Fairfax Financial Claims in Suit That Third Point's Loeb Lied to Investors!

[Uccmal]

Crip posted on the board the other day.  I agree with Partner24. 

 

Bsilly - I haven't heard or seen him in 3 years or so.

 

Cardboard too, and Sanjeev.  Very helpful back in the day, as they say. 

[berkshiremystery]

I truly miss the old MSN board days with bsilly and lotsofcoke. Wonder what has happened to them. ::) Maybe they take a 25 years winter sleep to see Prem's next book "The first 50 Years"...  ;D  Anyway, I'm still sound and lurking occasionally here. Last summer, after I had just purchased some LUK's in the low 20's, I came here accidently back, after not reading the boards for weeks and I saw that Sanjeev had just posted that he also took the opportunity to load up the truck on LUK. I had to laugh while sitting at my screen, reading the board here. Aren't we all connected by telepathy, knowing each other moves without reading the boards here.   ;) ah,.... just kidding. --- But anyway,.... Graham value investing is a virus of the mind. Wonder what we all do next without reading the boards regularly  :o

 

Can't wait to get a glimpse of the new book, "The First 25 Years". ::)

[berkshiremystery]

Apropos,...speaking of books. I got almost myself buried alive below mountains of books in the last 12 months.

Some financial books, but mostly interdisciplinary books about complexity science, network science, information theory (i.e. Kelly Criterion), genetic algorithms starting from Kurt Gödel to present days.

 

Some interesting reads are:

 

"Complexity: A Guided Tour" by Melanie Mitchell (Santa Fe Institute)

the book also contains a segment on Claude Shannon, the father of information theory and a good friend of John Larry Kelly, Jr.(i.e Kelly Criterion)

http://www.amazon.com/Complexity-Guided-Tour-Melanie-Mitchell/dp/0195124413

http://en.wikipedia.org/wiki/Melanie_Mitchell

http://www.complexityaguidedtour.com/

YouTube Video:

 

Six Degrees: The Science of a Connected Age by Duncan J. Watts (Santa Fe Institute)

http://www.amazon.com/Six-Degrees-Science-Connected-Market/dp/0393325423/ref=pd_sim_b_15

http://en.wikipedia.org/wiki/Duncan_J._Watts

http://en.wikipedia.org/wiki/Six_degrees_of_separation

YouTube Video:

 

here are also some interesting upcoming books:

 

The Kelly Capital Growth Investment Criterion: Theory and Practice

by Leonard C. Maclean, Edward O. Thorp, William T. Ziemba

http://www.amazon.com/Kelly-Capital-Growth-Investment-Criterion/dp/9814293490

http://stevanovichcenter.uchicago.edu/seminars/Handbook.pdf

 

The Information: A History, a Theory, a Flood by James Gleick

a book about Claude Shannon, the father of information theory

tp://www.amazon.com/Information-History-Theory-Flood/dp/0375423729/

http://en.wikipedia.org/wiki/Claude_Shannon

http://en.wikipedia.org/wiki/John_Larry_Kelly,_Jr

[Parsad]

I truly miss the old MSN board days with bsilly and lotsofcoke. Wonder what has happened to them.

 

Bsilly is a member, but he does not post.  Contrary to Harry Long's view, I think most of the old-timer board members would agree that no one knows insurance better than Bsilly!

 

Lotsofcoke left the investment business several years ago, after a woman stole his heart!  ;D  Between them I believe they have five kids and two dogs, and are living the life that money can't buy!  Between you and me, I think he just decided to go out on top after Prem named him in the annual report and at the meeting a few years back.  He was one of the original founders of the Yellow BRK'ers, but no longer goes to Omaha either.  When you're happy, you're happy!  Cheers!

[cwericb]

Rather interesting that this conversation is going on at the same time as a little deja vu is taking place on the Yahoo Fairfax board.

 

http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_F/forumview?bn=24033

 

That board had been more or less dormant since the NYSE de-listing with posts only now and again, but over the past few days has become more lively under the thread "Concerns about Fairfax Unfounded". It's almost like we were back in 2006-7.  Perhaps some board members here are defending FFh over there as there have been a few well informed posts over the past few months. Perhaps some of them should be invited over here if they haven't found us.

