do this. Just wondering if anyone buckets themselves in that way any longer.

Thanks!

Care to share?

Slow Horses S3 is ace. Love it.

This is exactly what I do as well. Compounded monthly returns with inflows/outflows intra-month left out of the calculation. The only more precise method would be to do it daily, but as you said, doesn't really gain enough useful precision unless you're a professional fund manager.

I have the Catherine book and been meaning to read it, Massie is great. Empire podcast recently did a series on Russia that re-piqued my interest in the development of Russia.

In fact he was arguing at the time they should have been buying more AAPL.

So let me get this straight. After 25 years in business for himself, Pabrai is starting a new fund by pitching...Berkshire? And after comparing his approach to Warren Buffett and "circling the wagons" around very long term compounders, his initial allocation is to put a third of the fund in coal companies? How deep is the well of suckers?