Buckeye

Hey CONeal- I am not sure what your current situation is, but you may want to consider trying to find a job in the field or type of business you are interested in purchasing. One advantage of this is that you will be getting paid to train and "learn the ropes" and will be far more knowledgeable if you decide to own that type of business. You may learn the types of things you can emulate to succeed or certain techniques that you can improve upon or practices you should avoid. Also, you may find that you don't like the type of business or industry at all and rather than already being financially committed you can quit and look for a job in another area of interest. Just my 2 cents, hope it helps.

Hey all, Has anyone been following these notes from Peter Thiel's Class? I find the lectures very interesting and thought the other board members may agree. Hope you all enjoy. http://blakemasters.tumblr.com/archive

Hey Ragu- I apologize if my comment seemed rude in any way. I did not mean to poo-poo your ideas or plans to meet up with fellow board members, as I am sure you are looking forward to the upcoming meeting. It is certainly a company and CEO that many members will continue to follow. Best Wishes Buckeye

Here's a great story for you all: After graduating college in 2000, my family friend bought me 11 shares of Steak N' Shake. It was the first stock I ever owned. I held them in certificate form and kept them in a drawer for years. You would imagine my delight when I read of this young man who was going to save SNS and return it to its glory. I then proceeded to watch, as he initiated a reverse split (to encourage "a long-term shareholder orientation") and then had to go through the pain-in-the-ass paperwork to cash my shares in, only to watch then stock proceed to rally on the surrounding optimism. We all know 11 shares is nothing, but are reminded of the story of the lady who only owned 1 share of Berkshire and asked Buffet a question at the meeting, only for him to comment about how they were partners! Guess I wasn't the type of "LONG-TERM" shareholder he was looking for as I had only owned my stock for 11 years :o What an ass!

I'm not sure if anyone on this board still owns BH ;)

Columbus, OH. Along with Stahleyp that makes 2 from Ohio :)

I couldn't resist :)

Would Loews be a good way to play this? They already own the pipeline and E&P business, but also offer the diversification through Diamond Offshore and CNA. There were some remarks on their last earnings call (also mentioned on this board) about how current Capex are greatly exceeding the current returns of many projects within the industry and they feel this should open up some acquisition opportunities in the near future. They have also recently drastically reduced their share buyback which may mean they are saving their money to take advantage of this. My thought is let them be opportunistic, while protecting shareholder wealth along with still providing a diversified income stream through their other businesses. Any thoughts?

Interesting devlopments: Sears Holdings to Separate Sears Hometown and Outlets Businesses and Certain Hardware Stores http://finance.yahoo.com/news/Sears-Holdings-Separate-Sears-prnews-1141358803.html?x=0 Sears Holdings Reaches $270 Million Deal for Sale of Eleven Sears Stores to General Growth Properties http://finance.yahoo.com/news/Sears-Holdings-Reaches-270-prnews-1646760299.html?x=0 Now, if they just had a capital allocator ;)

