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Thanks, no apology necessary! I'm just trying to learn about the investment. I believe both bonds have payed only cash interest as the PIK-toggle only comes into play in 2012. So he's payed tax on the interest earned, but would have a tax loss if he took the haircut, right? I agree with everyone that the utility assets are his ultimate downside protection, in that he would be thrilled to "rescue" this valuable company in a restructuring. Here's hoping he gets another chance at Constellation after they extricate themselves from the EDF nuclear mess and (hopefully) successfully exercise their coal plant put. They might be too healthy then to even want a deal at BRK prices... Thanks again.

ValueCarl, could you help me understand what you mean by: "paying tax on 70% of principal on the PIKs" means? Thanks

I hope he doesn't have to take the haircut, but it shows he still rocks rule #1 - he's received over $681 in income on his 1.975 Billion investment - and the haircut would put him at 70% of the 2.1 B face value, 1.47B. Not good, but not an absolute loss either.

Buffett bought them in 2007: $1.1 Billion of 10.25% bonds at 95 cents on the dollar, effective yield 11.2% $1 Billion of 10.5% PIK-toggle bonds (interest can be paid in cash or more bonds) at 93 cents, effective yield 11.8% At the time the bonds were hard to sell and they probably couldn't have done the deal without Buffett (Goldman didn't want the bonds itself)

Seems Mr. Greenberg caused a bit of a short squeeze for you there!

At first glance it looks like they added 58k shares since their last filing. They own ~29% and can only own up to 30% with the present standstill agreement, I believe. So they are limited in the additional purchases they can make if Berkowitz is unswayed by Einhorn's presentation.

Yes, currently a long term capital gain on a gold mining stock would be taxed at 15%, where GLD or bullion would be taxed as a collectible at 28%. All subject to change in the future, of course.

Yes, Krugerrands are taxed as collectibles at punitive rates in the United States. Many people sell under the minimum reporting amount (just changed under Obama I believe) or sell on eBay and neglect to report on their tax returns. Many coin dealers will not have the word "coin" in their name to facilitate this (example "The Camino Company" in burlingame, CA). Currency profits are also taxed in our country.

GLD and physical gold are taxed as collectibles at high rates. Why wouldn't somebody who wanted to short gold just short the highly liquid futures contracts on the nymex? There are even mini sized contracts at nymex and cme now if the contract size is too large for you. My advice - don't short gold. Work on company valuations where you have some edge (hopefully). There are much easier and safer ways to make money than identifying the biggest bull market of the decade and trying to short it. Just ask the owners of 10 year yield calls who thought they were making the trade of their lifetimes. Bull markets end in speculative frenzy. Prices usually become pretty stupid at the end when your cabbie is buying (houses/tech stocks/gold/bond funds)... Most people own zero gold, so the bull market has a long ways to go.

Hi, I'm pretty new on this board. On the topic Pabrai mentioned of a basket approach to Japanese companies, I have an investment in a wisdomtree small cap dividend weighted fund, ticker DFJ that some might wish to check out.

Regarding the post below - The reason it traded above 26 was because of a large circulation email to generally unsophisticated investors - sent by an Agora Inc. subsidiary, Stansberry & Associates. This company was the reason for many of the sudden spikes in the series A pref. To see a similar effect by the same publishing house, look at TPL in mid August. (I'm new here on this board, happy to see such high quality information here) "Good timing. I chickened out and sold all of mine at 25.40. Did not think people would be crazy enough to bid it any higher. Still don't get why people paid over 26 to take the risk of a highly probable 4% absolute (i.e. not annualised) loss just for the prospect of getting an 8% annual yield. Another nail in the coffin of Efficient Markets, I guess."