Ballinvarosig Investors

I think Betfair Group is something that would interest you - http://www.google.com/finance?q=LON%3ABET Gambling is mostly illegal in the States, but in Europe, it's a huge business. Historically, the industry has been dominated by a small number of large companies that ran the business out of bricks and mortar establishments. Betfair came along a few years ago and completely changed that dynamic. This company has not only taken gambling online, but has also taken the middleman (i.e. the bookie) out of gambling, allowing people to put wagers on sports events between themselves. Because Betfair operate solely online, this means that their revenues and profits are driven by by innovation of their website, and stability of their system. This is not trivial, as the volume of bets that they take on a typical days is in the million (if not tens, or hundreds of millions). If gambling is ever legalised in the States, Betfair are basically the only company in existance who have the scale and dominant position in the industry that they would just completely clean up. The price has come down a bit since it IPO'ed. A little expensive for my tastes, but the business itself is basically a monopoly and has some incredible growth prospects.

It seems strange that Sokol would make a bank his investment vehicle with the restrictions it would entail.

I don't think you're getting the gravity of this. For a senior Berkshire Hathaway manager (let alone a possible successor to Buffett) to try something like this is completely against the core principles that Buffett has instilled in the company. I suspect that this incident will have shaken Buffett more than he has let on, and will probably force him into putting more controls around what employees can, and can't do, just like Parsad said.

Lubrizol was not "for sale" anymore than every public company is "for sale" on any given day. It was on a list of chemical companies, not a list of chemical companies being 'shopped' by Citi. LZ was, in fact, considering a very large acquisition. It was arguably undervalued and fairly un-leveraged, which would make it a target - but the company was not being shopped and the management was not considering a sale. Why would Citigroup come up with a list of possible acquisitions for Sokol, unless they knew that they could be acquired, therefore earning Citigroup a cut on the deal? I think Sokol knew Lubrizol was open to a deal, and he used this information to profit from the takeover.

To compare what he did to Munger is just wrong. Sokol obviously knew that Lubrizol was up for sale, and that in the event of a takeover, he would stand to profit very handsomely.

I am not so sure. Citigroup presented Lubrizol to Sokol last Autumn as being on the block. Sokol used this information, that was not public knowledge, to acquire stock. That seems pretty open and shut to me. I do agree, that Sokol's position in the company was untenable and if he hadn't left by choice, he would have been pushed. Some questions that this throws up. 1. Sokol still owns 6.2% of Mid-American energy. Will Buffet buy him out, or will he cut the cord to Berkshire himself? 2. Middleburg financial have just served notice for their AGM. Sokol's name isn't currently on any of the proxy documents. If he is going it alone with Middleburg, he would want to be throwing his name into the hat fairly soon.

Don't listen to anyone else but me on this one. Get a job with Process Driven Trading (PDT) at Morgan Stanley (looks like they are spinning it off). Nothing else will be as good. They're the Skunk Works of the operation. That's where you want to be as a technical person--on the cutting edge. A friend of mine was headhunted for this very operation. This guy is the smartest person I know, but the only way this guy kept up with everyone else who was doing 60-70 hour weeks was by doing 80-90 hour weeks. He told me stories about people who came into work violently sick and vomiting into bins (cleaning staff would be summoned to clean so work wouldn't be disturbed of course), one chap who managed to lose several teeth from lack of sleep/stress on the job, etc.

The biggest issue now appears to be burning of the spent nuclear fuel that's stored above the reactor. If that stuff is broken down into particles that are small enough to be ingested, or inhaled; this will become a disaster.

If you get involved with this, you might as well be opening a mystery box, or buying a lottery ticket, because it's certainly not investing.

