Parsad Posted February 9 Posted February 9 6 minutes ago, Gregmal said: Except the “short sellers” of this ilk scream fraud 100 times and might get a small handful, and even out of the small handful the material nature of which? Even less. Chanos literally lived off 1 call(Enron) for two decades. Ironically Chanos and others went after GE at like $5-7 a share. IBM on “accounting”. DLR, same thing. Short sellers use “accounting” as a license to literally make up anything they want. It’s like giving credit to the people whom claim they “called” all the crashes….well, if you’re calling for a crash every day…of course you’re going to have predicted them. Doesn’t mean your track record is respectable. What’s even more hilarious now, especially lately, is they deliberately insinuate up to wazoo “fraud”, but refuse to actually say it, because they don’t want to have to answer for it factually in court. See the Burford short from MW. He made it so clear that even Hellen Keller would have walked away thinking “insolvent” and “fraud”….but then like a weasel covers his ass by claiming “never said fraud” or “it is just my opinion”. Zero accountability. Although I doubt it even matters because this is also somebody who openly admits he trades against his own noise, often the same day or days around his public campaigns. +1! Cheers!
coc Posted February 9 Posted February 9 Longs make up utter bullsh*t all day long on CNBC and Twitter, and Prem has made up a whole bunch of his own, so this whole idea that short sellers are some unique demon is nonsense. Even if MW is incomplete, he's allowed to go out there and say, with a great deal of backup "Here's why I'm short". If he's wrong he'll eventually go out of business. But he's called out a LOT of bad actors in his time (no, he hasn't batted 1.000 - have you?) and Fairfax is not some innocent lamb. If shorts are out there getting "100 wrong for every 1 right" A. No one would trust them and B. They'd lose a lot of money fast. Chanos is a good example - he made a career out of calling out bad accounting and bad actors, but in the end the totality of his analysis wasn't good enough so he went out of business. Prem has been wrong again and again, and publicly so - why is Chanos the bad guy? Bulls don't get a monopoly on the microphone.
Parsad Posted February 9 Posted February 9 3 minutes ago, coc said: Longs make up utter bullsh*t all day long on CNBC and Twitter, and Prem has made up a whole bunch of his own, so this whole idea that short sellers are some unique demon is nonsense. Even if MW is incomplete, he's allowed to go out there and say, with a great deal of backup "Here's why I'm short". If he's wrong he'll eventually go out of business. But he's called out a LOT of bad actors in his time (no, he hasn't batted 1.000 - have you?) and Fairfax is not some innocent lamb. If shorts are out there getting "100 wrong for every 1 right" A. No one would trust them and B. They'd lose a lot of money fast. Chanos is a good example - he made a career out of calling out bad accounting and bad actors, but in the end the totality of his analysis wasn't good enough so he went out of business. Prem has been wrong again and again, and publicly so - why is Chanos the bad guy? Bulls don't get a monopoly on the microphone. I never said they did. But you can't make up bullshit that short sellers are some sort of savior. I qualified what I said by stating that there are as many bad actors on the long side as there are within short sellers. You're idealistic view of short sellers doesn't match fact. And to suggest that short sellers are the only ones catching frauds is also make believe. Cheers!
Gregmal Posted February 9 Posted February 9 That’s the absolute craziest thing about this whole scheme. These guys want the free lunch of taking a position right before bashing and attempting to drive down the stock on TV and social media, and then covering into the publicity effect of it all, yet they REFUSE to even stand behind the lions share of what they go so far out of their way to insinuate. Like let’s call this what this is. Some guy wants to take a position, and then go on tv or social media and move the stock in the direction he wants it to go so that he can close or substantially reduce the position profitably as soon as possible. This kind of stuff has gotten plenty of long in trouble legally.
SongDonkey.AI Posted February 9 Posted February 9 If even 10% of Muddy’s allegations are true you are in trouble, guys. It is not popular on this board to be contrarian but this is what it is.
