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Mephistopheles

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Everything posted by Mephistopheles

  1. I read the report but don't get what's the significance. How did it make a guy like Carney change his mind? EDIT: Oops I was reading this all on the phone and misunderstood Carney and the CRS report. I get it now.
  2. Just curious, why do you want to avoid gluten? It's not bad for you unless you have Celiac disease. It's important to note that Coca Cola and other sodas sold in the U.S. don't contain the table sugar we're all familiar with. It contains high fructose corn syrup, which is far worse for you. If you want to drink healthier Coke, then buy the Mexican bottled one, which contains real sugar. Sugar and carbs are of course an important part of a healthy diet so it's not necessary to cut down too much. Btw I'm a vegetarian too.
  3. After all that you've done for us in the FNMA/FMCC thread, I look forward to all your insight on this topic, Merkhet!
  4. I don't think having a soda or junk food every once in a while is a bad thing, it's about moderation. Having it from time to time means letting go of yourself and taking pleasure in life. I'd much rather drink and eat what I enjoy (without overdoing it) than eat a balanced diet every day of my life even if it means I lose 5-10 years of my life. What's the purpose of life if you can't enjoy it? Having said that, obesity and cardiovascular disease are two of the biggest health problems in the country, both measured quantitatively and in dollar cost. So it does become a problem for everybody, not just unhealthy individuals. We need to create incentives as a society to keep people from over indulging. I think what Bloomberg did in NYC by banning the sale of 16 or 20oz sodas is a good thing. Helps society as a whole. It's amazing how much healthcare costs would decline in this country if it wasn't for tobacco, alcoholism, and junk food. Like Ben Franklin said, an ounce of prevention is worth a pound of cure. We need to focus on preventing these diseases in the first place, and not just leave it up to the individual, because we're all paying the price. Oh and Ackman, one of the largest shareholders of Burger King, is a hypocrite for saying that he wouldn't invest in Coke because it's unhealthy.
  5. Interesting..thanks.
  6. Where did he say that, on Squawk Box? I'm surprised because a) the Euro has come down quite a bit and b) he once was asked about doing exactly this in Japan but said he wouldn't want to take currency risk, so if he borrowed in yen he'd want to invest in yen.
  7. I thought it was the best interview with him that Becky Quick has done. Very little time spent on the same old questions about taxes, economics, and politics which usually take up half the time. This time she asked him questions about many of his major holdings and businesses.
  8. If it was the opposite, short term oriented shareholders who constantly hound the management about quarterly performance, disclosure, etc over 50 years...nobody can operate at their best under such pressure. Buffett and Munger have leeway to do whatever they want, deservedly so, and that's immensely beneficial for all parties involved.
  9. Have you held an upper management position in your life? CEO? If you think that he only encountered "a handful of business problems that have occurred over the course of his 60 year career", you are deluding yourself. I could make that list quite a lot longer, but what's the point. And even if the list was just "a handful", I want to see a person who would have handled them with little stress. IMHO you are assuming his cheery TV persona is how he feels every day. I seriously doubt this is the case. But we will never know probably (unless someone really close writes a candid story after he dies) No, have you? I said fairly stress free compared to the average American - not completely stress free. He's a CEO but never had to deal with being sharp elbowed and the politics it takes to get to the top like it does for almost any other organization. He doesn't have to worry about dealing with clients, customers, suppliers, competitors, shareholders, Wall Street, or keeping his job. His weeks aren't filled with countless meetings and travelling. Unlike most Americans, for most of his life he hasn't had to worry about money or reporting to someone. Unlike most Americans, he has a job that he loves, and doesn't work for the money (doesn't even care to paid a big salary). I could make the list of stressors longer too. Probably one of the most significant ones in his life was when his wife left him. I can't comment on his personal life much because I just don't know, but I assume it's fairly average. There is no doubt though that his professional life has been far more stress free than it is for the average person, and the average CEO. So yes I still stand by my comment.
  10. LOL. Maybe you guys can ask him how can he lead a fairly stress free life while running one of the largest companies in USA and periodically running into near-death corporate situations (Washington Post strike in 70s, SEC investigation in 70s, Salomon Brothers debacle, Gen Re debacle, Net Jets debacle, death of all the "made in America" brands he bought, Lubrizol and Sokol, etc.). I would have killed myself multiple times during his career. "Stress free" my a** ??? ::) :-X :'( :o Hahaha So you typify what his 84 years must be like based on a handful of business problems that have occurred over the course of his 60 year career?
