Rabbitisrich

It looks like McDuff Ken Fishered his clients. Instead of tailoring portfolios to client needs, he sought return. If true, it's definitely unethical, but not necessarily in such a way that it casts doubt upon his stockpicking ability.

Good stuff, but what are the Cramers doing on that list? It's incredible that Seth Klarman managed funds from age 25, and not from friends and family! Does anyone know of written material from Klarman's under-30 period?

I think you mean to say that he has stayed within his circle of competence not that the circle has not increased. Although he has been a very prudent investor, his circle of competence has most definitely increased! (To paraphrase Munger, he is a learning machine.) n He bought See's candy then, he bought Wrigleys now He bought Geico then, he bought General Re now He did not buy IBM then, he did not buy Microsoft later, Google now He did not buy health insurance biz then, he does not buy them now And then he bought commercial airline stock once and swore never to touch them again....he admits to have strayed outside his COC. The "learning machine" he was, has allowed him to firm up his circle of competence to be an exact circle. To stay within the circle he waited for years/ decades for things inside his circle to become available to him at attractive prices. So I am saying that his circle of competence as it had to do with how he acted buying businesses changed little. Actually Munger, Lou Simpson, Ajit Jain, et al have bought stuff on their own. Not everything bought by BRK was Warren's decision, especially in the past 10-15 years. The world will probably never know but my wag is that Munger's enchantment with the first principles of engineering lead to the BYD, ISCAR, LUBRIZOL and BNI purchases. The problem of having too much capital to deploy started two decades ago, not now and BRK has been expanding the collective circle of competence since then. Tuck-in aquisitions at the operating companies is clearly a new phenomenon at BRK and that is part of enlarging the collective circle. I don't have quite the same take on those business lines. Gen Re and Geico don't have much in common aside from being insurance companies, and the long-tail insurance lines have hugely expanded in the last decade. Among the other companies you mentioned, BYD stands out for being an small outlay and predominantly discussed by Munger. Without the appreciation, and the ties to Li Lu amidst the successor speculation, it didn't bear any marks of being a Buffett pick. Munger also pushed for the Iscar acquisition. But the merger documents show that Munger had nothing to do with Lubrizol, and BNI required less engineering knowledge and more conviction about the direction of energy prices, efficiency, and the roles of California and coal amidst Chinese growth. You could say that Buffett stayed within his COC in the sense of hewing to first principles of business, but he has successfully (and unsuccessfully) applied that knowledge to new fields.

Thanks for the link. Pretty spectacular returns considering the period reported. Perhaps Alice Schroeder will find another anonymous commentator to report that Weschler is actually really dumb.

Is he R. Ted Weschler of Peninsula Capital Advisors? If so, his 13-F follows Munger's views on concentration.

Packer16, you seem to be confusing the theory of evolution with the evolutionary explanation for the formation of man. Evolution is reconfirmed everytime you spray a bacterial growth and it returns. Science is a Bayesian process and while evolution does not "disprove" god/creator models, it renders those factors unnecessary.

I am long PNC, but Rohr oversaw the transfer of nonperforming assets to SPEs at inflated prices in 2001. He's crazy like a fox.

HP just released its latest 10-Q. The current market cap doesn't apply much value to old cash cows like imaging and printing, and continued strong results from enterprise servers/storage/networking. Is there an Apotheker discount, or simply too much attention devoted to declining consumer computer pricing? Imaging and printing doesn't get much media attention considering its profits relative to the market cap.

Interesting meeting. I like the speed dating program... just enough time to exchange ideas, not enough time to be infected with someone else's enthusiasm.

Where is Gross' evidence that credit supply is constrained due to low reference rates? Mortgage lenders have been dropping interest rates and points to little effect, and NFIB surveys consistently show demand expectations as the major concern. If people won't borrow at current rates, why would they do so at higher rates? Instead of focusing on yield twists, collateral pricing provides a better explanation for limited loan demand and the relative rise of C&I loans. And general deleveraging, of course.

I am no expert in index construction but the Barclay's Systematic Trader's Index contains a few biases. It accepts firms with a minimum 4 year history, but then equal weights the return. The number of index participants grew by 5% a year over the last 10 years, and by 6% from '01 to '08. According to Sol Waksman, the overall CTA index shows 15% to 20% annual turnover. We would need more information to tease out survivorship bias, but one possibility is that younger firms, with presumably smaller capital, significantly contribute to index performance due to the lower starting point. Also note that performance numbers are voluntarily reported and consists of around 1/3 of the index coverage universe. When a manager decides to stop reporting figures, the performance record is recorded as 0% from that date until the end of the reporting period. The index might also benefit from the momentum benefits of survivorship. For example, currency trading participants jumped from '03, which means that the included firms started from at least 1999, following the volatility of the IMF crisis and russian default. Again, when they stop reporting, their results are simply recorded as 0% until the end of the reporting date. One counter argument is that all indices possess some degree of survivorship bias. But S&P movements are replicable and the transaction costs are fairly easy to model. Without more information regarding the money flow policies of the participants--are taxation policies disclosed or controlled by Barclays?--a direct chart comparison to the S&P is of limited value.