Gmthebeau Posted February 9 Posted February 9 33 minutes ago, coc said: Practically every fraud is first caught by short sellers. This argument holds no weight. The SEC and Deloitte are sure as hell not out there calling out the Wirecards, Enrons, Valeants, Sino-Forests of the world. Exactly, but it's like talking to wall to fairfax fanboys. Reminds me of the TSLA crowd at the top
coc Posted February 9 Posted February 9 18 minutes ago, Parsad said: Baloney! Hundreds of ponzis, frauds, etc are caught by regulators and whistleblowers every year...SEC alone filed 760 enforcement actions in 2022. Short sellers don't even account for a tiny fraction of such frauds that are caught. On top of that, there is a widespread investigation of short sellers, including Muddy Waters by the SEC for improper, illegal trading practices: https://www.bnnbloomberg.ca/vast-doj-probe-looks-at-almost-30-short-selling-firms-and-allies-1.1718553 Short sellers are as corrupt as many long-only hedge funds...the presumption that somehow they aren't is incredibly off mark! Cheers! Hundreds per year?? Please show evidence. And they have caught no MAJOR public fraud I am aware of, that was not first highlighted by a market participant. Enforcement actions often (frequently) come after the house has already burned down, and most of those 760 are minor. An enforcement action is not = catching frauds as they operate. I am aware of some of the penny stock stuff and I'm glad they perform that service. When you say "short sellers are corrupt" you reveal that you dislike the entire concept (rather than "some" short-sellers). I'm sure some of them are. Also, the DOJ probe has gone nowhere 2 years later. I don't short at all and have no skin in that game but the anti-short thing on this board stemming from the 2005 FFH debacle needs to be pushed back on.
coc Posted February 9 Posted February 9 Here's a great example of an "enforcement action" - from the SEC website: Charges against Deloitte’s China-based affiliate for failing to comply with fundamental U.S. auditing requirements when auditing U.S. issuers and foreign companies listed on U.S. exchanges, allowing clients to select their own samples for testing, and having clients prepare their own audit documentation. You mean the stuff that short sellers have been calling out for ten f*ckin years?!
Viking Posted February 9 Posted February 9 (edited) 1 hour ago, SharperDingaan said: FFH is a solid company, but the reality is that its complexity also makes it vulnerable to this. It survives these attacks primarily because this board exists; and the great many very experienced people who contribute to it in live time, quickly call BS when they see it. Were this a more 'normal' internet board, round 1 of this attack would probably have been more successful. SD @SharperDingaan I am not sure what the actual problem is for Fairfax. Pain in the ass? Yes. Problem? No. The short campaigns from 2003-2005 were successful because of Fairfax’s financial condition, especially in 2003, and also because of the NYSE listing. IMHO, there is almost zero comparison to the situation today. Fairfax was also caught flat-footed. Fairfax is in better than rock solid shape. They have top tier insurance operations. Their fixed income portfolio is likely positioned well (details to come next week). Their equity portfolio has never looked better (in terms of quality and prospects). They have record free cash flow locked in for years. And they have a great deal of experience with how to deal with short campaigns. If the stock falls much below book value Fairfax will vacuum up shares. Look at the last 4 years. When adversity hits, this team doesn’t ‘survive’ they thrive. I suspect it will be the same this time around. It’s like the shorts thought they were picking a fight in the schoolyard with that scrawny new kid from 20 years ago. But that scrawny kid has grown up - older, bigger, stronger, wiser. And he has a bunch of buddies who love to brawl. And how do you deal with a bully? You punch them right in the face. Next week will be interesting. PS: and as an aside, as a Fairfax shareholder, this will also perhaps be a timely lesson for the Fairfax team to not get too high on their horse in the coming years. They have the table set to do something truly special. Edited February 9 by Viking
Parsad Posted February 9 Posted February 9 3 minutes ago, coc said: Hundreds per year?? Please show evidence. And they have caught no MAJOR public fraud I am aware of, that was not first highlighted by a market participant. Enforcement actions often (frequently) come after the house has already burned down, and most of those 760 are minor. An enforcement action is not = catching frauds as they operate. I am aware of some of the penny stock stuff and I'm glad they perform that service. When you say "short sellers are corrupt" you reveal that you dislike the entire concept (rather than "some" short-sellers). I'm sure some of them are. Also, the DOJ probe has gone nowhere 2 years later. I don't short at all and have no skin in that game but the anti-short thing on this board stemming from the 2005 FFH debacle needs to be pushed back on. I have no problem with investors taking a short position. What I have a problem with, and that includes the guys who go long and pump a stock, is the "smash and grab" tactic used by short sellers including Muddy Waters. When Mark Cohodes goes after another short seller, that should tell you something. Block even says that he does "smash and grab", but calls it "risk management". What the fuck?! https://www.institutionalinvestor.com/article/2bstlvaw9ypad6621cxz4/culture/short-seller-carson-block-sues-the-sec The guy should be in jail with others promoting or pumping and dumping. If Block takes a short position, but keeps his mouth shut...fantastic. But the whole circus that he participates in to blow up a stock short-term, sell his position and then move on to the next target...well that should be illegal. Cheers!