Hello All: Can someone help to explain how this Loss Portfolio Transfer with Berkshire works. I have read and reread it, and as a complete newbie I am trying to understand how this transfer is accounted for, how it's structured and its effects on CNA's financial statements. Below is the language from Loews annual report: On August 31, 2010, CCC together with several of CNA’s insurance subsidiaries completed a transaction with National Indemnity Company (“NICO”), a subsidiary of Berkshire Hathaway Inc., under which substantially all of CNA’s legacy A&EP liabilities were ceded to NICO. Under the terms of the NICO transaction, effective January 1, 2010 CNA ceded approximately $1.6 billion of net A&EP claim and allocated claim adjustment expense reserves to NICO under a retroactive reinsurance agreement with an aggregate limit of $4.0 billion (“Loss Portfolio Transfer”). Included in the $1.6 billion of net A&EP claim and allocated claim adjustment expense reserves was approximately $90 million of net claim and allocated claim adjustment expense reserves relating to CNA’s discontinued operations. The $1.6 billion of claim and allocated claim adjustment expense reserves ceded to NICO is net of $1.2 billion of ceded claim and allocated claim adjustment expense reserves under existing third party reinsurance contracts. The NICO aggregate reinsurance limit also covers credit risk on the existing third party reinsurance related to these liabilities. CNA paid NICO a reinsurance premium of $2.0 billion and transferred to NICO billed third party reinsurance receivables related to A&EP claims with a net book value of $215 million (net of an allowance of $100 million for doubtful accounts on billed third party reinsurance receivables, as discussed further below). As of August 31, 2010, NICO deposited approximately $2.2 billion in a collateral trust account as security for its obligations to CNA. This $2.2 billion will be reduced by the amount of net A&EP claim and allocated claim adjustment expense payments. In addition, Berkshire Hathaway Inc. guaranteed the payment obligations of NICO up to the full aggregate reinsurance limit as well as certain of NICO’s performance obligations under the trust agreement. NICO is responsible for claims handling and billing and collection from third party reinsurers related to CNA’s A&EP claims. 2010 (In millions) Other operating expenses $ (529) Income tax benefit 185 Loss from continuing operations, included in the Other Insurance segment (344) Loss from discontinued operations (21) Net loss (365) Amounts attributable to noncontrolling interests 37 Net loss attributable to Loews Corporation $ (328) In connection with the transfer of billed third party reinsurance receivables related to A&EP claims and the coverage of credit risk afforded under the terms of the Loss Portfolio Transfer, CNA reduced its allowance for doubtful accounts on billed third party reinsurance receivables and ceded claim and allocated claim adjustment expense reserves by $200 million. This reduction is reflected in Other operating expenses presented above. In its most recent actuarial ground up review of pollution exposure completed in the fourth quarter of 2010, CNA noted adverse development in various pollution accounts due to increases in average account severity. As a result of this review, CNA recorded $80 million of gross unfavorable pollution-related claim and claim adjustment expense reserve development for the year ended December 31, 2010, which has been ceded under the Loss Portfolio Transfer resulting in no net prior year development. The gross A&EP claim and allocated claim adjustment expense reserves ceded under the Loss Portfolio Transfer and other existing third party reinsurance agreements were $2.5 billion at December 31, 2010. The remaining amount available under the $4.0 billion aggregate limit of the Loss Portfolio Transfer was $2.3 billion on an incurred basis at December 31, 2010. The net ultimate losses paid under the Loss Portfolio Transfer were $154 million through December 31, 2010. The Loss Portfolio Transfer is considered a retroactive reinsurance contract. In the event that the cumulative claim and allocated claim adjustment expenses ceded under the Loss Portfolio Transfer exceed the consideration paid, the resulting gain from such excess would be deferred. A cumulative amortization adjustment would be recognized in earnings in the period such excess arises so that the resulting deferred gain would reflect the balance that would have existed if the revised estimate was available at the inception date of the Loss Portfolio Transfer. Thank you to anyone who takes the time to explain this to me, I greatly appreciate it! Buckeye

No problem. I have thoroughly enjoyed these videos and figured they were old news around this group :) I am glad to be able to contribute to the forum. Also, I am in Columbus..you?

Hey Liberty- Here you go! http://www.bengrahaminvesting.ca/Resources/videos.htm Watsa, Chou, Whitman, Schloss, Kahn, Hawkins, Cundill and many more. It is probably one of the finest collections on the web, Buckeye

Hey Peter_Burke- Have you watched this video? http://www.bengrahaminvesting.ca/Resources/Video_Presentations/Guest_Speakers/2009/Klarman_2009.htm It's been a while since I watched it, but it may be more of what you are looking for. Let me know what you think.

