Parsad

Article on the new stress test standards. More details will be released by the government on the 15th of November. Cheers! http://blogs.barrons.com/stockstowatchtoday/2012/11/12/for-dividend-hungry-bank-investors-3-important-stress-test-development/?mod=yahoobarrons

Clip of Buffett from Becky Quick's new interview show "Off The Cuff". Cheers! http://finance.yahoo.com/blogs/off-the-cuff/warren-buffett-213923494.html

Does anyone disagree with this? You'd think this spread would have closed by now today. No, you are correct. We bought a bunch of JEF this morning. The spread is still there because there is always the remote possibility the deal will be shot down by shareholders. I don't think that is likely. It's a very good deal for both companies, and I think JEF under Leucadia could really start to take some market share away from the big boys over the ensuing 20 years, while Leucadia in one fell swoop has deepened their bench and solved any possible succession issues. Cheers!

I would not be surprised if it was BYD, as Munger also has a huge portion of his wealth invested in it. But I still don't understand BYD and cannot fathom putting that much into it. Cheers!

LOL! Nice. By the way, I don't think it's DELL either, because he told me I'm going to take it up the butt on that one...to put it nicely! ;D Cheers!

$700M deal...$5.40 per common, and $4.40 per warrant. Will work out very well for Fairfax! http://www.reuters.com/article/2012/11/12/thebrick-leonsfurnishing-idUSL3E8MC0Z720121112?feedType=RSS&feedName=mergersNews&rpc=43 Cheers!

Both Indirectinvestor and I tried to pry it out of him over dinner, but to no avail. Indirect thinks it is a company that some of you would be familiar with, and in fact it has been discussed in the "Investment Ideas" board...yes, I know that doesn't really narrow it...but he's pretty confident that is it. I on the other hand can't see that being the idea, but have no idea what it is...I don't think it is BAC, even though BAC makes up a very significant portion of the Pabrai Funds. Go to work my minions! ;D Try and give it a guess, and eventually we'll see who had the correct answer. Cheers!

The bulk of his net worth, and pretty much all of the incentive fees he has earned over the years, is in the funds, but Mohnish had money before starting the funds too. Also, I believe he and his wife have retirement accounts outside of the funds, and any college funds/trusts for his children are outside of the funds. So that is probably the capital he refers to when he talks about his family's investments. But for all intents and purposes, I would guess at least 80% of his money is tied up in the funds...interests are definitely aligned with partners. Cheers!

I go to sleep reasonably well but I wake up early and check the pre-market quote. As Sanjeev knows, on the West coast that comes pretty darn early... at 4:30am which is a fact I didn't even realize until the past few months. I just sleep with Bloomberg or CNBC on all night, so I sleep, but periodically wake up to see if anything is happening...just habit! In the fall and winter months, I like falling asleep on the great room sofa with the warm glow of the fireplace late at night, and so many nights it's been joined by the neon glow of the television as well. Cheers!

Jaime Dimon interview on CNBC. Cheers! http://www.cnbc.com/id/49762930

Anyways, I sleep very poorly some nights. Only, it's not for the reasons you might think. If you have young children, you could replicate this by telling them that Santa is coming... only tell them you don't know which night he's coming. They'll be up every night waiting. Great analogy Eric! But try and get some sleep, since you know you won't be able to see which night Santa comes anyway...plus it will happen in the day before markets open with a press release. Cheers!

So a couple of updates regarding the events around Fairfax's AGM next April. First, many of you will be happy to know that Dr. George Athanassakos is doing his conference again this year. It will the morning and afternoon before the Fairfax AGM, and is tentatively set of the Fairmont Royal York. George will release details later, and you will be able to find them on the Ivey site: http://www.bengrahaminvesting.ca/Outreach/conferences.htm Second, NormR's pre-dinner event will be held also at the Royal York. We have the Railcar Bar set aside specifically for his event, and the new name of the annual pre-dinner going forward is "Norm's Fairfax Cocktail"! Details will follow as we get closer to the event. Lastly, our Fairfax Financial Shareholder's Dinner has moved from the Tudor Rooms to the Ballroom on the Mezzanine Level, as the Royal York was able to create space and fit us into that room. Tickets are selling quick, so make sure you get yours. Cheers!

Hi Rabbit, I'm not quite sure what you mean. Those articles are about Ken Lewis overpaying for Fleet...not Moynihan? Are you saying that he orchaestrated the deal? In that case, he did what he was supposed to...maximize the premium Fleet could receive when they were bought out, and then he did what was required of him when he came over to BAC under Lewis. Other than the premature dividend announcement before Fed approval, I can't really fault him on too many mis-steps...and was that really such a mistake, as some have characterized? He thought they could pay it out, and the Fed thought different...lesson learned...so going forward he makes BAC the best-capitalized large bank in America and does not say a word about whether they will pay a dividend this year. Cheers!

