bmichaud

I'm veering off topic here but what was Manning's problem? I don't remember hearing anything overtly negative. Yeah, I haven't heard anything really negative about Peyton or Eli. Other than Peyton pretty much runs the practices himself, but its worked for 12 years. Cheers! I have some friends in Indy that said he's pretty notorious for "getting around".

Welcome to my mind! Vinod Vinod - this quote by F. Scott Fitzgerald comes to mind:

I too question some of the things I hear about Tiger, and i keep hearing things like that about Phil and that he's a huge douche behind the scenes. My problem getting on Tiger's case is that what huge sports star has had a flawless character? Michael Jordan? Lord no. Lebron James? No. Kobe Bryant? No. Peyton Manning? No. Etc... Etc...

I've been a huge lifelong Tiger and his personal character was never part of that admiration before or after the scandal. It's unfortunate he has to be such an arrogant prick, but if your a fan of sports and competition, it doesn't get any better than watching one of, if not the greatest mental competitors of all time (in any sport!) at the top of his game. Full body chills on that 16th hole chip in!! Haven't seen a reaction like that since his 18th hole putt at the 2008 US Open to tie Rocco Mediate. Commentators such as Brandel Chamblee on the golf channel are living in a fantasy land writing Tiger off at this point. Barring injury, he will obliterate Jack's record in due course.

Please explain how redemption/euro bonds would be junk....here is Kiron Sarkar's description (http://www.ritholtz.com/blog/2012/05/euro-zone-continues-down-the-plug-hole/): Any jointly-guaranteed bond out of the Eurozone would be pretty high quality IMHO, would it not? As a whole, is the EZ not potentially in better shape than the US? Fiscal unity and Eurobonds with an ECB functioning how the Fed does here would create a rock-solid "United States of Europe". Yes, yes when you add in banking sector debt the situation becomes more precarious, but there is no possible earthly reason why those who lent all those liabilities to the EZ banking sector cannot take a loss and/or turn their liabilities into equity. Then just use the ECB to backstop deposits. Anyway - please explain how they are junk. I'm not being difficult, I'm just struggling to follow. Your posts, while extremely insightful, take quite a bit of work to understand....

When would investors have refused to take paper losses? If they had known the consequences of letting Lehman fail? I think it is safe to say "Lehman 2.0 not being allowed to happen" is currently priced into markets, as most believe governments will act. BUT, there is a much higher probability of it taking place priced into stocks, as evidenced by the market currently selling for 18.4 times median 10y Schiller earnings versus nearly 24 times right before Lehman, since the dreadful outcome of a Lehman scenario is very much on everyone's mind. I don't understand the redemption fund thing....are you saying the redemption fund currently being discussed won't be implemented until after a market catastrophe?

Had the post Lehman outcome been as widely known before it actually happened, do you not think the market would have been far lower heading into that fateful weekend? All of these articles are spelling out Lehman 2.0. Isn't the rule of thumb that if something has made the papers it is already priced into markets? Rhetorical questions of course..... Here are the latest musings of Kiron Sarkar, a London-based HFM who posts on The Big Picture, regarding the current EZ situation and the likely upcoming policy responses: http://www.ritholtz.com/blog/2012/05/euro-zone-continues-down-the-plug-hole/ http://www.ritholtz.com/blog/2012/05/draghi-urges-ez-politicians-to-act/ http://www.ritholtz.com/blog/2012/06/bp-considering-the-sale-of-its-50-shareholding-in-tnk-bp/ http://www.ritholtz.com/blog/2012/06/eurozo-policy-action-is-coming/

