lennie_88

I like that idea FFH.... If you come to Van in summer look me up.

Two fellow Vancouver-based board members and I plan to get together to share investment ideas and discuss business topics (sort of a knock-off of Benjamin Franklin’s Junto group). We are looking for others on this board to join us. We plan to meet at a pub in Downtown Vancouver on February 16th at 7pm. If you are interested please let me know by responding to this post or by sending me an email at lennie_88@yahoo.com. Brian

http://www.nytimes.com/2010/05/27/opinion/27einhorn.html?th&emc=th

-Because it's nice politically to say you want people to own their own home. -Because this extra credit doesn't show up as new taxes. -Because it's well implemented in most people's head that it's better to be an owner then a renter. -Because home ownership encourages the velocity of money, therefore increasing government's revenues. -Because politicians have an outlook of maximum 4 years... -Because most people have an outlook of maximum 1 year... -Because most politicians loose focus of the social impact and concentrate on the popularity. Keep your cash on the side... it's going to be great to buy all those apartments at a PE of 5. I can wait longer then failing homeowners can. BeerBaron Great insights. Thanks!

Absent a new way of thinking about how the government can promote homeownership, Mr. Mudd said, there is no way to escape the fact that “government entities created to support homeownership as a social good will tend to socialize the risk to all taxpayers.” When I read this quote from the former chief executive of Fannie Mae I could not help but think of the similar role CMHC plays in encouraging homeownership in Canada. It seems pretty stupid to have the same organization charged with expanding home ownership and underwriting loans/insurance. It seems highly probable that the push to increase homeownership will beat out the need to underwrite with prudence. Surely this drives home prices higher and socializes risk. Why is this so widely accepted as a good thing? What is wrong with renting until you can truly afford to buy? I don't understand....

Greenspan hasn't claimed no fault, to my knowledge, but has claimed that low interest rates did not significantly contribute to the credit bubble. He actually has a decent argument involving correlations between short-term rates, the 10-year treasuries, and overseas savings. However, that is not an argument to absolve the Fed given the regulatory powers that Greenspan squandered in his Fountainhead fantasy. It just does not make sense to me that Greenspan says "I was not wrong on monetary policy" but "I was wrong on regulation". Who cares? Why confuse the situation? The simple thing for him to say is "I had the power to mitigate this housing/credit bubble, but I didn't". Then he can help answer the question: How can the Fed mitigate the next bubble? Maybe they need to hire a few guys like Michael Burry and fire some of there "best-in-the-world" economists.

I am surprised/confused that Greenspan seems to be claiming no fault for the financial/housing crisis. Didn't he come clean in a congressional hearing and admit that his thinking was wrong? I recall Munger calling him a hero for this admission, but he now seems do be denying that he missed anything…. Regardless, I am glad Dr. Burry held him accountable.

http://www.nytimes.com/2010/04/04/opinion/04burry.html?th&emc=th

It is amazing how long it took for the "authorities" to get to the truth in this drama. I am happy that Mr. Einhorn has finally been vindicated.... I wonder if anyone from the SEC has called him to apologize for what they put him through for telling the truth? NYT article on recent inspector general’s report: http://dealbook.blogs.nytimes.com/2010/03/24/how-not-to-run-an-s-e-c-investigation/#more-198477 Link to book website: http://foolingsomepeople.com/main/

It is easy to see why Gates picked this guy to run his foundation.

Does Japan have a version of Sedar and Sedi? Specifically I am looking for prospectus and insider holding information. If anyone could help me out with this info it would be very appreciated.

This book by James Grant is a collection of commentaries from Grants Interest Rate Observer from around 2000-2008. Anyone interested in learning more about the root causes of the credit bust and past financial panics will love this book. It is amazing how much of these problems Grant foresaw! There are also speeches that he gave to value investor audiences like Third Avenue and Fairfax (it appears that maybe they got their CDS idea from Grant?). If I was not so cheap I would definitely subscribe to his publication after reading this book. Brian

Great. Thanks for all of the feedback.

Great website.

Does anyone know of a good source for finding private market multiples? For example many value managers reference asset managers to be worth 1-3% of AUM. Where do they find that data?

