TwoCitiesCapital

PEFIX ~ 11% FNMAJ ~ 9% FRFHF ~ 8.5% SAN/BSMX ~ 8% FCAU/EXO ~ 8% ATUSF ~ 6.5% SBRCY ~ 6% PDER ~ 5% ZROZ ~ 4% OGZPY ~ 3% LUKOY ~ 1.5% Cash ~ 26% Not including sub 1% positions or my shorts, the gross exposures are above.

Sigh, great timing... guess I can average down now. Sold all of my common (~30% of my position) and replaced it with a bit more preferred - overall position reduction of around 20% though.

I never understood why there was a second thread. Always made more sense to me to have all transactions consolidated into a single thread as opposed to having multiple places for people to express their overall investment views and transactions. Isn't a sale just a "buying" cash? This thread was first. It makes sense to consolidate. I'll keep posting here ;)

Me too. Liquidated 10% last week to hold ~25% cash. Used about 2% of that buy more FNMAJ after Mnuchin's confirmation. Getting antsy to begin liquidating more.

Thank you for this. Just makes it all the more ridiculous. I was relatively understanding of the partial move post-election to reduce duration and hedges. I did the exact same thing until we got more clarity on tax reform which had the potential to be a BIG change in my thesis. As time has passed, it appears tax reform won't happen quickly and won't be anywhere near as big as most Republicans would like, so I've added mine back. Fairfax, on the other hand, went ahead and sold all of their bonds and killed their hedging program in the middle of a tightening cycle with valuations at their 3rd most expensive ever while corporate profits are significantly off their 2014 highs...all because of a change in president?

Shorting the stock would be TOO obvious. Buying shares and options after it had fallen would have put him in the company of many other individuals and it'd be less obvious.

:o :o :o :o I get the feeling that they will just about have called the top in U.S. equity markets with the 100% reduction in hedges.... Obviously, I'm biased since I'm still bearish, but I'm blown away by how the result of the presidential race was the catalyst for a tens of billion change in investment strategy...

I don't think it's this simple. Volume matters as much as density and how long it takes to digest. I could eat a massive portion of veggies and be hungry again in a few hours. Meats are more dense than fruits and veggies and take longer for your body to break down and digest. This why people have such success with protein heavy diets - they consume less food and are hungry less often because your body takes a lot longer to digest it. For breakfast, I typically eat 3-4 eggs and 12 oz of oatmeal and I'm not hungry again until 4-5 clock. It's a large breakfast, but a much smaller amount of food than a typical person would have across breakfast + lunch AND it keeps me full just as long on fewer calories despite what this chart would suggest.

I moved my IRA from Scottrade to IB so I could get better access to international markets. Seems like a Fidelity thing.

Page A-6, Section 7(b) (partial): It appears a forced conversion would be inconsistent with the first sentence in section 3(d). And we already know that the major preferred holders are willing to fight for their contractual rights in court, so a "we're going to do this anyway, see you in court" stance by the government is unlikely. I think "mandatory" is the operating word. If it was put forth as an attractive option to convert (i.e. get 10 common vs not receiving dividends for years), and the preferred shares vote in favor of it, it's not "mandatory" and could still happen, right?

Some hedge funds have taken to watermarking their letters and keeping track of which clients get which watermarked copies to identify leaks. Makes it difficult to share to the broader public if there is a good chance you'll be identified and stop receiving them as well.

I used to count cards.... The "stacks" of cards are known as decks. Back in day, Blackjack was either 1 or 2 decks. At some point in the 70's, the casinos started using 4,5,6,8 decks dealt from a "shoe". This makes counting only marginally more difficult. You adjust the "count" to reflect the number of decks in use. In advanced counting systems, the count may change your "basic strategy". What DOES make 4,5,6,8 deck counting MORE difficult is that you have to hold your concentration for longer periods of time. In single deck, once the deck is shuffled, your count starts all over, in a shoe game, you might have to concentrate & count for 20+ minutes. As time has gone by, casinos have put in many different counter measures to combat counters. 1). They are changing the rules & payout on BJ. For example, BJ pay 6:5, NOT 3:2!!!! A rule change is that NOW dealers commonly hit on "soft" 17's. Another rule change is upping the minimum bet. For example, at MGM grand in Detroit, the MINIMUM bet is rarely less than $25/hand. On weekends the minimum bet is $50/hand!!! As a counter, you want to be the minimum (i.e. $5) and then when the count gets favorable jump you bet up to $100 or $200. At $25 or $50 a hand, you need to have a bankroll of $5,000+ every time you sit down to play. How many "counters" can do that? 2). Some casinos now use "CSM" or continuous shuffler machines. After every round of cards being dealt, the cards are fed back into the machine, shuffled, and then dealt out. Thus, there is almost no reasonable way to count the deck. 3). Casinos are much aggressive about "backing off" AP's & counters. In ALL jurisdictions, counting cards is legal, HOWEVER, in most jurisdictions, a casino does not have to gamble with you. They can "back you off". Thus, as a counter, you can't ply your trade.... 4). Finally, even if you are skilled counter, your advantage will rarely get more than 3% or so on the house. A good advantage for sure...but a string of bad luck can easily wipe you out. You need to have HUGE amounts of capital to deploy if you are going to be serious about counting... Thus, while counting cards is not dead, it is a shadow of it's heyday. AP's have largely moved onto Poker and sports betting for the most part... I like to keep it simple and play craps where I can get true odds. No advantage needed - just a little luck and a large enough bankroll to wait for it.