Parsad, Wonderful explanation - I can only wish I had been so eloquent last year describing my bearish bent. Yet another unfortunately painful lesson learned.....I really admired your and other investors' ability last year to look through what I thought to be painfully obvious macro concerns not discounted in even the cheapest of stocks and step up and buy.....now you're making the same arguments I made last year about Klarman holding cash even when individual opportunities are available....lesson learned - stick to your own f$cking guns. I should have never listened to any of you, though now is not the time to get bearish, IMHO, due to the oversold nature of the market and the likelihood of a major policy response in the near future. However, as i was telling Moore, Buffett and Munger's advice from this year's AGM that they have never not bought an individual security based on the macro environment has been ringing in my ears for awhile now.....there always has been and always will be macro concerns such as there are now, and my guess is that one misses out on a lot of opportunity by foregoing individual opportunities based on macro concerns. For example, my guess is that coming out of the Great Depression there was a lot of fear mongering about the world economy and how long it would take to recover, and most likely there were lots of sovereign debt issues as a result of dealing with the Depression - BUT, that didn't stop KO, WFC or Geico from expanding their franchises year in and year out, providing investors with a time horizon longer than a few years with the ability to generate enormous wealth over a lifetime. ..... If the above sounds like a very confusing train of thought, thats because it is. On one hand I still believe this secular bear comes to an end somewhere below 800 on the SPX, but then on the other hand how can I pass up such undervalued securities that will most likely do extremely well over the next three to five years regardless of the market? Then on the third hand, why on earth if the general market falls to below 800 would BAC NOT get hammered even from here?

But.... all these negatives were there at the beginning of this year, 3 months ago, etc... The market is now pretty much at the same level as Jan. Not much has changed. I don't see how one can have different views now vs barely just few months ago. It's pretty simple isn't it? I didn't think Spain was on the precipice of defaulting and that the amount of money Europe would throw at this thing would be larger than it is...and as such, I became more cautious. You should read the rest of that Leucadia letter. Cummings and Steinberg sold investments to specifically pay down debt. That isn't any different than what we did. What did they see two months ago, that they did not include in their analysis 6 months ago? Something perturbed them as well. And whether anyone likes it or not, why did Buffett forgo a $22B deal that normally would have looked very good? Because he doesn't want Berkshire's insurance businesses to be constrained? No. Berkshire went as low as $22B in cash in 2008/2009. They have about $40B in cash at the end of last quarter. He could have easily issued $4B in debt at rock bottom rates to finance this thing, and still kept $22B in cash. Something stopped him from doing the deal. What changed in two months that he didn't see six months ago? Cheers! Here is what else I'm struggling with....what money did you think Europe had back then that they don't have now? There never was any money available since it all has to be created. Back then the entire situation rested upon the willingness to create the money necessary - they didn't prove their willingness until LTRO, thus markets tanked. Now we know they will print, thus the situation is far more stable..... What are you seeing? Or is it a gut feeling, which is perfectly fine, I'm just impressed with the instincts if that's it!

Ha, BMI I'll take that with a sense of humor and thanks! ;D Truth is, the only reason I'm not still posting the weekly carloads is because they used to show up every week on the Yahoo Finance news under BRK-A. I stopped posting them the same time they stopped showing them. You can still go to the American Association of Railroads site and get monthly stats, but I only go on there monthly now. If you would like, I'm happy to post them for you monthly, but you can find them at www.aar.org. They are more expansive then the bloomberg linked weekly numbers, but those were concise and not in report form. About 95% of the news and articles I post on here comes from these sources, because they are the ones I read every day: - Yahoo Finance News under about 45 tickers I follow daily...BRK-A & FFH are two of them. - Bloomberg.com - CNBC.com - Globeinvestor.com - Reuters - Googlefinance.com for those same 45 tickers - FT.com - Financialpost.com With great respect, Calls are only as good as the returns they produce. We were down 9% last year net of fees, up nearly 40% as of March 2012 and now "only" up 5% as of Friday. Sanjeev would you care to share your returns for the same periods (Dec 31 2011, March 31 2012, and Friday May 31) Hi Moore, If we aren't providing those numbers to our partners until quarter end, we can't provide them to you either. I can give you our numbers until March 31, 2012. MPIC Fund I, LP was down 8.5% in 2011, and up 8.3% in 1st Q 2012. MPIC Canadian LP was down 5.1% in 2011, and up 9.7% in 1st Q 2012. What I can say is that we are in about as good a position as we've ever been in both funds at any time...including 2008/2009 and middle of 2011. We've put a bit of the money in both funds to work, and we'll put the rest to work over the next few months if things remain as they are or worsen. Our partners will be very happy with how we've positioned the funds and I'm very excited every day when I wake up right now...so that should tell you something. The last time I felt this way was through the better part of late 2008 and early 2009, and we weren't positioned like this then...it was good, but this time it is great! The results in the ensuing two years were terrific for both funds as well, and I'm pleased that we'll finally be able to reward our Canadian fund partners, who've been loyal and faithful to us after suffering the two lean years we had when we started that fund. Cheers! Haha no need to post, I read them every week anyway. Just used as an example of something you used to emphasize. I only use the phrase market timing because that's what any top down market analysis is referred to around here. I don't think it is market timing at all, rather simple valuation and risk analysis, which doesn't take into account WHEN the market could come down. It is just curious to me that given the large number of individual opportunities available out there that fifty percent cash is warranted. My ass was chewed out when I discussed being cautious last year since "buying an equity interest is no different than buying an entire business, so NEVER worry about the general market" - just trying to figure out how once analyzes this environment and when a buying opportunity arises given A) general market valuations are not terrible like they were before Lehman, and B) individual securities are very cheap. For example, how do you know BAC will ever get cheaper than it is now? What if they come out with a positive litigation announcement and the stock doubles, and THEN the market craters bringing BAC down to levels higher than they are currently? Do you buy when the market gets to 10 times earnings? Do you buy at 15 times earnings? Do you do it from a bottoms up perspective? As Klarman and all value guys say, you only hold cash when you can't find individual ideas....