Details for next year's London Value Investor Conference. Howard Marks will be speaking. Cheers! http://www.londonvalueinvestor.com/?dm_i=O75,10O5G,5IS8ZA,34KKM,1

Thanks to Shai for the link to the article: http://blogs.wsj.com/totalreturn/2012/11/08/warren-buffett-read-all-about-him/ [amazonsearch]Tap Dancing to Work[/amazonsearch] [amazonsearch]The Oracle Speaks: Warren Buffett in His Own Words[/amazonsearch] Cheers!

Your explanation that their ratios were really strong and they made a big profit that quarter are the reason why I'm wondering why they couldn't retire the TRUPS without selling stock. You say the TRUPS were a good deal. I agree. You say they had all the ratios and made a big profit. I agree. So, they were a FORTRESS if you look at the ratios, yet they couldn't handle the retirement of the TRUPS unless they sold equity. That's what really confuses me. They were also in the process of facing and settling multi-billion dollar lawsuits. I think they just felt that a capital raise was necessary to maintain ratios, retire the TRUPS and still settle litigation. Cheers! I maintain that it was a mistake to retire the TRUPS at a discount when the cost comes at $6 per common share. We'll soon see them paying $12+ for those shares, eviscerating whatever "gain" they made on the TRUPS and showing it would have been better to maintain patience and just retire the TRUPS at face value down the road. I don't disagree with you. But they were making decisions on the fly, while facing daunting tasks in their mortgage business and litigation, as well as shrinking the business and reducing their debt. You get some right and you get some wrong. This sort of goes back to Fairfax's capital raise with Cundill, Markel and Southeastern for well under book...yes they could have been patient, but at the same time your stock is facing pressure, regulators could be breathing down your neck, and your reputation is being shred in the media. It's a cost longer term, but you eat it because you need to continue to bring stability to your business. BAC may be wrong on the TRUPS, but they've been right on a heck of alot more stuff. As long as they keep doing that, we'll all do very well. Cheers!

Your explanation that their ratios were really strong and they made a big profit that quarter are the reason why I'm wondering why they couldn't retire the TRUPS without selling stock. You say the TRUPS were a good deal. I agree. You say they had all the ratios and made a big profit. I agree. So, they were a FORTRESS if you look at the ratios, yet they couldn't handle the retirement of the TRUPS unless they sold equity. That's what really confuses me. They were also in the process of facing and settling multi-billion dollar lawsuits. I think they just felt that a capital raise was necessary to maintain ratios, retire the TRUPS and still settle litigation. Cheers!

It wasn't the short-selling or being wrong. I couldn't care about that. It was the unethical way he went around spreading misinformation in the media, calling large shareholders, feeding information to hedge funds, etc...60 negative articles by Peter Eavis in a 9-month span? Herb Greenberg, Fabrice Taylor and others he pushed to write stories? John Gwynn releasing analyst reports early to shorts? It was coordinated and he was the prime individual in the whole thing...initiated, instigated and fueled. Cheers!

You're probably correct. Notice the change in tone of both parties already. Cheers!

