arbitragr

Looks like its fair value.

WEB takes risk, however nobody talks about it. He invested in 2 Irish banks that failed. And investing in energy at the top of the cycle, that was risky. Back when Berkshire was still small, taking a large position in GEICO, which was almost on the brink of bankruptcy ... was risky.

Gas prices in Alberta should do okay from here on in. see here: http://www.energy.gov.ab.ca/NaturalGas/1322.asp Back in recession of 2002, prices got down to about 2.5 ... then rose up as the economy turned to about $3-4. In 2008 it got up to $9!! :o :o I'm gonna stick with this one, maybe a small position. ;) Ha! Good on me for finding this.

I've owned it since higher, and it's a great (but risky) value here. Note their costs, and note their pricing is in Alberta (AECO). Also note the massive dilution to the tune of 200% the other day. :) Ben What's the difference with AECO pricing vs. say Henry Hub (or whatever it is on Nymex)? Anyways, the way I see it it's a bit like a call option. Key thing is gas prices will it go up? If so this should be a winner, or at least the protection of capital. The massive equity offering that is dilutive was at $1.29/share somewhere. They've had bids for a takeover in 2008 somewhere at $10 a share. Obviously they won't fetch that now, but even $3-$4 is good. If you value their mining assets at say 70% of the current 2B now, and take away all the debt ... "net-net" ... the company is still worth about $3 bucks. :D

check this little net-net out: Compton Pretroleum (NYSE:CMZ, TSX:CMT) Lots of debt, however good quality assets that produce income. Should be able to ride the storm out and see natural gas prices rise. Way undervalued.

We maintain a class above the other boards, but I'm still human. ;) Don't be such a prude. :D

Poppy Harlow is a hottie ... :-* :-* Anyways, I like the last quote: "The dangers of leverage, the dangers of everybody getting a belief about an asset class that can do nothing but go up, the dangers of joining the crowd just because the crowd made money yesterday ... all of those things they just recur throughout history and we've seen an extreme version of that, but there's really nothing nothing new."

hahah awesome. obviously there will be other issues ... he's still young and just getting started. :D :D

Hats off to Eric and others for letting us in on your inside trade. ;) ;) ;) Let's find the next one and band together to push the premium up again. :D

Well they've issued equity at 1 billion. At 1.0+ x BV ... and markets all optimistic again, now was a good time to issue, if ever. They expect to get ORH for a certain price. Thing with this deal is that they don't have the cash vs. last time with NB. In the NB deal they did have cash and the buyout was less, around 780M so they could afford to offer a bit more of a premium. What happens if they don't have the funds this time? They gonna issue more equity and dilute? FFH expect a certain price and it's going to be around 60. Not any higher. At $60/share x remaining 28% shares left (i.e. 16.37M ) = 982M. They aren't bluffing IMO ... $60 no more, no less ... and if it doesn't go through FFH will use those proceeds to improve the balance sheet.

If ORH special committee told me to pay more than $60 I would walk away from the deal. It's not like FFH need to consolidate ORH into the FFH group.

I think they buy out ORH at $60. No more. They already own 72% or so. Just bully the minorities into accepting. If they don't accept then FFH can just walk and life goes on, no big deal. I think we forget who is in control here. This is why bogus news articles like that Tripp one pops up, because someone is trying to alert the public of the unfairness of the situation.

I think this is a bogus news article. Tripp Levy?? non-existent ...

How sure are you of this? The only public offer made for the NB deal was $39, and the deal was done at that price, despite Prem offering a lower price privately. I am of the view that when Prem goes public with a price he expects to get it done at that price. FFH are majority owners of ORH so he is less worried about minority shareholder reservations/revolts about the premium paid.

Thanks for that. I guess the filings on sedar have changed and they've taken that out i.e. there is no circular on Dec 8th. In any event, the only publicly announced price was for $39 on Dec 1st. And that price was the final and subsequently accepted price. All prior negotiations below this price, i.e. $38 was not made formal and public, and FFH did not revise their original "public" offer. Which indicates to me, that in all probability the ORH price announced will unlikely be revised upwards and $60 will be final.

I don't see any directors circular that mentions the above. The only thing available is the press release for $39.

To be honest a 20% premium is quite poor given most who have held have been doing so for almost 1.5+ years now. Relatively speaking there have been things one could have bought in the last 2months or so that have returned alot more than what current ORH shareholders are getting.

Well unemployment is 10% ... at least 90% of the population are working. ;)

Try it and see what happens. :)

Thanks guys. Well done. Cheers!

Well they've done it. I never thought this would happen this year. But the premium is only like 20%. ??? What's the likelihood that the deal will be sweetened? Was the Northbridge deal sweetend last time? I don't think as a ffh holder you would want to pay anymore than what they are paying now. Hhow long did it take northbridge deal to complete?

Buffet buying up Capmark with Leucadia. Capmark is in the real estate finance business if I recall correctly.

I thought you were bearish on real estate Sanj?

Oaktree looking to buy distressed real estate assets in Australia and Asia: http://www.bloomberg.com/apps/news?pid=20601087&sid=aUzfNQQlf4Us Oaktree is looking to buy distressed real-estate assets in Australia, China and South Korea. Oaktree is set to acquire buildings in Sydney and other major Australian cities by the end of the year, he said, without giving details. It also is seeking investments in the securitized debt market and property trusts, Zulkoski said.

Junk bonds face quieter ride after 40% surge: http://www.marketwatch.com/story/junk-bonds-face-quieter-ride-after-40-surge-2009-08-28 Speculative-grade debt, also known as junk bonds, has returned almost 40% so far this year, the most since at least 1987, according to an index compiled by Merrill Lynch. And while high-yield debt still offers attractive yields, that advantage over stocks may be fading. ... "From where we are now, the opportunity in stocks is likely to be better than in high-yield bonds, which had a phenomenal run," Ablin said. "We're looking for equities to take the hand off." ... Still, analysts warn that as a rising tide might have lifted all boats, it's become much more important to research the finances of individual companies instead of making a broad allocation into the sector and hope for the best. Debt defaults are still expected to rise in the coming year.