Sportgamma

I fail to see how it changes the probability of a margin call, that sns operations are offered as a collateral rather than BH as I would think that what determines the margin call is the market price of CRBL. Could you elaborate?

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/tanker-industry/msg57021/#msg57021

Bank Nordik http://www.euroland.com/omx_attachments/2012-08/493647-0-is.pdf Market price (DKK) = 69 Book value = 200 http://www.euroland.com/SiteFiles/company/company.asp?GUID=5941796F2BE0B74F95F8EDC073CE5316&Isin=FO0000000088&MarketID=15&CompanyCode=FO-BANK&Customer=1&ShowMyShares=true&menuitem=90&wtlang=English http://en.foroya.fo/Admin/Public/Download.aspx?file=Files%2fFiler%2fRating%2fcreditopinion2001feb.pdf

I'd say HF Verðbréf, they are independent (not one of the big banks), especially if you're considering participating in on of the currency auctions. http://hfv.is/en/cm

I thought that you had gone x-skiing in Iceland, so I was wandering who your ski-guide was as I know a few (and as you say, its a very small place). I'd definitely recommend Jökull Bergmann (he's the only IFMGA Internationally certified mountain guide in Iceland and he is a member of the Association of Canadian Mountain Guides ACMG): http://www.arcticheliskiing.com/en/media/videos http://www.arcticheliskiing.com/en/media/photo-gallery/best-of-arctic-heli-skiing And Arctic Adventures: http://www.adventures.is/ http://www.glacierguides.is/ Well, if/when you're heading over, you're more than welcome to drop me a line if you want to catch a beer/coffee.

With Marel the currency is not that much of an issue as the revenue streams are for most parts in foreign. Also the operational leverage mean that minor improvements in efficiency and/margins will have a big impact on the equity value. Where did you ski and who was your guide?

I have no idea if there is a moody's manual . Hassle was not the right phrasing. I meant the extra research, dd and general involvement one has to put in when investing in a private company as opposed to buying shares in a publicly traded entity.

The central bank regularly holds a Króna auction (every two months or so) in which you can get Krona for a 20-25% discount: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/disney-dollar-special-situation-(quiz-investment-idea)/msg84140/#msg84140 I´d recommend looking at Össur and Marel as those two are operating in global markets with 4-5 major players. If one is willing to go through all the hassle, there is also value to be had in private companies. Fisheries are in a very uncertain state at the moment, due to government policies. Properties I think are still very irrationally valued, except maybe some unique/prime locations with very solid cash flows. Gísli

What I think truly makes Buffett unique (and this is a view that many others have expressed here on this board already on numerous occasions) are: 1. The robustness of his approach. He has been able to adapt his style/strategy each particular environment during his career. I think this is truly difficult because people in general are ignorant about how the environments effect when making decisions (Kahneman & Tversky, the basketball and gorilla test, etc. etc.). 2. His business acumen. Yeah sure, to do what he did you would "just" have to lever up for free and voilà. Is there any case ever of an insurance company that has been able to increase its business at that rate and to such a size without sacrificing profitability of its underwriting. Take Berkshire Re for example, Buffett actually had to spot the genius of Ajit Jain. Mr. Jain was someone who excelled at school, he didn't have his uniqueness written on his forehead. Gísli

Roger Lace President, Hamblin Watsa Investment Counsel Ltd. Mr. Lace is currently President of Hamblin Watsa Investment Counsel Ltd., a wholly-owned subsidiary of Fairfax Financial Holdings Limited, a publicly listed insurance holding company. In this capacity, he and his team are responsible for managing Fairfax’s global investment assets. He leads the equity management group in uncovering investment opportunities worldwide using the value investing approach. He has served in the investment industry since 1975, initially receiving his training as a research analyst at Confederation Life under the tutelage of value investing specialist John H. Watson (cofounder of Sprucegrove Investment Management Ltd.) He subsequently worked in portfolio management at Scotia McLeod and has been a portfolio manager and principal at Hamblin Watsa since 1986. He received his SB in management from the Alfred P. Sloan School, MIT in 1973, his MBA from Ivey in 1975, and CFA in 1979. http://www.bengrahaminvesting.ca/About_Us/advisory_board.htm http://advisoranalyst.com/glablog/2009/03/10/prem-watsa-letter-to-fairfax-financial-shareholders/

