Rabbitisrich

I thought so, JR. The Lowenstein book went into more detail, but I believe that the prosecutor introduced Buffett's own words as evidence. Buffett spoke about the tendency of regional papers towards monopoly. On the other hand, the case was bogus, as the government could not prove that Buffett undertook anti-competitive actions such as producing below cost or paying advertisers to stick with the Buffalo News. He only tried to start a Sunday paper!

I wasn't a big fan of the psychological profiling in the Snowball. However, it explained the business aspects quite well for a non-technical book. As far as I know, Schroeder gave the fullest description of the Blue Chip Stamps purchase, and of the complications arising from Berkshire Hathaway, Dexter Shoes, and Solomon Brothers. It's difficult to write a book about Buffett because you have a readership that wants technical information about his investments and another audience that wants to know about Astrid Menks and Susan Buffett.

FASB announced today that they will no longer allow these investment vehicles to be held off the books. It will be interesting to see the long term effect of this rule. In the short run, lending will definitely decline as companies renegotiate covenants. In the long run, the optimist in me hopes that investors will learn to read financial statements more carefully. http://www.fasb.org/news/051809_fas140_and_fin46r.shtml http://www.washingtonpost.com/wp-dyn/content/article/2009/05/17/AR2009051701779.html

Add the number provided in the earnings release, -$23, to shareholder's equity from the 10-K.

You may find Valueline to be useful.

Yep, good point Viking. IMO, the public overemphasizes the risk that Buffett's replacements won't match his investing skill. The longer term danger is that Berkshire sans Buffett won't retain high quality managers, attract unusual or familial businesses, or receive special considerations (i.e. Berkshire with Solomon Bros., the Moody's conflict of interest, etc.). Who else can replace that reputational goodwill?

Good stuff, thanks Thiru.

It's true that GDP doesn't measure profit margin, but it's not exactly a revenue measure. For example, one business' labor costs show up as an employee's PCE. The various expenses that erode the revenues of a single business instead become a component of GDP. The export-import difference acts as a proxy for expenses by measuring the capital that has left the country.

Maybe if Tilson's question runs too long, I'll saunter up behind him. Ole!

Same. I've got the flu. Normally I would go because I live right across the street from the convention center, but in this environment I might as well show up with a hospital gown and a sombrero.

But would you not agree that it would be nearly impossible for Joe Cola to match Coke/Pepsi for distribution reach?

I might have to miss this year's meeting. Is anyone planning to take notes or knows of a good source for the transcript? Thanks.

Thanks for the link. I didn't know you ran thestreetcapitalist. I've been enjoying it for the last couple months.

Probably not. Getting into oil too soon and the Irish banks were the major mistakes. Buffett defended the legitimacy of oil prices at $140+ by noting that the physical product exchanged at those rates.

Value-is-what-we-get, didn't we also used to "Xerox" everything? I would also add that a new competitor would probably need to be more than 'better' to displace Google. The reason Google displaced MSN and Yahoo is that those engines were fairly ineffective in 2000. Unless the average person finds themselves sifting through link after link for their page, the First Mover advantage should be sticky.

That's exactly why it's so important that FFH develops a cost free float. Hamblin-Watsa can do a lot more with small asset-liability matching concerns than the average insurer. Sorry to beat a dead horse, but I would rather that FFH stayed away from insurance acquisitions until A) they find that perfect combination of price and management quality or B) they have a Berkshire like balance sheet.

I just finished the Snowball and I am curious to see how Warren Buffett spoke and thought when he was younger. The oldest video was a 1996 lecture that I found on youtube. Does anyone else have even older sources?

