dcollon

Cardboard, Here is some data on M&A for you. https://imaa-institute.org/mergers-and-acquisitions-statistics/

Here is the transcript for the call the other day. Thanks to gurufocus http://www.gurufocus.com/news/459820/bruce-berkowitzs-fairholme-capital-management-conference-call-transcript

Great article. Thanks Liberty

From none other than Bruce Greenwald: "It’s a crazy deal. It’s an insane deal. We looked at Burlington Northern at $75 and I’ll give you the exact calculation we did. You don’t have a high earnings return. They are paying 18 times earnings, but it’s really much worse than that. They report maintenance cap-ex very carefully. They report depreciation and amortization, and they report only about 70% of the maintenance cap-ex. So they are under-depreciating, and their profit numbers are lower than the true profit numbers – and in a bad way, because the tax shield for the depreciation is undergone too. Their profitability is much lower than it looks. Buffett’s paying 18-times [at $100/share] and at $75 he was paying 16-times. Our calculation is he was paying 21-times. Secondly, there are two kinds of assets. There are the rights-of-way, which you can’t get rid of. So there’s no issue about having to earn a return on them because you have to keep it in the business, and because there’s nothing they can do with those rights-of-way. If you look at the asset value of the non-right-of-way equipment, and you write it up because it’s more expensive than it was originally, you get an asset value that’s very close to the earnings power value. We didn’t see a lot franchise value or hidden asset value. The other thing is that if you try to calculate sustainable earnings, you have to cope with the fact that earnings are up enormously since 2003, when oil went up. There is a simple calculation you can do, which compares the cost-per-ton-mile for freight for a truck versus a railroad. If you build the increase in the price of diesel fuel into the post-2003 experience, when revenues suddenly start to grow, what you see is that the entire growth of the revenue is accounted for by the energy advantage that the railroads have and therefore how much business they can capture from the truckers, and how much pricing they can get because the competition is now more expensive. There is nothing special about the railroads. It’s entirely an energy play. If you look at what their margins should have gone up by, given the energy efficiency, the margins go up by only about half of that. So you don’t have a good aggressive management over these five years producing outsized returns. We looked back at when they did the merger with Santa Fe, because then they did increase margins. But they got bored with it, and margins started to come down. The same thing happened recently. We don’t see a lot of hidden profitability in the culture of the company. It looked to us like an oil play. He has a history of making bad oil play decisions. And that was at $75/share, we thought there were better oil plays. At $100/share we think he has lost his mind."

Thanks for posting the interview Jurgis

Thank you for posting the link

Fairholme Schedules Public Conference Call Bruce Berkowitz to Present Portfolio Outlook and Address Investor Questions October 20, 2016 05:14 PM Eastern Daylight Time MIAMI--(BUSINESS WIRE)--Fairholme Capital Management (“Fairholme”) today announced that Bruce Berkowitz, the firm’s Founder and Chief Investment Officer, will host a one-hour conference call on November 18 at 11:00 AM EST, with the objective of giving investors the opportunity to participate in the discussion of portfolio outlook and recent performance. The format of this call will mirror that of February’s public call: Mr. Berkowitz will provide commentary on investments while responding to comments and questions submitted in advance by the public. Fairholme will accept questions and/or comments until Friday, November 11 at 5:00 PM EST. All topics for discussion may be submitted electronically to Ask@fairholme.net. Please note that submissions will remain anonymous. Participants are encouraged to review recent commentary and topical postings by visiting www.FairholmeFunds.com. Dial-in details for the call are provided below: U.S. and Canada UK Toll-Free UK Local Toll International Toll Conference ID Toll-Free Dial-In Dial-In Dial-In Dial-In (888) 267-5949 0800 028 8438 0203 107 0289 +1 (864) 568-3268 92870820

[amazonsearch]Filters Against Folly [/amazonsearch] I found this book via Farnam Street (like many of the other books I read) and have thoroughly enjoyed it. It discusses three main topics: the literate filter, the numerate filter and the ecolate filter. Hardin focuses on many topics that are discussed on this board in one way or another. I would hope that most of you would enjoy the book.

From the WSJ Theranos Inc. said it will shut down its blood-testing facilities and shrink its workforce by more than 40%. Theranos_Retreats_From_Blood_Tests_-_WSJ.pdf

The discussion here made me think of this letter from Mr. Buffett to Kay Graham. Hopefully it's good reading for you guys. 160301289-Warren-Buffett-Katharine-Graham-Letter.pdf

Combs joining JPM's board http://www.bloomberg.com/news/articles/2016-09-20/jpmorgan-chase-names-buffett-deputy-combs-to-board-of-directors

I completely agree with netnet. It's a very fun read and well worth a place on the book shelf next to other Warren & Charlie books.

Thanks to ValueWalk for this one. It's a great discussion http://www.valuewalk.com/2016/07/eugene-fama-vs-richard-thaler-are-markets-efficient/

U.S. Regulator Bans Theranos CEO Elizabeth Holmes From Operating Labs for Two Years http://www.wsj.com/articles/u-s-regulator-bans-theranos-ceo-elizabeth-holmes-from-operating-labs-for-two-years-1467956064

I thought some of you might enjoy this... https://www.youtube.com/watch?v=i95IcdS_fbE

Thanks to FarnamStreet: http://www.newyorker.com/news/news-desk/the-mistrust-of-science

I think the 29th will be the bigger date to focus on for the banks capital return announcements.

Some links about a recent commencement address from Taleb: https://www.farnamstreetblog.com/2016/06/nassim-talebs-life-advice/ http://fooledbyrandomness.com/AUBCommencement.pdf Thanks to FarnamStreet for highlighting it.

Thanks very much for posting the video/interview.

Thanks for posting the link Liberty. I wish we could watch the video of Charlie Rose interviewing him.

From WSJ: Regulators Propose Banning Theranos Founder Elizabeth Holmes for at Least Two Years (see attached WSJ article) Regulators_Propose_Banning_Theranos_Founder_Elizabeth_Holmes_for_at_Least_Two_Years_-_WSJ.pdf

This article in the NYT this morning was interesting. Chinese_Scions’_Song__My_Daddy’s_Rich_and_My_Lamborghini’s_Good-Looking_-_The_New_York_Times.pdf

Great video. Thank you for posting the link.

I really enjoyed this book and would recommend it to others. There are some great stories about some well known and not so well known investors. The book covers many different generations/time frames, which made it interesting as a business history book as well. The two chapters I liked the most focused on Ross Perot and Karla Scherer. I wasn't familiar with the battles they had with GM and RP Scherer and they were great to read. Actually, after having read about Karla Scherer, I would love to meet her. She comes across as a very sharp and tough lady.

thepupil, I think you make a good point. In addition, they seem to be doing a good job of swapping public securities for operating businesses. John Malone and Greg Maffei have done this same thing at Liberty to avoid paying taxes. Just another way of thinking about it.