TwoCitiesCapital

I will regularly look at a chart to determine what the range of prices are to determine where I want to set my limit orders for buys/sells. I also use things like Heiken-Ashi candles to determine probable turning points in names for transactions at the margin. It doesn't mean I liquidate entire names based on top/bottoming patterns, but I may opt to sell near the money covered calls as we near a supposed top OR stop selling put spreads to reduce leveraged upside. Or buy calls near a supposed bottom. Etc etc etc.

This isn't how recapitalization/restructurings works. It's not necessarily zero sum, but what is good for preferred holders is generally bad for common as preferred is higher in the cap structure and commons only get what is left over after satisfying preferred obligations. Same goes for any preferred &to-common conversions - what advantages preferred disadvantages current common owners.

This is why it's important to be diversified. Sometimes bonds hedge. Sometimes gold hedges. Sometimes equities are a hedge. They don't need to move opposite of one another - they just need to move differently. I tend to like Bridgewater's All Weather quadrant of thinking about diversification. You want some exposure to things that do well when growth is high and inflation is high (real estate, base commodities, energy, emerging markets). You want some exposure to things that do well when growth is high and inflation is low (developed market equities, corporate bonds, high yield/emerging markets debt, etc.) You want exposure to things that do well when growth is low and inflation is low (cash, treasuries, money market, mortgages, etc) And then exposure to things that do well when inflation is high and growth is low (TIPS, gold, perhaps Bitcoin). Bridgewater uses leverage to "equal weight" this exposures based on expected volatility. I don't think you need to get that fancy. But just owning a little bit of all of them is helpful and then you can overweight or underweight according to your views of relative attractiveness and environment going forward.

Flat over the last 12 months, but was up 300-400% in early 2024. Seems perhaps it SHOULD trade higher, but given the lack of information, the lack of liquidity, and the size - I'm not sure the price will ever reflect the value and we'll just have to wait as it self liquidates.

Depends on the drawdown. I think oil is a pretty good hedge again inflation. Gold is a hedge against negative real rates or political uncertainty. Bitcoin isn't a hedge at this time IMO. Obviously shorting stocks and buying puts is going to be a better hedge than bonds....if you're right on timing. I've had mixed success with puts so do the bulk of my recessionary equity drawdown hedges with bonds.

TIPS are only a decent inflation hedge if you wait around for the principle to pay. Otherwise, they're basically as bad as any other bond due to their overall interest rate sensitivity and the expectation that interest rates would rise in response. Look no further than 2022 when TIPS were just as miserable as most of the bond market and you were better off in cash/short-duration instruments vs TIPS. In the long-run, I think this is the right approach. In the short-run I think it ignores that babies can, and do, get thrown out with the bathwater and I don't want all my babies in the bathwater. Fairfax went down significantly in 2008 despite minting billions on CDS. Fairfax went down significantly in 2020 despite have a fortress of cash/treasuries that they could invest in opportunities that also went down. Fairfax bucked the trend in 2022. So in 3 economic contractions, Fairfax was given credit in 1 of them. The other 2 times it went down significantly with the market despite being well positioned. Had you owned a small portion of bonds in those two instances, they could have been sold for a profit and Fairfax could have been purchased 10, 20, or 30% cheaper. I'm sure there are similar examples for Amazon, Berkshire, JPM, etc.

I tend to agree with Fairfax that it's not their job to cater to this nonsensical bias and that it probably DOES make for a more rational shareholder base by excluding them. Especially in a day and age where fractional shares are now a thing and nobody is prevented from owning it as a result of a high share price.

"Implicit guarantees" seems like an oxymoron, but we'll see what they do

Whatever the P/L for the final period is. These things typically settle monthly or quarterly where net cash flows of the stock movement less financing costs get settled. This is where Fairfax either gets paid cash if the stock outperforms the financing rate or pays cash or it underperforms the rate. The only costs to close the position would be the final settlement of this P/L.

Not typically. There would be a return of the margin/collateral held against it and a final settlement of P/L.

