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rtgross

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Everything posted by rtgross

  1. It is for this reason that I evaluated Interactive Brokers as recently as last week. However their highly trader oriented interface put me off. And I was under the impression that their monthly fee is $30 if your trading volume is light - which mine will be. $10 changes the picture. Sticking to TDAmeritrade for now. I will try to negotiate international trades with them - can you share how much it costs to do international trades at IB? Thanks! The min is $10/month which is offset against any commissions that are charged during the month. You need to have $30/month commissions to receive the non-professional data service bundle for free. I am guessing that this is what led to the confusion. IB 's business model is to run on a cost-plus basis. Thus, their intent is to basically charge you the actual cost of the trade plus a spread to over their own costs. As a result, commission are different in every market because regulations are different in every market. That said, in my experience the average cost for my trades run 1/10 Schwab, Etrade, Ameritrade. The primary markets that I access are the US, Canada, and Japan. http://individuals.interactivebrokers.com/en/p.php?f=commission
  2. My personal opinion is that Interactive Brokers is one of the best and lowest cost brokerage firms for international trading. That said, you will want to have sufficient size to make it worth your time. There is a $10 min monthly fee ($120 annualized) plus additional fees for data streams if you need it. The primary attraction for me is the relatively low cost international trading and distressed bond access.
  3. It sounds like I really missed out this year. Good job organizing the event. I will be there next year without a doubt.
  4. I surprised no one has already commented on the fact that Prem specifically mentioned pursuing these acquisitions in the 4th to last paragraph of the shareholder letter.
  5. Be very careful of counting on the div...most analysts expectations are for it to be cut 25%-50%....regardless if they have the "ability" to pay it due to the political backlash in the US on their recent comments to keep it stable.
  6. BP spill losses hit reinsurers; premiums soar LONDON, June 3 (Reuters) - Reinsures have bumped up prices for offshore energy-related insurance premiums by 50 percent following insurance industry losses of up to $3.5 billion from the BP plc (BP.L) oil spill in the Gulf of Mexico, Moody's Investor Service said in a report on Thursday. http://www.reuters.com/article/idUSLDE6520QU20100603
  7. Credit Suisse analysts yesterday said cleanup costs and legal settlements and claims ultimately may reach $37 billion, or almost nine times the costs incurred by Exxon when its Valdez tanker ran aground in Alaska’s Prince William Sound in 1989. Source - http://www.bloomberg.com/apps/news?pid=20601087&sid=akXEqg6_doxQ&pos=2 I don't think anyone truly has any idea what the total liability cost is going to be. I'll be staying clear of it as it is in my too hard basket. Some of you may find it interesting that even with everything going on the 5-yr CDS spread is still at just 200 bps implying a very low default probability. The bond market does not seem too upset. (By comparison the Greek Gov CDS is ~700 and IG Corp ~150)
  8. Did you notice the large divergence in value between the TSX and Pink prices on the close yesterday when liquidity dried up for the pinks. Tried to swap out of my pinks and into TSX but I didn't get the order in fast enough.
  9. Don't look for another big windfall from the CDS positions. The portfolio is basically in run-off mode. The next big windfall, if it occurs, is going to be the large position Fairfax appears to be building up in inflation swaps. (pray that this windfall never occurs) Nevertheless, these are some of the biggest CDS's that Fairfax currently has outstanding. I no longer have access to Bloomberg so you will need to find someone else to look up the change in spreads from 3-31 through today. I ignored all of the contacts expiring in June and Sept of this year. These are the big ones (and the most valuable ones) expiring in 2012 and 2014 Ace Ina ~5% of Fairfax total CDS notional and ~15% of MV Allianz Finance ~10% of total CDS notional and ~30% of MV Societe Generale ~10% of total CDS notional and ~20% of MV Zurich Financial ~5% of total CDS notional and ~15% of MV
  10. Closing price information from IB for those looking. GOLDMAN SACHS GROUP INC DEP SH REPS Stock Type: Public Stock GS PRA NYSE 16.26 USD GOLMAN SACHS GP - 6.20% DEP SHS SERIES B Stock Type: Public Stock GS PRB NYSE 23.20 USD GOLMAN SACHS GP - DEP SHS SERIES C Stock Type: Public Stock GS PRC NYSE 18.58 USD GOLMAN SACHS GP -DEP SHR FLOAT RATE NON-CUM SER D Stock Type: Public Stock GS PRD NYSE 16.72 USD
  11. Although I do not have many posts I have been reading this board for a couple years. I must say I'm a bit surprised by what appears to be a display of strong emotion intensity in the comments on this topic. That being said I have had many strong conversations in the past with fellow investment professionals on the topic of options. One of them has a very strong distaste to options saying they bring nothing good to the world due to the act of tying up capital on an instrument that does nothing but act as a conduit for wealth transfer rather than going to a company that can employ it to produce capital goods. I would say this is valid point in the theological debate. I started reading about Buffet around 10 years ago and noticed that both he and Charlie generally had negative opinions on derivatives. That being said, Buffets actions have often spoke quite differently as has already been commented. For many years I avoided options mostly for reason of the theological argument already mentioned. However, in the last 2-3 years I have started to use options fairly regularly. Most often as a seller when implied volatility on the contract is very high (40-50 when stock is trading at strike). My normal path of action is to begin with the valuation work. Once I have identified something as a favorable prospect then I will begin to look at the most cost advantageous method of putting on the trade. Sometimes I sell puts, sometimes I buy the equity, sometimes I do both. I will also often sell short term covered calls (1-3month) on my positions when they approach my valuation. Part of this is an attempt to keep my emotions in check on a company that has had a rapid advance in market valuation. It is well studied in behavioral finance that both novices and professionals will increase their valuations as the market price of a followed company rises. It is an easy trap to fall into and I find selling the covered calls help me avoid it. A couple weeks ago I did a case study on my Burlington Northern merger arb position. You may find the spreadsheet helpful in grasping the various methods of analyzing the structure of your investment. Enjoy, Rich http://rtgross.wordpress.com/2010/05/14/mergerrisk-arbitrage/
  12. For those concerned with margin. IB requires the US pink sheets on Fairfax to be fully paid. (100% margin) Ameritrade will margin the US pink sheets IB will provide liquidity against the TSX traded shares.
