colinwalt

The authors reference a much longer related article they wrote: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2480835 Warning: It's long, 54 pages... Overall, they argue that shareholders seem to have a case, but feel that any compensation should be based on the value of the shares / preferreds at the time the 3rd amendment was enacted... - they are worried about speculators / hedge funds making out like bandits... P45: "In other words, what would be the price that Fannie or Freddie would have to pay to purchase the remaining stub at this time?" Not sure what the implications of this are? If there had been a share buyback at the time and holders had voluntarily sold, fair enough, but if you were holding at the time, with no plans to sell at the then prevailing prices because you could see the start of the return to profitability and then, the 3rd amendment was enacted, essentially pulling the rug out from under you, is it then fair to compensate you now at the then prevailing prices? And what does it mean in terms of fair compensation, if you've bought since? So even though you've seen billions taken due to the third amendment and valued the securities based on getting compensated for that - hard luck, even though you win the case, you can't value the securities you are holding based on the earnings that have been "taken"? And if the 3rd amendment sweep is considered a "taking" then the money has to be returned - correct? How could we end up with the Government losing, and getting off by essentially just having to retroactively "pseudo-buy-out" (if that makes sense?) the current security holders at the Aug 2012 prevailing prices (which I think seems to be the logical conclusion of what they propose) and, at the same time, the Government gets to keep all the profits swept since then?

ECB takes raft of new steps to avoid deflation http://news.yahoo.com/ecb-takes-raft-steps-avoid-deflation-125227440--finance.html So is this going to be a repeat of Soros v's Bank of England? In the remake, it's Watsa v's ECB? PS: Hope I'm not the only one here old enough to remember the original ;)

Draghi Gets Ready to Go Negative as Inflation Sinks http://www.bloomberg.com/news/2014-05-30/draghi-gets-ready-to-go-negative-as-inflation-sinks.html

I had a position, but sold out everything yesterday based on the excellent review of the Adcom briefing document here: http://mannkind.freeforums.net/posts/recent

I'm no lawyer either, but this was pretty much my take on the motion

Do not know enough about this to comment - leaving that to those more knowledgeable than me... http://www.bloomberg.com/news/2013-09-26/fannie-woos-investors-as-regulators-embrace-risk-sharing.html ... "The risk-sharing transactions resemble provisions included in legislation introduced this year by Republican Senator Bob Corker of Tennessee and Democratic Senator Mark Warner of Virginia, and endorsed by President Barack Obama. The proposal would create an agency to replace Fannie Mae (FNMA) and Freddie Mac that would bear catastrophic mortgage losses, after private firms take the first 10 percent." .... "Fannie Mae and Freddie Mac may not want to do too well at luring bond investors to their risk-sharing deals, according to Sanders, the former bond analyst and professor. “I think that they’re nervous about succeeding, because if they succeed that gives a lot of people in Congress the ability to say, ‘Well, we don’t need them after all do we?’” he said."

Atul Gawande of "The Checklist Manifesto" fame has written some great stuff on the state of US healthcare: http://www.newyorker.com/magazine/bios/atul_gawande/search?contributorName=atul%20gawande All his articles are worth reading, here are some of those relevant to this thread: http://www.newyorker.com/reporting/2011/01/24/110124fa_fact_gawande (Can we lower medical costs by giving the neediest patients better care?) http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande (What a Texas town can teach us about health care.) http://www.newyorker.com/online/blogs/comment/2010/12/the-cost-conundrum.html http://www.newyorker.com/talk/comment/2007/07/23/070723taco_talk_gawande (SICK AND TWISTED) http://www.newyorker.com/archive/2005/11/14/051114fa_fact_gawande (THE MALPRACTICE MESS)

Berkowitz likes the preferreds too... http://www.fairholmefunds.com/show_pdf.php?file=http://www.fairholmefunds.com/sites/default/files/FAIRX_6.30.13%20v14_web.pdf#pagemode=bookmarks "The Fund was able to purchase the preferred stocks of Fannie and Freddie near one-fifth of liquidation values – a significant bargain thanks to market predictions of U.S. Government agencies expropriating their assets. we see them differently. Fannie and Freddie are successful, publicly traded, shareholder-owned companies just like AIG and Bank of America. Shifting political winds can change their futures, but not alter their pasts. The Fund has filed complaints in the court of Federal claims and the U.S. District court in Washington. In our suits, we seek nothing more than the enforcement of existing contractual rights, which require the payment of dividends to Fannie and Freddie preferred shareholders. our arguments are based on fundamental principles. In America, property ownership is a sacrosanct freedom, guaranteed by our Constitution. In America, we follow the rule of law, not the rule of the crowd. In America, profitable companies honor contracts"