Reading the thread, and this is a very good comment about the excellent Fortune article from last year. --------------------- Denny, I hear you on the acquisition issues with BofA. We were BankBoston customers until Fleet gobbled them up as well. Fleet was terrible. They hiked fees all over the place, and everyone just left. Moynihan was actaully the acquisition monkey for Fleet, so I was not thrilled with that aspect of his pedigree. To my recollecction Fleet was at least an order of magnitude worse than BofA on the Darth Vader- scale. That's in part why I was surprised by a couple of elements of a Fortune article pertaining to BofA that recently came out. http://finance.fortune.cnn.com/2011/07/07/can-brian-moynihan... The first one was that Moynihan made an agreement with the board that no acquisitions would even be considered: Moynihan landed the CEO job during a secret interview at the Four Seasons hotel in New York City in November 2009 by promising the board's search committee that he would follow a rigid set of principles: Sell virtually every asset unrelated to bedrock banking. Forget all acquisitions, now and forever. Don't grow total loans, but do change the mix so BofA won't be overexposed to risky consumer credit in a bad cycle. In effect, Moynihan was repudiating the go-for-growth culture that reigned under Lewis. "We got in trouble trying to grow far faster than GDP," he warned the directors. "Our goal should be to grow with the economy and the customers we have now, not take a lot of risk chasing new ones." Never again, he swore, would BofA need to sell stock in a downturn to survive. To the board, Moynihan's plan was far more than a knee-jerk reaction to the crisis. It struck them as a better way to run a bank, period. "Brian wants to level out the peaks and valleys, so that we won't get hit in a downturn as in the past," says director Thomas Ryan, the retired chairman of CVS Caremark (CVS). The second was that BofA would attempt to become more customer friendly (very anti-Fleet business model. Fleet was all about fees, fees, fees...). The following is heavily edited for brevity: Moynihan also aims to make the retail experience more customer-friendly, free of hidden "gotcha" fees that make people hate their banks. A crucial move is his decision on debit card fees. Last year Congress enacted legislation requiring banks to ask customers if they'd accept or decline being allowed to overdraw their accounts. If customers chose to "opt in," banks could keep charging the fat fees. Moynihan eliminated debit card overdrafts on purchases. That gambit erased $1 billion a year in revenues and astounded the competition. "We can't be the biggest bank in America and have people thinking we're taking advantage of them," he says. No such attitude ever existed in any way at Fleet. One last passage seems to indicate their impression of how long the "road back" might be (2-3 years), and where they go from there: In explaining his current strategy, Moynihan divides the future into two main periods. Over the next two years, he says, Bank of America will retain virtually all its earnings to build the funds necessary to comply with the new Basel III international standards of capital requirements for financial institutions, which are anticipated to be stringent. He adamantly insists that during this period, BofA's earnings power makes the crunch scenarios that critics fear impossible. "To say we have to raise capital is wrong," he says. "We'll generate all we need from our own earnings." When BofA has built up a sufficient capital cushion, probably two to three years from now, Moynihan plans to return all earnings to investors in dividends or share buybacks -- we're talking about $25 billion a year, all stuffing shareholders' pockets. "We need to get back most of the shares we issued in the crisis, that caused all the dilution," says Moynihan. It's a classic value strategy of growing modestly without plowing profits back into the business. I've held BAC in the past, but none right now. I may reconsider when this momentum turns. The market did not like this big red number, but it shouldn't have been a surprise with the Mortgage settlement that BofA just closed. Right now, they look like they may just get cheaper. A shout out from me to Mike for that excellent write up. Thanks for taking the time! Peter Fantastic article! Don't remember reading that one...thanks! Cheers!

I think while the risk is small, a systemic event could still take down the banks. If governments are already quite leveraged, what is the likelihood they could bail out all of the banks again...especially outside of North America? Remember, Prem is still fully hedged...parts of Europe are in the midst of a depression...China is slowing and we have no idea what the underlying liabilities of their financial institutions are...Japan is heavily leveraged. A systemic event that triggers a domino style collapse is still a remote possibility. While U.S. banks don't have much European exposure or in general alot of global exposure, a systemic crisis could create a run. So, while it is remote, remember banks are very leveraged businesses that are susceptible to runs in a panic. Cheers!

That's strange. Under the new rule I ask for $100b, and they say I miss by $95b. So then I say, okay, I ask for $5b then. Why don't we cut to the chase and just have the Fed tell the banks what they can return? That would be too logical and would put the onus on the Fed instead of the banks...they don't want that liability, even though they backstop the banks! ;D Cheers!

He was also calling large shareholders telling them to sell their shares, feeding information to numerous journalists who would write hack stories, and was alledgedly dismissed from one of the firms he worked for. http://www.deepcapture.com/introducing-john-hempton-the-plunderer-from-down-under/ http://www.deepcapture.com/the-word-on-thestreetcom/ Peter Eavis features prominently in several documents acquired through discovery in the Fairfax case. The earliest mention of him appears in an email dated July 10, 2002, in which John Hempton told Rocker employee Monty Montgomery “I have Peter interested” in his belief that Fairfax Financial was a fraud. Later, short selling hedge fund manager Jim Chanos refers to Eavis as John Hempton’s “guy”. I guess it's ok to just excuse someone's unethical, borderline criminal activites, if he writes a great blog and has great returns on his fund for two years. Cheers!

Both will be up if there is a settlement. But a settlement for BAC has little to no impact on their finances (already provisioned). For MBIA, it could mean the difference between success and failure. In fact, I think they are getting concerned enough now where they are moving into a defensive position and trying to pretty much target BAC into a settlement. I'd like to see BAC continue to settle more cases if favorable. Cheers!

True! This one was a slow build like Fairfax. People had plenty of time to jump aboard. They also had four years to jump on the Overstock wagon! ;D Cheers!