buylowersellhigh
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Posts posted by buylowersellhigh
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Thought this was interesting considering the cash level they had in 2013 and the outperformance.
Mentions Malone and company:
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I wrote puts on AIG this morning.
Thanks,
Lance
What puts did your write?
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Tactical error...
I need to change that trade.
I bought IWM puts.... if those become hugely profitable at expiry, I'll have to take a painful tax hit.
Instead, I need to rework the trade by dumping those puts, shorting IWM directly, and purchasing calls to hedge. That way, I can keep the short position open forever without a tax consequence.
Let's say for example the market drops 50% and I want to dump the hedge. Well, I don't want to dump the hedge literally because I would be stuck paying the capital gain. Instead, I should just keep the IWM short position open (at a large gain) and buy an offsetting amount of depressed stocks. Then over time the gain on the IWM short will unwind and I'll have an offsetting gain on the stocks I purchased.
No realized gains that way. Keep the assets for myself.
How are you buying depressed stocks w/o realizing profits on the IWM short? Are you assuming some unencumbered cash?
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Surprised to see that the stake in GM warrants is so large...I knew he had the warrants, but didn't realize as of YE 2013, it was worth more than BAC.
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Does anyone have good names for these types of companies. I have not been to concerned about taxes because I have been investing in tax advantaged accounts but I have some folks I am giving recommendations to that have taxable accounts. I guess the benchmark here is BRK and FFH.
Packer
Packer,
Would love to hear which ones you consider to be good compounders in a taxable account. I think PRAA will fit the bill and will continue to grow nicely. Love the management team there.
BLSH
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I believe for AIG and BAC, the 2016 leaps come out Oct. 14, 2013.
You could get the 2015 and roll to the 2017 by the time 2015 come close to expiration....
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Around 90% in my top 6 - 8 ideas. I am learning the value of sticking to my best ideas and saying away from lesser ideas.
Roughly in order:
BAC - my leap position is 100 % hedged again at current levels. Also have warrants and common
Aig - warrants, common, and leaps
SSW - largest common position
Smaller In no particular order:
RBS preferreds
WFC - common & warrants
JPM - common & warrants
Extendicare
FFH
& other - very small.
I have built part of my holdings to generate dividends to finance a couple of years away from work.
Returns similar to Rodriguez experiment, after tax, over 9 years with leverage. The leverage roughly cancels out his non payment of taxes in his IRA experiment.
Uccmal,
Would love to hear your thoughts on Extendicare. Just came on my radar.
BLSH
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Anybody have links to the free notes for DJCO? I only see for fee notes.
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Oh well, I'm not going to cash. I just can't do it. Market is just too fun and I don't have a day job anyhow.
I wrote a bunch of MBI puts today just before the close and used the proceeds to purchase SPY puts.
I purchased about $2.70 of at-the-money SPY insurance for every $1 of MBI insurance written (slightly out of the money).
We'll now see if MBI drops more than 2.7x harder than SPY. Let's say the market drops 27% -- well, this trade is only going to lose money if MBI drops more than 72.9%
Perhaps I can make the argument that I de-leveraged my portfolio with this trade (on a notional basis).
I really need tax losses this year. That 52% tax rate is just murder.
Scenario #1 (market has epic crash):
1. capture tax loss on MBI puts on Dec 31, 2013
2. capture SPY put gain on Jan 1, 2014.
Scenario #2 (market doesn't have epic crash)
1. capture SPY put loss on Dec 31, 2013
2. capture MBI put gain on Jan 1, 2014.
Other scenarios... lots of them...
One of the main goals of this is to shift my short term capital gains from 2013 to 2014. I just don't want to pay 52% tax rate.
How much of what you are doing is dependent volatility in MBI puts and/or what you think downside is in MBI?
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While doing some research about Portugal…
Translation?
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finetrader i am a little confused
you bought deep ITM (in the money) puts? doesn't that cost more?
hy
Yes, it does cost more to buy the deep ITM puts. However, by doing so, you are paying less for time value, which decays faster as you get towards expiration. This way you are essentially moving with the underlying with leverage.
