Parsad

If I mistake in my own portfolio, I live with it and no one can fire me. Even if I institute a lock-up, if I screw up with a big position, when that lock-up comes due...those partners will leave regardless. So, while I may be able to take a slightly bigger position than I currently do now (our max is 25% right now in a single idea), it won't really make a huge difference because I'll be inclined to still not go to 50% or better with other people's money. The obligation, if you are honest and ethical, is to do them no wrong. So you do no wrong because you want to be able to live with the worst case decision. To put it as simply as I can...I would feel ten times worse losing someone else's money than my own! Alot of people don't feel that way. Cheers!

Nicely done. No leverage either. The day I was buying equity for the funds, I was buying equity only for my personal account. Never bought more again for any of them, as the price never hit our bid and BAC has risen ever since! I've done this three times before...BRKB's in 1999/2000, FFH, SNS and now BAC...I'm looking forward to the fifth time whenever that appears! ;D Cheers!

Thanks guys! It looks like Google changed the feed data somewhere along the line, as I cannot find any way to change it from my end. Cheers!

If you want to attract OPM, I would be hard pressed to believe that you could do it with your PA results. It's just not the same thing and no one you talk to will believe that it is. While it wasn't his PA results, Dr. Michael Burry's blog helped him raise tens of millions from White Mountain and Leucadia, so I'm not dismissing PA results entirely. I'm just saying it's a very different animal than public money, and much tougher to raise money using PA results. Cheers!

No, Prem was saying build a track record with public money, but use your own and whatever you can raise to get started. The $400K was from our first four partners...all four who are still with us to this day...we couldn't invest directly into the U.S. partnership, as we were Canadian residents. Actually, one of those first partners, Andrew Cooke, became a director and then minority owner in our small firm. None had any idea if we could actually manage any money! Andrew was a board member on the old MSN Berkshire board and he's on here as well. Cheers!

Thanks Compoundinglife! Cheers!

Parsad, maybe you can explain this to me, as I've always been confused--why do the redemptions matter? For example, many people have said that Berkowitz shouldn't have taken on the extra money from "hot money" investors, but I never understood why. When they sell, they only hurt themselves and not the other investors right? I think Berkowitz said in one of his videos that everyone could leave and he'd still make money off his portion of the fund. No, it just means you have to be prepared for possible redemptions. You need to maintain liquidity, so that means you cannot have significant amounts of the portfolio in illiquid, microcap investments, where there may be a huge discount to intrinsic value. As partners redeem, you end up concentrating in your best ideas like Berkowitz. What you find is that you then get a second exodus because some partners who stayed with you, are now concerned about the amount of concentration in few ideas. In the end, Berkowitz and those partners who stayed, end up doing very well because the fund is very undervalued and concentrated. But in the meantime, the manager is left somewhat frustrated by having to spend so much time massaging emotions and fears. That's just part of the business...whether you have no lockup or a 2-year lockup. There is always redemption risk. It's why someone like Sardar has a massive advantage over any other fund manager...captive capital is a huge advantage! It's also why Buffett can keep compounding massive sums of capital at reasonable rates. If you look at in those terms, what Berkowitz does with $12-15B, is probably as tough, if not tougher, than what Buffett does with $200B. But it is, what it is! Cheers!

What is a good way to show a track record? Would brokerage statements suffice, or is there a more formal way of doing it? Do you mean for your personal account or a fund? Cheers! For a personal account. I have a brokerage account, at some point I'd like to be able to post my results in the same way. You should probably track it properly (either by spreadsheet or software) including when capital flowed in and out. Use your annual returns, and if you are missing any full years, indicate what the full period for that year was. Cheers!

Very interesting. Do you have a lockup? It seems like emphasizing the lockup and a fee schedule which rewards longer lockup periods would help solve that issue. Nope, no lockup. We're masochists like Bruce Berkowitz! ;D Cheers!