This discussion is a bit over my head I'm afraid, but FWIW Third Ave think (or thought, as these are the April 2013 letters) there's a possibility of significant upside: http://www.thirdave.com/ta/documents/sl/Third%20Avenue%20Funds%202Q%202013%20Shareholder%20Letters.pdf See page 31 / 32: The unfortunate truth about Fannie and Freddie is that, against the wishes of many of the Senators and Congressional reps in the U.S. government,these mortgage insurers provide vital services to the economy, to homeowners and to voters. They have a combined $5 trillion balance sheet that cannot be duplicated. They are larger than Bank of America, Citigroup and Wells Fargo combined. Our original investment thesis on FNMA/FMCC has not changed.These are nearly impossible institutions to replace, recreate or eliminate. They are the ultimate U.S. housing price recovery play.They have an incredible cost of capital advantage(thanks to the quasi-government guaranty). This has always been a political risk that can go either way based on the swipe of a pen and the political winds that are blowing at that time. Against this political risk, we have the facts on our side (helpful but not always sufficient). ... If the government decides to extinguish those Senior preferreds after getting a full return of capital (but no return on capital) all of that value will drop to the public preferred securities we own and they will be worth par($25 or $50) versus where they are trading now $4-$8 (15 cents on the dollar).That will result in a 6-7x return from here. ... The common stock could be worth well north of $100 billion if the Government preferreds are extinguished after full repayment – that means the stock, with 5.8 billion shares outstanding could be worth $17-20 per share vs.the $1+ or so it has recently been trading. Thankfully we do not live in Argentina, China, or some other country that likes to seize and run private companies indefinitely. At some point we will realize that these companies need to be returned to the public markets – and fortunately for taxpayers, our government can get all their initial investment returned and make a significant profit on the equity.

Interesting article on how manufacturing is actually starting to come back to the US.... and as someone who's had to manage outsourced projects, all I can say is that it's about bloody time someone realized the bean-counters can't see past a P&L statement! http://www.theatlantic.com/magazine/archive/2012/12/the-insourcing-boom/309166/

This has got to be one of the best (probably the best) forum out on the world WILD web for amazingly well informed, civilized and any other appropriate superlative I can think of (and many that I can't) - the only other one that I think comes close is Greenblatt's Value Investor's Club. $10 seems a small price to pay to preserve the incalculable value of this forum.

Rough Q2 2012 Call Notes - Apologies in advance for anything not clear or just plain wrong! Mannkind 2012 Q2 Call 159.9 Million shares outstanding 32M dollars cash left. 58.9M including credit line from Al Funding until Q4 2012 Nothing definitive re cash-raising Litigation: Company 2.8M shares issued + 225K shares. Insurance company paid all cash settlement part. Company denies all wrong-doing. Clinical trials – screened > 87% + 83% for the two studies. Expect screening to be done next month. Have considerable experience with the product now Have a lot of interest in the delivery system New patent on micro-particles + usage – extends patents until 2031! Very aggressive trial – FDA requested very poorly controlled patients! On track for recruiting re the revised schedule Trails should be done by 2nd Qtr next year and re-submission by Q3 Financing – nothing firm yet Addresses glycemic problem in a natural way. Relative insulin effectiveness is not much less than injected rapid acting insulins (meaning, need to give a little higher does for same impact?) Most significant fact is that it will be an effective tool throughout the entire diabetic illness range – including type2, where the market is huge – (type1 – 5-6%, type2 is about 92% of the total) 70% of type2 currently don't use any insulin at all. But all the current drugs that the 30% do use have limited effectiveness and side-affects – but no alternative currently. Diabetic association recently updated guidelines to start insulin earlier than previously for early onset type2 patients. And FDA has guided Mannkind to test these patients too in this trial. Already showed, in a separate trial, type2's can gain good control, even if used with no carbs ingested. 15 patients have already completed the 171 trial 175 is a faster trial – starting a little later Cash burn 10 to 12M per month. By early next year, with trial winding down, will be about 8M per month. But if winding up for commercialization, that could end up being higher. Early trial results? No concerns / issues of hypo so far. How long will the FDA review take? Expect it to take 6 months. Partner will already in diabetes field? Don't have to be, but should have some endocrinological experience – open-minded about type of partner. Want just US or world-wide? Looking for a global partner, but some strong regional partners have approached them – so not entirely discounted as an option. Type2 trial, due to guidance from the FDA itself – said it would be a very valuable thing to do – would serve a very significant need Planning to look at the early onset diabetes trial participants separately from the rest of the trial participants. Al Mann: A lot going on, but not a lot we can discuss except for the trials – hope will have some interim updates before next Qtrly call.

No problem... thanks for the clarification...

Guess I'm being dumb about this, but this is all I can find: http://www.choufunds.com/pdf/AR11.pdf Factors Influencing the 2011 Results The portfolio had gains in the holdings of Sanofi and Next PLC. Securities in the portfolio that declined most in 2011 were Aer Lingus Group, Topps Tiles, Nokia Corporation and the debt securities of Hellenic Republic. The Fund added equity securities of Abbey PLC, Heracles General Cement, The Governor and Company of the Bank of Ireland, and the debt securities of Hellenic Republic and MannKind to the portfolio; on the sell side, the Fund sold all shares of CryptoLogic and all its debt securities of Global Crossing U.K. Finance. And that's noted for the "Europe Fund" - I must admit, I didn't read every word - just searched for Mannkind.

