Ballinvarosig Investors
-
Posts
885 -
Joined
-
Last visited
Content Type
Profiles
Forums
Events
Posts posted by Ballinvarosig Investors
-
-
I don't think you're getting the gravity of this.How much did he make on this? $2m?
If he was given a $2m bye-bye package anywhere else, it wouldn't be news. Some CEO's who are basically fired for sucking ass get $10 - $20 million.
I'm already past this issue. In a week, my guess is that the market will be too.
It is questionable and I may get attacked for my comments, but this guy has probably taken $100 million in salary (just guessing) from Berkshire over the years and this is rounding for me.
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.
-
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.
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.
-
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.Im pretty sure it is not insider trading because he is not an insider.
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.
-
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.Given a chance - which company will you work for..
Technical position.
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.
-
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.
-
They have a real auditor and a growing cash pile. If the company was a fraud, there is no way in hell that Deloitte and Touche would not have unearthed the inconsistency in their findings.
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
EAST RUTHERFORD, N.J., Feb. 9, 2011 /PRNewswire/ -- The Board of Directors of CCA Industries, Inc. (NYSE Amex: CAW) (the "Company"), to provide protection to stockholders and enable the Board to discharge its duties to all stockholders, today adopted a Stockholder Protection Rights Plan (the "Rights Plan") and declared a distribution of one Right on each outstanding share of common stock, par value $0.01 per share and each outstanding share of Class A common stock, par value $0.01 per share, of the Company to stockholders of record at the close of business on February 22, 2011.Each Right entitles the holder to purchase a fraction of a share of the Company's participating preferred stock having terms nearly equivalent to the Company's common stock at an exercise price of $18.00 per Right. The Rights Plan is designed to cause dilution to a person or group that acquires 20% or more of the Company's common stock and/or Class A common stock, and will expire on February 9, 2012, unless it is supplemented or amended pursuant to the terms of the Rights Plans. Until the Rights become exercisable, they will not be evidenced by separate certificates and will trade automatically with shares of the Company's common stock.
The Rights Plan was adopted by the Company to allow it to consider its strategic options in response to (i) the purchase by Sardar Biglari, Biglari Holdings Inc., Biglari Capital Corp., The Lion Fund, L.P. and Philip L. Cooley, as reported on their Schedule 13D with a report date of January 25, 2011, of 381,506 shares of common stock, which the Schedule 13D states as constituting 6.3% of the Company's outstanding common stock, and (ii) their stated intention, reported in their Schedule 13D, that they "may acquire additional shares of the [Company's] capital stock or dispose of shares, in the open market or otherwise, or may formulate other purposes, plans or proposals regarding the [Company] or its shares."
Ira W. Berman, Chairman of the Board of Directors, stated, "The Rights Plan is intended to promote the fair and equal treatment of the Company's stockholders and deter any potential coercive takeover tactics that could be used to deprive stockholders of the full value of their investment. The Board is committed to acting in the best interests of all its stockholders."
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.
The special committee also disclosed that it retained Philo Smith Capital Corporation as its financial advisor to explore a broad range of strategic alternatives to enhance shareholder value. These alternatives include, but are not limited to, a revised business plan, operating partnerships, joint ventures, strategic alliances, acquisitions, exchange listing applications, a recapitalization, and the sale or merger of Fremont. -
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!Move over Warren Buffett, there's a new stockpicker in town – and he has just made $10m (£6.4m) almost overnight. After rapper 50 Cent unveiled a new brand of headphones bearing his name last week, the former drug dealer, whose album Get Rich or Die Tryin' went multi-platinum, used Twitter to tell his 3.8m followers to buy stock in the marketing company – a business he partly owns.H & H Imports has "one of the 15 products this year. If you get in technically I work for you. BIG MONEY," he tweeted. 50 Cent, aka Curtis Jackson, added that the "stock went from 5cent to 10 in one day. You can double your money right now. Just get what you can afford." His follower s evidently took his advice: 9.24m shares were traded in two days and the value increased tenfold.
Being a financial adviser is not, of course, 50 Cent's first gig. Long before he started out as a Billboard chart-topping rapper, he was a teenage crack dealer in Queens, New York. And since his first album went sextuple platinum,'s success he has moved constantly to new industries.
-
Agree completely. You can dress it up however you want to, but China is still a totalitarian dictatorship.....how much longer the misallocation of capital can continue....
As long as Chinese communist governement has firm control over its citizens ('slaves') and continue to pay minimum possible wages.
-
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).
"I turned and rubbed my hands with glee. I always keep a tin of glee handy". -
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.Not cheap by any means. It's fairly valued, even with Sardar at the helm. You are paying over 20 times earnings, 10 times free cash and nearly two times book. Add in the fact that intrinsic value per share has now decreased going forward, based on the new compensation package that will kick in. With that package, fair value drops significantly...especially the longer you hold the stock and the better he does!
He continues to write very well, and the continued ideas at SNS will help, especially the lower build out costs for franchisees and operating cost containment. No comments on Fremont tender.
The compensation discussion was a real cop-out!
- He comments that there is no need to change your attitude on compensation simply because you've changed the structure of the entity...but unfortunately there is a real difference...the capital is permanently locked in.
- On top of that, you can issue as many shares as the market will bear, so that you have access to more capital.
- Fundamentally, he now has a very accessible form of capital to utilize and receive his hedge fund compensation, compared to what would have been achievable at the Lion Fund. At best, he has significantly compressed the time frame needed to achieve the same compensation, since he would not have been able to raise $300-$400M in the Lion Fund so quickly.
- Also, no comment that the 82% vote had no bearing on the compensation package, but only on the tax treatment.
Cheers!
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.
-
Shalab: BH is trading at about 10x FCF. That to me says that the market attaches no premium to the abilities of Biglari, his capital allocation skills, or his ability to grow the Steak n' Shake business.
-
Incredible results, look at the free cash flow, astounding. Company still looks undervalued even at these prices because there's nothing to suggest that Biglari is slowing down.
Investors Buying Up Middleburg
in Berkshire Hathaway
Posted
It seems strange that Sokol would make a bank his investment vehicle with the restrictions it would entail.