Parsad

Article on Prem, RIM and today's conference call. Haven't been able to listen to it, as we are moving offices today. Probably listen to it tomorrow evening or Sunday. Cheers! http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/on-rim-watsa-asks-for-a-little-perspective/article4444009/

Some interesting appointments. I hope Prem is around till he's well over 100, but Fairfax has some horses ready if the need ever arises. I think one thing Prem has done early, unlike Buffett or others, is a solid succession plan. Cheers! http://www.fairfax.ca/news/press-releases/press-release-details/2012/Executive-Announcements1130335/default.aspx

They are also moving ahead with the $3B clean energy gasification project in Chicago that LUK is funding. Cheers!

Yup, pretty much! ;D Cheers!

With such clear conviction, why in your opinion didn't WeB invest directly in the equity? does the preferred route not suggest it's not that clear to him? When Buffett invested the $5B, BAC was in a much more precarious position. Did he not recently say he wishes now that he had invested more? Buffett invests with Leucadia in things such as Berkadia, but he never invests directly in Leucadia...does that say something about how he feels about Leucadia equity, or is there just some things that Buffett chooses to invest in one way, and perhaps not another. Don't spend all your time wondering why Buffett did or not do something. Like everyone, including you or myself, there are things he will miss and many things he will get right. Investing is as much an art and based on your comfort level, as anything else...Buffett had much more comfort in preferreds rather than equity at the time. I would not be the slightest bit surprised if he buys equity at some point, and let's not forget we still don't know what Munger bought for DJCO...alot of people think it was BAC common...but would that matter?! Not one iota to me. Cheers! One can of course disregard buffet's doings, at his peril. However, his past preferreds investments were based, as you say on - not enough comfort. I do not understand banking well, too many moving parts to my taste, so I ask... why the discomfort? (and re LUK, yes, I think it says something about how he feels about Leucadia equity). I honestly think Buffett invested in the preferreds because it was a better deal than the equity. He gets 6% annually, while having the option to convert to shares at $7. Little risk on the downside and plenty of upside. I think if he didn't get the preferreds, he may have just bought equity...but the preferreds were a better deal. And I disagree about Leucadia. I suspect he didn't invest directly in Leucadia because of the fact there was no succession plan for a very long-time...Buffett had no interest in stepping in and running a company. What they do is very unique, and if they didn't already have the right person in place, he wasn't going to be able to try and find the right person if both Cummings and Steinberg dropped dead...whether he owned a minority share or majority share. In general, I think you could come with various questions about why Buffett didn't invest in one thing or another, and never actually know the real reason why he did or didn't. He's invested in White Mountains, but why has he never invested in Fairfax or Markel? You could presume a dozen scenarios on his motivation, and none of them may be right. Cheers!

With such clear conviction, why in your opinion didn't WeB invest directly in the equity? does the preferred route not suggest it's not that clear to him? When Buffett invested the $5B, BAC was in a much more precarious position. Did he not recently say he wishes now that he had invested more? Buffett invests with Leucadia in things such as Berkadia, but he never invests directly in Leucadia...does that say something about how he feels about Leucadia equity, or is there just some things that Buffett chooses to invest in one way, and perhaps not another. Don't spend all your time wondering why Buffett did or not do something. Like everyone, including you or myself, there are things he will miss and many things he will get right. Investing is as much an art and based on your comfort level, as anything else...Buffett had much more comfort in preferreds rather than equity at the time. I would not be the slightest bit surprised if he buys equity at some point, and let's not forget we still don't know what Munger bought for DJCO...alot of people think it was BAC common...but would that matter?! Not one iota to me. Cheers!

