Parsad

Great post! +1! Cheers!

Two sides to every story. For 15 years, Buffett also said that Ajit Jain and David Sokol were the two people who have done the most for Berkshire shareholders and most likely to lead the company. Cheers!

Seaspan enters the energy business, and possibly asset management business. Diversifying into energy, with one of the best energy executives in the last 50 years and changing its name to Atlas Corp: https://finance.yahoo.com/news/seaspan-announces-proposed-holding-company-120000393.html Bing Chen will remain CEO and David will remain Chairman. I know that David was investing alot of his family capital through his family holding company, but I think this will be the main vessel (pardon the pun) now. Imagine what Berkshire might have looked like if Sokol had been given the reins eventually instead of being terminated! Cheers!

scorpion, do you have a value where you'd be a buyer? Do you have a view of what JEF is worth? Which subsidiaries do you think are worth more or less than tangible/book value? What price/book do you think is appropriate for JEF. If the merchant bank traded separately, what would you pay? If the investment bank traded separately what would you pay? I ask all of these, because you comment on this thread regularly and it's the same "Handler sucks" narrative. I understand your view and understand your reasoning for not investing, but if someone repeated back over and over that "handler is awesome" it would add as little value to the discussion. Since March 2013, when JEF/LUK combined, tangible book value per share has gone from $19.9 to $27 and about $2.4 of dividends have been paid. (subsequent to the $27/number SPB was distributed to shareholders and NAtional Beek will be written up and converted to cash). JEF has not grown in value at a spectacular rate and there have been mistakes, but to call the past 6 years a "symphony of failure" is mistaken. I'd also note a large portion of tangible has been cash or a DTA (which by definition can only go down in value once it's been written up). To say that the only upside in the stock is a 10-20% move up in rates going up does not appear to be based in any kind of fact based analysis. Agreed. I'd add that Handler - sloppy and clueless and ignorant of growth and value as he is - managed to compound BVPS at 11% from when he took over as CEO until the merger, despite the inconvenience of the GFC. He also managed to persuade Cummings - nobody's fool - that he was a worthy heir. Problem is that Steinberg & Cummings were distressed asset investors or true value investors. Handler comes from the investment banking world. Two very different worlds. Handler ended up inheriting a merchant bank, when that is not his area of expertise. So not only did the CEO get lost in all of the shuffle, so did the markets grasp of what Leucadia had become. Finally, after all of these years, Handler decided to clean up the entire thing and restart with the assets that make sense to him. He is selling off portions of the merchant bank business, trying to value the remaining assets for analysts and investors, and focus on getting back to what he knows...the investment banking business. And here we are seeing a lag...Jefferies has picked up many employees to provide better coverage in areas where it wasn't seen as a leader. It isn't a stagnant mid-tier investment bank...it is slowly becoming a major competitor in the arena...one that Handler built at a 12% annualized pace for 20 years. Jefferies first few years after the Leucadia merger are no different than what happened to Fairfax during 2000-2007. A period of simplifying and cleaning up to move to the next stage of growth. Cheers!

Jefferies selling remaining 31% stake in National Beef for $970M! https://finance.yahoo.com/news/jefferies-agrees-sell-remaining-31-010200783.html Not sure when the market will recognize the value in the company if it can't do it now! Should be priced at tangible book at the very least in almost any environment...in this market, should be trading at 1.25 times book value. Cheers!

Not related to your question but I work in TO in the finance industry. Here is what I heard on the grapevine: CIBC makes most of their money on interest margins. Lower interest rates really hurt them. Other banks are more diversified...make more money off investment banking or other things less tied to interest rates. Fear of interest rates going down in event of another recession is why CIBC trades low. CIBC is a horrible internal culture. Everyone I know says this...I personally never experienced it. CIBC historically has always had a less diversified portfolio of business than Royal Bank and most of the other big banks. Their credit portfolio standards have historically been the worst of the big banks. When credit losses rise, CIBC gets hit harder than anyone else. TD has done the best job in the last decade to expand their book of business, especially the U.S. market. Royal Bank, TD and Bank of Montreal have all done a good job of expanding their services and book of business, and Bank of Montreal has done a good job of improving their credit quality standards. Bank of Nova Scotia has been doing a good job over the last 3 years and should be the bank to improve their banking profile the most over the next few years as they expand their wealth management business. The credit quality standards for these big banks is superior to CIBC, as is the underwriting culture between them and CIBC. Cheers!