  13. On slide 21 at the annual meeting Prem identified Wells Fargo, Johnson & Johnson, US Bancorp, and Kraft foods as investments they were committed to holding for a very long duration. In addition the following comments were made in the annual letter to shareholders (pg 6). The investment section in the MD&A gives you a lot more detail on our long term investment record. Last year gave us an outstanding opportunity to add to our investment holdings of excellent companies with fine long term track records. All things being equal, we expect to hold these common stocks for the very long term. Hyperlink for spreadsheet. I was having a hard time getting it into the text box. https://spreadsheets.google.com/pub?key=0AjsvR_WMf5u1dGppYWlIbDI2ZmNiS3UzUDMtTzZwMGc&hl=en&single=true&gid=0&output=html So, selling of all the recently identified core holdings. To include a huge 30% decrease at Wells Fargo and US Bank. What gives? Are they short on cash from the subs for the Zenith acquisition? Have they changed their assessment of the core holdings this quickly? Perhaps they are growing bearish on financials again as credit spreads approach 07' levels. ....another acquisition in the making? I wouldn't say this action indicates they are generally bearish on the overall market, if that was the case it would make more sense to increase their S&P shorts rather than sell these holdings. I would be interested to hear everyone else's thoughts. As a couple side notes they also liquidated Magna International and Leucadia. Plus they cut the GE and Dell holdings by ~30% Very interesting 13F.
  14. No doubt. It can be very confusing. I must have looked at it/read through it at least 4-5 times prior to opening an account there. The examples on the right side of the commission page give decent clarity. This brokerage is geared to bigger/active clients and professional traders. The .005 quote you mentioned is for US trades. It is .01 for trades on the TSX. Unless you are trading penny stocks or in very low quantities this will be the rate you will be charged on your trades. Most individuals will be using the pricing under the bundled guidelines. The unbundled rates are geared to professionals who are doing thousands of trades in large quantities. In terms of opening an account there, I like it but there is definitely a steep learning curve for their platform. From a cost benefit standpoint you will want to keep in mind that there is a $10 min fee per month. Translation - If you are a long term buy/hold investor you are better off with Fidelity or Ameritrade as you will be paying at least $120 a year at IB. (IB offsets the fee against your commissions, ex. if you have $12 of commissions in the month you will not be changed anything additional. If you have $4 of commissions you will pay an additional $6 maintenance fee) I have had my account there since last fall (previously I held it at Ameritrade). My primary reason for switching was the margin rate and the short borrow structure. I wanted to hold 10-35% of my portfolio in convert arb/merger arb positions and it was much too cost prohibitive to pursue such a strategy at Ameritrade. In terms of commissions most of my trades come in below $5. I will warn you. If you are going to open a margin account be very diligent is accessing your market risk & excess margin availability. I am very familiar with it but I have read postings from individuals who were liquidated due to their lack of understanding on margin. (Although they seldom write it that way). IB will give you about 1-2 hours before liquidating your positions. Scottrade & Ameritrade by comparison will give most clients several days to correct a deficit.
  15. It depends on the broker in terms of international trading as there is a significant amount of legal filings that need to be made in addition to the technology set up. It doesn't make sense from a financial perspective unless your clients are going to trade a significant amount of $ on the foreign exchanges. The majority of retail clients feel most comfortable buying/investing in their own country thus the lack of demand contributes to the lack of development. Personally I use Interactive Broker for acquiring international positions. If I don't feel comfortable with the currency risk then I hedge by creating a debit in that currency. Transaction cost currently for Interactive is 1 cent a share with a maximum charge of 0.5% of the trade. http://www.interactivebrokers.com/en/p.php?f=commission I know that Etrade use to offer access to the TSX but that might have changed after the sold their Canadian sub. I don't have an account this them so I can't speak to much about it.
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