A_Hamilton

I wonder how Gary Shilling feels about Paulson now. Did he ever get his money out? His most recent book says he had an 11x return in Paulson's fund. Hope he moved on...

I'm on my 3rd and I'm confident that I'll finish this one since it has my attention and I find it really interesting (Dan Ariely's A Beginner's Guide to Irrational Behavior). It has real life, relatable examples and he's engaging. I've given up twice on Model Thinking since it just doesn't live up to what I had thought it was. I just see a bunch of useless data that neatly fits into a model that they create around it. The problem is more my own since I relate models to Munger rather than University math course. Augustabound, I assume you have a traditional college education? Just curious because these MOOC's are being touted as the salvation of America's crappy education system, and from everything I've read our undereducated don't have the motivation or discipline to complete these courses without some kind of institutional support. Shows great personal dedication to want to improve ones' self.

Nah...the problem is not your 8-10% loss ratio. The problem is the high fixed cost of having a title plant and having the necessary personnel in place when transactions pick up.

It is not 1 out of 10 policies that have losses. It's substantially lower. However, when you have a claim you typically get a real gem in terms of severity. Here's one we covered in my law school class: A railroad with a 200 year easement to run tracks on another's property hasn't used the property in 50 years and you decide to give title coverage to a company building a factory over the easement (you don't think the railroad will ever use its easement) without getting the easement waived by the railroad. 20 years later railroad comes back and says WTF I'm now wanting to put in my rail line. Title company has absurd payout for the $1,000 premium they received 20 years ago to fix the problem satisfactorily to both parties. The industry is low price per premium, low frequency in claims, extremely high severity when claims hit.

The 8-10% combined loss rate is a loss on the premium dollars received in a given year, the notional exposures are significantly higher than premiums received.

Figure out who has a consensus opinion and who doesn't. I'm going to say Prem is the contrarian here.

Ick. Having covered french regional banks in a past life...seemingly no price is low enough for these institutions. Maybe Ile De France in Paris...but most of the management teams at these insitutions make US community bankers look like brilliant capital allocators. Also, while they are kind of like MHC's here, there is no real way to demutualize these things. And spot on with CA...what happens to the regionals when CA has a trading blow up on their trading desk? The regionals get diluted in the cap raise.

Sorry for asking, but did you mean STRA as in Strayer Education, i.e. this: http://www.shareholder.com/visitors/DynamicDoc/document.cfm?DocumentID=3006&CompanyID=STRA&zid=e1f0bfae APOL looks cheap, but something Charlie Munger said about being on the wrong side of a trend (or something similar) has kept me from looking in more detail at the for-profit education companies. I try to read letters and reports from LUK, Y, MKL, BRK, SHLD, DJCO and BAM. Yes, meant Strayer. Different companies in the for-profit segment are positioned very differently.

When was the last time they provided any value?

Brk/a, FFH, MTB, JPM, STRA, WRB, MKL, Y.

I think you should download the 2012 AGM presentation from Fairfax website. Then, read all Mr. Watsa’s letters to shareholders: they are great, full of a lot of information both on Fairfax and on the insurance industry and the investment world in general. :) giofranchi Yes, the slide presentation @ the AGM from 2012 is as good a primer on FFH as any. If I had to tell the FFH story in a few words, the following "scream" from the presentation: Long term focus, Totally risk averse, Against-the-herd, International (emerging markets ie non-USA) insurance growth focus and investor friendliness(Like few others!). One fact included in the presentation that blows me away is their bond portfolio performance (5 year- 13.3%; 10 year - 12.5%; 15 Years - 10.4%)! Shareholders need to appreciate the bond team lead by Brian Bradstreet for this, given the challenges faced by FFH especially during the last 10- and 15- year periods! IMO, this is unprecedented. Remember that >80% of the investment portfolio was invested in Fixed Income over this period, Equities have increased only since 2008. This defines the investment mindset @ FFH better than anything else. See if you can't find a copy of the First 25 years of Fairfax.

Al Friedberg. http://friedberg.ca/content/resources/quarterly/filelist.html

[amazonsearch]Change.edu[/amazonsearch] Andrew Rosen's (CEO of Kaplan) book on higher education. The book provided a number of insights into the higher level education system that had not occurred to me before. In particular, I appreciated the depth of statistics around community college graduation rates and how they compared to online education, as statistics indicating how difficult it is to go to a community college and be able to obtain a full course load in order to graduate “on time.” I also appreciated the insights that the book gave on Strayer University, which shed some light on Washington Post's recent purchase of shares in that company.

