Valuebo

You think both have very little exposure? Considering their speciality underwriting I wouldn't think their share in the claims will be that big, but who really knows? And FFH? Their marketcap in premiums for Asia is still very small compared to their other markets and is especially located in Singapore/Hong Kong/India (?) ?

Unbelievable.. Are there any projections of what the damage claim(s) may be?

(about soft and hard markets : ) I liked the presentation of Zeke Ashton on the value investing congress last year in october. He doesn't explain exactly what defines soft and hard markets but in general you could of course just say that in soft markets premiums are much less attractive and in hard markets capacity is removed making it possible for well-prepared insurers to take advantage of this. I would think that professionals in the business have some metrics to define wether we are in a soft or hard market. Anyone got an idea on this? He also said : "The best players in the industry produce good ROE and book value growth during the soft parts of the cycle, and hyper-growth during hard markets. Industry valuations do not support new entrants as was true in '01 and '05." which is exactly why I like companies like FFH or LRE right now because I believe I can't exactly tell when the market will turn. With those companies in the end I will most likely get a fair return or home run anyway. http://www.scribd.com/doc/39285829/Value-Investing-Congress-NY-2010-Ashton

Aren't current losses of their hedge already +- calculated in their latest bv of 378? Why should we add another 12 to 14$ to their loss? Reduction of time value? (Sorry if this sounds dumb, I don't know anything about derivates.) Also those are unrealized losses which could (partly) get erased if a market correction hits? Seems to me that FFH is a great substitute for raising cash at current market levels.

I've just read The Little Book of Behavorial Investing (which was a true eye-opener and light read at once, recommended!) so I will definitely check this out. Thank you!

Yes, in 1986 they had an increase in BV of 180% and the next four years is wat 37% on average. That adds up. Still amazing of course, but I wouldn't dream of 25% going forward (not that Prem is).

Correct. I already have a 15% position and only plan to buy more under 0,90-0,95 p/b. I would say that is neutral, although my understanding of Watsa's vision is growing and so is my willingness to buy more shares when the stockprice gets depressed. I am (wishfully) hoping for a market correction that drags Fairfax down a little extra. That would be a double win considering the hedging.

I had this discussion on another (dutch) forum the other day. In my view, averaging down can be a winner as long as you do your homework, are value-oriented (get your MOS!) and make sure you don't make the position too big for your portfolio. Another investor, focused on momentum trading and growth stocks, claimed that averaging up is the only way to go and that averaging down only leads to bigger losses. The second guy, I think he uses a lot of technical analysis in his trades, claimed the same thing and even said that "soon enough, every investor walks into an Enron or Worldcom" (confirmation bias? I don't hear anything of the thousands of stocks that don't do anything illegal). He claimed that sooner or later, averaging down would whipe you out and you could forget about your carreer in investing. Seems to me that this can only happen if you underdiversify but oke... Am I wrong? Why wouldn't you buy more of a great company that just got even cheaper if you have room for it in your portfolio and you redid your homework? I don't get it...

What day did the stock go ex dividend?

This is probably more accurate : http://www.market-harmonics.com/free-charts/sentiment/investors_intelligence.htm

Not sure how accurate it is but these surveys make me wonder : http://www.aaii.com/sentimentsurvey

Maybe I was unclear about the annual reports. I meant that I have been reading some reports (FFH, RLE,..) in general, not those of BRK. :) I will definitely try to find such small and simple companies and get started with those! I am from Belgium, Europe. I study finance & insurance, but the education isn't worth much imo, just some basic stuff. For example on the subject of insurance, we don't learn how insurance companies work, we learn how the products work, etc. ;) I have been working (student job) for an insurance agent whom I know well for some time. But I am just starting to deal with contracts etc., before it was mainly administrative work. This of course won't help me to understand the industry any better. But maybe I can get more information and knowledge through the agent, he has some experience in the sector and asking doesn't hurt... The point is that the sector lies in my line of interests. I have a great interest in marketing and sales so retail seems to be a second sector I would like to explore. Also, retail seems to be one of those sectors where most companies probably still somewhat lie in my field of competence. @ SD = Thank you. Will look into the book. I will stay of the buttons until I fully understand the lessons, thanks.

