FFH short position

[tgmk54]

 

 

NASDAQ today reported FFH's short positon at 287,866 shares as of 2/27, down from 294,496 as of 2/13. 

 

FFH's share price collapsed US$80 during this 9-business day period from a $325.81 close on 2/13 to a $246.00 close on 2/27 despite a good 4th quarter report on the 2/19.  Although I have no expertise in this area, it appears that the price drop was not due to short selling.

 

Maybe these numbers support those who felt the drop was due to the extensive unwinding of the CDS postions.

 

If it was due largely to a general emotional sell-off of all market shares I wonder if we might see an equally strong upward price move should some confidence return, as happened these past two days.  At least I hope the days of the bear attacks may finally be over.

 

Any insights would be appreciated.

 

 

[SharperDingaan]

 

Much of the price drop was technical - 02/23 it broke through the 50day moving average.

 

Since 02/24;

Volume accumulation has been volatile, but net neutral. Typically short covering.

Market sentiment has flatlined (probably CDS/UW discussion). Upticked in the last day or so.

 

 

[Partner24]

Well, I suppose that you should focus on what's happening in the farm, not what the manic-depressive stock market feels about the farm.

 

By the way, FFH is a pretty volatile stock, so you should be prepared to handle these situations.

 

Just my 2 cents.

[FlyingArrow]

Manic depresive Mr. Market is your friend. Use him.

 

I picked up 4 more $220 leaps today.

[oec2000]

I know why FFH has been falling. There have been more sellers than buyers. ;D

 

This forum is named the Corner of Berkshire and Fairfax for a reason. Aren't we members supposed to be value investors in the Graham, Buffett, Watsa mould? All this obsessing over why FFH is up or down is truly counterproductive. How is this different from listening to the talking heads on CNBC telling us why the market went up or down 100 points? Do we really learn anything? Do they really know what they are saying?

 

All we should care about is that FFH's book continues to grow and that it's price continues to fall so that we can buy more.

 

Sorry for ranting but I hate to see unproductive discussion crowd out useful commentary.

[Guest longinvestor]

Great post oec2000.

 

Reason I gave up on Yahoo and about to give up InvestorVillage is noise level.

 

And then the problem is "me". My reasons for investing in FFH are found within the Annual Reports of FFH. Or should be! Right?

 

So why do I find myself reading message boards? Every day? Because I need reinforcement that I made the right decision in light of the moving price of the stock? Need to wean off this teat.

 

Sanjeev, is there a way to include post recommendations so that the wheat can be separated from the chaff?

 

Longinvestor

[Guest Broxburnboy]

Some of the companies whose stock FFH purchased are beginning to look like the walking dead...The situation at CGS is critical, SFK and Abitibi Bowater may be soon under water. The hedges against the failure of some of these positions have been unwound and gains realized, in the near term we should expect that the losses against which these hedges were placed will also be realized.

[Viking]

Broxburnboy, given the very large investment losses we have seen at NB the past two quarters do you not think that most of the losses have not already been taken (i.e. CGS, SFK & AB have been trading in distressed territory for at least the past 6 months of 2008). Yes, given current market levels, more 'other than temporary losses' are likely in Q1. However, offsetting this will be the remaining CDS positions and the higher yield in the equity and muni bond portfolio.

[oec2000]

Some of the companies whose stock FFH purchased are beginning to look like the walking dead...The situation at CGS is critical, SFK and Abitibi Bowater may be soon under water. The hedges against the failure of some of these positions have been unwound and gains realized, in the near term we should expect that the losses against which these hedges were placed will also be realized.

 

Most of these positions have already been marked down as at 31 Dec 2008. They took a huge OTTI charge Q4. Whether these losses are realised or not will have little impact on book value. Like Buffett, Hamblin Watsa will make some investment mistakes from time to time. What matters is that their successes outweigh their mistakes - so far, this has been the case by a big margin. This is good enough for me.

[Guest Broxburnboy]

I don't regard the current  losses (realized and other) in the equity portfolio as investment mistakes. They were calculated risks, with the downside hedged (over hedged in fact). Success on either side would have more than paid for the losses on the counter trade.

My point is that the losses on the long investments have yet to fully accounted for and may be responsible for the current short term (mistaken) negativity on FFH future earnings.