Please comment on my observations after a brief look at their filings and financials. Their CFO left in Sept, generally not a good sign. Their Chairman sold half his holdings of trust units in Dec., again not a good sign. However this may be a very small % of his total interest in the REIT through the holding Co. Is this correct? They apparently did something very smart in 08, selling most of their best hotels for a nice gain. But they used about all of these funds that remained after their large special distribution and buybacks to buy units in other hospitality REITs that promptly tanked. Is this a fair description of what happened? It looks like this could be a multibagger if they survive, but this may be a BIG IFF. Did they take advantage of the option to extend the maturity of their mortgages due in Oct 09 for 6more months? What then, also with their debt due this year? Have the other REITs they hold rebounded? How much if any are they still under water? Any clarification would be most helpful. :) You have made some very good points-- thank you. In response to your questions: 1. Yes, the Chairman owns most of his units via Clarke Inc. (in which he has approx. 25% interest). As a side note Fairholme Funds owns about 5% of Clarke (which gives me added confidence in the Chairman because they are essentially going long his money management ability). 2. They did purchase units of Holloway and Innvest shortly before they tanked (using funds from the sale of hotels). From what I gather their cost base per share for Innvest is 8.88. As of Dec 2008 they traded at 3.84 and when I last checked they were at 5.85. Although the short term results from these investments were not good, the process/logic used by the management was fair—sell overvalued assets (hotels) and by undervalued assets (trust units). So yes the timing was bad but that is not the yardstick in which I think they should be measured. 3. Yes, they extended Oct mtg. for 6 months. They have secured a $20 million credit line and appear to be selling off some of their trust units to fund share repurchases (and maybe debt maturities?). They also have 5 hotels with no mortgage. 4. The CFO departure and high debt to cash flow is what concerns me most. I believe there is a high probability that they can meet their debt obligations (if not via operating and investment cash then through asset sales) without default. In the worst case that they default I believe common unit holders would still be made whole at the current price.

I don't understand that change either. My guess is that it is to appease clients more than anything--- people don't like lumpy results.

I beleive that Royal Host is safe and cheap based on the below analysis. Depressed RevPar/earnings and a cut in distributions have likely caused sell off. Any thoughts/comments? Royal Host REIT (RYL on TSX) $2.50 Business Owner/operator of 31 hotels primarily in eastern Canada Margin of Safety -Assets are flexible and marketable -Major upgrades to properties over last 3 years - Stable cash flow - Aggressively repurchasing shares (tender to purchase approx. 1/4 of outstanding) - 12% yield - activist Chairman (George Armoyan) has a 27% interest via holding company. Reputation for unlocking s/h value. -Selling at 50-70% discount to estimated NAV (GBV of properties, working capital and market securities net of all debt). Travelodge franchise rights and management business for free.

Another sign that Van real estate is likely overvalued: everyone I talk to thinks that it can only go up and that renting is dumb without any mention of value. I plan to be a renter until owning is out of vogue. Not great for being popular at party's but neither is value investing!

Here is the presentation. Thanks for your help UhuruPeak!

Thanks for all of the great posts on this topic. The Charlie Rose interview was very interesting. I have a copy of a presentation Mr. Parbrai made regarding checklists to the Columbia Business school. It is in a pdf so if anyone is interested I can email it (or is there a way to attach on the forum??).

I agree that price-to-rent is a better measure of "valuation". But I also think that it would be foolish to think that prices are sustainable when people that live and work in the market cannot afford to buy. Florida and Arizona are good examples of what can happen when prices are bid up just because it is a very nice or trendy place to live without the incomes to support it. This is a decent article on price-to-rent (has US specific examples): http://www.forbes.com/forbes/2009/0525/086-investment-guide-09-buy-or-rent.html An excellent book related to this topic is “the Subprime Solution”, by Robert Schiller. One stat he referenced that has stuck with me is that over the past 100 years or so the average return on real estate is around 2-3% annually.

Excellent article from the NYT. http://www.nytimes.com/2010/01/06/business/economy/06leonhardt.html?dbk These simple valuations of of housing seem very logical to me. I have never understood why one would buy when renting is comparatively cheaper (like it is now where I live- Victoria, BC) and risk free. "By any serious measure, houses in much of this country had become overvalued. From the late 1960s to 2000, the ratio of the median national house price to median income hovered from 2.9 to 3.2. By 2005, it had shot up to 4.5. In some places, buyers were spending twice as much on their monthly mortgage payment as they would have spent renting a similar house, without even considering the down payment." The ratio of median price to income in Vancouver was 8.4 in 2008, making the least affordable major market in the world according to http://www.demographia.com/dhi.pdf.