A_Hamilton

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.

Hello, Has anyone ever shorted a U.S. listed publicly traded limited partnership? I am wondering what the tax implications of this are. Do you receive something like a k-1? I just don't know how you'd adjust your basis each year (assuming I believe my short candidate is a terminal short). Thank you for any thoughts that you may have.

I think he is the real deal, in spades. Separately, Fairfax has been shorting FCX and RIO in decent dollar amounts in recent quarters. Additionally, they now are substantially short the Canadian dollar with their large canadian dollar debt and preferreds outstanding relative to their capital base there.

Look at how underlevered their insurance operations are. Several combined ratio points can come out from there. Deflation hedges are effectively free at this point as FFH has written them down to near 0. Massive optionality potential in several equity positions...ICICI Lombard,RFP,LVLT, IRE...each of which should more than outperform the Russell 2000 at 25x trailing earnings for the forseeable future.

I don't know what to think. I want to know 1.) How much FFH spent on this endeavour, 2.) Whether it was poor maneuvering at Kasowitz to have FFH file in NJ instead of New York, and 3.) Whether there is any way to ever recover money when a fraud like this is put on your company. How can you not look at the facts of what Gwynn and Sender did and not think that they meant to publicly disparage and harm the company, and that the subsequent fall in the stock price/ blow out in credit spreads did actually harm the company? What a mess.

Tombgrt, I don't know if you are a shareholder or not, but for what its worth I about jumped thru the phone at DELL IR the day of the announcement. I'm sure Longleaf was just in pure shock. Longleaf can just use it's dividend to buy more shares. It should make little difference to them mathematically in terms of the compounding record of their fund. I hope their thinking is more complex than that. The dividend has to come from repatriated USD (as do share repurchases), and so the dividend has an impact on taxes Dell pays today and whether it acquires companies with foreign or domestic cash. Additionally, now there is the lame institutional imperative to pay a dividend when it may make sense to do a larger acquisition, pay down debt etc. Additionally, with one of your largest holdings you would think that you would want them to maximize the cash usage through their own repurchase of shares/invest in the business decisions.

Tombgrt, I don't know if you are a shareholder or not, but for what its worth I about jumped thru the phone at DELL IR the day of the announcement. I'm sure Longleaf was just in pure shock.

...He is a very concrete and no-nonsense ROIC guy and over the years has made some tough decisions. See, this is what I believed until the recent announcement of a quarterly dividend after years of repurchasing stock at prices that are significantly higher than current levels. Now, I know many will argue that it only costs ~$500 million per year to do the dividend, but in my mind initiating a dividend after all of the higher priced repo's is a tacit admission that you purchased stock at too high of a price previously or that you don't know what you are doing on the capital allocation front!

I thought that was what Whitney Tilson was all about? Am I wrong?

Long BMW3 (BMW's preferred) Short BMW Common I'll leave it at that.

Plumbers, Pipefitters & Mes Local v. Fairfax, et al., the class action suit against Fairfax, was dismissed on Monday. As Judge Keenan's opinion states "...the Defendants' motion to dismiss is granted. Because the statute of repose has run, the Court declines to grant leave to replead. The Clerk of Court is directed to close this case."

Maybe tomorrow Byrne will get to the business of running overstock.

I hope for his sake he doesn't think it's Pandit!!! Awful.

Weill has got to be the biggest thorn in Jamie Dimon's side. First he cans him and now he tries to breakup his business!

Some mope just showed an order to sell 7,800 shares in the OTCBB at a limit of $372...if showing 25% of FFH's daily toronto volume on the pink sheets in one fell swoop isn't a way to lose your shirt on a trade, I don't know what is!

Prem Watsa in Q&A on most recent conference call May 2, 2012: Treasury rates have come down. Last year, long treasuries were the best asset to have, and so we've sold half our treasuries, we told you, long treasuries, and we continue to sell it. We likely won't have any treasuries soon. And so we're continuing to sell that, the long treasury position.

The market sees the horrible value traps they have bought recently in businesses or industries eclipsed by technological change and ignores their outstanding, long term investing record, especially in bonds. The $500 million question for this quarter is when during the quarter they unloaded the LT treasuries. Did they get any benefit at all from the day yields dropped to 1.45% on the ten year, or were they already out completely? I fear they were pretty much out of the trade by then.

I agree that right now these guys are at very low leverage levels (6x being lower than NLY's historical average of 8-12x). However, realize that they are at 6x precisely because they realize that the duration of their MBS position is going to increase to absurd levels on a sustained 200-300 bps increase in mortgage rates (for instance w/o offsetting swaps, the duration of their book to equity could easily be 90 assuming durations on mortgages move out to 15 years (D/E *(duration of assets- duration of liabilities)) at 6x leverage...one better hope they have got their decimals right on their swap hedges!!!). Also, to the extent that operation twist/economic conditions cause long dated treasuries and mortgage rates to continue to decline, the spread on NLY's book will continue to narrow. Historically, they've levered up when spreads have narrowed to keep ROE flat. However, this won't be possible if yield curve continues to flatten out and they need to worry about the duration extension issue. Separate of all this, on an extreme shock, I wouldn't be surprised to see haircuts move from 3-5-8% for agency paper...though the federal reserve would move quickly to add hundreds of billions to the monetary base to stop this from happening.

I'd add to this: what is a sustainable leverage ratio for an agency REIT, and what kind of haircut should they expect repo lenders to take on their collateral.