SFValue

I dont want to give too much away, I found the book really interesting. He tried to raise a dedicated fund for the CDS, was not successful doing it..(Paulson certainly was) and the book talks about most of the points Sanjeev mentions: concentration of the fund in CDS, catalyst for the trade, angry investors (strating with founder and main backer Gotham Capital (Joel Greenblatt),..very interesting read.

very interesting, thanks for posting I find it fascinating how the analysis relies on market prices so much (comps, % changes compared to market prices in different points in time, etc). considering how FFH thinks about Mr. Market, that is how they were able (and willing) to pull this of at this juncture. Fairness opinions are too mechanical, ideal for the Prem's of the world to take advantage in "friendly and Fair" way.

Thank you very much Joey. Very interesting

I went to Prem's lecture at the Uof W yesterday - and to the AGM last week. What a contrast! I went only to the AGM, can you elaborate? Thanks,

A very interesting comment by Prem was that they view the acquisition of NB as adding flexibility and strength to FFH. He mentioned that now they have the ability to upstream (200 Mill on average per annum ??? (is that right - please correct me if I am allucinating here)) to the holding co. In other words the 400 mill they spend in NB is worth much more to FFH than the cash. regarding buy backs, my take is that like everything else they do, it is opportunistic. Last year they bought 1 mill shares, this year (so far) they are buying other equities and bonds, so they look at everything. They look for value everywhere. having said that, it is obvious that the 1 mill shares that they bought last year represents value to them.

the only thing I want to to add is that there is only one way for you to leave in style (if you must leave).. FFH @ 1000.. ;) stick around till then...

to be honest, my first reaction was that FFH might have gotten some TARP money through AIG's CDS settlement or something like that ja ja ( a la GS)....

are you assuming the CDS hedge the whole bond port? I am under the impression that the munis portion are + ve (as of now ) and unhedged...

T-Bone I agree. I think it is more difficult to act that way if you manage OPM, thats why FFH or BRK can do it as they see fit. If you look at Munger's history as a money manager the bear market of the mid 70s killed him sicologically as a manager of OPM. Well, killed him in the scense that he went on to partner with WEB and become a billionaire..;)

I remeber at last year's AGM that somebody asked Prem about buying MBS. he said that the only reasonable way to do that was to go over one by one and not look at them as an asset class. He also mentioned that they did not have the intention of doing that at that point (IIRC). Well, they are doing it now... Also, Tilson has gone over a tranch that they purchased under the same premise...cash yields are huge and very sensitive to a few % of sensitivity, like a call option.

thank you for the comment, was wondering If I was missing something.. how easy to say that you only care about the biz and forget about the quote but how difficult to do... from a risk / reward perspective I kind of agree that at his prices it is a better deal than a few years ago....

any general insurance news or specific FFH/ORH that i am missing today; or this is more of the they went all in to equities and their CR sucks repricing by Mr. Market? thanks in advance,

i did not, otherwise would have sold at BV+ to buy back now (all in less than a month).. ;) it is acting as if a big hurricane is on the way.... Prem makes billions when everybody looses their shirts and the market says: great, but you can not do it again...you deserve to trade like all your others wounded colleagues. the equity port is suffering greatly, munis are doing well, corporates are suffering, CDS are doing well... has to be a fixation with CR (markets reaction)...specially while looking at ORH wichich is less leveraged to the equity market. No respect at all, I agree with Partner that we should comment when we see concrete numbers, but I certainly hope that they are incresing my piece of the pie by retiring some stock since I can not buy more now...

well I dont think he is selling at this prices, he could have sold some 25% ago...

apparently they are out of FFH....which jives with my thesis that a lot of people piled in FFH for the CDS, equity puts and Tys as protection... now we need time for the weighting machine to caliber FFHs earning potential...

it adds up... I would be very susrprised if they are not buying stock back (based on last years action, comments are their capital flexibility). However, it could be a pleasant surprise since that would mean they are buying something that they understand better and consider it cheaper, a very very high threshold.

I think he is talking about flawed ideas (investment ideas) here...not the concept of conentration.

well...I am trying to understand the market's reaction to the report. I think the market does not care for FFH now that the CDS are mostly gone (and Tys). Market is repricing based on latest 13F would be my guess. never mind the munis, corporates, CDS still in the port, cash...does the market care that BRK insures most munis? I hope the company is buying back more stock , based on last years actions I would guess they are.... any thoughts?

more problems for AIG, CNBC reporting they need more money from gov. less and less capacity out there.

If you bought FFH a couple years ago for the CDS, TYs, etc...you have a logical reason to sell now that they have closed (most) of those positions. What is interesting to me, is that since selling based on them closing certain positions (and opening others) is implicitilly saying that now their current investments are wrong and the market price of their portfolio is an accurate reflection of reality. it is hard to imagine a better bunch flushed with cash in this markets. question: if the current destruction of capital plus having had the 3rd costliest hurricane in history does not hardened pricing, what will? what about purchasing power from ins. buyers, they are certainly hurting too... thanks,

irrelvant title / good article http://www.reuters.com/article/marketsNews/idCAN2026106920090220?rpc=44

great conf. call one takeaway (for me) is that when they say they look at downside risks and try to hedge them out they really mean it, 2008 is the perfect example. they are positoning the company for the stated lumpy 15% (as they historically have). To me, is extremelly impressive how they change their minds when the facts warrant it (in their opinion). Historically they have been more right than wrong and there is no reason to think it will be different this time, on top of that they will not bet the farm anyway. if you think you can do better (investing wise) than HW (blended port) FFH at book is not your best deal. However from a risk adjusted perspective I think it is one of the beat deals out there. It will not triple quickly, but I think it eventually will.....

At the end of the day when you evaluate BRK and FFH you have to take into account Buffett's and Prem's investment capabilities. They can change their minds withouth you knowing. they can (will and had) made mistakes, However I think this environemnt suits their styles and they have been waiting patiently for it. I can not make myself buy WFC (or any other bank for that matter - circle of competence) I defer to them on those desicions. More importanly, in FFH case, we are not seeing the whole port. (international, hedges, etc...)

I am pretty sure he sold his house back in 2004 or 2005 For those that doubt his ability to time the markets or think he did not see the housing debalce coming ja ja...

thanks for all your hard work....looks great