[Parsad]

It's really just that one turkey who is making all the noise it looks like.  When individual investors have a good year, suddenly the Buffetts and Watsas look stupid.  This usually corrects itself over the ensuing years.  We'll see who is running the Ponzi scheme after both the Overstock and Fairfax cases against the brokers and hedge funds hit the courts this year.  Cheers! 

[Rabbitisrich]

It's amazing that a professional money manager would short a company without understanding the short thesis. At the risk of over simplifying, it suggests that Loeb is an overrated and lucky manager, or that he made a rational bet on something pushing down the price.

 

Parsad, do you have a link to Hempton's argument, or to any of the old anonymous attackers? I'm always

 

 

[Crip1]

Philippe (Partner 24), as always, you are far too kind. To be sure, my faults are many, as illustrated to me on a daily basis by the wonderful Mrs. Crip!

 

Al (Uccmal), you’ve lumped me in with Cardboard and Bsilly which, while much appreciated, is giving me too much credit. When you and I, among others, spoke over drinks at the FFH pre-dinner orchestrated by JEast a couple of years ago, I remember thinking of you “This guy’s smarter than me, better watch what I say before he figures it out”.

 

This has been an interesting little trip down memory lane, thinking back to the short attack on FFH. Who could forget Martin Luther King Day in, I want to say 2001 or so, when FFH took the huge dive down to the US$40s? This was a very concerning time for holders of FFH, uncertainty was rampant and I, for one, wondered whether or not I had made a big error in sinking a sizable percentage of my retirement assets in FFH. The old Stockhouse board was pretty active then with Sanj slugging it out with Brolgaboy (One of Hempton’s aliases I think) and other bashers on the Yahoo board predicting FFH’s demise. Through this, Sanj, BSilly and Cardboard were the individuals I recall who were posting most frequently, and most effectively. Particularly, BSilly, would calmly, thoroughly and intelligently answer the accusations of Brolgaboy, seemingly daily. BSilly ran intellectual circles around Brolgaboy. This is where I learned the biggest lesson I’ve ever learned in business and investing, that being the importance of character. It was clear that the three lads mentioned above, and others, simply had a higher degree of character then the FFH bashers. There was far more objectivity in their postings where they acknowledged the Crum and TIG acquisitions were far more problematic than Prem had believed they would be, but steadfastly insisted that he was not a crook. This, compared to the bashers who asserted that Prem’s was a thief and a liar, the FFH financial statements were full of holes, and FFH was insolvent and would be forced to close in 6 months…they acknowledged nothing remotely positive about Prem and/or FFH. The character of the individuals involved was crystal clear. I stuck with the character crowd which, obviously, turned out to be the correct move.

 

Buffet’s been quoted that “Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if they don't have the first, the other two will kill you. You think about it; it's true. If you hire somebody without the first, you really want them to be dumb and lazy.” The episode with the FFH shorts illustrates this perfectly…the bashers were not dumb, and were definitely hard working, but they lacked integrity and character. The FFH bashers had the three qualities Buffett described. Associating with such a crowd will, undoubtedly, result in far better results than associating with those who lack one or more of these qualities.

 

I currently manage a small group of people who are rather diverse as it relates to age, gender, religious beliefs and personalities. But, they all work hard, work together and they all tell the truth, and we’ve been pretty successful as a group. Fortunately, I inherited many of these folks and have hired the rest. It’s hard to determine character in an interview, but it is ONLY possible if that is what one is seeking (along with some brains and energy, of course). The importance of character and integrity cannot be overstated.

 

I’ve done this before, but will do it again. My heartfelt thanks to Sanj, Cardboard and the unfortunately reclusive (at least in this venue) BSilly, for helping to teach a lesson which is applicable time after time after time throughout our lives.

 

BSilly, you really should toss out a posting every now and again. Maybe I can get you out of your hiatus by bashing FFH!

 

-Crip

 

[Parsad]

Well said Crip!  You know, some of the stuff I've forgotten to a degree.  This was a real nut-buster when we were all going through it.  I remember I had to shut down new membership to the old MSN BRK Board because we were getting inundated with anonymous posters and paid bashers.  It was nuts!  Every other day, some new article would come out about Fairfax. 

