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Will get same treatment from me as for Biglari


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I have never read a further word from Biglari or about his actions on this board since Steak N Shake changed name. Fairfax and Prem are now in the same camp. Some quotes are in order:

 

“We’ve got a track record of 28 years of completing what we’ve done,” Mr. Watsa stressed in an interview with The Associated Press.

 

“We’ve never renegotiated.”

 

“We thought long and hard before we offered $9 a share and we’re not in the business of offering a number and at the last minute changing the figure … Rest assured when we do this it won’t be done to split the company.”

 

“We wouldn’t put our name to such a high-profile deal if we didn’t feel confident that at the end of the day that our diligence would be fine and we’d be able to finance it … Short term these things fluctuate, there is speculation one way, there’s speculation the other way. We never pay too much attention to the marketplace.”

 

Mr. Watsa said Fairfax won’t put in anything more to the offer than the 10 per cent of BlackBerry it now owns.

 

“The 10 per cent is like $500-million,” he said.

 

“It’s a significant amount of money. We’re going to bring equity partners and we think the company will be very well capitalized.”

 

 

Cardboard

 

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I am extremely disapointed and rather frustrated by Fairfax right now and let my emotions cloud my judgement when the stock was at $475.  First the 100%+ equity hedges and now blackberry.  I cannot understand why Prem and team does not follow Buffett's lead and use this capital to buy a high quality business.  ARGH!!!!!!

 

Tks,

S

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I was wrong in buying BBRY as an event play under what I thought was a conservative TBV calculation. But I cut my losses. I don't understand how one could have honestly viewed PW as capable of getting a deal done when the stock was below $8 the Friday before the deadline. The market is not that dumb especially with rampant insider information.

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I am extremely disapointed and rather frustrated by Fairfax right now and let my emotions cloud my judgement when the stock was at $475.  First the 100%+ equity hedges and now blackberry.  I cannot understand why Prem and team does not follow Buffett's lead and use this capital to buy a high quality business.  ARGH!!!!!!

 

Tks,

S

 

Perhaps you should be looking into Markel instead

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I have never read a further word from Biglari or about his actions on this board since Steak N Shake changed name. Fairfax and Prem are now in the same camp. Some quotes are in order:

 

“We’ve got a track record of 28 years of completing what we’ve done,” Mr. Watsa stressed in an interview with The Associated Press.

 

“We’ve never renegotiated.”

 

“We thought long and hard before we offered $9 a share and we’re not in the business of offering a number and at the last minute changing the figure … Rest assured when we do this it won’t be done to split the company.”

 

“We wouldn’t put our name to such a high-profile deal if we didn’t feel confident that at the end of the day that our diligence would be fine and we’d be able to finance it … Short term these things fluctuate, there is speculation one way, there’s speculation the other way. We never pay too much attention to the marketplace.”

 

Mr. Watsa said Fairfax won’t put in anything more to the offer than the 10 per cent of BlackBerry it now owns.

 

“The 10 per cent is like $500-million,” he said.

 

“It’s a significant amount of money. We’re going to bring equity partners and we think the company will be very well capitalized.”

 

 

Cardboard

 

This is quite unfair!  Yes, it's a mess.  Yes, it didn't pan out the way everyone expected.  But Prem and Fairfax aren't making money off the backs of other shareholders, nor are their egos making them do stupid things like naming hamburger restaurants or companies after themselves.

 

This thing got screwed up, plain and simple!  It makes up 2.2% of the entire asset base, and even if you assume Fairfax funds the entire $1B convertible, then it makes up about 7% of assets.  Compare that to something like CBRL, which if it went the wrong way, could have cost BH shareholders 30% of their assets!  Not a fair or rational comparison at all, and something that is based purely on emotion.  Cheers!

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Parsad,

I don't want to comment Cardboard's post, he must have his reasons to have such small respect for Mr. Watsa and co. But I must comment your answer:

There is a huge difference between the way Mr. Watsa and co. invest in equities, and the way Mr. Biglari invests in equities. A basket approach is completely different from the way Mr. Biglari invested in CBRL. He knows the fast-food industry better than almost anybody else and understands CBRL very very deeply. That's how an entrepreneur invests in a business. You certainly cannot say the same for Mr. Watsa and BBRY, right? I am not saying one way is better than the other, the truth is both of them can yield excellent results, I am just saying they are very different. So, any comparison should take that difference into account.