Parsad Posted February 9 Posted February 9 9 minutes ago, SongDonkey.AI said: If even 10% of Muddy’s allegations are true you are in trouble, guys. It is not popular on this board to be contrarian but this is what it is. Have you even read the report? Not doing research and analysis and then expounding on something...what does that have to do with contrarian? Cheers!
SongDonkey.AI Posted February 9 Posted February 9 2 minutes ago, Parsad said: Have you even read the report? Not doing research and analysis and then expounding on something...what does that have to do with contrarian? Cheers! Imagine your partner stole $100 from you making financial statements. Your business is $2 million plus a year. Is it a problem? Immediate? No. In the future? Of course, it is.
LC Posted February 9 Posted February 9 19 minutes ago, SongDonkey.AI said: If even 10% of Muddy’s allegations are true you are in trouble, guys. It is not popular on this board to be contrarian but this is what it is. Help me understand here: So if MW argues that Fairfax's book value needs an 18% downwards adjustment, and you're saying if 10% of that is true....then I need to be worried about a 1.8% BV contraction? Sorry but the magnitude is not screaming "trouble" to me....what am I missing? And if you'd care to elaborate - what parts of MW's allegations do you think are most accurate and most impactful? I'm just having trouble seeing it.
Parsad Posted February 9 Posted February 9 4 minutes ago, SongDonkey.AI said: Imagine your partner stole $100 from you making financial statements. Your business is $2 million plus a year. Is it a problem? Immediate? No. In the future? Of course, it is. How does this relate to the MW's report? Are you suggesting Prem is the one stealing $100? How does he benefit from that? Cheers!
Gregmal Posted February 9 Posted February 9 1 minute ago, SongDonkey.AI said: Imagine your partner stole $100 from you making financial statements. Your business is $2 million plus a year. Is it a problem? Immediate? No. In the future? Of course, it is. This is all old news though. I’ve been pretty vocal here over the years that for the past decade, Prem seemed to be an egotistical asshole whose investments sucked and the complexity of Fairfax only made the whole situation more unappealing. However this changed around 2020-21 and go forward, what’s your fair value here if Fairfax earns $500 a share over the next 3 years?
Parsad Posted February 9 Posted February 9 1 minute ago, LC said: Help me understand here: So if MW argues that Fairfax's book value needs an 18% downwards adjustment, and you're saying if 10% of that is true....then I need to be worried about a 1.8% BV contraction? Sorry but the magnitude is not screaming "trouble" to me....what am I missing? And if you'd care to elaborate - what parts of MW's allegations do you think are most accurate and most impactful? I'm just having trouble seeing it. +1! Cheers!
SongDonkey.AI Posted February 9 Posted February 9 Just now, LC said: Help me understand here: So if MW argues that Fairfax's book value needs an 18% downwards adjustment, and you're saying if 10% of that is true....then I need to be worried about a 1.8% BV contraction? Sorry but the magnitude is not screaming "trouble" to me....what am I missing? And if you'd care to elaborate - what parts of MW's allegations do you think are most accurate and most impactful? I'm just having trouble seeing it. My point is - if there is any slice of lye in their reporting it is a “sell” at any price you get.