  11. A large part of why he's healthy is from living a fairly stress free life compared to the average American.
  12. If the Republicans smell blood, they will go after the President for asserting executive privilege this aggressively -- in the hopes that where there's smoke there's fire -- and this could lead to a settlement. To take it one step further. It's hard not to imagine Bill Ackman making calls to D.C. politicians to turn them in our favor. With the smoke showing, why not lobby the Republicans with this information help ignite a political war against Obama? This is in the same way he lobbied regulators to investigate MBIA and Herbalife.
  13. Well what I'm trying to say is that even if the companies are released, D.C. still would own 79.9% of the $32 billion. So it's really a matter of $6.4 billion that they're fighting over. Take out 35% taxes from the $6.4, and it's a fight over $4.2 billion in perpetuity. So the political equation is this: Is an 11-12 figure windfall worth a cost of $4.2 billion annually? My guess is yes. However, I don't know if politicians think in this manner because all they might see is the $32 billion rolling in every year. A big wild card is the capital requirements. I don't think there would be a major dilution up front because that would erode the Government's stake. So perhaps they will allow a slow capital build. But this is all added speculation, so that's why I'm holding just the preferred. My point was that they will not keep 79.9% after release unless they pay in capital. If somehow the GSEs had $180B of excess profits swept that could be used to recapitalize them, then at that point the feds are giving up $180B to get 79.9% of $250B using your numbers. Or maybe the sweep is about even today with wiping out the senior prefs, they sell $180B in common to private mkt, the feds are left with $56B of common they can sell. In both cases, the taxpayer would be getting off a big layer of risk present today, but that is hidden from most voters. They would be giving up $21B/yr for $56B today in the second case. I just don't think it is fair to say the cost is only $4B/yr. I see what you're saying. So in either of these scenarios, there is either dilution (how little or large idk) or the Govt. has to return excess profits. So you're right that the true cost is not just $4 billion/year; and if it is, than the true windfall is smaller. However, I think we can agree that the cost is still significantly less than the pre-tax earnings of $32 billion annualized, particularly if we're counting the taxing power.
  14. Well what I'm trying to say is that even if the companies are released, D.C. still would own 79.9% of the $32 billion. So it's really a matter of $6.4 billion that they're fighting over. Take out 35% taxes from the $6.4, and it's a fight over $4.2 billion in perpetuity. So the political equation is this: Is an 11-12 figure windfall worth a cost of $4.2 billion annually? My guess is yes. However, I don't know if politicians think in this manner because all they might see is the $32 billion rolling in every year. A big wild card is the capital requirements. I don't think there would be a major dilution up front because that would erode the Government's stake. So perhaps they will allow a slow capital build. But this is all added speculation, so that's why I'm holding just the preferred.
  15. Exactly, why risk another bailout, it's best to give it to private hands. Here's some quick math: it looks like the companies are earning $32 billion pre-tax, all money that is going to Treasury. But the fighting is only about 20.1% of that - $6.4 billion. Of course they get to tax 35% of that, so all this drama is really only about $4.2 billion! Put on a 12x multiple on $21 billion of after-tax earnings and we get $250 billion. Take off $30 billion to pay back the preferred. And take out (I'm just making up a large number here) $150 billion to recapitalize, and we have a $70 billion market cap. So $56 billion would be the windfall. So would you want to secure $4.2 billion for perpetuity, when you're only in office for another year and half, and risk embarrassment in the Courts? Or do you want to be a hero and announce a $56 billion windfall, sealing your legacy and priming an election run for the Democratic nominee? It's not like the government cares to make their investments very profitable anyway. They auctioned off the TARP warrants, GM and AIG stakes, all at severely undervalued prices. And then they went to the media to announce that the taxpayer earned a profit. The more I think about it, the more I am convinced that the companies will be released. Having said all of this, you're right in that we must look at the price. At 12% of par for the preferreds, I'm happy with the risk/reward. I'd love to hear everyone's take on this.
  16. If Buffett doesn't qualify as genius to you, who does in the field of business/finance? Genius is way to strong of a descriptor for anyone in business/finance. He isn't exactly curing cancer or getting noble prices for mathematics. Those people are geniouses and they have to think in new ways to do what they do. Buffett is just using the knowledge built by others. I'd be willing to use descriptors like disciplined and knowledgeable. But not genius. I think it depends. He's not a genius because of his great returns, but because of the way he's built up the company to what it is now (which of course led to the returns). If someone beats the market year after year by cloning or investing in a systematic way (low P/B, for example), then I agree that's not genius. You mentioned those curing cancer and noble prize winners thinking in new ways. But Buffett did get to where he is by coming up with his own model, and it was never done before. His sort of genius is also manifested in gathering information throughout the course of a lifetime and being able to see risks that aren't even accounted for before. For example, didn't he realize the risk of terrorism well before 9/11, and tried to get out of its insurance? In hindsight it seems easy but I would argue it comes from years of reading about and understanding business, geopolitics, etc. On the flip side, for those who achieve medical innovations such as curing a disease, etc., well their research is an add on to all the research that has happened prior - they don't exactly get there on their own either. Not denigrating what they do, but just saying that nobody gets anywhere by themselves.