JR, can you clarify your statement above? Are you saying that the banking system won't change if 100% of the capital came from TARP at 5% now and 9% in 2014? Or are you arguing that unorthodox capital sources are fine as long as they keep NIMs high and allow banks to earn their way out of trouble? Regarding Ackman's Debt/Equity swap--ignoring moral hazard, fairness, etc..--the equity provides a greater buffer against regulatory ratios and gives banks more confidence to lend aggressively vs. building their balance sheets. It also gives them more breathing space to lend intelligently. I understand your point that Bank A can pay out interest and dividends and Banks B-Z will eventually recieve those dollars. But we've already seen how, as in the S&L crisis, banks under cost of capital pressures can make dumb decisions on the asset side.

I decided to avoid this company almost after reading one 8-K. Their corporate governance is miserable--the audit committee is the same as the compensation committee and is paid by the GPs, and the board of directors is tiered--and the compensation structure is ridiculous. Do the senior executives really need a short-term incentive plan on top of their base salaries and long-term incentive plans? I also don't like that the company announces about $12M in SGA reduction, of which $10M is an accounting move from SGA to operating expenses. That accomplishment will benefit their short-term incentive plans. They are also in the process of selling 2011-2012 hedges to pay down debt. That is not necessarily a bad move, but in the context of their compensation policy, I can't trust that management has a rational basis for this and future actions. I'm probably wrong on this one, and I hope that you two do well on your investment, but all of my investment errors have come from chasing high cash flow yields into the arms of untrustworthy or poorly run management.

JackRiver, I disagree on the point that how the FDIC (i.e. government) funds the system has no economic impact. Imagine a prepackaged bankruptcy in which equity, debt, and counterparties take severe haircuts. The result is a massive refocusing of capital into the fractional banking system. However, you risk systemic negative feedback from all sources of bank capital ex depositors, and the banking system becomes bloated from public capital. In contrast, the current modus operandi uses public capital to float debtholders and counterparties. Pimco has been very open about the moral hazard of this strategy. You also increase the risk of politicization of the banking system, and of zombie banks. Depending on the execution of the stress tests, we may also see the risk of "checklist" management of private companies. To make things more complicated, there may not be a right solution for all times. Perhaps the government needed to save debt and counterparty agreements in 2008 because of the fevered atmosphere. And likewise, perhaps the government can, and should, minimize the use of public capital by drawing from debtholders and counterparties once the economy settles down.

No need for recriminations Wabuffo. If I recall correctly, your criticisms were fair and accurate. The key to the turnaround was Biglari's realistic appraisal of the financial situation and his aggressive efforts to improve short-term cash flows. Just imagine where the company would be if the previous management had managed to stay in place.

Their stock price cratered today after they cancelled their dividend to comply with covenants. Their dividend will not resume until they reduce their outstanding debt to below 90% of capacity, which could take a while as the lenders may reduce capacity by just enough every quarter. The price drop may have more to do with the fact that partners must continue to pay taxes on the expected dividends, regardless of cash distribution, than with the actual business. I would love to purchase a company that drops on technical factors. Any thoughts on this company?

Partner24, I don't know the names of the major shareholders, but Central Securities Corporation provided seed money in 1982 and held onto its shares. http://www.centralsecurities.com/largestHoldings.cfm

The shareholder letter came out for '08: https://www.prac.com/about-us/annual-reports/index.asp If anyone is interested in the nuts and bolts of running an auto insurance, the Plymouth Rock letters are probably the best free course you can get. The 2007 letter is also interesting in that it offers a glimpse into why so many institutions placed their money with private equity. Basically, the reasoning went that if a private equity persisted despite high fees, then they must have some advantage.

Like many of you, I'm skeptical of this rally. I haven't sold anything since March, but I've been purchasing puts on various high beta, low fundamentals stocks. The Financial Times argued against any major economic improvements in 2009 because of the damage to consumer balance sheets. Even in the case of a partial recovery, according to the article, the governments balance sheet might prevent a full recovery (i.e. inflation targeting, currency protection). http://www.ft.com/cms/s/0/3d89a930-220d-11de-8380-00144feabdc0.html CalculatedRisk.com has been doing some good work clarifying the difference between quantitative easing and credit easing.