gfp
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Posts posted by gfp
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9 minutes ago, Xerxes said:
These charts of Japanese investments have very good technicals
good technicals = up and to the right
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Are you willing to entertain the notion that increased government interest payments to the private sector is net stimulative by increasing government deficit spending, increasing the transfer of new money from the government to the private sector. So that with government debt held by the public three times what it was last tightening cycle, we may be past the point where fed rate increases are "tightening" and the fed funds rate is no longer an effective tool for managing the economy (unless they bankrupt enough banks to kill demand - a rather blunt tool). Sizing the fiscal deficits according to economic goals / desires is a much more effective tool to manage inflation and employment.
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1 hour ago, Spekulatius said:
Listening to this is like taking an ice cold shower. These guys are pretty bearish.
I do agree that the banking issues cause a credit tightening but by how much is unclear to me.
I feel like you are commenting on the podcast with the Raymond James whole loan guys, not the Kalpan interview. The Kaplan interview reads like Wabuffo / Warren Mosler / MMT - which is not bearish at all.
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Little update on BRK's Japanese investments:
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Jury decision against PacifiCorp - Oregon fires
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Which interest rate are you asking about? The Fed Funds target or the 10 year US Treasury or what?
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Thanks for sharing Ulti - great podcast and these guys are seeing things the same as I am. Didn't hear them worry about "inflation" a single time and one made a special point to clarify that he was talking about "deflation" and not just "disinflation." Bank credit is money. This sucker is tightening up.
John Toohig has an excellent free newsletter on LinkedIn that is worth following if you like this perspective.
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4 minutes ago, Thrifty3000 said:
where it makes sense to cash in the TRS gains and use the proceeds to buy back the $1 billion
I believe the cash moves between counter-parties each month or each quarter, so Fairfax is getting the profits approximately in real time in cash. There isn't a cash payoff when they close the contracts.
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19 minutes ago, SafetyinNumbers said:
Do you know how the SOFR + spread compares to the cost of other borrowing or the returns on alternative investments including buying their own shares back?SOFR moves with the Fed Funds rate - it's around 5% now and has moved up similarly to other overnight rates. It's just a secured (collateralized) overnight rate.
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I don't usually pull these filings for Fairfax subsidiaries, but I have Odyssey's Q1 2023 NAIC filing and thought some here might find it interesting to see under the hood on one of FFH's largest subsidiaries. Investment holdings are near the end so might be easier to scroll from the end to see those. Lots of deflation derivatives still left on the books. Weird stuff like puts on Milk and Livestock. I assume those are relics of the past, along with the CPI-linked derivatives that were a bet on deflation. Anyway, just in case someone is interested I am attaching the NAIC filing here.
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3 hours ago, benchmark said:
This makes sense.
From the owner's earning perspective, isn't SBC always bad? i.e., you now have more dilution. In this case, they have close to 4% dilution from a year ago.
SBC isn’t always “bad” because anytime the shares are more dear than cash it might be preferable. You don’t know the future so it’s a guess but sometimes issuing highly valued shares is better than paying cash.
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Well I agree that "Quantitative tightening" doesn't matter, Tech almost always has a rich valuation and "bank deposit outflows" doesn't matter. No clue what LEI is so that probably doesn't matter either (number of legal entities that exist at any given time??)
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12 minutes ago, benchmark said:
See KCLarkin's post above - just think about it as two separate transactions. One where you get diluted by new share issuance (could be good, could be bad, depending on valuation at the time you are diluted) and one where you pay the employee with that money.
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They add non-cash items back in the cash flow statement because those are the rules of that financial statement. It is accounting for the cash. It isn't 'true' earning power and I don't think they are claiming it is (or at least they shouldn't be).
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This is standard accounting on the cash flow statement. Use the SEC filing and not some yahoo site.
https://www.sec.gov/ix?doc=/Archives/edgar/data/1441816/000144181623000087/mdb-20230430.htm
Page 5 will show you statement of cash flows.
There is $53.7 million in cash from operations during the quarter. This is not "owner earnings" for the reasons mentioned above.
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My point was that they wouldn't be taking credit risk on a BNSF bond. But opinions differ on the direction of long term rates. I think all rates go lower from here and FFH wouldn't be worried about locking in 3yr bonds using forwards at 3.7% if they disagreed with my view that rates aren't headed higher.
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10 minutes ago, SafetyinNumbers said:
With an expected duration of claims at 4 years, I wouldn’t follow that strategy.Different strokes for different folks. I'd rather see some barbell like stuff than them buying forward contracts to lock in 3yr notes at 3.7 - 3.75% but they have a better track record than I do in the bond market. I prefer the Berkshire method of sticking to t-bills but Fairfax takes a different approach.
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If Fairfax is really interested in extending duration while not giving up too much from their t-bill yields or taking additional credit risk I hope they took some of this BNSF offering yesterday. 5.2%, 30+ years, obviously a good credit
https://www.sec.gov/Archives/edgar/data/934612/000119312523160840/d477190dfwp.htm
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5 minutes ago, rkbabang said:
I really only know two types of people in my life. People who think a million dollars isn't really that much money and people who think $100k in the bank makes you rich.
This is so true.
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58 minutes ago, maxthetrade said:
What an interesting thread! I live in a small town in Germany and most of you would be shocked how little I spend and still, I eat japanese Wagyu, drink good wine, have nice vacations, drive a X3M, etc. all on <60k/year. I really can't think of much that i'd like to do but don't do because of monetary considerations. Money just keeps piling up. The one thing that comes to mind is that I'd like to travel by NetJets, I really hate the security shit and lines at airports. And one day when I'm really pissed I'll sign up
Well you didn't live on less than 60k the year you bought the X3M.
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Yes, exactly. The forward SOFR curve is predicting deflationary recession. Something so bad the Federal Reserve would be forced to cut overnight rates and cut them fast. I don't know why you think that predicts sticky inflation. That is deflation.
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It's better than that - it's essentially a blended 10% yield to maturity on something like $3B in total capital. Plus the incremental investment in KW that should do well in addition.
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Raising bank capital requirements at the onset of an already-underway credit crunch. What could go wrong?
Have We Hit The Top?
in General Discussion
Posted
Liberty (remember them? They used to post here back in the day) posted this graphic on twitter that I thought was a pretty good illustration of why Buffett and other successful investors like to stay in the market all the time. Hard to argue with this graphic ->