By John Hempton, a Sydney-based investor, recovering financial services analyst, and former Australian government official who writes at Bronte Capital I met Hank Greenberg in late 2000. He was chatting mostly to Ajit Jain – the Berkshire Hathaway reinsurance impresario and I was a spare wheel. But Hank was I thought the most impressive person I had ever met. He name-dropped shamelessly (he had had just flown back to New York on a private jet after “chatting” with Li Peng). But he was so far ahead of me on so many issues it made me feel dumb. He even looked – at least in the brief conversation – as if he were considerably smarter than Ajit Jain – and Ajit is no intellectual slouch. I was just out of my league… Anyway there is a view around AIG – a view that I shared – that AIG was built in the mold of Hank and it required Hank – a certified genius and an unbelievable workaholic – to keep it all together. AIG you see had a single risk control mechanism: Hank. In this view Elliot Spitzer by causing the demise of Hank Greenberg caused the demise of AIG – and by extension the demise of the entire financial system. I thought that might be going a bit far – but it is hard to argue against the proposition that AIG got much more risky without Hank around. And the stories were legion too. I know someone who was on a trading floor for AIG in Taiwan. There was a big error and it potentially exposed AIG to hundreds of millions in losses. Everyone was kept silent because if it leaked then people would front-run AIG closing their position and thus increasing their losses. People slept at their desks. But the next morning – fresh off the private jet from New York – there was Hank. He had come to take control of the situation – and he stood behind traders as they solved the problems for minimum losses. Hank was the man. Now Hank is only a couple of percent the man he used to be. His multi-billion dollar holding of AIG has been reduced to its last few hundred million. His main asset is Starr Asia – a holding company for a variety of Asian investments (and some old AIG stock). It was through AIG that Hank made his investment in China Media Express (CCME). At peak Starr’s investment in CCME was worth over $60 million. This is nothing to the Hank of old – but the new diminished Hank probably thinks that $60 million is a lot of money. It might even be a reasonable proportion of Hank’s fortune. As recently as January 2010 Starr dropped another $30 million into CCME. And by that time CCME was a controversial company. The demise of CCME I wrote that China Media Express was either (a) one of the best businesses in the history of capitalism or (b) one of the most brazen frauds in the history of capitalism. Given the auditor has resigned and is suggesting fraud, the company is suspended and well – all sorts of other ugliness – we know which now. It was one of the most brazen frauds in the history of capitalism. And we know who was the biggest victim: Hank Greenberg. And given Hank’s much dimiished status this was not chump change. It was a meaningful hit. If your one-man-risk-control unit can be fooled by something so obvious then why couldn’t it also be fooled by someone offering 25 bps extra carry by double-levering life insurance statutory funds into the AAA strips of subprime securitizations? China Media Express – apart from being a really fun story – punctures the last Hank Greenberg myth – a myth that I personally believed. John PS. I think we can conclude that Ajit Jain really was the most impressive person at that table. I sure as hell wasn’t.

A few years ago a Chinese company called China Expert Technology (CXTI) was discovered to be a fraud. They also had a brand-name auditor if I recall correctly (a member firm of BDO Seidman?). Here is how CXTI did it: The auditor signed off on their year-end financial statements, for our purposes this might be December 31, 2009. The subsequent quarterly statements are unaudited, so management can invent them if they wish to do so. The next audited financial statements for the year ending December 31, 2010 would not be due until March 31, 2011 or June 30, 2011, depending on whether the company files 10-Ks or 20-Fs. So, management has more than a year to put out fake quarterly financial statements in an attempt to get the share price up while disposing of their own shares in the company (probably without making the requisite SEC filings), and/or stealing the actual cash on hand. This seems to be what CXTI did -- they disclosed a relatively modest cash number in the yearend audited financials (this was cash from the IPO or something like that). Then in the unaudited quarterly financials they made it look like cash was growing by leaps and bounds and the company was performing incredibly well. By the time the next year's audited financials were due, management had stolen the actual cash that was there and was gone without a trace, and U.S. investors (including Jeff Feinberg's fund) were left holding the bag. There was never any kind of justice nor did U.S. investors see a penny. What's interesting with CCME is that we are also seeing a very rapid increase in cash following the audited financials as of yearend 2009. At December 31, 2009 cash was $57 million. Then on March 31, 2010 it was $114 million (unaudited), and on June 30, 2010 it was $139 million (unaudited). I don't get to toot my own horn too much, but in this case, I think the analogy to CXTI was spot on. Back in September I said that the CCME fraud could go on until the audited annual financials were due. I think this type of fraud should be added to everyone's mental model -- just because the unaudited quarterly financials look good, it doesn't mean that the audited annual financials will look as good or even be released -- ever. I was thinking of your words when trading was suspended ;D It got me thinking. Since these fraud's are so easily spotted, surely it's a simple case of shorting them at the start of the new year - waiting two or three months for the auditors to come calling, have the fraud exposed and make a lot of easy money? You'd have to be fairly certain the company was a fraud, of course.