As far as I know, Paul Rivett is managing the shop and B. Bradstreet is key member the team. There is a former Mackenzie Cundill analyst working there: "Wade Burton, a key fund manager in Mackenzie Financial Corp.'s Cundill Investment unit, is leaving to run money for Prem Watsa at Fairfax Financial Holdings Ltd. "I'm leaving to take the [investment] craft to another level," the 37-year-old manager said yesterday. "If you get a chance to work with Prem in his prime, I don't think you have any choice but to do that." As lead manager of Mackenzie Cundill Canadian Security and Mackenzie Cundill Canadian Balanced funds, Mr. Burton has been overseeing $2.4-billion in assets in addition to running other money at the Vancouver-based unit." http://investdb2.theglobeandmail.com/servlet/ArticleNews/story/GAM/20090407/RFUND07ART1851 http://www.torontolife.com/features/2-billion-man/?pageno=3 I know from experience that they are extremely fast moving. I once made them aware of an investment opportunity outside of North America. Within the hour, Mr. Rivett had made contact and the same day I had a chat with a person at HWIC. I've witnessed business managers have trouble deciding if they should take a cup of coffee, so this was truly amazing.

The equity hedge is a short position on the S&P500 and the Russell2000. A very big chunk of their portfolio is in companies such as RFP, RIMM, LVLT and BOI. There is no reason that the market value of these particular investments will move in tandem with the broader market.

Man, have you got some cojones! With your protections, how much would you estimate the downside to be, given a worst case scenario?

It is my experience that economic theory (at leas macro) is often aimed to fit a theory to explain some prior event and then test the "fit" with some econometric analysis. What I truly like about the Austrian school is (1) its emphasis of not knowing better (let the market decide) and (2) always be aware of perverse incentives. When I look at MMT discussion being cited on the thread, it just (1) seems risky (as Moore points out, when do you know when the deficit is to big? When it is to late? In that case your passing the bill to your children) and (2) it is only applicable in a leading economy with a strong currency (if the economy is to small a major risk would be a sudden stop situation). Moore, I am a bit confused by you connecting productivity and debt. As I see it, you could for example increase productivity by adding debt and reducing labor. Perhaps you are talking about household debt? Could you please elaborate?

Sure, Disneyland is Iceland Some info for those interested: The prelude http://en.wikipedia.org/wiki/2008%E2%80%932012_Icelandic_financial_crisis http://www.imf.org/external/np/seminars/eng/2011/isl/pdf/jk.pdf http://sedlabanki.is/lisalib/getfile.aspx?itemid=8715 http://www.imf.org/external/pubs/ft/scr/2012/cr1289.pdf http://sic.althingi.is/pdf/RNAvefurKafli21Enska.pdf http://eng.efnahagsraduneyti.is/media/Acrobat/Future-Structure.pdf http://www.imf.org/external/pubs/ft/scr/2012/cr1289.pdf The currency auctions http://www.worldcommercereview.com/publications/article_pdf/601 http://www.sedlabanki.is/lisalib/getfile.aspx?itemid=9487 http://www.icenews.is/index.php/2012/04/04/andri-gudmundsson-of-h-f-securities-in-iceland-talks-with-bloomberg/ Sample of companies with most of value creation in currency http://www.marel.com/Investors/?source=marel-header http://www.ossur.com/?PageID=12532 http://hampidjan.is/Home/ http://www.ccpgames.com/en/company/about-us Other stuff http://icelandicecon.blogspot.com/2012/03/historical-inflation-in-iceland.html http://icelandicecon.blogspot.com/2011/11/icelandic-krona-and-icelandic-debt.html http://www.rtbot.net/play.php?id=JDcDv4Vthbo http://www.capacent.is/library/Skrar/Capacent-Glacier/CAPACENT%20GLACIER_Foreign%20Investments%20in%20Iceland.pdf http://www.sedlabanki.is/uploads/files/mb001_8.pdf http://www.invest.is/resources/Files/DoingBusinessInIceland_April_2011.pdf

I´m guessing that was sarcasm :D Anyways, that would be a no. By the way, I really enjoy your blog, especially the Syms stuff.

http://www.dailymail.co.uk/sport/article-2196966/Patrick-Collins-Big-spending-elite-heed-Wengers-demand-sanity.html

