Parsad

That was quite funny! No, I don't think I want to fly with them...it would be a fun trip until we died in the crash. Cheers!

Hi Meiroy, that's what I thought happened. That's why I posted the CNBC article because it didn't quite make sense to me. Cheers!

CDS insuring municipal debt was cancelled five years ago. Cheers! http://www.cnbc.com/id/48733981

My choice for flying is called "Aeroplan points!" ;D Cheers!

What I'd like to see is what stories we tell when Prem is 80 years old, Fairfax is a $50B company, and Prem's investing prowess continues to gain notoriety. Old men with scratchy voices and painful bunions..."Remember Al, when we saved Prem and Fairfax with our six-shooters! We took Chanos and Cohen down. God-awful shorts! Cardboard and LotsofCoke teamed up with Bsilly and walloped Brolgaboy and Peter Eavis. Those were the days. A man could make a fortune by betting it all on LEAPS and spitting with one eye closed!" As you can see, I like Westerns! Cheers!

For those inquiring about what transpired on our old message board back in 2003 when Fairfax was attacked, you can read it all on the old MSN Board archive. Go to: http://msnbrkboardarchive.multiply.com/ Click "Blog" on the left hand side. Then click "Last" on the page numbers at the bottom. Work your way back up to Page 468...that's where it all started shortly after the U.S. listing on the NYSE. Cheers!

Article on private jets, in particular Netjets. Cheers! http://www.nytimes.com/2012/08/21/business/private-jet-industry-recovering-among-business-travelers.html?partner=yahoofinance

Terrific post Ubuy2wron! Cheers!

Article on Buffett and Berkshire. Cheers! http://www.chicagotribune.com/business/sns-201208091800--tms--kplngmpctnkm-a20120820-20120820,0,271930.story

The goal of becoming lean, mean, efficient and customer-centric...with a rock-solid balance sheet to boot! As loan losses and litigation evaporate, the markets will rationalize the business. Cheers!

Sanjeev, We will agree to disagree. We owned Fairfax when their leveraged investment portfolio moved....and that was related to their large U.S treasury holdings....it later moved to their CDs portfolio...a liquidation would given great results. Bank of America assets are impossible to quantify...their derivative portfolio and corporate structure make Fairfax look like kindergarden work. Hi Dazel, not quite true. The net derivatives risk at BAC is quantifiable and relative to the deposit and lending base, or even shareholder equity, is relatively small. It's not nominal we are worried about, but net exposure. For Fairfax when the market saw the earnings that were produced by investments the stock moved... but we already knew what the investments did from the bond yields. We would sell at that point. Fairfax business is and was tough. You say Prem...but our hero was Brian Bradstreet. Of course Prem was the leader we agree. We hope to once again get a chance to own Fairfax as it was the team that produced the results. Yes, definitely it was a team effort. But the credit for the CDS idea belongs to Brian and Francis...but no one really knows that. Francis came up with the original idea, but Brian was the one who brought it up in the committee meeting when Prem was asking the team for good ideas. And then it had to be a unanimous decision for the committee to approve it. Interestingly enough, Francis owns alot of BAC warrants and he's never sold a single Fairfax share. It will be the brand that wins out for Bank of America if it is to once again flourish. If they are modelling themselves after Wells Fargo, then I'm guessing it will be good business sense as well. The reduction in leverage, shrinking of their book of business, and focus on basic banking seem to suggest that it is occurring. Cheers!

I think Fairfax was actually much harder to analyze than Bank of America...smaller company, fewer analysts, lesser known company, complicated subsidiary structure, huge runoff business and recoverables relative to book...it was very difficult. The only reason that many people held the stock was because of their trust in Prem and our message board. I think alot of people that ultimately held the stock, would have sold without both. When you have a leader with trust, and a community to vent and talk to, it helps alot. Fairfax's decision to listen to shareholders and decide what information they needed was also crucial. With Fairfax, you were truly relying on their numbers being correct and that the reported exposures were accurate. With Bank of America, and many other large financial institutions, there has been so much scrutiny, on so many levels, that you have some more trust in the reported numbers. There is no industry in the United States, that receives as much regulatory guidance or provides as much detail, as the financial industry presently...other than perhaps the Department of National Security. And when things do show up like at JPM, every level of government jumps on them to explain and make changes. Remember, at the worst point in Fairfax's 7 years, they had leverage of about 11-1...for an insurance company! Today that leverage is less than 5-1. BAC today has leverage of about 9-1, down from about 12-1, and I expect that to creep down to about 8-1. In a business that is a heck of alot more transparent and simple when examining long-tail risk. In fact, I dare say that both businesses look very similar in the way their CEO's went about repairing the company and reducing leverage, while opening up the books to their shareholders to give them more comfort. I can't say with certainty what will happen, but my bet is obviously that this is another significant case of mispriced valuation due to an overabundance of fear relative to the actual underlying risk. Cheers!