Sanjeev, You must admit that you are a phenomenal market timer. Last year at the bottom and now this year at the top you have made some phenomenal calls. Wouldn't you agree though that the articles you post on here in support of your current market view are more or less coincidental with the current market movements and that the market is going to do what it wants regardless of the particular negatives or positives you highlight? For example, the weekly posts last year highlighting continuing strength in carload strength was how you defended your bullish US economy thesis, which to the average poster would seem to be the reason for market strength since last October, when in reality it was merely coincidental with the market moving up in order to clear the excessive negative sentiment built up last September. And likewise, you have discontinued posting the continued strength in carloads and instead switched to posting about the problems in Spain in order to support your view that we are going to run into a period of higher volatility - again, what I think we can consider coincidental to the market moving lower in order to clear out the excessive optimism built up since October. All that to say - why are Spain's excessive asking assets relative to GDP and its lack of ability to deal with the crisis any different than last year or the year before? Couldn't you make the argument that Europe is more capable of dealing with the crisis this time around given they have proven they are willing to print (i.e. The LTRO program) and are now widely discussing Eurobonds, deposit insurance and an ECB-financed ESM recap facility despite what is just absurdly ridiculous posturing by Merkel who has practically zero say in the matter whatsoever (again proven by her willingness to look past the LTRO program) with Germany only having what two votes on the ECB? Perhaps we continue to free fall from here, but there seems to be a very healthy amount of fear building up to allow for a reversal upon some data point the market deems sufficient to justify a turnaround....feels pretty good though having individual securities going down literally multiples of the market. Just goes to show the importance of holding cash for these types of opportunities - congrats on the phenomenal call....

Wonderful point. Germany is HUGELY at fault. They generate massive trade surpluses via debt-financed exports it's neighbors - ONLY possible due to a lack of floating exchange rates, which would naturally correct trade imbalances - yet has the audacity to jam austerity measures down the throats of those same countries that fueled its booming economy. It's hysterical. They are China on steroids, yet they claim innocence while they drive the EZ into depression. They should be ashamed of themselves.

Precisely why I am only half kidding when I say to buy the TBT once it hits $0. Understanding the BSR dynamic saves so much time, effort and capital wasted on endeavours such as the one Kyle Bass is currently pursuing.

Just buy the TBT once it hits $0 - can't go much lower than that 8)

Which markets are you referring to? European or U.S.? I think money is flowing to the U.S., including U.S. equities and debt, so they are doing a bit better than their European and Asian counterparts. Cheers! US market. Just interesting it's holding up the way it has given the macro backdrop is arguably worse than it was last year during the big decline.