Thanks! Very useful comments and tips woodstove, I appreciate it! Just to give you an idea of my knowledge, I have read The Intelligent Investor, Value Investing From Graham to Buffett and Beyond, The Little Book thats still beats the market and Rule °1 (not great...). On my shelf I have left for the near future : Common Stocks and Uncommon Profits, You Can be a Stock Market Genius and One Up on Wall Street. I think that will cut it for the basics of value investing? Atm I am reading Buffett's letters as well and digging through the first couple of annual reports. I hope reading those annuals gets easier over time. :) Would it help if I read the annual reports of smaller companies first because most of the time they are less complex? Or isn't there a big diference between <100million and >1billion market cap companies?

Hm. :) On what subject do you mean? Business in general? I found that one now I think : http://cornerofberkshireandfairfax.ca/forum/index.php?topic=2986.0 And also I did find one on the insurance sector now. :) But I can only find a very short one on behavorial finance and none on other sectors (or even the idea of doing that, maybe it's just stupid).

Hi all, I am a starting (value) investor and since a couple of months I am trying to read as much as possible about it. After reading 4 value investing books and with 3 left on the shelf, I begin to feel confident about my basic knowledge on the subject. However, I feel that I am missing basic knowledge on sectors that I am interested in, probably mainly because I have little actual business experience (being 21 years old). I want to focus on 2 or 3 sectors first, so that I don't lose my way in the big big world that investing is. Would it be a good idea to read general books about these sectors (as an extra besides the companies' annual reports) to get some background of each sectors' specifics, general knowledge, the used ratio's, marketing, ... ? Because now, I feel like I am missing important information and background on various sector-specific topics. Or would it be a complete waste of time? If not, what would you recommend on, for example, insurance, retail, *insert other sectors*? I am about to read the book 'The Little Book of Behavioral Investing: How Not to be Your Own Worst Enemy' too. Are there any other good books on the subject, perhaps going in greater detail? As someone already told me before, the subject probably is equally important as valuation on itself. And while I am at, can anyone recommend good books on business in general or entrepreneurship? Thanks in advance, Tom

Lets keep the dividend low shall we. I'm losing 50% on each dividend as an European. :-X I have a 7,5% position and will be adding after dividend if we are down a couple more percent.

I was looking forward to this, thanks TariqAli!

A lot faster here in Belgium, Europe. ;) Thanks Parsad!

Wow, thank you very much valuecfa (and TariqAli of course), I réally appreciate your lengthy replies. Definitely gives me a better view on my options and CFA on itself. :) For CFA, I am considering starting this after I went through the training program of any large bank I will start working at which on average takes six months. I have also read that you need at least a bachelor in the field of economics/finance or 4 years of experience in the sector, so I can't start just yet anyway.

A very interesting topic, thank you all for your insights everyone. I don't want to hijack this topic, but I myself was wondering about something myself concerning CFA. I hope you don't mind me asking it here Shane Smith? :) I am currently in my last year of a bachelor in "business management - finance & insurance" in Belgium, Europe. Like many here, I am strongly considering aiming for a job as an analyst, fund manager, ... in the future. Even though I consider myself a curious and determined person who has a passion for finance and equities in specific, I feel that my chances against masters in Economics will be limited. Therefore I am considering CFA to improve my chances. I am not sure about my chances to complete this program tho... I am afraid I will lack knowledge in mathematics for example and the fact that it is in English in combination with self-tuition (Which shouldn't be the main problem. But the fact remains that you are on your own if you have any problems with the subjects.) could mean an extra challenge. To what degree are the studying materials clear and comprehensible? Does it require a great deal of foreknowledge in finance in general and mathematics? Is the program focused on theory, mathematics, implementation/practice or is it just one big mix? I have also read that some people felt that there was to much focus on "complicated, far-fetched bs topics" that turned out to be useless. To what extent is this true? What is the percent of "drop-outs" for the program? Would it be wise to start with the program as soon as possible or would a couple of years of pratical experience (in finance in general) be a better choice for a bachelor like myself before even starting studying? What actual value does an employer give to a CFA in comparison with an MBA focused on this specific subject? Of course, in Europe this might be valued differently but I would like to hear more insights about this if possible. I had more questions but these are the ones that pop to mind after reading the topic. Would be great if someone could clarify some of the above issues, thanks in advance!