With FFH you had a relatively defined catalyst holding the stock down - i.e. a coordinated short attack - whereas BAC is simply depressed due to a horrendous operating environment. Perhaps Parsad's theory of TBV by FYE 2012 due to litigation risk retrenchment is a form of catalyst, and he's probably right, but still who knows... We own no BAC LEAPS...just common and the A warrants. Even though I believe that BAC should trade at tangible book, you have to be absolutely right on the timing buying LEAPS. We're far more comfortable with a six-year time horizon, $13 strike and adjustable strike price than buying two year, no-benefit LEAPS. It certainly took alot of balls for those guys to buy FFH LEAPS back then, but at the same time, they were using their own money. It would have been painful to lose that capital, but it would be harder to explain it to partners in a fund. We had no fund back in 2003, and I did buy quite a few LEAPS as well in my personal portfolio...not as many as Ericopoly, Uccmal or Indirect...but quite a bit. We only put a small amount of the portfolio in SNS LEAPS...about 6%...we made a killing in them. Anyone who bought OSTK LEAPS a couple of months ago would have done quite nicely too. But getting the timing right has a bit of luck involved, so you should be careful. Cheers!

http://financialsector.blogspot.com/2006/01/prem-watsa-fairfax-financial.html There are two quotes in the article that are very interesting when viewed over 6 years later! The first: In its rebuttal volley, Fairfax charged that short sellers were trying to manipulate its stock. Short sellers attempt to profit from share price declines by "borrowing" stock. The lender may be a brokerage or a shareholder, and typically takes a commission. The short sells the stock, hoping a wave of selling will drive down the price so he can purchase shares later at lower prices. The short returns the shares to the lender once he's taken a profit. Naturally, the shorts try hard to talk the stock price down. Morgan Keegan analyst John Gwynn, one of the authors of the damning report, responded angrily to Fairfax's accusation. "We're not in cahoots with the shorts," he said. We subsequently now know that Gwynn released his report ahead of time to a number of hedge funds...Kynikos was one of them. Spoken as only a diehard conservative investor can. For a sunny forecast from Watsa, one has to turn the subject to the only sort of event that will bring the long war with the shorts to an end. "Once we perform, once we make a lot of dough, believe me, the stock's going up." Say no more! Cheers!

I'm sure both Ericopoly and Uccmal can enlighten you on that period. One retired and one could have retired. Cheers!

IKEA will attempt a $1B Euro entry into the European hotel market, but with no relation to the IKEA brand. It will be a no-frills, friendly hotel. Cheers! http://ca.finance.yahoo.com/news/ikea-eyes-billion-euro-move-093902055.html

That's why Buffett has it on mute all the time until he sees something he wants to listen to. I also can't believe how Andrew Ross Sorkin has been sucked into the CNBC culture. Having him and Joe Kiernan doing interviews together is awful...with Joe always shouting over Sorkin and everyone else. Cheers!

LOL! +1. Cheers!

John Paulson has the equivalent of 44% of his fund's equity assets in gold-related investments. The most since March 2009. Cheers! http://www.bloomberg.com/news/2012-08-15/paulson-steps-up-gold-bet-to-44-of-firm-s-equity-assets.html

Thank God they only make up 1% of the population...and probably an insignificant fraction of that as well! Cheers! http://richkidsofinstagram.tumblr.com/

Article on the GSE's demands for banks to buy back loans. Cheers! http://www.bloomberg.com/news/2012-08-15/freddie-fannie-push-bank-bad-debt-cost-to-84-billion-mortgages.html

But BAC was sued separately by a smaller investment firm in New York, along with a couple of other institutions. The lawsuits will come, because everyone has their hands out now and the banks still have bad reputations. But they will get settled for far less than the face value of any suit. In a couple of years, no one will remember. Look at BP! You wouldn't even know they polluted the Gulf Coast for 2 months. Cheers!

Forbes article on Buffett & Berkshire. Cheers1 http://www.forbes.com/sites/martinsosnoff/2012/08/15/buffett-gets-flush-with-cash-then-its-on-to-the-next-one/?partner=yahootix

CNBC had a little slideshow on Buffett's homes. Cheers! http://www.cnbc.com/id/48336350

Yes Bmi, I agree with all of that. I don't agree with the technical analysis and attempts at Zeal to quantify 17-year cycles. This seems to be something that has taken hold of alot of people after Buffett wrote his Fortune article in late 1999. His comment about the previous 17 years and the next 17 years looking very different, seems to have become fodder for alot of value managers as well as technical analysts. They've taken his comments out of context and believe that 17-year cycles exist. Cheers!