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beerbaron

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Posts posted by beerbaron

    Age of board members

    in General Discussion

    Posted

    So after the net worth thread it would be interesting to cross link it with the age of board members. For the ones that want to question how does one calculate it's age I would use the following calculation.

     

    Current Date-Birth Date = Age  ;)

    Networth of board members

    in General Discussion

    Posted

    I calculate my saving rate as Savings/Gross Salary. My mortgage payments are considered as a full expense it simplifies the calculation.

     

    A personnal account does not have to be GAAP accounting. For as long as I have enough to retire on I'll be happy.

     

    BeerBaron

    Networth of board members

    in General Discussion

    Posted

    My net worth isn't that high, but my savings rate is somewhere around 90% of net income.

     

    Aren't your parent complaining about having you in their basement?

     

    Lol just kidding... how can you achieve 90% saving rate, I'm at 40% and I don't know anybody that can match me.

     

    BeerBaron

    FFH to sell 8 million pfd shares at $25

    in Fairfax Financial

    Posted

    dont they still have the high yield Crum debt etc to get rid of?

     

     

     

    I'd be a little surprised if the motive was to pay off existing debt.  The preferreds yield 5% after-tax.  The before tax equivalent would be roughly 5%/(1-taxrate), or roughly 7.5%.  That's more or less the same as the stated interest on most of FFH's existing debt.  In addition to that, some of that debt would likely have to be bought back at a premium, so that would be a net income hit in the current year.  IMO, the only debt that might be bought back would be ORH debt to permanently eliminate the need to do ORH financials.....however, I seem to recall that FFH has already found a work-around for that.

     

    I'm guessing that Prem sees that the price of dry powder is stupidly-low, and the potential returns to being ready (liquid, with lots of equity) for an opportunity may be high, so might as well issue preferreds.  That opportunity might be another Zenith type of acquisition, or perhaps it'll be a buyback if the price of FFH shares should tumble for any reason.

     

    I remember a time when FFH had little room to maneuver.  This is kind of nice to see the potential avenues that can now be taken!

     

    SJ

     

    Yep, part of the reason I invested with BRK and FFH at the beginning of the year was they both were drowning under cash. I like what I'm seeing sooo much cash! Opportunities arise in a period of post crisis, not in a bubble.

     

    BeerBaron

    Good article on NFLX

    in General Discussion

    Posted

    I had a guy in my office a while back who I'd known for a year or two.

     

    A couple of years ago, he came over and wanted to discuss an option trading strategy that a friend had come up. To make a very long story short, I took a look at it, and told him it was not viable. However, he decided to proceed with it anyway.

     

    To give you context, he is a young guy, and working very hard without a lot of education he had saved up over six figures. Fast forward a year, he's in my office, totally despondent. He had lost his entire life savings, and he has to start over again. There are a lot of stories like that. It's really sad.

     

    If something can happen, if you live long enough (given enough time), it eventually will.

     

    If one continually engages in transactions with unlimited downside and limited upside, without risk control, one WILL eventually go bankrupt if one lives long enough.

     

    The sad thing here is, if heaven forbid, a couple of guys on this thread ever do go bankrupt, they'll be thinking, "Harry's not a very diplomatic guy, but he was right. I should have listened." Only a fool needs to learn from experience. There is nothing new in markets, only the pockets change. Statistics are irrefutable. Reconcile yourself to risk control when shorting.

     

    Harry, at what point do you plan to exit NetFlix?

     

    BeerBaron

    Canadian Discount Brookers

    in General Discussion

    Posted

    Yeah, it might be 1.5% each time.  It's been a long time since I have allowed them to convert anything on my behalf.  For the RRSP, in the past I used a variety of elaborate in-kind exchanges between my RRSP and my after-tax accounts in $US in $CDN to avoid currency exchange.  These types of swaps are not permitted for TFSA, so I was quite happy when the dual-currency support was introduced!

     

    SJ, would you care to help me understand how you avoid their 1.5% spread?

     

    BeerBaron

    Seems we should be discussing banks all the time these days

    in General Discussion

    Posted

    My favorite place to fish Banks is Texas banks. Texas had a very nasty real estate crisys in 86-91 where the NOL went up to 7%. As a result they had much stricter lending practices then most of the country. Texas is also closely linked to commodity, which get less impacted by the continuing recession then other markets.

     

    My favorite bank there is SBSI, which I was able to acquire around 18$... ridiculously cheap no matter how much deleveraging is expected. In my view it's a high quality asset at a Graham price. If you look at their investor presentations you can see the depth of their management, all of the senior executive have more then 25 years experience for SBSI. They are focused on organic growth which I like much better then acquisitions. Their 5Y Investment Performance is in the top 1% and has always been in the top 30% for as long as I can find this data in their presentations. Their interest spreads have narrowed in the last 2 quarters because they switched the maturities of their MBS, management says the spread should return to more normal levels in Q3. Ah and also, SBSI went trough the 80s real estate crisys without cutting the dividend which tells you a lot about the way these people's lending practices.

     

    BeerBaron

     

    Texas Real Estate Rules Overview

     

    1.

    Beginning with the cold hard figures, your entire debt, including the home equity loan cannot exceed 80% of the fair market value for your house. What does this mean? If you bought a home for $100,000 and you’ve paid $75,000 toward the mortgage with $25,000 left to go you could possibly borrow up to $55,000. If you’ve not paid more than 20% of the mortgage, you’re not eligible for a loan. A home at $100,000 with a mortgage of $75,000 still to pay eclipses the 80% fair market value, so mortgaging your home at this time is not permitted.