For the sake of entertainment I have decided to dress this investment idea up as a quiz. It is perhaps a bit far-fetched and it does not have a ticker symbol, therefore I will post it in the general discussions category. So, without further ado: In 1981, the residents of a small far away land, took up a brand new currency. We shall refer to this currency as the Disney dollar and therefore refer to this little land as Disneyland. There is a deliberate reason for calling it a Disney dollar. The fact is that the Disney dollars aren't really a currency, for one is not able to use Disney dollars anywhere else than in Disneyland, nobody would accept it elsewhere. So in fact, one could assume that the Disney dollar is more of a derivative or a function of (1) how well Disneyland conducts its business and the amount of Disney dollars in circulation. So, therein lies the predicament. A few years back the upper management of Disneyland thought of a brilliant marketing plan. In order to attract more people to Disneyland they started selling pre-payed Disneyland cards to potential customers. Tourist agencies stocked up on the cards and the upper management was all to keen on offering them preferable terms. In fact the campaign went so well that they even sold the cards to people who never even intended to go to Disneyland. For the people working in Disneyland this had drastic consequences. Since they effectively got payed in Disney dollars, the only way for them to spend their Disney dollars was to knock on the doors of the upper management and ask for currency in exchange for Disney dollars. During the boom, the upper management offices became flush with currencies as the sales of the pre-payed cards skyrocketed. The upper management was all to keen on buying Disney dollars from employees in exchange for currencies at rates previously unheard of. Some of the younger and more ambitious of management came up with a plan to pay employees a lump sum in advance, allowing them to invest in commercial slots or even just to upgrade their sleeping chambers at the employee residential campuses. The only catch was that the payment schedule of the advance payment was linked to the future exchange rate of the Disney dollar with outside currencies. Needless to say, when it became clear that the people of Disneyland were in fact living inside a bubble, all hell broke loose. The tourist agencies lost their most of their advance payments but still there was an overhang of about about 500 billion Disney dollars. The treasurer of Disneyland had received requests from "off-shore" dollar owners to sell in exchange for currency. The treasurer´s predicament was that if he would exchange all those dollars at once the value of the Disney dollar would collapse. That by itself would not be all to bad, as Disneyland would become cheaper to its customers and gain competitive advantage. The catch was that (1) since most of the employees had already gotten payed in advance on a much higher exchange rate, they would have to pay back for investments that they bought for bubble prices with Disney dollar future exchange rates and (2) most of the necessities that the employees needed they had to buy outside of Disneyland. From an operational standpoint Disneyland was doing well as its income statement was showing decent profits, but the Disneyland treasury simply did not have the currency it needed to pay out the so-called "snow-hang" of "off-shore" Disney dollars without a drastic devaluation. So the treasurer effectively split the Disney dollar into (1) the new Disney dollar and (2) the "off-shore" Disney dollar that was waiting to get out. Now the treasurer had to solve three problems. First of all, he had to make sure that the "off-shore" dollars exchanged hands to parties who intended to keep them in Disneyland. Secondly, he had to make sure that other tourists agencies would not become afraid of dealing with Disneyland. The third problem was that he had to make sure that the employees would not participate in exchanging Disney dollars for currency in order to buy off-shore Disney dollars for a much lower exchange rate. So, the treasurer convinced the the rest of upper management to place two new rules. Disneyland employees were strictly forbidden to buy off-shore Disney dollars and would be held accountable if they were caught doing so. If an employee wanted to exchange his hard earned Disney dollar he would have to write a detailed description on how he was planning to use that currency. Employees from the reception where transferred to the treasury to evaluate each submission. The second rule was that every two months the treasurer would hold a Disney dollar auction (which it named "the investment route") in which employees and tourists alike would be able to bid for a minimum of €9.000 worth of Disney dollars if they would pledge to not exchange them for currency for at least five years. The treasury will review each bid and rule if it fits the criteria or not. What the investor receives when he bids in the Disney dollar auction is one half new Disney dollar for the official treasury rate and one half "off-shore" dollar which is priced roughly at half of the treasury rate. This would effectively give the investor a ~25% discount on the treasury rate (it is not possible to simply contact an owner of "off-shore" dollars, buy at the off-shore rate and bring to Disneyland, for it is stuck at the treasurer´s office). The investment idea Obviously the bidder in the auction is taking on considerable risks, because he does not know the real rate of the Disney dollar. He does know that there will be pressure on the exchange rate until the "snow-hang" is cleared, but he does not know how long it will take to clear it. A value oriented investor will likely conclude that it is too-difficult and potentially a value-trap. But once the eclectic value oriented investor digs a little deeper he will find that there are assets within Disneyland which value have no direct relationship to the Disney dollar. In those cases the Disney dollar is merely an manipulated exchange rate for an asset that has value measurable in real currency. For there are operations within Disneyland that have revenue streams that are mostly (+90%) in currency. Hell, there even is an operation that is a top 5 producer in an entrenched market in which Berkshire Hathaway recently bought into by acquiring a competitor. The eclectic value investor would be able to buy an assets for 25% discount, knowing that if the Disney dollar devalues, the value of the assets will be unaffected. Of course, other risks will remain (business, management, industry etc.) but the exchange rate will not be one of them. I´m curious if anybody gets what I am referring to.