 

But the executives didn't leave.  The employees didn't leave.  Sam Mitchell actually joined Fairfax!  Prem wasn't selling stock and moving to Costa Rica!  The guys backing up the truck were the likes of Cundill, Longleaf, Markel and Letko Brosseau.  Mohnish bought and wasn't selling. Lotsofcoke contacted Sir John Templeton, who said that he owned a million shares, I believe, in Fairfax and had never sold.  There were a couple of analysts who were doing their job, and I have to give them credit too, for sticking to their analysis and not bowing to the pressure...Quentin Broad from CIBC and analysts from Ferris Baker & Watts come to mind. 

 

To steal from Dickens...It was the best of times, it was the worst of times!  Cheers! 

[ERICOPOLY]

When criminals unload something on the black market inexpensively, the buyer runs the risk of losing everything for accepting stolen property.

 

The novel thing about these financial crimes is that there is no such risk to the buyer.  They drive the price down for whatever reason and then let others participate in the bounty!  They even provide inexpensive non-recourse financing (LEAPS).

 

 

[Rabbitisrich]

Does anyone have a link to the old board? I remember a search engine, though I don't know if it works now, that ran even after the board closed.

 

Edit: Looks like the search engine is inactive and the old board dissolved.

 

Edit (again): If anyone is so inclined, you can peruse the board through google caches. Enter "site:visualhash.com msn berkshire" into the search box, quotes removed, and click the "cache" option to view all comments listed under the search term. You can narrow the field by entering a term next to the quoted search string.

[Parsad]

Does anyone have a link to the old board? I remember a search engine, though I don't know if it works now, that ran even after the board closed.

 

Unfortunately, because the old board was an MSN board, the only way I could archive everything was to move it over to the "Multiply" service that MSN created.  To view the old board, all the uploads and old posts, go to the link below and click on the "Blog" tab.

 

http://msnbrkboardarchive.multiply.com/

 

Remember PremWatsa.com?

 

Actually I own it!  After those bashers vacated it, I snatched up the domain name so they couldn't do it again.  Prem and Fairfax know I own it now, and if Prem ever wants it, he can have it.  But I will only give it to Prem and Fairfax.  It links to the home page for this board now.  Cheers! 

[Uccmal]

That's priceless Sanj... I had to try it out.

 

Crip, thanks for the kind words - Believe me when I say I was thinking the same thing at the time. :-).

[sdev]

Wow, those old posts are incredible to read. Somehow I landed randomly on the page where Sanjeev did a simple valuation of their public holdings and demonstrated the market valuing FFH at less than (-500m). Can't imagine what that time must have been like!

73.7% interest in Odyssey Re

65.14 M shares outstanding = 48M shares owned by FFH

48M x $18.03/share = $865M US = $1298M CDN

 

Interest in Hub International

11.24M x $13.9/share = $156M US = $234M CDN

 

Interest in Lindsey Morden

9.52M x $7/share = $67M CDN

 

Interest in Zenith

7.81M x $19.74/share = $154M US = $231M CDN

 

Total market capitalization of FFH on today's close

14.33M shares x $87.1/share = $1248M CDN

 

Market values the rest of FFH at -$582M on Friday's close!  And these valuations include a U.S. dollar which is nearly 3 cents lower since the last update!  Businesses valued as worth -$582M are:

 

Commonwealth Insurance - 84.1% CR

Crum and Forster - 103.3% CR

Falcon Insurance - 99.8% CR

Federated Insurance - 94% CR

Lombard Insurance - 98.6% CR

Markel Insurance - 96.3% CR

Ranger Insurance -

TIG Specialty Insurance - *106% CR

Compagnie Transcontinentale de Reassurance

CRC (Bermuda) Reinsurance

ORC Re - 99.1% CR

Wentworth Insurance

The Resolution Group (TRG) - now completely owned

Riverstone Group

 

* 58.2% excluded

 

[Rabbitisrich]

Thanks for the link, Parsad. Going by some of the old posts, a lot of current and former board members increased net worth over the recession.