     

     

    2.

    Before acquiring a second home mortgage loan, the first one must be paid in full.

     

    3.

    Only one loan per year, thank you very much. Even if you pay it off well in advance, you cannot get another loan within the same calendar year by mortgaging your home.

     

    4.

    If you own property and pay taxes on it as “open space” or “agriculture” you cannot borrow against this property.

     

    5.

    Only licensed folks can make a home equity loan with two exceptions: a company that sells and provides financing or a relative within the second degree which means anyone who shares at least one quarter of your genes, like an aunt, uncle, grandparent, child, mother, father, etc.

     

    6.

    Lenders cannot exceed 3% of the principle loan when charging fees outside of interest.

     

    7.

    A lender cannot insist that additional assets be mortgaged along with the home.

     

    8.

    There are only three locations where a mortgage may be closed: the company’s office, an attorney’s office, or at the office of a title company.

     

    9.

    After applying for a mortgage loan, the borrower has twelve days until closing. During this time a notice of borrower’s rights will arrive.

     

    10.

    An itemized list of the following must be in the hands of the borrower at least one day before closing: Actual fees, points, interests, costs, additional charges.

     

    11.

    Once the loan is signed, the borrower is allowed three more days to ponder his decision. If he changes his mind and cancels the loan within the three day period, no penalties or charges may be inflicted on the borrower.

     

    12.

    If a borrower defaults on his loan the lender cannot execute a private foreclosure. All home mortgage foreclosures must be court ordered. Although the borrower may lose his home, the lender cannot sue for money.

    Making 50% per year like Buffett (on small sums)

    in General Discussion

    Posted

    That's my RothIRA account with that return (according to Fidelity's calculations).  And to date (as of 8/31/2010) it's 99.19% annualized for a total of 18,465% cumulative since 2/1/2003.  The FFH options had a lot to do with it.  Earlier this year the cumulative return was something like 24,000% but since end of April it has pulled back.

     

    Blended (including my taxable account) it's 61.64% annualized since 2/1/2003 for a total of 3,709% cumulative.  The reason the RothIRA outperformed is that I manage it with a different mentality, due to taxes.  It was also a smaller sum so taking a huge risk on it didn't matter to me.

     

    Another board member who doesn't post anymore (dengyuthenugget) has done 170% annualized since 2005 or so (perhaps it was 2004) -- overall, all accounts combined.  Again, credit the FFH options for quite a bit of that. 

     

    Still pretty respectable... I hope that 30% drop does not keep you awake at nights?  :)

     

    BeerBaron

    What companies do you currently own?

    in General Discussion

    Posted

     

    Rim - trading stock - last week - have held many times before

    Al,

    whats your current take on Rim? Ive never had it on my "investment" radar - just as a piece of interest type thing but see its trading somewhat like a "normal" company as premiums to sales and earnings etc etc but with no debt - WOW!

    From the little I know I feel they have a bit of market share but this is REALLY out of my area of expertise (I dont even own a blackberry or Iphone HA)

     

    I believe there was talk on Rimm in a thread here a while back but I think it was buried in a thread of a different subject?

     

    Jim Balsillie has been unloading so many shares in the 80-60$ range it's quite scary. Aren't you affraid when the most knowleadgeable insider sells massively?

     

    BeerBaron

    Canadian Discount Brookers

    in General Discussion

    Posted

    I would be happy to hear the board's toughs on their Canadian Discount Brooker's. I'm with Questrade and here are my comments:

     

    Pricing

    Minimum comission: 5.95$

    Maximum comission: 9.95$

    Currency Fees: 1.3-2% Depending on amount in account

    Options: 9.95$ + 1$ per contract

    Annual Fees: None in any types of accounts

     

    Availability

    Available accounts: RRSP, TFSA, RESP, Margin

    Available Markets: USA / Canada

    Available instruments: Stocks, Options, Gold, Mutual Funds, Bonds

     

    Others

    Not possible to get bond quotes online. Need to call trade desk.

    Very bad interface, need 4 logins to manage my 3 accounts there

    Customer service is acceptable

    They have nice promotions when you switch assets or refer someone

    Big plus! You can hold USD and CAD in your registered accounts

    Watsa and Buffetville

    in General Discussion

    Posted

    Index ETF is an incredibly amazing tool for the average Joe. For a management cost under 0.5% they can build a fully diversified portfolio of stock and bonds and get the liquidity.

     

    I bang my head every time I hear people tell me they got some kind of mutual fund offered by their bank. When I ask them what's the management fee they says "management what?". People don't seem to realize that 2% management fee over 30 years is a LOT of money.

     

    BeerBaron

    Charlie Munger on US Economy: Pain Not Over

    in Berkshire Hathaway

    Posted

    Guys,

     

    Thanks for posting the video, much better than the notes I was typing up on the airplane.  Kind of funny to see my picture on the video.  I was the one that asked about pension liabilities.  Charlie made the joke that the groupies had followed him to Ann Arbor.

     

    As I orginally said it was a great two hours.

     

    Sorry for not getting the notes out before the video.  I hate when work gets in the way of fun.

     

    DCollon, the public questions in this interview were so much better then the ridiculously stupid questions asked Buffet in the interview from the other thread. WTF, they complained there was not enough train freight... he is not the operator of Burlington he's just the owner.

     

    BeerBaron

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