 

giofranchi

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Parsad,

I don't want to comment Cardboard's post, he must have his reasons to have such small respect for Mr. Watsa and co. But I must comment your answer:

There is a huge difference between the way Mr. Watsa and co. invest in equities, and the way Mr. Biglari invests in equities. A basket approach is completely different from the way Mr. Biglari invested in CBRL. He knows the fast-food industry better than almost anybody else and understands CBRL very very deeply. That's how an entrepreneur invests in a business. You certainly cannot say the same for Mr. Watsa and BBRY, right? I am not saying one way is better than the other, the truth is both of them can yield excellent results, I am just saying they are very different. So, any comparison should take that difference into account.

 

giofranchi

 

If they didn't get that tax reassessment at Steak'n Shake shortly after he took over, Steak'n Shake probably would have gone to zero, and the Lion Fund might have closed because it was nearly 100% in SNS.  Do you prefer that type of behavior, or Prem's behavior to take a 2.2% position in a dying industry he feels has breakup value but doesn't work out? 

 

If both were running insurance companies, and at some point Biglari will, do you think a good insurance executive writes all or nothing policies or a diverse group of non-correlated risk policies?  The former has a tendency to shine brightly and then blow up!  Cheers!

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If they didn't get that tax reassessment at Steak'n Shake shortly after he took over, Steak'n Shake probably would have gone to zero, and the Lion Fund might have closed because it was nearly 100% in SNS.  Do you prefer that type of behavior, or Prem's behavior to take a 2.2% position in a dying industry he feels has breakup value but doesn't work out? 

 

If both were running insurance companies, and at some point Biglari will, do you think a good insurance executive writes all or nothing policies or a diverse group of non-correlated risk policies?  The former has a tendency to shine brightly and then blow up!  Cheers!

 

Parsad,

you know I have the utmost respect for your money-management background, which is something you share with the great majority of the people on the board. But you also know that my background is different: I have started as a businessman and only afterwards I have looked at the stock market as a way to complement my strategy for building wealth in the long run. So, mine is the perspective of the businessman. And, according to Mr. Buffett, both perspectives, the investor’s and the businessman’s, are important, right?

Now, given my background, I know personally many more businessmen than investors, money-mangers, or traders (if, of course, we exclude all the great people I have had the chance to meet on the board!). And all those businessmen that I know are alike: each one of them has built one business and runs one business: one and only one! And let me tell you that in their eyes I am the exception, the unconventional one: what are these stock market investments? They seem to ask. Why don’t you concentrate on your true business instead? And they seem to disapprove what I do. Now, it is true you will never read of them on Forbes or Fortune, because their businesses lack scale and will never grow very large, but, believe me, they otherwise have been and still are very successful! They have put everything they own in one single business and have been successful for many many years. In my world they are not the exception, they are the rule! And most of them have thrived! :)

 

Cheers!

 

giofranchi

 

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If they didn't get that tax reassessment at Steak'n Shake shortly after he took over, Steak'n Shake probably would have gone to zero, and the Lion Fund might have closed because it was nearly 100% in SNS.  Do you prefer that type of behavior, or Prem's behavior to take a 2.2% position in a dying industry he feels has breakup value but doesn't work out? 

 

If both were running insurance companies, and at some point Biglari will, do you think a good insurance executive writes all or nothing policies or a diverse group of non-correlated risk policies?  The former has a tendency to shine brightly and then blow up!  Cheers!

 

Parsad,

you know I have the utmost respect for your money-management background, which is something you share with the great majority of the people on the board. But you also know that my background is different: I have started as a businessman and only afterwards I have looked at the stock market as a way to complement my strategy for building wealth in the long run. So, mine is the perspective of the businessman. And, according to Mr. Buffett, both perspectives, the investor’s and the businessman’s, are important, right?