Interview of Meredith Whitney on CNBC. Cheers! http://video.cnbc.com/gallery/?video=3000105384&play=1

Yup! They are further along than I expected at this point after reading the 2nd Q report. But the stock is doing laps like it's still going to go under, and the market perceives it as the worst capitalized out of all major and regional banks. If Bank of America goes down from some cataclysmic event in the world, then Wells Fargo & JP Morgan won't be far behind...probably days at best...and I doubt if Citigroup would last as long as BAC. The markets are counting the broken branches on the tree, but not examining exactly how strong the trunk is and all of the other branches where leaves will still sprout. Cheers! Except, that as I started to put money into BofA, I thought it would be the only circle of my competence currently under financials. But my knowlege of the AIG situation also grew over the last months and made me very comfortable to put the same amount into AIG,... so currently I have for every $1 of BAC, also about $1 of AIG. Somehow Buffett's IBM share repurchase thesis gave me my "eureka effect" about AIG. The AIG position is mostly in common stock and a few warrants. Sanjeev, how do you think BAC stacks up against AIG? Anyone else cares to comment? I like AIG, but I think it's a bigger black box with more tentacles than BAC. If I had to choose one, then it would be BAC. I understand the banking business, especially a shrinking one, better than I'll ever understand some of the more complex and esoteric products at AIG. Cheers!

Why 3-5 years if you expect it to hit book value by the end of the year? Never said book by year-end. Said tangible book by year-end. Cheers!

Guess who were the lowest: BAC was lowest, then Citi and finally US Bank. Cheers! http://www.bloomberg.com/news/2012-07-24/wells-fargo-ranks-no-1-in-hard-to-value-assets-s-p-says.html?cmpid=yhoo

See's Candies created the world's largest lollipop. Cheers! http://news.yahoo.com/blogs/sideshow/see-candies-creates-7-000-pound-lollypop-world-210921788.html

Yup! They are further along than I expected at this point after reading the 2nd Q report. But the stock is doing laps like it's still going to go under, and the market perceives it as the worst capitalized out of all major and regional banks. If Bank of America goes down from some cataclysmic event in the world, then Wells Fargo & JP Morgan won't be far behind...probably days at best...and I doubt if Citigroup would last as long as BAC. The markets are counting the broken branches on the tree, but not examining exactly how strong the trunk is and all of the other branches where leaves will still sprout. Cheers!

We've bet a good chunk of the farm on BAC now. I think it's one of the cheapest companies I've seen since I bought Steak'n Shake at $3.50, and that company was in rough shape at the time. The last time I saw something this good, this cheap, was Fairfax at $80...and even that was in rough shape! I think our partners will be very happy 3-5 years from now! Cheers!

My numbers are the same as yours on capital levels. Capital generation over the last year has been $20Bn. Another way to say it is, if the 2013 stress test were identical to 2012's, BAC would pass with a $20Bn repurchase. Similarly C should be able to pass with the $10Bn in capital they generated, plus, the capital they wanted to return last year minus some margin of safety. JPM has showed zero capital growth y/y, they gave it to a whale and decent shareholder returns. I thought C would pass the stress test. I thought JPM would be returning capital today. Neither are, and so being wrong in the past, I just say "hope for" a capital return in 2013. But by my numbers, the potential for 2013 and onward capital returns are very large. Hey, I had said that BAC would not be buying back shares or paying dividends in 2012. But I am saying that they will be buying back shares and/or increasing their dividend in 2013, and will be approved after this year's stress tests. No reason why it should be not be trading near tangible book except because of fear from Europe and the market's general delay in understanding what is happening in the underlying business. Seen it before, over and over. This is a 3 bagger over the next five years! Cheers!

+2! Smelled a little foul to me as well. Cheers!

Fairfax averages in and out of positions. They probably doubled down to bring their cost down, while Prem works with the board and management to try and right the ship. I don't think it means anything one way or the other...just that he has a very significant vested interest in RIMM's future and they've reduced their average cost. Cheers!

DCG, you know as well as anyone that measuring over the short-term means virtually nothing. Fairfax's shareholder equity in 1999 was $155...at the end of 2011 it was $364...or about 8.2% annualized compared to the S&P500, which was down about -1.3% annualized, but with dividends broke about even. During that time, Fairfax also paid dividends in half of those years, so their return is closer to 9.5%. So, let's not focus on the short-term, and worry only if Prem and Fairfax can stay ahead of the indices over the long-term. Cheers! Understood, and I haven't sold a single share of Fairfax, but large investments in companies like RIMM are a cause of the stock sliding (or not moving). I agree. I think it's mainly a lack of catalysts...holding pattern on investments with the hedges...and investments in things that would be counterintuitive...RIMM, Resolute, private companies, etc. Spain is getting incredibly close to a full-scale bailout...Greece is essentially in a Depression. Much of what Fairfax is concerned about is slowly coming to fruition, and it is likely some of their longer terms hedges will pay some dividends over the next couple of years. Cheers!