The theory is simple. Buyback at 1.2xBV on a stock that has a daily volume of about 300 Millions $/day. The company has about 20 Billions of extra money in the bank and generates about 10B a year. If it ever goes under 1.2xBV BRK can therefore buy substantial amount of it's own stock and sustain it's price. BeerBaron I understand that....but why is that a "put"? Because you can always sell your shares (put them) back to Berkshire at ~1.2x BV.

Wood-Panel Rally Seen Fizzling Amid Increasing Supply http://www.bloomberg.com/news/2012-12-27/wood-panel-rally-seen-fizzling-amid-increasing-supply.html

Did he say this on CNBC this morning? Would love to get footage of this.

Yeah, but I'd prefer you have to go to the black market to get your cocaine. In the same way, I'd prefer that a guy who failed to take his psych meds couldn't walk into the local Walmart/Dick's/Bass Pro and pick up an AR15 and would have to go through some more difficult channels.

Agreed. Gun control, kicking out Reagan's religious right (and I'm a republican), coming up with a tax system that is progressive rather than the absurdly regressive one that has lead to no growth in median incomes in a decade, coming up with some kind of limits on how much the government will spend on your medical care through our new universal healthcare system...the U.S. has its work cut out for itself.

Interesting question as one here who is going to law school at night while working full time during the day. At $35,000 per year for tuition I believe that there are two intelligent ways to go about this mess. Either 1.) Don't work and make sure you are a Straight A student as this leads to scholarships to retain you at your current law school (or undergrad), cutting future student loan payments and leading to some probability of a job or 2.) Work full time during the day (as I do) and make sure you make enough that you are covering your room/board and books/and getting healthcare coverage (at least). In any case, from what I have seen in peers at my mid-tier law school, I wouldn't be suprised that a low double digit percentage of them default. Facing $165,000 (tuition + room and board + accumulated interest on student loan debt while in school) in student loan debt at graduation at a blended rate of 7%+ (stafford loans + plus loans, and, virtually none of this is tax deductible) with job prospects providing a median salary of $65,000 at graduation (only 90% in current economy will get a job coming out to begin with), defaults are going to be very high. If my peers worked through school and were a middling student, maybe they get this $165,000 down by $50k, but still who knows. Massive education cost bubble.

Thanks. It seems like at this point there's two options: 1) They did have ownership but were very close to the line, hence this paper (presumably the case given the previous audits); or 2) They are about to get the case opened again. Sounds like they were quite desperate at the time. I have a bias for FFH since I own a lot of it, but other than blasting her character, I haven't seen any indication of factual mistakes in the article. I'm not positive, but I believe there is a third option. Suppose FFH was in the wrong with this transaction, and, after the fact due to the whistleblower and normal IRS audits the IRS went to the company about this issue. FFH along with PWC and BofA described the transaction in detail to the IRS (honestly disclosing all information and providing their opinion of the transaction), the IRS agents handling the matter listened to FFH and wrongly allowed FFH to tie out those 2003-2006 tax years through closing agreements. The IRS now (in 2012) issues guidance to IRS agents so that no one tries one of these transactions ever again. IRS doesn't go back to FFH to try to reopen those tax years, as FFH was completely honest about what happened/disclosed everything, the IRS just made a horrible call. Any thoughts on this? Separately, I hope (and believe) this is/was an isolated incident for the company and was a hail mary to save the company when its capital position was significantly weaker.

Morgenson article in the NY Times. http://nyti.ms/UPURVh

Going sideways has not looked like such a bad thing, in the last couple of weeks! Pretty amazing to see such a big drop for what seems like such a technicality. Do we get to go back up when the company is readmitted to the MSCI club? Anyways, it' a good example of the virtues of having a little extra cash (do as I say, not as I do); I hope FFH is taking some advantage, while it lasts. I don't know how bad insurance hit will be (I'm thinking at least $300 million pre-tax), but FFH will also have sizeable gains on Cunningham Lindsey sale/The Brick sale and it looks like for the first time in what seems like a long time, the company's public equities are outperforming the indices that FFH's hedges them with.

You can also roll your traditional 401k into a traditional IRA and then do partial transfers (or full) into a Roth IRA. I planned mine out so that I dumped a lot of money into a regular 401k right out of college, and then in the year I went back to school I converted everything to a Roth so the tax bill would be substantially lower. I fully intend for my Roth account to create truly dynastic wealth for my family.

Sanjeev, Just bought a ticket, can you confirm order, also I can PM you with personal contact info if need be. This will be my first time to the dinner and AGM. Looking very much forward to it!

Agree on that. Actually looking at the LP's that invest in commodity futures. They don't make distributions to holders.