"Francis Chou does have a position in Mannkind in his Asia fund." Strange, where do you see that - this link / pdf (http://www.choufunds.com/pdf/Asiaport1112.pdf) supposedly shows all holdings in the Asia fund as of YE 2011, no Mannkind (copied below) - has he established a new position since then? CHOU ASIA FUND AS OF DECEMBER 31, 2011 Total Holdings (excluding cash equivalents) Chunghwa Telecom Company Ltd. ADR 9.2% Able Chintai Holdings 8.4% PRONEXUS Inc. 6.9% Sankyo Company Ltd. 6.4% BYD Company Ltd., Class H 6.3% SK Telecom Company Ltd. ADR 4.9% Pyne Gould Corporation Ltd. 4.1% UTStarcom Holdings Corporation 3.6% Qiao Xing Mobile Communication Co. 3.3% AbitibiBowater Inc. 2.8% Delta Electronics (Thailand) Public Company Ltd. 2.6% Glacier Media Inc 2.2% BYD Electronic (International) Company Ltd. 0.9% China Yuchai International Ltd. 0.7% Hanfeng Evergreen Inc. 0.6% AJIS Company Ltd. 0.5% Total Holdings 63.4%

I've been following this one for a while - FWIW here’s a random (but not exhaustive) list of some pros + cons (I’ll let you guess which are pros and which are cons): • Al Mann has quite a track record and has a huge amount invested. • The product was pretty much approved at one point as per the FDA insider trading case: http://afresa.blogspot.com/2012/03/liang-insider-trading-documents.html • I’m pretty sure I’m suffering from a severe case of “endowment bias” (and every other bias out there) but it does seem to me that at this stage there’s very little risk with the approval. o Admittedly, they have to conduct yet another trial, but they’ve proven they can run trials in the past so I’ll be very disappointed if they slip up here. • Al Mann had a very similar experience with the insulin pump he invented and that went on to appreciate by an obscene amount - no anchoring biases here on my part of course – but boy, if lightning were to strike twice! • One big question is market acceptance – you’d think this would be a no brainer – no injections, works better than existing treatments… but there’s probably a lot of treatment inertia from doctors that will take some (significant?) effort to overcome – on the other hand patients should come clamoring for it, assuming they aren’t concerned about any possible impact on their lungs (studies have shown no associated risk) – but people are more scared of flying than driving, so what do I know… • Al Mann could try to take it private, but he does seem to have a history of acting with integrity plus, as MNKD is looking for potential marketing partners I am pretty sure there are some very convincing internal projections that value the company at a meaningful premium to the current price – so those would be difficult to hide if he did try to pull a fast one. • There do seem to have been some misjudgments on the part of management / Al Mann, for example switching the delivery device at very a late stage - the reason the FDA gave for wanting the new trials o But there’s a lot more to this than appears at first glance, which I’m not going to try to get into right now. • And Al Mann does seem to over-promise, which is a bit worrying, however as I noted, he has a tremendous track record and I think part of it is that he must be incredibly frustrated with the whole process at this stage – he’s spent years working on this, invested hundreds of millions of his own money, has conducted trial after trial proving the product works, is safe and is better (significantly it would seem) than existing treatments and he’s still pumping money into it and diabetes patients still can’t get to benefit from the product. o And all this at an age way past when most people have any desire or ability to work. • There’s a pretty good (a bit dated mind you) overview here: http://seekingalpha.com/article/80475-mannkind-overlooked-biotech-with-excellent-prospects-part-i • Francis Chou had a small position, but sold out so I’m assuming I know more about this than he does – seems to me that’s a bit like taking the other side of a bet against Buffett! • Oh yeah, and they are going to run out of money (again) by around the end of the year. • And the company is named after the founder… • MNKD Full Transcript 1-12-12 JPMorgan Healthcare Conference o http://agoracom.com/ir/Mannkind/forums/discussion/topics/524814-mgmt-statements/?message_id=1661573#message_1661573 o If you’ll read this closely you’ll see Al Mann says the share price will “pop” once financing is in place – sounded wonderful except the price tanked! o And for some reason (couldn’t be related could it?) the webcast of this on Mannkind’s site never worked.

Call transcript: http://seekingalpha.com/article/387351-sears-holdings-s-ceo-discusses-q4-2011-results-earnings-call-transcript Lampert's letter: http://searsholdings.com/invest/index.htm#letter

I think there's a serious need for Apple to consider that there are more important things in life than profit at any cost, especially the health, welfare and safety of the people actually assembling their products - I think this is an absolute disgrace: http://www.nytimes.com/2012/01/26/business/ieconomy-apples-ipad-and-the-human-costs-for-workers-in-china.html THE IECONOMY In China, Human Costs Are Built Into an iPad By CHARLES DUHIGG and DAVID BARBOZA Published: January 25, 2012 The explosion ripped through Building A5 on a Friday evening last May, an eruption of fire and noise that twisted metal pipes as if they were discarded straws. Two people were killed immediately, and over a dozen others hurt. As the injured were rushed into ambulances, one in particular stood out. His features had been smeared by the blast, scrubbed by heat and violence until a mat of red and black had replaced his mouth and nose.