Ok, so here is the somewhat complete listing of events for the Fairfax 2013 AGM: Wednesday April 10, 2013 Ben Graham Centre's 2013 Value Investing Conference Fairmont Royal York Ballroom Tentatively: 8am-5pm Host: Dr. George Athanassakos, Ben Graham Chair at the Richard Ivey School of Business The value investor panel will include Francis Chou, Tim McElvaine, Robert Robotti and Tom Russo. The morning speaker will be Gary Shilling and the luncheon speaker will be Jeremy Grantham. Complete details for George's event, including conference ticket and registration information, can be found at: http://www.bengrahaminvesting.ca/Outreach/2013_Conference.htm Norm's 2013 Fairfax Pre-Dinner Meeting Fairmont Royal York Railcar Bar Tentatively: 3pm-6:15pm Host: Norm Rothery, notoriously stingy investor (www.ndir.com) and writer for The Globe & Mail There's room for about 25-30 people, so some of you may be sitting on the Railcar's roof or holding onto the sides "New Delhi" style! Fairfax Financial 8th Annual Shareholder's Dinner Fairmont Royal York Ballroom 6:30pm-11:00pm Host: Sanjeev Parsad, Founder of "Corner of Berkshire & Fairfax" website 6:30pm - Meet & Greet 7:00pm - Speakers & Dinner 8:30pm - Presentation Guests (from you know where!) We will of course have our usual raffle and silent auction. A wonderful dinner is on the menu, and a cash bar will be open again. Tickets are $150 (including dinner), or $75 (no dinner, water & beverages will be available). Get your tickets soon, as we are going to be running low. Just go to the "Corner of Berkshire & Fairfax" homepage (www.cornerofberkshireandfairfax.ca), and click on the ticket purchase box on the right hand side. All profits from ticket sales, auctions, and raffle will be donated to the "Crohn's & Colitis Foundation of Canada", in memory of Prem Watsa's executive assistant, JoAnn Butler. Thursday, April 11, 2012 Fairfax Financial Annual General Meeting Roy Thomson Hall Host: V. Prem Watsa, Chairman & CEO of Fairfax Financial and perhaps savior of Canada's beloved Research in Motion 8:30am - Registration 9:30am - AGM Noon appox. - Cocktail in Lobby There should be plenty of kiosks again for shareholder's to visit. All of the Fairfax managers and executives will be on hand to answer your questions. Prem should have a very interesting presentation as usual, and I'm sure there will be plenty of questions on RIMM, Sandridge and most likely Fibrek. And who knows, we may get another Ajit Jain sighting! ;D MPIC Funds Annual General Meeting Roy Thomson Hall - Pickering & Green Rooms Host: Alnesh Mohan & Sanjeev Parsad, Managing Partners of the MPIC Funds 1:30pm - Meet & Greet 2:00pm - Presentation 2:40pm - Q&A As usual, we will have plenty of beverages and food. We look forward to seeing all of you again!

Hi RK, yes that is the issue. Do you know, or does anyone else know, if the author's name used to show up on the feeds? I never use it, so I can't remember if it did or didn't show up. Cheers!

What is a good way to show a track record? Would brokerage statements suffice, or is there a more formal way of doing it? Do you mean for your personal account or a fund? Cheers!

Investment advisory business is very restrictive in most jurisdictions. Even if you manage individual accounts, I believe you still have to be registered as an investment advisor to take non-accredited accounts...double-check with those that currently manage IR's and are up to date on the regulations. For LP's, even if registered, under the exemptions most fund managers use, there is no way around the accredited investor requirement other than the friends and family exemption...and those are quite restrictive. Incidentally, friends and family are the worst partners because they tend to treat the fund as a personal piggy bank...not understanding the long-term nature of investing. We struggled with this for the first three years in the Canadian fund. We no longer accept friends and family, really into the fund! If you register as an advisor though (you'll need your CFA or MBA), then you can actually structure your fund as a mutual fund and you would be able to solicit any investor like Tilson Funds, etc. There is a significant amount of reporting and regulation though once you start a mutual fund, including trustee expenses, etc. Cheers!

Ok, so I was a little early with the tangible book by Christmas prediction! I've got a new one for 2013. - Legacy issues slip, sliding away. - Bulk of "New BAC" reductions should be in place by mid-year. - Servicing costs will drop like a rock through 2013. - Housing prices remain firm, or modestly higher, so loan loss reserves will continue to modestly improve. - Interest income will not go any lower than it is now. - Long-term debt costs will also continue to drop. Here is this year's Christmas gift...BAC hits $17.50 by Christmas 2013. Cheers!

With respect to why I'm doing this versus other tracking stuff, I just started keeping more rigorous track of my records to accurately see how I was doing, then I was letting my family know how it was going in emails, and finally it morphed into me formalizing it into "partner" letters just for fun. Hi Racemize, I can totally understanding tracking your own results and see how they do over time. I'll tell you one thing though. I won't give an ounce of recognition to personal account track records if I was investing with someone managing my money or running a fund. It's just not the same thing. You've got to look at a record running public money. - The capital in a public fund, especially with no lockup, is fluid. Personal capital is totally captive and pretty much permanent. - In a personal account, you are dealing with one personality...your own. In a public fund, it is completely schizophrenic in terms of the emotions and personalities. - With personal capital...one mistake and you are still in business. In a public fund, one mistake and you may be history! - Few, if any really, frictional costs in a personal account. In a public fund, you have accounting, legal, custodial, administrative, audit, mailings and setup costs. - In a personal account, you can go to 100%, leveraged position in one stock. In a public fund, you will rarely see a manager take a 20%, unleveraged position. There are a couple of advantages to managing OPM though: - Your fees are leveraged as the fund gets bigger from additions of capital, whereas your own personal account only grows based on your returns and your contributions. - If the fund is of size, you can start to do more esoteric things that a smaller sum of capital would not allow you to do...control positions, activist positions, etc. So, as much as I admire everyone's personal track records, and I hope everyone continues to build plenty of wealth, getting an actual track record of managing public capital is more important for potential investors. Give you an example...my personal portfolio was up over 125% in 2012...all BAC! MPIC Fund I, LP and MPIC Canadian LP did better than one tenth of that, because most of our partners would leave if I put everything into one stock! ;D Cheers!