I have no doubt that the US will devalue. But do you really think that the Euro-zone will devalue less? You guys are saddled with all of the problems of the PIIGS who clearly do not have a culture that will enable them to take bad medicine....even the French are resisting the bad medicine that they clearly need. The Euro zone is a mess and will either need to inflate or disintegrate. Norway will ultimately be happy they steered clear, and the UK will be happy they at least opted out of the currency union. I would re-think your US vs Euro views. If you are really concerned about the US, go with Canada or Australia....but in your place, over the long term I'd want to diversify away from the Euro and all of the weak players that look like they will be forced to default. SJ I agree. (And this is coming from an European who has been buying dollars for the last two weeks and will continue to do so if the euro appreciates more against the dollar. Only have fairfax as an overseas investment atm tho...) I have some stockidea's I founded mostly based on both moat and growth, not looking at the current prices : - Telefonica - Danone - Nestlé - Vinci SA - Boskalis Westminster (and watching competitor CFE too but that company is 6 times smaller at +- 500M market cap) - Fugro - LVMH - GlaxoSmithKline - Siemens - SBM Offshore - Novartis - Sanofi-Aventis I have not done any thorough research but this is basically a list of companies I will have a closer look at asap. GBL (The holding which Pargesa partly owns) is also pretty decent but I am afraid Albert Frère doesn't come anywhere near Buffett or Watsa in terms of investing skills. But a great discount to book, that is a fact. (Sorry for any possible "stupid" choices, as I am rather new to investing. ;) )

Ok great, seems like my scepticism is probably justifiable. I have also bought "The Little Book That Still Beats The Market" and "Value Investing From Graham To Buffett And Beyond" for some more ideas on valuationmethodes and I will certainly look into Pabrai as well. As you've said, I'll have to develop my own method over time with influences of others. Thanks for your input! :)

Hello, my name is Tom and I am in my graduate year of my bachelor 'finance & insurance' in Belgium, Europe. I have found this website through google as I am a big fan of both Warren Buffett and Prem Watsa. I hope I can be of some value to the community here, although I am rather new to investing. I have been reading a lot, the first book I read was The Intelligent Investor by Benjamin Graham which gave me a lot of insights. Also, I have been reading tons of blogs and this forum. :) Now I am halfway through Rule#1 by Phil Town but I have my doubts as it is written in a very commercial way and because he claims its "so easy" to get 15% annual returns. He also says that, in order to prove the moat of a company, it should at least have a growth rate of 10% on the big five (being ROIC, EPS, equity, sales and cash) for 10 years in a row. With that thought in mind I started looking for such companies (leaving out 2008-2009 which would make it even harder). After I looked at about 20+ companies which seemed to be very strong growers with a good moat compared to others, I still didn't find one company that had most of the criteria fulfilled, let alone all 5 of them. Before I start looking any further I would like to ask your opinion about this method. Totally useless? It seems to me that only extreme growth companies which are widely known such as Apple and Google might get to fulfill those 5 criteria + have a strong moat. Then I am wondering how you could ever get such stocks at depressed prices with a big margin of safety which mostly only occurs when the results are down (which means again that they wont fulfill the criteria?). What am I missing? Anyone any thoughts or experience with this book/method? Tom