Mephistopheles

Just curious, how do you know Mohnish, or what's your relationship with him? :)

They could have preserved availability by enacting the PIK, which was to be used for precisely situations in which they can't afford to pay the dividend. The dividends accumulate, and you pay them off as they make money. Effectively, the sweep does exactly that: you don't pay when you don't have the money, and when you do have money, you pay it off. Except even when you pay it off, you continue paying with everything you earn. So if granting relief was the goal, a 2% penalty with the PIK is much more relieving than an infinite penalty. I'm not sure what you mean here? They wouldn't pay the dividend regardless if there aren't any profits, sweep or no sweep. Only way to pay dividends without making money is by continuing with the draws - which doesn't make any sense either. The only people for whom this is a sign of weakness are for those below the senior preferred. Well, turns out the sweep makes it far weaker for us. And the real sign of weakness for parties other than equity holders is depriving the companies of capital, which wouldn't be the case if there wasn't a sweep.

Lol, yeah I try very hard to avoid commitment bias. But this main argument of theirs makes no sense at all! The sweep is useless without profits, and with profits the PSPA suffices!

I was excited to see Judge Wheeler's remarks. Let's see what happens. On a separate issue, I like to read John Carney's posts on Twitter just to provide myself with a Devil's advocate. One thing he keeps saying is that the 12% PIK was not a viable option, because it doesn't provide a cash dividend. I really don't understand this argument, so maybe someone can enlighten me. Basically he's saying that the sweep was necessary, because it doesn't make sense to continuously borrow from Treasury to have to pay dividends to Treasury. Nor does it make sense to create an IOU in the form of payment in kind. Therefore, the best option is to take all the money that pours in. My question to this is, weren't the Senior preferred dividends cumulative? So if the companies can't afford to pay, they would still accrue, right? And if the companies ever do return to profitability, the Senior preferred be first in line to receive all missing payments anyway. Furthermore, it's not like the sweep would help if the companies don't return to profitability, at which point it would be no different than an IOU. And if the companies do earn money, well then cumulative dividends get paid and no need to worry about it being non-cash. Tough to follow Carney's or the government's logic here. Edit: FWIW, Judge Wheeler and Judge Sweeney were both appointed on the same day by George W. Bush. Hopefully that's not all they have in common. :)

Unless BVPS has gone up significantly last quarter, it is still sporting one of the highest multiples it has had in recent memory. Somewhere at 1.4X range, we'll see more precisely at Q1. I did not adjust for HNZ/KRFT. It's not very cheap, but considering a rather hard floor at 1.3, it's possibly unlikely that one can get BRK much cheaper. Whether it's worth paying 1.4X is something people have to decide for themselves. :) I think he means the share repurchase program, but that is at 1.2x BVPS, not 1.3. So the hard floor, if it exists, would be 1.2.

Here's a copy of the actual letter: http://online.wsj.com/public/resources/documents/GrassleyResponse04212015.pdf

The only one thus far with ENFP, fwiw.

LOL

Don't forget his explicit bias towards hiring a woman over a man with equal credentials.

+1 +1 +1 +1

I have a question about RE investing but didn't want to start another thread. With leverage, like 20% down, it's possible to get a great return. But you have to pay off more and more of the loan every year, so your return on equity declines over time. Is it possible to reconcile that somehow? I know they used to have interest only loans pre-crisis, but I doubt it's possible to get those nowadays. A friend and I have looked at properties and which would produce great leveraged returns but on an unlevered basis it's not worth it.

This blog is too flashy, as opposed to Berkshire's website which is bland. Therefore, Bruce doesn't count as a value investor anymore.

Does Kraft own Cadbury? Or is that under Mondelez? This is ironic given that Buffett criticized the Cadbury acquisition and the simultaneous sale of the pizza business, a few years ago, and ended up selling his shares. Now he will own probably a 50% stake lol.

Given how Buffett sold out his XOM stake, I don't think I would be the only one chastising him for the purchase... On second thought, you're right on this one. How the hell Buffett goes around claiming to be a value investor after daring to invest in a horrendous business such as XOM, I don't know. That Buffett is the greatest value investor of all time is the greatest misconception of modern times. The man is an outright scam. Disclosure: Short XOM and BRK.A

Pretty sure that was a joke about Buffett reading his analysis. I don't get how he's a clown for wondering why Buffett doesn't own MCD. So basically you chastise Buffett for investing in XOM as well, with the line "how can he call himself a value investor"? +1 Plus, XOM is down about 5% (when you account for dividends) since bmichaud made his comment while oil prices have dropped about 55%. Such a terrible pick!!! lol It's so ridiculous to see a guy with 23 posts come on here and start throwing insults to long standing members. Not to mention the criticism isn't even deserved in this case.

Pretty sure that was a joke about Buffett reading his analysis. I don't get how he's a clown for wondering why Buffett doesn't own MCD. So basically you chastise Buffett for investing in XOM as well, with the line "how can he call himself a value investor"?

http://www.wsj.com/articles/would-be-financial-whiz-is-charged-with-stealing-from-investors-1426554634 Investors who asked for their money back from Mr. Malik were rebuffed with email replies that ranged from affectionate (“you know that I love you”), indignant (“stop your nonsense”) and angry (“go f— yourself”), to bizarre (“I am going Deer hunting”). “I AM CRYING, I AM A HUMAN BEING…NOT A MONEY MAKING MACHINE, I HAVE FEELINGS AND DREAMS” he emailed one investor at 10:45 p.m. in February 2014. “YEAH PUT ME IN JAIL GOOD JOB!” Mr. Malik spent the money on a “lavish lifestyle,” including $30,116 on vacation travel and $36,124 for restaurant dining and liquor, the SEC said. The purchases allegedly funded by investors include $25.53 in the Statue of Liberty gift shop and a $49.99 subscription to a Muslim dating site, court filings show. Mr. Malik tried to fake his own death, the SEC said, sending an email to one investor from a nonexistent employee named Courtney that read: “Mr. Malik has been passed away with the heart attack after accident. We will dissolve the fund shortly.”

And even that falls short by 100 hours by some standards

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.

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.

After all that you've done for us in the FNMA/FMCC thread, I look forward to all your insight on this topic, Merkhet!

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.

Interesting..thanks.

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.

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.