I've been notified by a board member that our RSS Feed is no longer showing the authors of posts in Google RSS Feed Reader. I've looked high and low, as well as all over the Simple Machines software, on how to change the settings, but there is no setting that needs adjustment. Does anyone know if Google changed the way it presents RSS Feeds, or how to fix this issue? Cheers!

I don't know the ongoing overhead very well, but I think just start-up legal fees are in the 20-50k range--without a lot of AUM to cover it (particularly if I go with no static fee), that's just not worth it for me. Hi Racemize, The best advice I ever got was from Prem...he said "just start it with whatever capital you have and can raise, and build a track record." I would suggest you just start. We started with only $400K, even though we had verbal commitments of over $2M! So, just start with whatever you have and can raise. The cost to start would be about $20K or less if you do your research and find quality advice at a reasonable fee. You can amortize it back to your partners over five years like we did...as did Mohnish and a number of other managers. I think our early partners had no qualms about paying a few hundred dollars a month in amortization costs to cover the legal overhead. We saved some money early on, as Alnesh did the accounting. We are of size now, where hiring our own bookkeeper/accountant to do the work on both funds is reasonable. All the administrative and day to day stuff was/is handled by me. We have terrific service providers in terms of our brokes, legal, auditors. It's alot of work, but I can tell you that I wouldn't have it any other way. If I had waited to see that $2M in verbal commitments materialize, I would still not have a fund today! Cheers!

I liked this quote by Moynihan that was in the article: Moynihan acknowledged the somewhat absurd balancing act he faces: "We want to be the biggest company we can be to impact our customers; and the smallest, most efficient company we can be for our shareholders and equity," he said at the Goldman Sachs conference. So far, so good! Cheers!

Foreclosure deal imminent. May be announced Monday. Cheers! http://www.nytimes.com/2013/01/07/business/lenders-said-to-be-near-deal-of-foreclosure-claims.html?partner=yahoofinance&_r=0

Would any of you ascribe any importance to the word "rapidly"? The word "rapidly" also caught my eye when I read it the first time. I really thought it was both in poor choice and poor taste for Sokol to say that. That being said, Buffett is now in his early 80's and none of us are going to live forever...except Ericopoly, because he can now afford his own cryogenic freezer and monitoring system for the next 50 years! ;D Cheers! Terrible taste indeed... saying it to a cancer patient. However this is a written response and this guy probably had time to think over his words. Did he also try to indicate something else with this dirty punch below WeB's belt? We don't know. It's possible. Apple kept Steve Jobs' condition under wraps for a long-time. I think shareholder's have to trust the CEO and board's judgment about such things. Cheers!

Looking at the title of the article, it's hard to decipher if this is a compliment or not. I still think Prem should be ranked higher than Drake! ;D Cheers!

That's a good plan Al. I agree, there aren't many good places to put capital right now. Cheers!

I am thinking along the same lines: exiting a majority of my BAC-WSA position around tangible book and retaining my stake in the commons. Is this your thinking as well or do you think the warrants are still a good investment past TBV? Once the stock is at tangible book, the warrants will move nearly like equity until the time arbitrage gets to about two years left. I am thinking along the same lines: exiting a majority of my BAC-WSA position around tangible book and retaining my stake in the commons. Is this your thinking as well or do you think the warrants are still a good investment past TBV? I don't want to get rid of the warrants. Rather, I was thinking of ditching some LEAPS in my RothIRA. I hold so much BAC it isn't even funny. At $14 a share I'd still be about 2x notional long in BAC after all on a total net worth basis. The biggest positions are the warrants and the $7 strike 2015 calls. The calls turned out to be a dumb idea so far because they've performed in line with the warrants yet carry more maturity risk. Hi Eric, I would do that as the stock goes up. There's always risk that the stock trades flat for a couple of years if you get some sort of systemic event. As you stated, the time arbitrage of the LEAPs may make the option premium worthless if some sort of crisis occurred, whereas you would still have another 3-4 years left on the warrants. Our plan is to keep all of the equity, and thin out the warrants over time as the stock rises. In a couple of years, the dividend based on our cost will be something like 10-15% annually on the equity if they eventually pay $0.50-$0.75. Cheers!

Would any of you ascribe any importance to the word "rapidly"? The word "rapidly" also caught my eye when I read it the first time. I really thought it was both in poor choice and poor taste for Sokol to say that. That being said, Buffett is now in his early 80's and none of us are going to live forever...except Ericopoly, because he can now afford his own cryogenic freezer and monitoring system for the next 50 years! ;D Cheers!

For our west coast boardmembers, in particular those familiar with the Tully's Coffee brand, actor Patrick Dempsey had the winning bid in bankruptcy court. Growing up next to Seattle, and spending an inordinate amount of time there with family and friends, I'm very familiar with Tully's. I always hit the one in Bellevue/Lincoln Square whenever I stay for a couple of days and am doing some shopping. Cheers! http://www.bellevuereporter.com/news/185696661.html http://www.cnn.com/2013/01/04/showbiz/patrick-dempsey-coffee-chain/index.html?hpt=hp_t2