DCG, you know as well as anyone that measuring over the short-term means virtually nothing. Fairfax's shareholder equity in 1999 was $155...at the end of 2011 it was $364...or about 8.2% annualized compared to the S&P500, which was down about -1.3% annualized, but with dividends broke about even. During that time, Fairfax also paid dividends in half of those years, so their return is closer to 9.5%. So, let's not focus on the short-term, and worry only if Prem and Fairfax can stay ahead of the indices over the long-term. Cheers!

Let me ask the board a hypothetical question, since there are many long-term value investors on here. How would you feel about a company that is mostly owned by Tim McElvaine, Francis Chou and Jeff Stacey, and if that company had the mandate to go out and acquire private businesses? Would many of you consider being long-term shareholders in such an enterprise, where the board of directors had a significant vested interest in the company, and ran it as a low-cost enterprise similar to an early Leucadia National or Berkshire Hathaway? Again, these are all hypothetical questions and scenarios, but depending on the outcome of the animation business sale, I certainly would feel comfortable being part owner in a company with such a mandate, and with the three value investors mentioned above! Cheers!

So, how will Tim & co allocate RNW´s cash? Well, there will be few if any liabilities left, so #2 would be out. I don't think dividends or repurchasing shares is the answer either, since you would have only $2M in working capital, with $5M tied up in the loan and $30M+ in tax loss credits. I think the fact that 60% plus of the company is owned by a handful of value investors, who would be very long-term partners, means that #1 would be the likely direction...as long as Tim or any of the other value investors are willing. Cheers!

yea, i go way back with overstock. as more of a buy & holder than a trader i've got what can be charitably called a checkered history with ostk as an investment over the yrs. patrick may be a dr of philosopy with a major in the taoist/buddhist disciplines but at heart he's a very emotional, gut-feel, shoot from the hip kind of guy. when he's had a good qtr or 2 of favorable comps & the wind at his back he tends to go off the rails & swing for the fences, eschewing the smaller, more measured incremental gains that take deeper root in more fertile ground & sow the seeds for future solid compounded growth. that said, i seem to have a soft spot in my heart (as well in my head!) for the the good dr & ostk, and am a perennial fan, always richer in hope & poorer in pocket for my foibles. That's about as good as anyone can explain Overstock and Byrne! Brilliant. Cheers!

Goes on to say Tilson will keep a lower public profile. Yeah, we'll see about that. Not sure what the heck is going on then at T2 according to their letter: http://www.businessinsider.com/whitney-tilson-and-glenn-tongue-part-ways-at-t2-partners-2012-7 Tilson is going back to focusing on investment management instead of his other activities, and Glenn is managing their SPAC vehicle. The general long-short component isn't really different on either side and they will be relatively focused, with Glenn targeting frauds, failed business models, etc. Beats the hell out of me! Cheers!

I think that Steve Chestnut and Jonathan Johnson are working to help keep things more orderly. Along with the board playing a more intricate role...such as not allowing the buybacks just yet. As long as they can keep Patrick focused, Overstock will do fine. Cheers!

Hey, I said this business should be profitable quarter in and quarter out. I spoke to Sam Mitchell about this in Toronto, and I think the Overstock team, as well as their board, is focused on doing just that. Sam said 2012 was their year to prove it and so far so good. Usually the 2nd quarter is a tough quarter and they lose money in the 3rd quarter as well, as they ramp up for the big 4th quarter, but if they have a profitable 3rd quarter as I expect, then they should finish 2012 with excellent results. Cheers!

No, I think it's an actual decision to shrink the business. What is the point of growing the loan portfolio considerably when spreads are narrowing? It could come back to haunt their competition if short-term rates start to rise quickly. You should write business...be it insurance premium or loan contracts...only when the business provides a commensurate reward for the underlying risk. I think BAC is choosing to partly write less loan business and give up some ROE, simply to write better business in the future. Everything at BAC is now about risk control...be it in the balance sheet, the loan portfolio, the investment composition, etc. Build it for the long-term, not five years out. Cheers!