MMM20 Posted February 9 Posted February 9 7 minutes ago, SongDonkey.AI said: Imagine your partner stole $100 from you making financial statements. Your business is $2 million plus a year. Is it a problem? Immediate? No. In the future? Of course, it is. BTW what they’re accused of is marking a $94 business at $100. The idea that that business is earning $15-20 in annual cash flow isn’t even in dispute.
SongDonkey.AI Posted February 9 Posted February 9 3 minutes ago, MMM20 said: BTW what they’re accused of is marking a $94 business at $100. The idea that that business is earning $15-20 in annual cash flow isn’t even in dispute. If your partner is a crook even in small matters - it doesn’t matter how much your business “earn” or “can earn”.
LC Posted February 9 Posted February 9 Ok so the argument is: if there's 1 cockroach, there's probably 100 more. Fair enough of an argument. But I think there's a few factors that run contrary: -Earnings: they exist and they are of high quality: interest & underwriting profits -Interest income is hard to fake. -Underwriting profits, sure you can under-reserve. But this info is public, and it is well known the industry is in a hard market. So it's hard to disprove that these are real profits. -On the asset side: if you think they are delaying taking markdowns of certain assets, then you also have to credit them for delaying unrealized markups of other assets. It has to cut both ways. Quote If your partner is a crook even in small matters - it doesn’t matter how much your business “earn” or “can earn”. Question: Warren Buffett/Berkshire marked down its Kraft-Heinz position well after a large and sustained drop in the share price. This is the same behavior MW is accusing Prem of. Do you think Buffett is a crook?
MMM20 Posted February 9 Posted February 9 (edited) 10 minutes ago, SongDonkey.AI said: My point is - if there is any slice of lye in their reporting it is a “sell” at any price you get. Sounds like might be news to you that accounting is only ever a crude approximation. “And it's not that hard to understand. But you have to know enough about it to understand its limitations because although accounting is the starting place, it's only a crude approximation. And it's not very hard to understand its limitations.” -Charlie Munger I’ve been arguing for years that FFH investors were being overly backward looking and book value accounting focused, missing the firehose of cold hard cash about to start spraying them in the face. But sure, let’s quibble over how the accountants value things a few % points in either direction when Fairfax have quite clearly lined themselves up to generate nearly the entire current market cap in cash flows over the next few years. It’s asinine. Edited February 9 by MMM20
Santayana Posted February 9 Posted February 9 28 minutes ago, SongDonkey.AI said: If even 10% of Muddy’s allegations are true you are in trouble, guys. It is not popular on this board to be contrarian but this is what it is. Actually even if they were 100% true it wouldn't be a problem. He didn't claim anything anything illegal or fraudulent was going on, just that he disagreed with how they valued certain positions. If book value really should be as low as he claims, then it just means that their ROE is even better than reported.
Parsad Posted February 9 Posted February 9 8 minutes ago, MMM20 said: BTW what they’re accused of is marking a $94 business at $100. The idea that that business is earning $15-20 in annual cash flow isn’t even in dispute. +1! Cheers!
Parsad Posted February 9 Posted February 9 1 minute ago, Santayana said: Actually even if they were 100% true it wouldn't be a problem. He didn't claim anything anything illegal or fraudulent was going on, just that he disagreed with how they valued certain positions. If book value really should be as low as he claims, then it just means that their ROE is even better than reported. +1! Cheers!
Parsad Posted February 9 Posted February 9 4 minutes ago, SongDonkey.AI said: If your partner is a crook even in small matters - it doesn’t matter how much your business “earn” or “can earn”. Who is he stealing from? He's the largest shareholder. His family owns shares. His staff owns shares. His foundation owns shares. How is he benefiting from his theft? Either he's the smartest thief in the world or the dumbest! Explain how he's solely, or in coordination with others, benefiting from any inflation of book value. Cheers!
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