Peter Burke, I am with you! I think one of Buffett's most impressionable statements is "thinking like a business owner." He has taught me to think about my investments as owning a piece of a business. If I own shares in Coca Cola, I am a partial owner of the business. If I think there is going to be a recession should I sell my company because profits may fall? Hell no! It seems like buying and selling businesses based upon near-term struggles is speculative at best. As a former small business owner I think back to the idea of selling my business anytime I thought there was going to be a recession, with hopes of buying it back cheaper, and it seems ludicrous. This ECRI guy may be correct in his predictions, but if he is such a phenomenal business person why hasn't he created a 200 Billion dollar company? He reminds me of the guy who sells the "How to Get Rich Book" that tells the reader the best way to do it is to write a book on how to get rich. I think part of the enjoyable thing with investing in equities is finding companies that you are willing to "ride it out" with, in good times and bad. Knowing you have selected "business partners" who you trust and admire and are willing to forge through the tough times with makes the end result that more gratifying. That's my two cents. Anyone can feel free to send me a nickel and I will send you back your three cents change.

Hey Sanj- I am going down to "Occupy" with my Levi's Blue jeans, Nike Shoes, Northface Jacket, while sipping on my Starbucks coffee. I will be sure to post some videos, pictures, and texts with my Iphone depicting my complete disgust with corporate America!!!

Hey Biaggio I think the value he quoted was @90.00 per share. This was pre 2008, I believe, which may mean that the real estate value has decreased substantially. However, the share count has also decreased substantially. If the percentage decrease in share count equals the decrease in real estate value it may still be @ 90.00 per share. I will look for the article or interview where the real estate value was quoted.

Another interesting tidbit with regards to MLI- I live in Columbus, Oh and every single metal cap on the water-main lines (located on all the streets, lawns, and sidewalks) is stamped "Mueller Industries." I noticed this the other day and thought that maybe part of Leucadia's thesis is a play on the aging water and sewer infrastructure in the United States. Maybe I am giving them to much credit. Thoughts? Comments?

This seems like an interesting pick. As a (biased) owner of CNI it looks like the better company, of the two, by far. Better margins, end-to-end network from Atlantic to Pacific, rail to Gulf of Mexico, rail into upper provinces and priced far lower on an earnings basis. Maybe with Gates being a large holder he wanted to stay away from CNI. Also, for you Canadians, wasn't there a stipulation when the two rails went public that there was a limit on the percentage of ownership one could have in either of them? I often that if not for this that Buffett's Burlington could make a bid to create the mother of all rail distribution system. Thoughts? Comments?

Thanks AZ and Liberty. I have read the other four as well, maybe Quality of Earnings is worth adding to the library. It's funny that Amazon just sent me an email recommending this book based on my previous purchases. I will make sure to post once I have purchased and read this one.

Hey Liberty- What are the other 4 books mentioned? Thanks in advance

The funny thing about DECK, that any Cali kid can tell you, is that UGG's were originally worn by the surfer guys who had cold and wet feet. I guess once they made them popular and the girls started wearing them they lost interest. We should be trying to find out what the surfers are wearing now :)

Got it. Thanks Sanjeev, I wasn't sure what the outcome of that endeavor was.

Is this one of the companies that he helped "turn around"?

I am looking forward to reading the transcript from what should be today's interview. It is perfect timing to actually hear some thoughtful explanations and reasoning with all of the recent macro financial porn!

-Confidence - probably not enough to ask everyone I know for their money to invest, I feel I need to learn a LOT more -I do have enough of a cushion to live without income for a couple of years. I do have savings outside of my current equities, however I wouldn't be able to continue to contribute to my investment portfolio. -I have been investing for myself for the past two and a half years which I know is only a drop in the bucket. I opened my brokerage account on April 8 2009 :), of all times. Therefore my returns have been great so far, but I feel it is more of an anomaly because of my timing - I am 33 years old, no kids, not married (yet:)), with a very supportive girlfriend, -Net worth- not enough to live on with 10-20% returns. -If it is very hard to break into the business working for someone else in your 30's to 40's do most just start out on their own from the very beginning? I thought maybe there are some types of careers that could lead future investing opportunities. I have met with Merrill Lynch for financial advising but wonder if that would take me down the wrong path. Not really sure what to think, hence why I posed this question here. Thanks again to all for any comments or suggestions. Feel free to ask and additional questions.