Uccmal, self-exercise would be equivalent to cancellation. The strike price would just flow around and back to the balance sheet.

There isn't enough information in the sale to make an informed judgement of Tilson. You would have to look at the sale + use of proceeds. From the letter, it looks like he sold an insurance company at 1.1X book to buy things that looked cheaper in his opinion.

Robert Kelly is stepping down as CEO and Chairman over "differences in approach to managing the company." The bluntness of the news release is unusual. http://www.bloomberg.com/news/2011-08-31/big-moves-at-bank-of-new-york-the-ticker.html

No kidding. That article was 37% ago! If anyone has a good method for predicting March 2009 moves, please pm me.

Poor communication on my part. Meant that Berkowitz's thesis seems ignored, criticisms come out after stock price volatility, but with no numbers or evidence that research occurred, so he loses regardless of thesis because grades are handed on quarterly or annual basis. Financials concentration was disclosed a long time ago, and yet redemptions accelerate with price drops. So where did his "investors" really get information?

I don't either. I was a math major so perhaps I'm just relieved that in this game you can get full credit for merely writing down the correct answer. That goes both ways, as Berkowitz is discovering.

Has anyone confirmed that the purchase adds to Tier 1 capital? Hempton responded to a question about qualifying non-common instruments by providing the Citi TARP preferreds as an example. But I thought that the TARP instruments received special dispensation to count as Tier 1 capital despite cumulative proceeds and a step-up coupon provision.

I'm not sure. It depends on the specific provisions of Berkshire's preferreds. Cumulative preferreds can't be used as Tier 1 capital, now, unless they meet certain standards, like the ability to defer payments for some period. But Basel III phases in some new test to determine how preferreds are counted as capital. It also takes away some of the seniority benefits.

Aren't these cumulative preferred's? If they don't count as Tier 1 capital in 2013, then the media is misreporting this investment as a capitalization, when it should really be regarded as a reputation buy.

If money supply keeps increasing at a faster rate than GDP growth, eventually we would have to choose between issuing yet more money to service debt payments and just defaulting. Some MMT proponents, or perhaps misrepresentatives, seem to ignore the possibility of a Weimar Republic cycle.

Management considered the effect of Dodd-Frank on TRUPs when they forecasted Basel III compliance targets. The last earnings call and presentation covers their strategy to reduce risk weighted assets going forward, and they focus upon Tier 1 common which excludes TRUPs and treats hybrids as if they were converted to preferreds. Moynihan target 6.75-7% Tier 1 common ratio by the end of 2012 (if the world still exists...) using 2019 Basel III standards. By comparison, the required minimum ratio is 3.5%.

Ragnarisapirate, I read your blog entry about CBRL, and I think that you said something similar in an old CBRL thread. Management may be justified in blending the segments for competitive or communication purposes, but they should also share their logic about why the blended model makes sense. For example, if the retail offerings affect restaurant preferences or vice versa, then we might expect to see more restaurant sales, or EBIT, per square foot compared to a competitor. Or we might see more sales per customer, or correlation between restaurant and retail spend per customer. Just going by the financials, management seems capable and the concept showed good performance through a restaurant downturn, but I empathize with Biglari's larger point that investors are not adequately educated. Perhaps he is wrong to focus on segment delineation, but more information is better.

The 3Q report will show more detail on restructured debt, which will offer more clarity on the bear argument that commercial RE lines benefit from extend and pretend. Even without the new disclosures, which we should have always had, BAC shows criticized portfolios and dollar amounts returned to performing status. So investors get a sense of magnitude and problematic areas. The current bear sentiment takes a reasonable argument that bank financials don't offer full information and perverts it into the argument that no information, or insufficient information, is presented. The information is there for anyone who looks (maybe not in investment banking).

Cracker Barrel's response to Biglari: http://www.streetinsider.com/Press+Releases/Cracker+Barrel+Responds+to+Letter+from+Biglari+Holdings/6741792.html It's been a few months since I looked at the company, but I don't recall seeing anything particularly unique about their blended margins. Has management communicated any metric that might help to explain the benefit of a blended store vs. more square footage devoted to the restaurant space?