Now, given my background, I know personally many more businessmen than investors, money-mangers, or traders (if, of course, we exclude all the great people I have had the chance to meet on the board!). And all those businessmen that I know are alike: each one of them has built one business and runs one business: one and only one! And let me tell you that in their eyes I am the exception, the unconventional one: what are these stock market investments? They seem to ask. Why don’t you concentrate on your true business instead? And they seem to disapprove what I do. Now, it is true you will never read of them on Forbes or Fortune, because their businesses lack scale and will never grow very large, but, believe me, they otherwise have been and still are very successful! They have put everything they own in one single business and have been successful for many many years. In my world they are not the exception, they are the rule! And most of them have thrived! :)

 

Cheers!

 

giofranchi

 

Gio,

 

I am not your conventional investment manager.  I'm probably the most improbable and most unconventional manager around...more like Francis Chou than Bruce Berkowitz!  I have no degree, CFA, MBA or CFP.  My view of the investment management business is as a businessperson, not as an investment manager.

 

I know/knew both men...Biglari and Watsa...probably better than almost anyone on here.  Watsa is no Biglari, and I can only be grateful for that.  Cheers!

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Parsad,

I don't want to comment Cardboard's post, he must have his reasons to have such small respect for Mr. Watsa and co. But I must comment your answer:

There is a huge difference between the way Mr. Watsa and co. invest in equities, and the way Mr. Biglari invests in equities. A basket approach is completely different from the way Mr. Biglari invested in CBRL. He knows the fast-food industry better than almost anybody else and understands CBRL very very deeply. That's how an entrepreneur invests in a business. You certainly cannot say the same for Mr. Watsa and BBRY, right? I am not saying one way is better than the other, the truth is both of them can yield excellent results, I am just saying they are very different. So, any comparison should take that difference into account.

 

giofranchi

 

If they didn't get that tax reassessment at Steak'n Shake shortly after he took over, Steak'n Shake probably would have gone to zero, and the Lion Fund might have closed because it was nearly 100% in SNS.  Do you prefer that type of behavior, or Prem's behavior to take a 2.2% position in a dying industry he feels has breakup value but doesn't work out? 

 

If both were running insurance companies, and at some point Biglari will, do you think a good insurance executive writes all or nothing policies or a diverse group of non-correlated risk policies?  The former has a tendency to shine brightly and then blow up!  Cheers!

 

Parsad, don't you give him any credit for being right about BH and CBRL? They could have gone badly but they didn't.

 

Gio, I think that saying Biglari "knows the fast-food industry better than almost anybody else" is absurd. He only has a few years track record. His turnaround at BH was impressive but since then progress has been slow. And his success investing in CBRL is primarily due to them being a pretty good restaurant chain. Whether or not it has suboptimal capital allocation, I am pretty confident that Cracker Barrel is a better restaurant organization than Steak N Shake is.

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Parsad, don't you give him any credit for being right about BH and CBRL? They could have gone badly but they didn't.

 

The outcome doesn't mean the decision was correct.  Just like Prem's outcome for the TIG & C&F acquisition doesn't mean that what he did was correct either. 

 

There was every possibility that they were too late once they got to Steak'n Shake...it was closer, very close to going under.  The tax reassessment gave them a lifeline and some time.  Sardar had to work incredibly quickly at that time to save the company...I gave him credit then, and I will still give him credit now for doing that.  Why do you think the compensation structure changed?  Because he was the one who would have lost everything and had nothing left to show.  He wasn't the only one responsible for the turnaround...there were two other people that played a big part. 

 

But going back to the original decision to put everything into SNS, or now into CBRL...these are not good decisions from a risk management point of view.  Hey I'm friends with Allan Mecham, and I would not have done that either with Berkshire, nor the correlated risks in Mohnish's portfolio before the credit crisis.  Mohnish learned from that...Prem learned from C&F & TIG.  Let's see if Biglari does?  Cheers! 

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But going back to the original decision to put everything into SNS, or now into CBRL...these are not good decisions from a risk management point of view.

 

Well, I agree. But some people have abnormally high risk tolerance. (I think Biglari fits that description, and gio does not.)

 

The outcome doesn't mean the decision was correct.

 

I certainly think a good outcome suggests it's more likely that the decision was correct, than a bad outcome does.

 

Investing isn't roulette - the odds are unknown. Most of the time I can only make extremely rough guesses about future "probabilities". I feel it would be presumptuous to second guess the past too.