  17. I just had an intuition. Several of us have mentioned the Government's incentive to continue collecting profits for the rest of eternity, so they might never voluntarily release the company's from Conservatorship. However, we all know that more than anything, politicians are impatient and will take short term gain over anything. So I think there is a possibility that, with continued pressure in Discovery, with depositions soon to begin, and with the continued risk of another bailout in the near future, there is an ever increasing chance that the White House will release the companies , cancel out the Senior Preferred, return excess profits to help recapitalize, and announce a major windfall in the tune of $100 billion+ because the shares would rally 5-10x, all before Obama leaves office. This will certainly provide a major boost to Obama's image and legacy, and perhaps even boost the Democratic nominee's chances in '16. I think this may spell out as a better scenario than the alternative, which includes the release of embarrassing documents and depositions, the risk of an embarrassing loss in the courts, and of course the chances of another bailout. And really, why not cash in on all of the profits up front (from the warrants), rather than share the profits in perpetuity with future politicians after you're long gone? The former is better politically, and gives you more money to spend in the mean time. This can especially happen if chances are looking bleak for the Government in the Court - in which case it might be better to take the windfall while you're still President rather than have your successor lose the case and announce the share gains? It might make sense to bet on the common after all, because we'd be investing alongside the Treasury in this scenario. Maybe this is Ackman's thinking as well. Anyway these are just my humble thoughts, feel free to critique.
  18. Merkhet, you mentioned some time ago that it would be great if the plaintiffs score David Boies as an attorney for these cases. I noticed that his law firm is involved in one of the GSE suits in Court of Claims: Cacciapelle v. United States, No. 13-466: http://www.valuewalk.com/2015/01/fannie-mae-conference-fairholme-coming-soon/ Boies himself isn't involved. I'm not sure what the significance of this is, just wanted to point it out. What are the chances that he gets involved after he's done with AIG, based on this?
  19. Oops, I meant if you can elaborate on what the person you talked to said about him being ruthless, but I think you'd rather not. I completely agree that his true genius is in giving people a certain perception of himself. I pointed this out when he abstained from the Coke vote - which I think was very deliberate; it kept his image clean while at the same time he was able to influence them to reconsider by going public after the vote.
  20. Have talked to some who have negotiated with Buffett, he is extremely ruthless. He didn't get to where he is by being a nice grandfatherly figure. Someone left a comment on a post of mine saying one of the KKR guys told them that Buffett had some skeletons in his closet like everyone else at that level. Buffett is incredible at manicuring his public image. My guess is the closet comes open at some point after his death. Some have contended BRK doesn't pay a dividend because of some side partnerships he setup could be exposed. I believe there was a lawsuit around this, don't remember the exact details. Can you elaborate on what the KKR guys say about him being ruthless? It's interesting, because we think of all these Wall Street or Private Equity guys as ruthless but it seems like Buffett out does all of them, and that's why he's richer. Just take the Goldman, GE, and BAC deals for example. Drove an amazingly hard bargain. Also, what kind of partnerships could be exposed if they pay a dividend? I don't see how the two are related.
  21. This is what makes Buffett great. He is able to see risks that aren't even accounted for, before they occur. Pure genius.
  22. I believe he returned a few billion to his clients. He planned to return up to 20% of capital in Q4. http://www.reuters.com/article/2014/11/24/investing-hedgefunds-tepper-idUSL2N0TE1US20141124 Thanks. Still, if he's returning a large amount of capital, that seems to be a market call. I'm glad to see that he sold very little of GM, even though that is his largest position, since I am a shareholder myself.
  23. I remember him once saying that the oil business is easy to analyze. Interesting given that oil prices collapsed after he bought both COP and XOM, so the timing proved to be terrible. lol This shows even the great ones are human.
  24. http://www.dataroma.com/m/holdings.php?m=AM Tepper drastically reduced his holdings across the board. Either there were major withdrawals or this is a market call. Interesting given that he predicted "panic buying" this year.
  25. I think, legally, it would be really hard to honor the rights of the preferred holders but not the common. It just wouldn't make any sense. If there is a deal like that only rewards preferred holders, than without a doubt Ackman is going to sue both companies under corporate law and I can't imagine him losing in that scenario.
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