pilaniman

I would love to be at both the sunday events. Any update?

I am re-pasting my comments from a different thread since this is more relevant place for it. From what I have read so far, Mr. Sokol looks culpable because he met Citi investment bankers and not the wealth management guys. As an ex-M&A banker, I can tell you that if I am meeting a guy like Mr. Sokol, I am talking to Berkshire unless he expressively states that he is there in a personal capacity in which case I would have talked to him about a lot smaller companies (than LZ) given the relative size of his checkbook vs Berky’s . In Dec meeting, Citi must have shown him 10-15 “elephant-size” ideas in general which would meet Buffett criteria of what Berky would want to buy. These initial meetings are to gauge client’s interest for a deep-dive on a potential M&A idea and/or to get CEOs talking. Even if in the first meeting, citi bankers did not discuss non-public information I would think that in the subsequent meetings they did. If the Citi bankers are doing their job competently, they would have shared non-public information because as a banker you are telling the client (i.e., Berky) something which is not well known or misunderstood about a business and potentially non-public information such as target CEO's willingness to do a deal, etc. The whole idea of such meetings is to highlight the business in the most favorable light for a potential M&A deal. There is an underlying assumption that the discussions are absolutely confidential. I don't know whether the non-public information was discussed or not. But for Mr. Sokol to say that he was meeting Citi bankers in personal capacity is completely naive IMHO. Even if you give him the benefit of the doubt, the timing of the purchase is so close that it does not pass the smell test. If I were him, I would have called general counsel or outside counsel as soon as Mr. Buffett showed interest in pursuing the discussions to flag this issue and seek proper legal guidance. For him to say Mr. Munger bought BYD before bringing it to Berky is a complete misdirection. One has to understand the timing of Charlie's purchase and the beginning of Berky's involvement. One has to know how many quarters had gone by between Mr. Munger's purchase and serious investment discussion between BDY and Berky. What kind of material non-public information Mr. Munger had before he made his purchases. So that is a different situation in my opinion. Let's think the other way around - would citi compliance allow bankers to buy the stake around the time Mr. Sokol bought it for the second time? The answer is definitely no! As soon as a deal starts to heat-up, it is logged with compliance in the banks to avoid such situations. All the team members esp. on the M&A side (industry bankers are generally prohibited from investing in their clients) would be stopped from doing any trades in LZ. I am not suggesting that the banks have the best compliance procedures. All I am saying is that Mr. Sokol was either grossly ignorant or did cross the line willingly. I hope it is the former for us Berky shareholders. Cheers,

From what I have read so far, Mr. Sokol looks culpable because he met Citi investment bankers and not the wealth management guys. As an ex-M&A banker, I can tell you that if I am meeting a guy like Mr. Sokol, I am talking to Berkshire unless he expressively states that he is there in a personal capacity in which case I would have talked to him about a lot smaller companies (than LZ) given the relative size of his checkbook vs Berky’s . In Dec meeting, Citi must have shown him 10-15 “elephant-size” ideas in general which would Buffett criteria of what Berky could buy. These initial meetings are to gauge client’s interest for a deep-dive on a potential M&A idea and/or to get CEOs talking. Even if in the first meeting, citi bankers did not discuss non-public information I would think that in the subsequent meetings they did. If the Citi bankers are doing their job competently, they would have shared non-public information because as a banker you are telling the client (i.e., Berky) something which is not well known or misunderstood about a business and potentially non-public information such as target CEO's willingness to do a deal, etc. The whole idea of such meetings is to highlight the business in the most favorable light for a potential M&A deal. There is an underlying assumption that the discussion is absolutely confidential. I don't know whether the non-public information was discussed or not. But for Mr. Sokol to say that he was meeting Citi bankers in personal capacity is completely naive IMHO. Even if you give him the benefit of the doubt, the timing of the purchase is so close that it does not pass the smell test. If I were him, I would have called general counsel or outside counsel as soon as Mr. Buffett showed interest in pursuing the discussions. For him to say Mr. Munger bought BYD before bringing it to Berky is a complete misdirection. One has to understand the timing of Charlie's purchase and the beginning of Berky's involvement. One has to know how many quarters had gone by between Mr. Munger's purchase and serious investment discussion between BDY and Berky. What kind of material non-public information Mr. Munger had before he made his purchases. So that is a different situation in my opinion. Let's think the other way around - would citi compliance allow bankers to buy the stake around the time Mr. Sokol bought it for the second time? The answer is definitely no! As soon as a deal starts to heat-up, it is logged with compliance in the banks to avoid such situations. All the team members esp. on the M&A side (industry bankers are generally prohibited from investing in their clients) would be stopped from doing any trades in LZ. I am not suggesting that the banks have the best compliance procedures. All I am saying is that Mr. Sokol was either grossly ignorant or did cross the line willingly. I hope it is the former for us Berky shareholders. Cheers,

Anyone who invested in the Pabrai Funds had Mohnish working for them for free over the last couple of years, since he had to regain the high watermark for his partners. We did the same in our Canadian fund. what's also worth noting is that current partners who add new funds or new partners who join in this period get absolute free ride since they are not paying any performance fee even though their capital is earning over the high watermark. The high watermark is applied at the fund level and not an individual partner level. Most hedge funds look at each individual partner's high watermark to calculate the incentive fee. My fund's administrator had charged incentive fee off of new partners in my fund even though the fund was below its high watermark but I reversed it because that's the right thing to do, IMHO. There are only a handful guys who do it so be careful of how high watermarks are applied. Cheers!

I believe it is only true if a fund is registered with SEC otherwise the rules of state where RIA is registered continue to apply. That's my understanding talking to a lawyer post FINREG.

quote author=bargainman " data-ipsquote-contentapp="forums" data-ipsquote-contenttype="forums" data-ipsquote-contentid="2420" data-ipsquote-contentclass="forums_Topic" 20005#msg20005 data-ipsquote-timestamp=1274814027] pillaniman, what about your conversation with Dash made you decide to move on? He confirmed my analysis that most of the restructuring was behind them. Any further increases in cash flow would come from creating franchise model successfully and Biglari's investment expertise.

Nice work, Tiddman! I agree with nejad and would add back cash but back out non-lease debt. Say around $50-$70 million of net cash and then the value one gets is more realistic. I have followed SNS/BH quite closely over the last two years and (not to boast) made 3x for my investors before selling out earlier this year as it was reaching my intrinsic value math plus I could not understand Biglari's salary structure. A conversation with Dash convinced me to move on. It has to fall materially from where it trades today for me to buy again.

Excellent point!