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Despite my previous rant about not liking Fairfax stock here, I must say that I still have the utmost respect for Prem and his team (and I look forward to attending many more annual meetings).

 

I don't think Blackberry was a bad investment at $9 and I think it probably works out from here (assuming they are willing to outsource/spinoff/shutdown the manufacturing side).

 

I bought calls to speculate that Prem was "a man of his word" with regard to BBRY, but I sold them after a few weeks because I didn't think he needed 6 weeks of due dilligence (thus it was fair to conclude that the market was roughly efficient and he was having trouble getting financing). 

 

Either way, my problem isn't with the team or their reputations - I hold them in the highest regard.  My problem is with them investing in crap.  I couldn't have been happier when the company held quality large caps and CDS . . . I used to get the yellow books on Odyssey as soon as they came out to look at the portfolio.  I no longer feel that way.  I'm not saying they are wrong, but I would rather make my own investments in things I understand. 

 

Abitibi/Bowater/RFP has been another mess.  The unions were willing to discharge the pension obligations in bankruptcy but Prem and Co chose to honor them.  This speaks to what high quality people Prem and Co are, but this is another example of Fairfax management transferring our (and their!) money to Canadian citizens for no good business reason I can see (maybe they thought it would make them work harder?).

 

The one that really bothers me is Sandridge.  That company was crap and crooked on top of it.  Tom lied to shareholders on numerous occasions and I believe defrauded them.  On top of that, he front ran them, self-dealt, was overpaid and incompetent.  Everything he bought went down in value year after year.  What the hell was the idea there?  Can Fairfax hire a real oil and gas guy or stay out of that sector?  Some funds have no problem with this.  Others, like Leon Cooperman appear to let some old drinking buddy pick the energy stocks (GMXR when it was clearly insolvent and borderline fraudulent, LINE when it was playing accounting games, and now SD). 

 

Does someone who was a shareholder in the 90s know what they invested in then?  Have they always owned these "lottery ticket" type companies?

 

When Prem talked about building big positions in KFT, JNJ, BAC, etc "for the long term", that resonated with me.  This doesn't. 

 

I don't mind that they are buying really distressed assets, but I do mind that they are giving away money to Canadian companies, getting in bed with bad actors, and investing in things they clearly don't understand.

 

Like I said, I have all the respect in the world for Prem and his team, and I want to own his insurance companies, but I don't want this team investing for me right now.  I wish they just went to cash in 2010 (other than the Berkshire backed Munis) and were content to be an insurance company (with the potential for great opportunistic investments in the future if they are right about deflation).

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"There was every possibility that they were too late once they got to Steak'n Shake...it was closer, very close to going under.  The tax reassessment gave them a lifeline and some time.  Sardar had to work incredibly quickly at that time to save the company...I gave him credit then, and I will still give him credit now for doing that.  Why do you think the compensation structure changed?  Because he was the one who would have lost everything and had nothing left to show.  He wasn't the only one responsible for the turnaround...there were two other people that played a big part. 

 

But going back to the original decision to put everything into SNS, or now into CBRL...these are not good decisions from a risk management point of view.  Hey I'm friends with Allan Mecham, and I would not have done that either with Berkshire, nor the correlated risks in Mohnish's portfolio before the credit crisis.  Mohnish learned from that...Prem learned from C&F & TIG.  Let's see if Biglari does?  Cheers!"

 

I think munger would disagree with you. He said multiple times at annual meetings he put more than 100 percent of his net worth in a single stock on more than one occasion.

We know Buffett did it a few times with the partnership at 40 percent and he bought a huge amount of geico in 76 when it was probably 50-50 it would avoid bk.

Buffett can't concentrate anymore  because brk is so damn big.

I don't think sardar has exhibited poor risk management with cbrl.

Berkshire is the result of about 15 decisions munger said. There was risk of a huge market decline but I don't think there was much risk with insolvency for cbrl and since sardar has permanent capital, he can wait it out.

His lion find limited partners are very loyal and that is akin to permanent capital. I think only one partner left after the severe drop with sns.

I think there are different views on this subject and it has more to do with the comfort level around market volatility since the definition of risk is permanent loss of capital which there really wasn't any with cbrl, maybe there was a decent amount with sns but even with hindsight I don't think it was a bad decision to put the amount he did if the upside was to get control of the company.