The banks have either hedges the exposure by buying shares in the market OR have offloaded the short to other participants (maybe a Muddy Waters or two) Typically is LIBOR/SOFR like rate plus a spread for both sides of the trade. The bank remains hedged with neutral exposure and collects the spread from both ends. Not sure what you mean by "kicker" The TRS offers them leverage they don't get via straight buyback. Also, each cash buyback continues to secularly benefit the TRS where exiting the TRS doesn't really help the buyback scenario. Only reason to reduce/exit the TRS is to manage the liquidity risk.

I sold 25% of my position, all acquired in 2021-2022 for $4/share or less not on "Orange man bad syndrome" but because I don't believe Orange Man is any different, any more motivated, or any more capable this time around and they had popped 300-400%. I've got other limit orders waiting for people to grow even more comfortable that Trump is their friend. You're welcome to buy them. They're still in conservatorship. Every penny they make still goes to the government's liquidation preference. All you have is a tweet saying he's considering doing something different because the first 4-years and the 4-years since weren't enough time to consider? . It isn't me that is demonstrably wrong.... Was just pointing out that the market appeared to be selling the news. Is down again this AM

Super funny. For as much as you go on about accountability, I thought you'd enjoy someone holding you accountable to the truth. Accountability for media, insurance companies, fund managers, and government...but not for Greg. Got it.

Yup, the only things working are Trump's doing... Someone should call Fairfax and let them know. And the CEO of gold. And the CEOs of BABA and Tencent. No one tell the CEO of Trump Media and Technology though - they missed the memo.. The outperformance of most foreign markets vs the US? All DJT.

No. Poor folks need someone to blame their poorness on.

Does this include the losses from pre-restructuring? Can't remember if the wipe out of commons occurred in 2014 or 2015 to know if Fairfax is including that in their calculation of the basis. Has certainly been a monster success story post-covid, but not sure how great it's been over the 10-year horizon once accounting for the initial wipeout of capital invested.

Both common and preferred are already fading the news and down bigly from the opening/pre-market values. We'll see if he actually does anything this time around or if this was just a bone for his administration to trade around. The only thing I'm really certain of here is that Don Jr probably bought a shit ton before the announcement.

Yes! Congratulations! There aren't enough jobs that pay enough for you to service the student loans we told you to get, or to buy a home, but congrats! You have YouTube!

That's what we told the last generation. It wasn't true.

https://www.bloomberg.com/news/articles/2025-05-21/trump-considers-taking-freddie-mac-fannie-mae-public The man who will look you in the eye and lie about Mexico paying for the wall or that China will pay for the tariffs' has strangely guarded and conservative language of "seriously considering" taking these companies public Lol. I guess he didn't 'consider' it seriously enough 5 years ago.

100%

Sure it is encompassed by the first amendment. But so are the people protesting them. And if we use our eyes to observe, the erection of statues to those who lost wars isn't common in any society/culture and isn't typical after wars - freedom of speech or not. So would generally put the onus on the side defending the losers to have a good reason for it. The removal of statues doesn't erase that it happened. Areas north of the Mason Dixon line still learn about the Civil War without Robert E. Lee blvd running out front of the building. But if that truly is your concern, I would propose changing street names and replacing statues with names and statues erected in honor of Ulysses S. Grant - so we can remember the side of righteousness and that justice won that war. But we both know that wont' satisfy most because it was never about 'remembering' the - it was about venerating the racist men who fought in it and to 'remember' a 'better' time when the white man treated themselves as superior and lived off the efforts of others. You want to show me where Brits erected statues to George Washington? Because that is the comparison you're trying to make. The only one I'm aware of was delivered as a gift from Americans to stand in front of a museum 150+ years after the war was fought....

I'm not sure what about my post suggests we should exhume human remains and give land back to a traitors' descendants, but if that is what you want to take from it...

See, here's the thing. While the political elite supported Biden WAY longer then they should have, your average Democratic had left him. That is why they had to change the ticket to Kamala because it was clear Biden didn't have a chance and that average Democratic supporters could see the cognitive decline. So, while both supporters ended up being "wrong", only one group has dug their heels in, refused to see what is right in front of them, and doubled down after seeing the disaster of a presidency the first time....

Don't I know it. It was pretty clear as they were flopping around from reason to reason like the flavor of the month. Manufacturing in the U.S. "Fair Trade". Imaginary fentanyl at the Canadian border. etc etc etc. They simply wanted tariffs and sold whatever lies they felt needed to justify them. But some people have yet to see through the smokescreen....