A_Hamilton

I have looked at SWY a number of times and know the story well. A number of questions to think about on this one: 1.) How are you determining free cash flow yield? What are you assuming for maintenance capex? SWY "overinvested" in CAPEX from 2004-2008 in order to refresh stores to their lifestyle models. By 2009 and 2010 they didn't need to do as much maintenance capex as others because the store base had been refreshed. 2.) What do you think about the fact that gross margins and operating margins fall religiously year in and year out? 3.) Referring to point #2, how much free cash flow will there be if gross margins fall another 200 bps. 4.) I agree with their current thought process in some respects on share repurchase. It certainly has a lower after tax cost than the dividend. However, the dividend is discretionary, interest payments are not. 5.) What do you believe it will cost to make up for pension shortfall overtime? 6.) What do you value Blackhawk at? These are all just questions, but the margin questions are concerning enough that I've been unwilling to put more than immaterial sums into the name.

Absolutely not.

I'm guessing he's not a Level 3 customer.

Did you include the total return swap that FFH owned at ORH?

Thanks Parsad, and other for responses to this. Great to get the Canadian perspective on this. I think it's a brilliant position for FFH to be in. Sitting on the board of a school known to draw students with great ability to innovate, and potentially getting to invest alongside them. Seems like a win/win. They get a smart Chancellor, Watsa gets to do well by doing good.

Can anyone give me an idea of the perception of the quality of the University of Waterloo education in Canada? Is the Waterloo area a mini-Canadian tech hub (ex-RIMM)? Perhaps FFH's interest is linked more to this phenomenon. If RIMM can attract the brightest Canadian tech developers, then over time it will find a way to compete globally.

Why would I want a change? Income Statement - 10 Year Summary (in Millions) Sales EBIT Net Income EPS Tax Rate (%) 06/11 69,943.0 28,071.0 23,150.0 2.69 17.53 06/10 62,484.0 25,013.0 18,760.0 2.1 25.0 06/09 58,437.0 19,821.0 14,569.0 1.62 26.5 06/08 60,420.0 23,814.0 17,681.0 1.87 25.75 06/07 51,122.0 20,101.0 14,065.0 1.42 30.03 06/06 44,282.0 18,262.0 12,599.0 1.2 31.01 06/05 39,788.0 16,628.0 12,254.0 1.12 26.31 06/04 36,835.0 12,196.0 8,168.0 0.75 33.03 06/03 32,187.0 11,054.0 7,531.0 0.69 31.87 06/02 28,365.0 7,875.0 5,355.0 0.48 32.0 Balance Sheet - 10 Year Summary (in Millions) Current Assets Current Liabilities Long Term Debt Shares Outstanding 06/11 108,704.0 51,621.0 11,921.0 8.4 Bil 06/10 86,113.0 39,938.0 4,939.0 8.7 Bil 06/09 77,888.0 38,330.0 3,746.0 8.9 Bil 06/08 72,793.0 36,507.0 0.0 9.2 Bil 06/07 63,171.0 32,074.0 0.0 9.4 Bil 06/06 69,597.0 29,493.0 0.0 10.1 Bil 06/05 70,815.0 22,700.0 0.0 10.7 Bil 06/04 94,368.0 19,543.0 0.0 10.9 Bil 06/03 81,732.0 16,820.0 0.0 10.8 Bil 06/02 67,646.0 15,466.0 0.0 10.7 Bil

Buying leveraged etfs for any period of time 1 second, 1 minute, 1 day, or long term (the last being particularly asinine).

I wonder what RIMM is on a cost basis. Also FRFHF's gross exposure to RIMM is larger than reported holdings given a new long total return swap on RIMM at ORH.

Hi MrB, Did Fairfax buy puts? Is the Sino-Forest investment disclosed in any filings? FFH bought SinoForest debt. A lot in Q2. A little more in Q3.

WFC will get hit by SIFI. The article suggested it might only be 1%. If you're saying that Wells' SIFI will be the same as JPM, C, etc. -- I wouldn't necessarily disagree but that's not what the article suggested was the preliminary result. Your point about banking products becoming more plain vanilla is exactly what I'm saying as well. That plays right into the hands of banks like Wells and US Bancorp. I distingush WFC and USB. USB's returns on risk weighted assets are much higher because they have more non-asset intensive businesses than WFC. WFC has historically had a better deposit franchise. I would argue today that WFC is much closer to a JPM, C, or BAC then a USB (especially post WFC's acquisition of Wachovia).