That is huge upside!

I do think it was a mistake to pay the high price for sns that he did but he has acknowledged that.

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I certainly think a good outcome suggests it's more likely that the decision was correct, than a bad outcome does.

 

Investing isn't roulette - the odds are unknown. Most of the time I can only make extremely rough guesses about future "probabilities". I feel it would be presumptuous to second guess the past too.

 

So the fact that Bernie Madoff's ponzi scheme didn't blow up years earlier suggests that the decision was correct until it eventually met its demise?

 

I think munger would disagree with you. He said multiple times at annual meetings he put more than 100 percent of his net worth in a single stock on more than one occasion.

We know Buffett did it a few times with the partnership at 40 percent and he bought a huge amount of geico in 76 when it was probably 50-50 it would avoid bk.

Buffett can't concentrate anymore  because brk is so damn big.

 

Munger nearly went broke in 1973-74.  In the end, things worked out ok, but not because he had bet everything on one stock.  You guys listen to him and bite hard on one sound bite, rather than examining exactly what he is talking about.  Munger says bet big when you have the odds in your favor...not always...but those few rare times when you know you have a huge advantage, bet big! 

 

He's not talking about someone like Sardar betting the farm every hand...he's talking about betting the farm on rare occasions.  I've done that, Ericopoly did that...but he was not talking about pulling all of the cash out of Steak'n Shake, leveraging it to capacity, and then betting it on a restaurant stock that was barely trading below fair value! 

 

You guys need a refresher...read below:

 

BETTING ON HORSES AND PICKING STOCKS HAVE MORE THAN A LITTLE IN COMMON.  -------------------------------------------------------------------------------- 

Odds on horses and stocks are set by the market. 

 

Munger: The model I like - to sort of simplify the notion of what goes on in a market for common stocks - is the pari-mutuel system at the race track.  If you stop to think about it, a pari-mutuel system is a market. Everybody goes there and bets and the odds change based on what's bet.  That's what happens in the stock market. 

 

Any damn fool can see that a horse carrying a light weight with a wonderful win rate and a good post position etc., etc. is way more likely to win than a horse with a terrible record and extra weight and so on and so on.  But if you look at the damn odds. the bad horse pays 100 to 1, whereas the good horse pays 3 to 2. Then it's not clear which is statistically the best bet using the mathematics of Fermat and Pascal. The prices have changed in such a way that it's very hard to beat the system.

 

And then the track is taking 17% off the top.  So not only do you have to outwit all the other betters, but you've got to outwit them by such a big margin that on average, you can afford to take 17% of your gross bets off the top and give it to the house before the rest of your money can be put to work.  Believe it or not, some people make money betting horses. 

 

Munger: Given those mathematics, is it possible to beat the horses only using one's intelligence?  Intelligence should give some edge, because lots of people who don't know anything go out and bet lucky numbers and so forth.  Therefore, somebody who really thinks about nothing but horse performance and is shrewd and mathematical could have a very considerable edge, in the absence of the frictional cost caused by the house take. 

 

Unfortunately, what a shrewd horseplayer's edge does in most cases is to reduce his average loss over a season of betting from the 17% that he would lose if he got the average result to maybe 10%.  However, there are actually a few people who can beat the game after paying the full 17%. 

 

I used to play poker when I was young with a guy who made a substantial living doing nothing but bet harness races.... Now. harness racing is a relatively inefficient market.  You don't have the depth of intelligence betting on harness races that you do on regular races.  What my poker pal would do was to think about harness races as his main profession.  And he would bet only occasionally when he saw some mispriced bet available.  And by doing that, after paying the full handle to the house - which I presume was around 17% - he made a substantial living. 

 

You have to say that's rare.  However, the market was not perfectly efficient.  And if it weren't for that big 17% handle, lots of people would regularly be beating lots of other people at the horse races.  It's efficient, yes.  But it's not perfectly efficient.  And with enough shrewdness and fanaticism, some people will get better results than others.  It ain't easy, but it's possible, to outperform in stocks, too. 