Yields are skyrocketing, particularly the 2y, and Spain's economy is literally collapsing (-9% YOY growth in retail sales?). Why is the market not collapsing? What's it going to take?

http://www.ft.com/intl/cms/s/0/90b3aaae-a818-11e1-b8a9-00144feabdc0.html#axzz1wAcLSBYY In order to get around borrowing directly from the capital markets, supposedly Madrid is looking to inject its own Government debt directly into Bankia. This just keeps getting better and better. With all possible political correctness, are European leaders mentally handicapped? You take on trillions of free ECB money then turn around and buy your own country debt and now face billions in losses as a result of rising rates? Now this maneuver? What a disaster - let's face it, the ECB is going to print one way or the other, but the path to get there sure is entertaining to watch while our economy and corporations continues to take market share from this wallowing economic area.

Thank you for the breakdown! As the last table shows, the equipment on operating lease addition shows up as a deduction to CFO. So to be more technical, you would add $300 million to my $2.2B CFO and $600 million CAPEX numbers.

Makes sense. For some reason I thought the wash rule only applied to losses.

Just rambling here, but if you think Xerox is potentially attractive to a larger entity that finds Xerox's scale and international presence attractive, I think boosting the stock price will help to mitigate the risk of a take-under. So for example, people on this board were advocating for Winn-Dixie to buyback stock below book value....it ended up getting taken under BV. Had Winn boosted the dividend and attracted a more stable investor base, resulting in a higher stock price, perhaps its suitor would have paid a higher multiple. Just food for thought, no pun intended.

At the right price, the Yahoo! situation would work, particularly due to the Asian assets. Put it this way, I'd take Yahoo! at the right price over Berkshire Hathaway at 50% of net working capital when Buffett bought it, ANY day of the week.

Good questions. They buyback stock primarily in the second half of the year due to timing of cash flow and D&A is higher CAPEX due to the depreciation of finance division equipment (the purchase of finance division equipment shows up as a change in working capital, not CAPEX). Regarding what they do, they provide primarily business outsourcing services - IT outsourcing, document outsourcing and business processes. So they administer the "EZ Pass" program for example, and recently won the California Medicaid program contract. Xerox is not a high-growth business, or even a GDP growth business - so personally, I'd rather see the cash come back to me in the form of a dividend. I'm not a huge fan of muddle-through or declining business buyback back significant amounts of stock over time - think Yahoo!, Best Buy, Radio Shack, HPQ or even Exxon - I consider Xerox a muddle-through type of business that should take advantage of the current undervaluation via a Dutch tender, but going forward have a more balanced payout plan. Basically I think the risk to only buying back stock for the next five years is that the value won't get realized as a result of the lack of growth. I'd rather actually see my cash over the next five years and as oppose to leaving that value realization up to the whims of the market in five years.

I'd love to take Yahoo! (or something like it - low capital intensity and zero debt) and put it into run-off. You could sell the Asian assets and re-deploy into other businesses, public or private (perhaps start amalgamating some insurance companies), then just milk the core business for as long as possible, re-deploying all available free cash flow back into public or private businesses. My guess is that you could increase current EBITDA by nearly 50% just by cutting away excess fat (I've seen Eric Jackson write about how bloated the staff is), then just manage the decline as best as possible. The only way this works is because Yahoo! has no debt - with debt, then the FCF must go toward paying that off if it's in run-off mode. Think about what Yahoo!'s market cap would look like in say five years if it deployed the proceeds from its Asian assets, excess cash on hand and future free cash flow into and equally-weighted basket of Bank of America, AIG, BP and MCD. Better yet, buy a group of insurance companies then deploy the float into these names.

Pardon the ignorance, but why don't you pay taxes on the $5K? I must be missing something simple because I don't get it.

Taking management at its word, the Services margin decline is due to new contract ramps, as those investments are required before revenue begins rolling in. Bottom of page 12/top of 13 is a good discussion on Services margins. Again, taking management at its word, the renewal issue is due to "3 or 4 meaningful contracts" in the ITO division. Xerox_Corp._Q4_2011_Earnings_Call_Jan_25_2012.pdf