Not surprised BAC is gone, very un-Buffetesque and quite frankly a turd.

Good article, although he understated just how bad things are here.

http://www.prnewswire.com/news-releases/cca-industries-inc-announces-corporate-action-115665169.html Biglari really shot himself in the foot with this attempt.

Get rich, or die tryin' ;D

That to me sounds like the Board will fight the takeover.

http://www.guardian.co.uk/business/2011/jan/11/50-cent-ramps-stock-on-twitter?INTCMP=SRCH Brings a whole new meaning to buying a $1 stock for 50 Cent!

Agree completely. You can dress it up however you want to, but China is still a totalitarian dictatorship.

That article about Biglari stealing Fremont was a hoot. For one, can anyone name me any thinly-traded company on the OTC market that trades at fair value? Secondly, the article completely ignores the two most recent quarters for Fremont. If you look at the last two 10Q's, you'll see that underwriting losses have ballooned in their personal lines business and that the combined ratio will almost certainly finish the year at over well over 100%. Ignoring book value growth (which really has only been a result of a rising market), does anyone really think that an illiquid insurer with poor underwriting really deserve a premium price? In my opinion, $28 (which is about book value, is what Fremont is actually worth). the $31 offer is a fair premium that an acquirer should have to pay. Disclosure: I sold up after the $31 offer was announced.

2010 was a great year, I think they'll bump it up. $12 for me.

I can't say I have ever understood why FFH holds Dell. When you look at where Dell is today, it's in exactly the same position it was back in 2000. In the mean time, the computer industry appears to have grown increasingly commoditized, where the lowest cost producers intensely drive down prices and margins. 11x earnings for something that isn't even growing doesn't seem cheap to me.

When I read statements like this, I am reminded by the immortal, and immensely influential words of Spike Milligan (a British-Irish comdien of the WW2-era).

Guys, there's no point comparing BH with a hedge fund just yet, most of its earnings are still going to be generated from the core Steak n' Shake operation for quite some time to come. What you really need to do is evaluate it against other restaraunt stocks, if you do that, you'll see that BH is good value (low price/book, high earnings growth, low price/cash flow, etc.). If you take the blinkers off, you'll see that BH is still good value, although I certainly wouldn't go as far to suggest it was spectacular value, like it was when the share price tanked a few months ago. I know some of you folks were keen on Red Robin, but when you stack the numbers up against each other, you'll see that they're quite similar, with the exception that Red Robin doesn't have the growth (it's in decline if anyting!) that BH has.

I sat on my hands for a long time with Steak n' Shake while it steadily produced knockout earnings, quarter on quarter. At one stage, I was ready to give up on ever getting Steak n' Shake at a fair price. However, we got the furore surrounding the compensation package, which subsequently annihilated the share price. I bought then, and I have promised myself that I will just leave part of my portfolio on this thing until something says otherwise. The compensation package will of course act as a dampener on future earnings, however the big picture is that you have a ridiculously talented guy at the helm of this operation who will make you money. The question you have to ask yourself is, would you bet against Steak n' Shake and Biglari? Assuming the answer is no, you then need to ask yourself why you're not investing with him. Sometimes you have to just take a step back and look at the big picture. Will Steak n' Shake make more money then what is it today? Absolutely. Will Biglari be able to invest the excess capital generated from the operation at a decent return? Almost certainly.