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Parsad,
Any insights from Pabrai from the meeting? I know he doesn't like to talk about current holdings.
Do you think it is Fairfax that he holds in his foundation's portfolio?
-B
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Slideshow from yesterday for Professor Bruce Greenwald's class:
He's got the song Jai Ho by AR Rahman from Slumdog Millionaire playing! ;D
Cheers!
Very cool presentation. Thanks Parsad.
What does the license plate translate to? COMLB26....compounding ..26%
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Slideshow from yesterday for Professor Bruce Greenwald's class:
He's got the song Jai Ho by AR Rahman from Slumdog Millionaire playing! ;D
Cheers!
So here is Pabrai's deeply undervalued fund:
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And this one is cumulative:
WOW!!
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March 8 in the evening.
From the Q4 conference call:
"Then before I pass it back to Prem, I'd like to remind everyone that our Annual General Meeting will be held on Thursday, April the 11th, at 9:30 a.m. at Roy Thomson Hall. Details will be in the annual report on the last page, which will be published on March 8 in the evening.
So back to you, Prem."
Thanks alot Grenville! Faster than head office and right off the transcript...how great is this board. Cheers!
Parsad,
What do you see as the future returns on Fairfax from here? From your posts, is this a long-term buy and hold position for you?
Thanks in advance.
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This applies far more to me than you though as you are heavilly in BAC. I am very curious however in the stocks that would interest you if say, you didn't understand banks, or weren't allowed to buy them?
I would own a large allocation in Fairfax if I couldn't own BAC. I do have 25% in AIG warrants at the moment -- that's the only non-BAC thing I own.
So if BAC were taken away I'd probably put 50% in FFH and buy more AIG warrants (to a 50% allocation).
Eric,
I am trying to get up to speed on Fairfax. The fact that you say that means a lot. Could you let me know why feel so strongly about Fairfax? I have read the Fairfax board. Obviously the lack of uw profits doesn't bother b/c you like mgmt, ability to allocate capital, etc.
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This thread feels like an AA meeting.
I've been a shareholder for 5 years. The last 3 have been frustrating, but I bought in 2008 so my avg is in the low 200's and starting this year I started re-investing my dividends, because to a certain point I agree with JEast. In 2009 and 2010 I sold a significant position in the low 400's...but at the height of 2008, FFH represented as much as 110% of my portfolio if I include the option position I had.
There are threads with arguments on why their underwriting is crappy. I agree that in the past they underperfoms; going forward I disagree, having been a P&C underwriter and knowing full well that there are no superstar underwriters out there that only write 70% CR's, your CR is as good as the markets you serve. RLI writes in such a small pie with little competition and they are able to price their way. You can look at HCC and basically this goes for most insurance...you're size determines the markets you serve and your economics. There are no insurance companies with 10Bn market cap and consistent 80% combined. Chubb and TRV are special though, but even they don't avg 80% through a full cycle.
With that said, I believe you can look forward to better results. 1) in the past C&F represented a higher % of premiums than today, Zenith, Mercury (both bought at cyclical lows) and Asian ops will improve. 2) Northbridge's market was pretty tough, I had a good friend (no longer in the business) but he was an underwriter for an entity that competed directly with NB and there were tough times. Going forward...legacy issues at C&F and NB will be less of a problem...CR should improve and if you're invested in FFH with an assumption/expectation of 80-90% CR consistently, I think you are looking in the wrong place.
So what are your expectations from Fairfax going forward?
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One thing I am not fond of is the lack of underwriting profits. Sure you are betting on good capital allocation, protection to the downside, etc., but the lack of uw profits at an insurer bothers me.
Not a big deal for others?
Trying to dig into Fairfax...
What are you buying today?
in General Discussion
Posted
Bought some LMCA on Friday.
Anybody buying any BAC common or KMI warrants?