 

Munger:  The stock market is the same way - except that the house handle is so much lower.  If you take transaction costs - the spread between the bid and the ask plus the commissions - and if you don't trade too actively, you're talking about fairly low transaction costs.  So that with enough fanaticism and enough discipline, some of the shrewd people are going to get way better results than average in the nature of things. 

 

It is not a bit easy.  And, of course, 50% will end up in the bottom half and 70% will end up in the bottom 70%.  But some people will have an advantage.  And in a fairly low transaction cost operation, they will get better than average results in stock picking.  What works betting horses also works for stock picking. 

 

Munger:  How do you get to be one of those who is a winner - in a relative sense - instead of a loser? 

Here again, look at the pari-mutuel system.  I had dinner last night by absolute accident with the president of Santa Anita.  He says that there are two or three betters who have a credit arrangement with them, now that they have off-track betting, who are actually beating the house.  They're sending money out net after the full handle - a lot of it to Las Vegas, by the way - to people who are actually winning slightly, net, after paying the full handle.  They're that shrewd about something with as much unpredictability as horse racing. 

 

And the one thing that all those winning betters in the whole history of people who've beaten the pari-mutuel system have is quite simple.  They bet very seldom.  Winners bet big when they have the odds - otherwise, never. 

 

Munger:  It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a mispriced bet - that they can occasionally find one.  And the wise ones bet heavily when the world offers them that opportunity.  They bet big when they have the odds.  And the rest of the time, they don't.  It's just that simple.

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Parsad, your view is blurred by your love for Prema and conversely your hate for Biglari... simple as that and you should own up to it. I have been on this forum for years and this is clear as day.

 

On the second item regarding to returns, Biglari's investments by and large have been superbly executed. It is still early to know how everything will play out. The key with him is to follow him into investments and not invest with him in BH.  Prema has been an average insurance company operator and slightly better investor. Nothing there to spark my interest in following or investing in FFHH over the years.

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Parsad, your view is blurred by your love for Prema and conversely your hate for Biglari... simple as that and you should own up to it. I have been on this forum for years and this is clear as day.

 

On the second item regarding to returns, Biglari's investments by and large have been superbly executed. It is still early to know how everything will play out. The key with him is to follow him into investments and not invest with him in BH.  Prema has been an average insurance company operator and slightly better investor. Nothing there to spark my interest in following or investing in FFHH over the years.

 

I don't hate anyone Junto...not even Steve Cohen.  But thanks for explaining to me how I feel. 

 

You don't even know me!  Have we even ever met?  Have you even had a conversation with me as long as I've spoken to Sardar, Prem, Mohnish or even many other board members on here?

 

Yet, you are perfectly comfortable making a statement like that.  People are awfully brave and honest under anonymity!  Cheers!

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Parsad, your view is blurred by your love for Prema and conversely your hate for Biglari... simple as that and you should own up to it. I have been on this forum for years and this is clear as day.

 

On the second item regarding to returns, Biglari's investments by and large have been superbly executed. It is still early to know how everything will play out. The key with him is to follow him into investments and not invest with him in BH.  Prema has been an average insurance company operator and slightly better investor. Nothing there to spark my interest in following or investing in FFHH over the years.

 

I don't hate anyone Junto...not even Steve Cohen.  But thanks for explaining to me how I feel. 

 

You don't even know me!  Have we even ever met?  Have you even had a conversation with me as long as I've spoken to Sardar, Prem, Mohnish or even many other board members on here?

 

Yet, you are perfectly comfortable making a statement like that.  People are awfully brave and honest under anonymity!  Cheers!

 

Far from anonymous....links abound since the beginning. I stand by my comments and my assessment of your constant either support or negative comments towards the two. Perhaps, severe dislike is a better characterization. I don't need to meet you to follow the trends/tendencies.  No negative feelings on my end just trying to point out my assessment of the situation that I think gets overlooked on the site. Words on a page are words on a page. Cheers!

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Parsad, your view is blurred by your love for Prema and conversely your hate for Biglari... simple as that and you should own up to it. I have been on this forum for years and this is clear as day.

 

On the second item regarding to returns, Biglari's investments by and large have been superbly executed. It is still early to know how everything will play out. The key with him is to follow him into investments and not invest with him in BH.  Prema has been an average insurance company operator and slightly better investor. Nothing there to spark my interest in following or investing in FFHH over the years.

