A_Hamilton
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Posts posted by A_Hamilton
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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.
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maybe some of these title company should stick with simple residential properties, one condo/coop, one house at a time
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.
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A_Hamilton
you are correct
any idea why its so high?
before i started looking I would think 1 out of 100 or so title insurance have losses. what is it about this industry that 1 out of every 10 real estate transation result in title having some sort of issue.
as you can tell i am new to this :)
hy
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.
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folks,
i have been researching title insurance companies (just learning and reading). one thing that puzzle me is the industry title loss provision on the yearly bases is around 8-10%
why is it so high?
it just seem to me so high that 1 out of 10 real estate transaction there is an title issue? why is that? is there that many fraud in this space? I would think before an real estate transaction occurs the buyer/seller/lawyer/bank etc would have done the research and would know if the title is good?
anyone have any background on the industry etc. on why 1 out of ever 10 RE transaction we have a title problem?
thank you
hy
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.
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A great question?
What do you do when two people that you admire greatly are each giving you the exact opposite advice?.....
Figure out who has a consensus opinion and who doesn't.
I'm going to say Prem is the contrarian here.
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The french banks are even more attractive then the stats make them out to be. They're essentially MHC's so you need to strip out those shares to get the true value, equity is understated. A few have been acquired at 80% of BV over the past five years which would be a 4x return from here.
I have debated endlessly on buying these. I've read the statements, gone back and forth on it, talked to people in France yet never pulled the trigger. A few things got in the way. The first is I have no idea if they're making good loans or not. The banks appear conservative yet out of no where they'll suddenly do a giant loan markdown. The detail on loans isn't that great, and I believe lending is fairly concentrated. A number of years back the Bordeaux branch took a giant hit when the wine industry hit the skids.
The second factor and more important factor is beyond the local lending. Local lending can only soak up a portion of the deposit base at these regional banks, so the banks in turn lend out their balance sheets to the main Credit Agricole bank. Credit Agricole's cheap funding comes from the regional banks. It's worth reading the financial statements of CA, and once you do that this looks a lot less rosy. Credit Agricole has both feet on banana peels and losses could be sizable. Would that mean a hit to the regional banks if CA couldn't raise equity to fill the gap? Could CA be in a situation where they couldn't fully pay back the regional deposits?
Once I started to haircut the money lent to CA and look at the loss potential for French real estate these things drop in attractiveness. I came to the conclusion that I'd rather just buy US banks, where the French ones could return 2-4x they were hard to decipher and not as transparent as US banks. I can also read English better than French, and nuances are important in banking.
The caisse regionalles seem to be a very popular idea with the French value bloggers. I wouldn't be surprised if some of the French investors on this board have shares as well.
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.
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Brk/a, FFH, MTB, JPM, STRA, WRB, MKL, Y.
Sorry for asking, but did you mean STRA as in Strayer Education, i.e. this:
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.
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How could we forget Marty Whitman's Third Ave Funds?
http://www.thirdave.com/ta/shareholder-letters-mf.asp
When was the last time they provided any value?
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Brk/a, FFH, MTB, JPM, STRA, WRB, MKL, Y.
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Hello,
What do you think is the best "primer" to read in order to understand Fairfax?
I am referring to a summary \ Valuation model, before diving into the annual letters and reports.
Many Thanks!
Humble
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.
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Change.edu
in Books
[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.
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Ok, I'm a little lost now. What exactly are people in this thread referring to when they mention "Warren's put"? I just see the 1.2BV level as a resistance point, but I am lost as to what "put" means in this context.
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.
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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
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Did he say this on CNBC this morning? Would love to get footage of this.
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I just read the story. My god that is horrific! CT already has some of the most restrictive gun laws in the country though, and of course guns in schools are already completely banned nation wide (which is one reason these things seem to always happen in schools). This loon already broke the law bringing the gun(s?) into the school. How did restricting the principle/teachers/ and other adults from arming themselves help the situation? The worst of these mass-shootings always happen in gun-free zones (schools/post offices/cities that ban guns/movie theaters that ban guns/etc). How would banning guns stop something like this? Cocaine is completely banned, but does anyone want to tell me that if I wanted some I couldn't get some in sort order? And cocaine doesn't grow in my climate, yet any semi-competent machinist could turn out guns by the thousands in his basement. It is 300 year old technology, I don't think you can ban them. And I wouldn't want to if you could.
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.
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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.
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Don't kids work anymore while going to school?
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.
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i got curious about the irs memorandum, so i started searching for the document, thinking that i would never be able to find it, guess what.... here it is:
http://www.irs.gov/pub/irs-utl/am2012007.pdf
these are the original transaction documents:
http://www.sec.gov/Archives/edgar/data/915191/000090956703000322/0000909567-03-000322-index.htm
looks to me like there is a decent probability that this is the same transaction.......
regards
rijk
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.
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Any idea into the price drop again this morning? ...down to about $356 CDN.
Morgenson article in the NY Times.
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Book Value = $360. Stock trading at $348. P/BV = 0.97
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Their investment portfolio will go sideways until their is a big sell off at which time FFH will have the cash to make out like bandits.
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.
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you should be able to do a partial rollover (if your plan allows it).
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.
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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!
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Not sure about tax implications, but MLPs are a miserable short; hard to borrow and big fat dividends.
Agree on that. Actually looking at the LP's that invest in commodity futures. They don't make distributions to holders.
Why Paulson's Results Are So Crappy!
in General Discussion
Posted
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...