The main benefit that I see in copying is if there is a good chance that the investor that you are copying is a successful activist as it could give you more certainty on how a worst case scenario would look like. I also thought this quote might fit the discussion: https://www.gmo.com/America/CMSAttachmentDownload.aspx?target=JUBRxi51IIBygYyITBInjNA2F%2f9X3Sdy1%2bKjwsV6N%2bX2pD6sXa1S85tJ0F7avyzmVC%2bWr%2bQ5rfRFT2VzSooE4IjewKtjeYGp%2bYF%2b1%2bgJIcb1PbNFtk5Syg%3d%3d

On the 1st of June 2011 I took a small position in Leading Brands (lbix) at $2,55 US a share. http://lbix.com/company/investors/default.asp What initially caught my attention was: - They were trading well under book - A month earlier they had announced an increase in their repurchase program by $1,000,000 (market cap was around $10 m.) http://lbix.com/company/news/pressrelease.asp?id=176 - In the second quarter of 2010 they had taken a hit on earning with a one-time charge on a stock compensation plan http://www.globenewswire.com/newsroom/news.html?d=202652 When I took a closer look at the compensation plan, it actually seemed reasonable as a good portion had an exercise price at $3 and above. http://www.sec.gov/Archives/edgar/data/884247/000106299311002412/form20f.htm My initial thesis: Management´s incentive is to allocate capital in a way that increases per share value as safely as possible. At the current price, share buybacks will not only increase the likelihood of performance options getting in-the-money, but will also increase the % share of ownership of management. What happened? - Lbix has used its free cash flow to buy back shares and pay down almost its entire long term debt ($2,5M) - In may 2012 the company (probably because of the illiquid nature of the stock) announced a dutch tender offer with an cash offer ranging between $4.10 and $5. The resulting offer came out at $4.10. http://finance.yahoo.com/news/leading-brands-inc-announces-intention-123000551.html http://finance.yahoo.com/news/leading-brands-inc-announces-final-231158876.html - As of today, the stock is trading at $4.20 and book value per share is about $3.94. I get a conservative estimate of owner earnings between $0.4-0.5 on a per share basis. My dilemma: - The FCF has been way better than I anticipated, causing me to stay longer than I was planning (I had $3.5 as an exit point). However, the benefit of buybacks is gone at these prices. - Today, the company issued an early warning report: http://finance.yahoo.com/news/leading-brands-announces-early-warning-123000313.html I would be very interested to hear the opinions of the members of the board, as to which scenarios they see unfolding in the near future and which consequences those scenarios might have for me as a shareholder: A few options - Is management aiming at going dark? And if so, should I be worried that they might try to rip me off? - Is management aiming at taking it private? And if so, should I be worried that they might try to rip me off? - Are they beefing up their stake before a buy-out? - Business as usual. - ? One interesting perspective: CEO Ralf McRae charges lbix $ 528,000 p.a. in "consulting fees" through a company of his. Lbix has a market cap of $10-13M and 17.78M in revenues. Prem receives C$600,000 in annual salary as CEO and Chairman of Fairfax, with a market cap of 8.0B

Hi Giofranchi, Just curious, as you are from Italy: Do you have an opinion on Exor? Best regards, Gísli

CEO letter with notice of annual general meeting (May 2012) http://www.opap.gr/en/c/document_library/get_file?uuid=b3a231dd-eb2e-4a2f-8654-560b2fd507be&groupId=11503 CEO letter with notice of extraordinary general meeting (October 2011) http://www.opap.gr/en/c/document_library/get_file?uuid=7c46769b-ac87-43ab-bb82-c4741ca12805&groupId=11503 Enclosed presentation: http://www.opap.gr/en/c/document_library/get_file?uuid=d492fe6d-0d99-4db6-986c-6d0ccb4a1f73&groupId=11503

I disagree with you. I´m more of the Popper-ian perspective (http://lachlan.bluehaze.com.au/books/popper_open_society_vol1.html). Our brains are hardwired to look for cause-and-effect connections and therefore it is logical for us look for some protagonist with a bad motive if something bad happens. But bad things can happen even if the ones involved had good intentions. I live in Iceland and after the collapse public debate has been severely distorted. A large part of the population simply assumes that if someone is wealthy he must be involved in something criminal or at least immoral. It is a strange atmosphere and one in which totalitarian views thrive in. It has come to a point that the authorities are allowed to wiretap people who accused of crimes against property (as opposed to wiretapping people who are under suspicion of committing a crime). In this case, I am of the opinion that it is indeed about countries and a system put up for the wrong reason and without taking the possibility of very bad outcomes fully into account.

http://www.eurointelligence.com/eurointelligence-news/home/singleview/article/a-tale-of-two-trilemmas.html?no_cache=1

I think the central theme here is the mundel-fleming trilemma. As you do not have a floating currency, you have to look at the flow of funds between countries within the Euro. This presentation from Richard Koo is very helpful (he talks about the Eurozone after 12 minutes):