 

I don't hate anyone Junto...not even Steve Cohen.  But thanks for explaining to me how I feel. 

 

You don't even know me!  Have we even ever met?  Have you even had a conversation with me as long as I've spoken to Sardar, Prem, Mohnish or even many other board members on here?

 

Yet, you are perfectly comfortable making a statement like that.  People are awfully brave and honest under anonymity!  Cheers!

 

Far from anonymous....links abound since the beginning. I stand by my comments and my assessment of your constant either support or negative comments towards the two. Perhaps, severe dislike is a better characterization. I don't need to meet you to follow the trends/tendencies.  No negative feelings on my end just trying to point out my assessment of the situation that I think gets overlooked on the site. Words on a page are words on a page. Cheers!

 

Well, that's exactly what they are...words!  Do you think that reading about dinosaurs tells you everything about dinosaurs?  Or if you read the financials on a company, that tells you everything about the company?  Of course not!  It may give you some insights, but no context or any other details. 

 

How would you feel if I came to certain conclusions about you solely through your blog?  I would assume you are more complicated than that, and that those words aren't the summation of your life or thoughts.  You don't know the extent of my interactions with Prem or Sardar, or even about events or experiences left unshared.  Wisdom indeed!

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You know, one of the things that attracts me to the investment field is the fact that personal issues (or however you want to classify this interaction) are relatively unimportant. Customers don't care when business owners fight. Love of Watsa, hatred of Biglari, in the end it doesn't really matter if you can go to sleep at night and earn an adequate return on capital while you catch some ZZZs. All the back-and-forth on the Apple thread, for example, is just a fantasy that people buy into rather than researching any of the tens of thousands of publicly traded companies. Just my two cents.

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I certainly think a good outcome suggests it's more likely that the decision was correct, than a bad outcome does.

 

Investing isn't roulette - the odds are unknown. Most of the time I can only make extremely rough guesses about future "probabilities". I feel it would be presumptuous to second guess the past too.

 

So the fact that Bernie Madoff's ponzi scheme didn't blow up years earlier suggests that the decision was correct until it eventually met its demise?

 

No, of course not.

 

Let's say I considered investing with Madoff in 2005, and after some research estimated that there was a 30% chance the fund was fraudulent. Obviously, this would be sufficient for me to abandon the idea. A few years later we discover that he was committing fraud. In other words I was incorrect, there was a 100% chance he was committing fraud. After processing new information, my 30% estimate is no longer useful.

 

I'm just saying, I apply a fairly heavy weight to factual history, as opposed to my analysis of things that might have happened.

 

 

Sorry, your first sentence reminded me of greenblatt.  I'm probably misquoting, but:  "You can run through a dynamite factory with a burning torch and survive, but you're still an idiot." 

 

If you were forced to run through the dynamite factory after the idiot survivor, would you follow his path or would you run some other route?

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Well, personally, I view individual outcomes as not that meaningful.  If the actual probability (based on a many worlds/many possible outcomes universe) is 90-10, and the 10% outcome occurs, we cannot infer anything about the original probability was, we just have one data point.  Thus, IMO, placing a greater weight on the actual outcome for a single event is logically flawed, unless there is a logical reason to believe in the process behind the result.

 

You can begin to infer something about underlying probabilities when the same process consistently yields positive results, since you are effectively rolling the same dice, or flipping the same coin repeatedly, which let's you begin to have a statistically significant set of events to measure.

 

If we only have two events for Bilgari, then I would be extremely cautious, particularly if the process had significant probabilities of failure, which seems like the case, given Sanjeev's comments above.

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If we only have two events for Bilgari, then I would be extremely cautious, particularly if the process had significant probabilities of failure, which seems like the case, given Sanjeev's comments above.

 

We have more than two events and ample history to build a story of Biglari's investment prowess regardless of the opinion of his management of the changed BH.

 

Start with Western Sizzlin to Friendly's Ice Cream to SNS to PMIC to Cracker Barrel.  My suggestion is to follow him into investment opportunities that underwrite well on your own part and let him shake up business and drive value as a partner in it. It has been extremely lucrative to those that have over the past several years.

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