I don't agree that WFC will be able to avoid SIFI stature as it continues to grow over time. Additionally, banking products are going to become more plain vanilla in time. BAC/JPM/MS/GS will reduce derivatives as capital rules make it too expensive for them to offer exotic derivatives that provide them an adequate return and provide enough value to clients to use a derivative versus buying or selling short some physical security/commodity,etc.

How about the fact that if I am carrying 9.5% equity/assets and Regions is at 7%, I'll put in every client presentation how I can survive any crisis while Regions/other midsized regionals with lower equity/assets cannot. The system will gravitate towards SIFI equity/assset levels. That is the true travesty...velocity of money will slow substantially.

It's too bad the supreme court has rejected prior restraint. Chris Whalen is the prime example of why we should gag some people's speech. Total nonsense.

UCCMal...I actually don't think AIG as much as LNC/MET/PRU...also how does GWO CN continue to trade at multiples of book when it is just north of the U.S. border and does material amounts of business in the United States and Western Europe...

I disagree. The freefall in MS/JPM has to do with declining activity in the investment bank-principal transactions (of which operation twist simply worsens) and little to no M&A activity. You really think money is flowing out of JPM on solvency concerns? And what bank is the money going to if there are JPM solvency ("fear for survival") concerns?

I was wondering if anyone had any insights into how the demutualization process of insurers works. If I am a policy holder, do I just get a prorata share of the company based on the number of policies outstanding, or is it based on premiums that I've paid in the past? Curious if anyone knows how this works as I am looking at moving my insurance coverages around and wondering if it would be fun/possible to create some deep out of the money call options by getting my insurance through some small/midsized mutuals.

Wow. Two nutjobs speaking to one another. Maybe with Bartz out Yahoo will dump Blodgett.

Moore, Japan's central bank has been printing money for the past 20 years. Why does their currency continue to appreciate?

Go to Fairholmefunds.com Click "Fairholme News" Go to page 9 Click on the 1992 OID Article.

Absolutely agree Grenville! I just would like to hear something from them that is along the lines of well...the french and germans are going to be holding the bag and you should really look at all EU debt as being the same because they are all stuck with the currency now and they can't let anyone default/leave the Euro zone.

Hi A_Hamilton, Could you provide a little more color regarding your comment? How much is a staggering amount? Also what % of par are they buying the debt at? I imagine you're finding this info in the NAIC filings. Thanks for the heads up on the developments in ORH's portfolio! -At 12/31 ORH reported $190 million in cost of Greek bonds par was $298 million (all of this is rounded) -3/31 purchases of $59 million, par of $91 million -6/30 purchases of $80 million, par of $180 million. These are all down this quarter as well. Needless to say they are averaging down and have claims on millions of man hours of greek workers' time at this point.

I would like to know what the thesis is on the Hellenic debt. ORH has been buying a staggering amount over the past couple of quarters. Also, are the Sino Forest bonds going to work out?

This seems to make sense if you are passively indexing, but I'm not sure what I would do with this information considering my portfolio is 100% equity and has ranged between 3-9 stocks so far (I'm Mungerian that way)... My recollection of Swensen is that he's a hero of the indexing crowd and that groups like the Bogleheads love him. I could be remembering wrong, but he's kind of the patron saint of those who manage large pension funds, endowments, etc. for moving away from generally a strictly fixed income portfolio and small "blue chip" bucket to include other major asset classes. I don't recall whether he strictly is a passive investor through indexes and the like, but I believe he is. Could be wrong about that. His views have generally been taken by this crowd to fall into the when one asset class is down another is up and what do you care as you've got them all covered! Yeah, I didn't like his book for individual investors. If you know what you are doing as an individual investor, put your eggs all in one (maybe three or four?) basket and then watch that basket!

I don't think there is a ton of value for an individual investor in this book. The book is simply the best if you are tasked with running significant sums of money. The book gets into some great detail about various asset classes and how they function. A lot of criticism has been heaped on Swensen because many peoples' takeaway from his book was that endowments and pensions should move their money into private equity and real estate deals. Swensen didn't say this at all. In fact he said that most institutions should avoid PE and real estate because the dispersion in returns between good and bad managers is so much greater than in traditional long only equity or fixed income. Small institutions typically have difficulty identifying and gaining access to the best managers so they should normally avoid these categories. In any case he gives some significant thought about being flexible in managing significant sums of money and moving money to asset classes that have been out of favor for several years as a way to get outsized returns for a large institutional client.