Rabbitisrich

Why would you rather that Apple hold cash instead of purchasing presumably undervalued shares?

ATPG collapsed to < $5 with the price of oil in 2008, and shares issued have increased by 60% including converted preferreds.

Hi Prunes, I also have a limited amount of experience, < 4 years, and reading sites that follow money managers, like market folly and gurufocus and dataroma, helped to narrow the field. I also like to check on money managers who own the same unpopular securities that I own. If the remainder of their portfolios look interesting, then you may have a good prospect. It would also be a good idea to attend a popular investment conference to introduce yourself to the various money managers. There are plenty of hungry, intelligent managers with limited capital, who would love to increase AUM by even a million dollars. Good luck!

Prunes, do you see a positive result for long-term shareholders, or are you treating this as a trading stock? They have impending debt maturities with cross-default provisions set against operations with increasing operating expenses, excluding non-cash charges, and declining same-store sales. Any dilutive recapitalization is going to include an adjustment to Lion Capital's convert ratio (and so the dilution will have to include that cost). It looks like a gamble, unless I'm missing something major, like a natural buyer.

It seems like his sort of stock given his track record. My bid for half my shares back didnt get filled, I hate having to buy the pink shares, they dont trade much. What was your bid and order size? I feel like it has been way easier to get an order filled compared to 2010.

Nice recommendation.

Oh bother. "And how do you determine N?" "Simply divide M and L."

ValueCfa, how do you keep track with all these legal developments? I have google alerts set up for MBI and its subsidiaries but I didn't catch this letter.

Bill Ackman is developing a warranted reputation as a value adding activist. GGP, Target, Fortune, Sears Canada, and Wendy's shareholders benefited from his activism. This is also a list of distressed debt investors: http://www.distressed-debt-investing.com/2010/12/distressed-debt-hedge-funds.html

Taubes published a new NY Times article: http://www.nytimes.com/2011/04/17/magazine/mag-17Sugar-t.html?_r=1&pagewanted=all When Glinsmann and his F.D.A. co-authors decided no conclusive evidence demonstrated harm at the levels of sugar then being consumed, they estimated those levels at 40 pounds per person per year beyond what we might get naturally in fruits and vegetables — 40 pounds per person per year of “added sugars” as nutritionists now call them. This is 200 calories per day of sugar, which is less than the amount in a can and a half of Coca-Cola or two cups of apple juice. If that’s indeed all we consume, most nutritionists today would be delighted, including Lustig. But 40 pounds per year happened to be 35 pounds less than what Department of Agriculture analysts said we were consuming at the time — 75 pounds per person per year — and the U.S.D.A. estimates are typically considered to be the most reliable.

Los Angeles has an 11.3% unemployment rate from 6.9% in '08, not seasonally adjusted. It's amazing to see some areas where restaurants can still charge $18 for a deep fried egg with some fish eggs, closely bordering run-down neighborhoods with blocks of commercial vacancies.

I wonder whether inflation can improve the value of logistical and bargaining advantages. For example, MCD in China competes with delicious, dirt cheap food stalls because labor is cheap, and there are fewer health and realty code impediments to opening a small food stall. Land, labor, and food inflation plus gentrification may improve the power of economies of scale relative to idiosyncratic competitors.

Coc, to be clear, Yo-yo dieting is your contribution, and otherwise unmentioned in the thread. Would you also infer that "move more" means attempt marathons and 3X bodyweight deadlifts daily? It's also worth noting that Taubes never argued against a relationship between caloric intake and obesity. He also never tried to prove a mechanical inefficacy of exercise in improving health; rather, he only demonstrated that exercise rates did not predict obesity trends (a very different topic). http://jama.ama-assn.org/content/291/10/1193.full USDA survey data for 1977-1996 suggest that factors contributing to the increase in energy intake in the United States include consumption of food away from home; increased energy consumption from salty snacks, soft drinks, and pizza; and increased portion sizes. Eat less, move more, thoughtfully.

It's incredible that there is controversy as to the owners of the surplus assets, and that the Canadian Association of Mutual companies supports the cash policy holders. Even if they were not informed of alternative policies, they accepted the terms of their policies with all the accompanying constraints.

Eat less, move more.

I don't own MBI and ValueCfa is the real expert on this thread. Ericopoly wrote about "outsourcing" the legal analysis to Berkowitz's legal advisors. Some of the numbers used by the author seem aggressive. For example, he projects pre-tax consolidated operating expense of $14.97 per share compared to actual expense of $314MM including legal fees in 2010. If I understand correctly, the author also applied a haircut of 50% to earning assets.