Yes, the US would never threaten a state with force if it wanted to become independent. That would never happen/has never happened. Lol - that pretty much describes our foreign policy strategy...

This. FFH is only half hedged and sold a ton of their duration. They won't be going gangbusters in a market sell-off any more so it's pretty much out of the question to expect them to outperform cash in the short/medium term if a market correction occurred.

Glad to see someone else who's watching velocity as their main indicator. This is why I'm still convinced deflation is the biggest threat and why I've started purchasing long-term, zero-coupon bonds again after having sold them in July.

I increased my position in the common by 20% yesterday in the confusion. Here's to hoping for a good outcome.

I typically do the McDouble and and McChicken. Split the McDouble. Place McChicken in the center. You now have a $2 McChurger.

They can just do a secondary to issue new shares... so it's like a company doing a secondary. interesting fact that ETFs are actually "closed ends" with just a very explicit and fast exchange / redeem feature... Interesting. I wasn't aware that CEFs had the ability to issue new shares after the IPO. For some reason, thought that shares outstanding had to remain fixed unless if repurchased and canceled. Thanks for the info.

Anyone have a guess at who was selling? Just trying to understand the significance of the money moving around here since new shares can't be issued. It's a closed-ended fund. That's exactly what a closed ended fund means - that it issues shares once and not again, right? Or can closed-ended funds regularly issue new shares?

Anyone have a guess at who was selling? Just trying to understand the significance of the money moving around here since new shares can't be issued.

Are you still short US markets? I reopened about half of them after the bulk of the rally following November's election. Still waiting on clarity for lasting corporate tax reform or for markets to begin to tank to get confident enough to go back to where it was at. Ultimately, the healthier the U.S. economy is, the higher interest rates go, the higher the dollar goes, and the higher wages will go. These will all act counter-cyclically to continue their contribution to negative earnings growth and I don't believe that there will be an incrementally large pick-up in U.S. consumer spending anytime soon to offset it given that we're hitting years where boomer retirements will be offsetting new job entrants (typically, spending drops in retirement and new workers won't be making enough to offset it). TL;DR - I'm expecting corporate profits to continue to fall in 2017. Was clearly wrong about 7 or so quarters of profit contractions being the end of the bull market, but I have a harder time believing markets will be ok with 11-12 straight quarters of corporate profit contraction without an eventual correction. How did you short it? A few different ways. I had direct shorts in IWM & SPY indices as well as long-term put options at varying strikes on the SPY. At varying times, I also sold covered calls against some of my more volatile positions if I felt the premiums compensated me enough for the risk of losing out. I also used indirect shorts/hedges in the form of a 25+ year, zero-coupon bond ETF (rates tend to rally when equities sell off) and large holdings of Fairfax who was also short IWM with a large bond portfolio and deflation swaps. The calls and the bond ETF went a long way to offsetting the losses of the shorts and the put options. Some well timed trading around the put options in January/February also helped. Probably detracted ~2% of total portfolio returns over the course of the whole year to be 30-40% notionally short through most of it.

Are you still short US markets? I reopened about half of them after the bulk of the rally following November's election. Still waiting on clarity for lasting corporate tax reform or for markets to begin to tank to get confident enough to go back to where it was at. Ultimately, the healthier the U.S. economy is, the higher interest rates go, the higher the dollar goes, and the higher wages will go. These will all act counter-cyclically to continue their contribution to negative earnings growth and I don't believe that there will be an incrementally large pick-up in U.S. consumer spending anytime soon to offset it given that we're hitting years where boomer retirements will be offsetting new job entrants (typically, spending drops in retirement and new workers won't be making enough to offset it). TL;DR - I'm expecting corporate profits to continue to fall in 2017. Was clearly wrong about 7 or so quarters of profit contractions being the end of the bull market, but I have a harder time believing markets will be ok with 11-12 straight quarters of corporate profit contraction without an eventual correction.

And that was 2007. The real meltdown occurred in 2008 - did he still have the position on? Could be that the whole 5x comes those two years. If we assume the 212% is the whole return, and that he was flat in 2006 when he started, it's about 5% annualized since 2007.

https://www.bloomberg.com/news/articles/2017-01-05/fairfax-said-in-talks-with-omers-to-back-4-9-billion-takeover OMERS rumored to help Fairfax with Allied to reduce equity issuance.

Out of the money SPY Puts Fannie Mae Preferreds