[T-bone1]

New emails from Loeb and others released . . . nothing incriminating, but it sure makes the hedge funds look bad:

 

http://www.businessinsider.com/dan-loeb-fairfax-embarrassing-emails-adam-sender-2011-3

[Parsad]

Well, they certainly reinforce the image of these Wall Street assholes being regular douches.  I would expect Loeb to dress up as Hitler like Prince Harry Williams and attend a costume party, or I'm sure jurors could view him paddling the asses of a bunch of fraternity pledges.  And is Sender still around?  I thought he would have suffered from severe levels of radiation due to the 25 LCD monitors around him all day.  I still can't get enough of this picture!  Cheers!

 

http://www.businessinsider.com/adam-sender-wins-bob-dylans-hand-written-times-they-are-a-changin-lyrics-2010-12

[valuecfa]

Well, they certainly reinforce the image of these Wall Street assholes being regular douches.  I would expect Loeb to dress up as Hitler like Prince Harry Williams and attend a costume party, or I'm sure jurors could view him paddling the asses of a bunch of fraternity pledges.  And is Sender still around?  I thought he would have suffered from severe levels of radiation due to the 25 LCD monitors around him all day.  I still can't get enough of this picture!  Cheers!

 

http://www.businessinsider.com/adam-sender-wins-bob-dylans-hand-written-times-they-are-a-changin-lyrics-2010-12

 

That picture is ridiculous. It is one thing to have a 4 screen terminal, a laptop, and a tv screen, but come on!

[Partner24]

New emails from Loeb and others released

 

Wow, they are very elegant (outragously racists and full of hatred).

 

 

[Partner24]

Crip,

 

To be sure, my faults are many, as illustrated to me on a daily basis by the wonderful Mrs. Crip!

 

You too? I guess it's business as usual ;)

[KFRCanuk]

Well, they certainly reinforce the image of these Wall Street assholes being regular douches.  I would expect Loeb to dress up as Hitler like Prince Harry Williams and attend a costume party, or I'm sure jurors could view him paddling the asses of a bunch of fraternity pledges.  And is Sender still around?  I thought he would have suffered from severe levels of radiation due to the 25 LCD monitors around him all day.  I still can't get enough of this picture!  Cheers!

 

http://www.businessinsider.com/adam-sender-wins-bob-dylans-hand-written-times-they-are-a-changin-lyrics-2010-12

 

"With just $150 million under management, he is better known these days for collecting works of art than his trading."

http://www.financialpost.com/news/financials/Fairfax+suit+exposes+Wall+Street+boys/4424227/story.html

 

It would be freaking awesome if journalists job was to cover the discovery and trial on a daily basis. Too bad Steve Langford is busy these days.

[Guest]

Sanj,

 

When this is all said and done, you should write a book on this. I think you would do a good job.

 

my questions for you guys, though, is why would they target Fairfax in the first place? Watsa had a good reputation and it seems like there would have been a bunch of easier targets.

[ERICOPOLY]

my questions for you guys, though, is why would they target Fairfax in the first place? Watsa had a good reputation and it seems like there would have been a bunch of easier targets.

 

This is what I was thinking.  They are stupid criminals in that they are risking prison time when all they really did was give us outstanding prices at which to go long (with really cheap non-recourse leverage).  It's a better crime to just wait for them to serve things up -- they take all the risk, we take most of the upside.

[Uccmal]

Here is a question.  The one article claims that Loeb has rehabilitated himself, runs an NYC charity etc. etc.  He wants to keep his image intact. 

 

Why doesn't he settle out of court and testify against the other allleged nefarious characters on condition that his personal communications are kept from the public?  This is a civil suit, not a criminal suit, so he is not going to get less of a fine for good behaviour because he has cleaned up his act.  He is still liable for alleged damages. 

[ubuy2wron]

When criminals unload something on the black market inexpensively, the buyer runs the risk of losing everything for accepting stolen property.

 

The novel thing about these financial crimes is that there is no such risk to the buyer.  They drive the price down for whatever reason and then let others participate in the bounty!  They even provide inexpensive non-recourse financing (LEAPS).

 

 

 

This makes the assumption that the criminals are unsuccessful in their endeavours. It appears that they were attempting to kill FFH , put it out of business . It smacks slightly of hubris not to understand that the good guys do not always win.