Biglari is incentivised to make money with his shareholders, but he is also removing disincentives to make money off of them. You have to consider your partners before joining any business undertaking, so when you see that management has imposed economic penalties on maintaining a voice in the business, you have to think about the partners who are willing to accept the deal. Why does management want them? That being said, Biglari may still prove trustworthy and recent actions may prove little more than noise. You just have little recourse aside from selling shares if you are wrong.

Munger, that was my reading as well. Although, you have to adjust post-recap pricing to account for the reduction of the A share value by the value of the B shares less the value of the voting rights disparity. It is a wash for the equity holder immediately following the recap, but the dynamic described by Parsad should occur thereafter. If the B class accepts 10% of the vote for 20x the economic rights of the A class, then is there any protection against a change in the terms in the future? Or is it like finding a magic lamp where you can wish for more wishes?

Distressed Debt Investing blog published his notes on the speech: http://www.distressed-debt-investing.com/2011/04/michael-burry-notes-from-vanderbilt.html

I thought that he presented a well-reasoned assessment of the situation, much like Charlie Sheen's discussions of professional responsibility. I also agree that Buffett thoughtlessly gave away his money to one random person. I said so and therefore it is. Hey, it's just my opinion, which is as valid as anyone else's.

It's true that the compensation/ethics argument doesn't seriously impair the long thesis, but that's because the current bet is a special situation. Brown was a major shareholder when he oversaw the expansion of non-municipal lines while maintaining financial leverage appropriate for municipal loss rates, and he was the executive chairman from '04-'07. This is not a heroic profile. Again, the issue is not whether Brown's ethics impair the long thesis, but whether he warrants a positive reputation. I think there is solid evidence that he is not especially trustworthy in terms of ethics and business performance. As the long thesis changes, it will probably become a greater concern.

Another viewpoint is that the contract specifies that the banks need to pay up, yet they refuse to do so. The courts now need to make them live up to the terms of the contract. Let's say for example that a reinsurer with the ability to pay a claim refuses to do so. Should the insurer just write down the reinsurance recoverable to zero while litigation is pending? Or would it instead be fair to leave it as an asset while litigation is pending, given that the contract states that they claim must be paid? Perhaps impair it somewhat, to discount the possibility that the courts won't enforce the contract, and that perhaps the reinsurer won't be able to pay? My complaint has more to do with the beneficial impact to management of a negative shareholder event rather than with the accounting treatment. Management does discount the possibility of payer insolvency and time value, but they currently anticipate 100% recovery of par related to losses incurred (which includes to be incurred amounts). I do view the discount to loss and lae as a red flag, however, given that such information communicates management's estimation capabilities, as well as the progress of existing policies. Selecting and weighting information appropriate to the insurance decision is well within management purview. If management provided a separate line item on the income statement resulting in a complete movement of putback recoveries to "insurance loss recoverables" on the balance sheet, then the shareholders can consider the two events (misrepresentation and malcoverage), and the effects of one on the other. Current accounting practices imply some agreement that the incurred losses were pretty much all the issuers fault. But why oh why does management get to use this factor to increase their bonuses? For reinsurers, wouldn't a misread of reinsurer character or capacity strike against management performance? Similarly, shouldn't a misread of issuer character, aided by subsequently lower standards of due diligence on the part of management, also represent a negative? It seems that the implied philosophy is "Ok, we screwed up, but if you want us to fight for you, you better pay up." I wouldn't purchase the company if management character were a necessary component of the long thesis.

Appearance is reputation is money in this case. It's like an absentee father driving to recover a relationship with his child, only to find out along the way that the child has just won the lottery. One thing may or may not have anything to do with the other, but there is no reasonable test to distinguish an honest motivation from a self-serving one.

Brown's ethics shouldn't be part of the thesis unless the proxy detailing compensation practices is an early April Fool's joke. Retention of expert employees accounts for 10% of the performance measurement, which seems to be a method of paying yourself more for paying yourself more. Furthermore, Brown and co. are rewarded for taking steps to improve ABV to $45 within 2 years. That helps to explain why anticipated legal winnings are deducted from LAE. Berkowitz's hand is needed for these bloodsuckers!

That would imply that MidAmerican is somehow the crown of the Berkshire empire, which does not seem to be the case from an operating income and growth rate perspective. The Schroeder coverage represented nothing more than hearsay from ex-employees, recently let go or otherwise marginalized in the turnaround, and from an anonymous source in the comments section.