Don't worry, the message board itself will remain the same or very similar. Ease of use will be the primary factor. Most of the changes will be around the rest of the content, utility, having guest contributors, the overall feel of how the COBF community developed over 18 years, and an upgraded more modern look and feel. Cheers!

Yo, bros...keep your pants on. COBF is going to be going a redevelopment over the next 6-8 months...thus why I haven't made certain upgrades, etc. It costs money to do a complete revamp! It will look - completely different - more modern - something I can actually treat more as a media website, rather than simply a message board - but the message board feature will be safe, and all existing posts transported over - including the section you love so much "Politics"...but it will be in its own play-pen, so you don't have to look at it if you don't want to. It will have more features, and all of the little "ignore" features you guys are looking for. Better security features. And yes, hats and t-shirts are coming, so that you guys can identify yourselves as the cult-nutjobs you are when you hold your city get togethers or go to Toronto or Omaha. Lots more as we add features, etc and redevelop COBF! Cheers!

They are getting a steal relative to the real estate. The retail business is awful, but they should just shut it down to the core and lease out the rest of the real estate...or sell a good chunk. Cheers!

Every time it falls below book value, I see Brian Bradstreet buying some shares. We shall know shortly! I think for long-term investors, who don't want to fiddle with their portfolio and just sleep at night...it's a buy! Cheers!

Also for those on a tighter budget, here is the phone call/teleconference auction: https://www.ebay.com/itm/123936600677?ssPageName=STRK:MESCX:IT&_trksid=p3984.m1557.l2649 Plenty of sizzle...no steak...literally, there's no food! ;D Cheers!

Personally, the current bid of $17,000 is too rich for me. I don't consider myself enough of a high roller to bid on lunch with Monish. Maybe if there was an option for just coffee. Since this is supposed to be a value investor thread, I'd like to make a couple of points about what might be hidden value for some of you. First, I'd like to say that I am more impressed than ever with the wisdom of what Pabrai is doing with Dakshana. If you want your dollar to go a long way then Monish has found a very positive way of impacting the world. I also want to call out some people on this board who like to complain about the injustices of Hunter Biden starting life on third base, or the inequalities that the left concerns themselves with. Well why don't you put your money where your mouth is and give some money to an organization that actually does something about that sort of issue? Second, I think you could mock Pabrai for having this fundraiser and say that he is just copying Buffett. I might be tempted to do the same, but there's a problem with that. Buffett and Munger say that you can't pick and choose which parts of the system to copy. They say that if you want to adopt their system, you have to copy everything. I am guessing that Monish's interactions with Charlie, Warren and others in their universe have taught him something about that. There are too many people who say, "I'm going to be just like Buffett, except for the part about ethics" or "I'm just like Buffett, except for the part about living modestly, in fact I don't even want to live with my means, borrowing heavily to consume seems like more fun." Kudos to Monish for his efforts to copy ALL parts of the system rather than picking and choosing. It's probably better to risk being mocked for copying everything Buffett does than to leave out something important due to ignorance. It's probably also worth accidentally charging $8 dollars shipping or accidentally using your personal eBay account and exposing that your hobby is collecting beanie babies, either of which would obviously open you to ridicule. Finally, since I thought we were supposed to be analysts, here's an argument that the auction presents a bargain. Even if you don't think that speaking to Monish about investing or business has value to your particular situation, Monish has had the opportunity to spend time with Buffett and Munger and has become friendly with many people who are close to them. Even if you think the only value is that maybe some pixie dust fell off on to Monish, at 37 bps relative to the cost of lunch with Buffett, maybe it's not a bad deal? Even if you thought you should make adjustments for the relative scarcity of Buffett's time versus Monish's time, or maybe adjustments for the relative AUM amounts, etc I think someone could still make arguments that the lunch is cheap on a relative basis. Plus, I suspect we could learn something from Monish about marketing and self-promotion. Now Monish, I know you read CoB&F occasionally, and as a master marketer, I'm sure you check up on your online presence . . . so, about that coffee . . . feel free to message me. https://en.wikipedia.org/wiki/Glide_Foundation Event number Year Winning bid (USD) 20 2019 $4.57 million[9] 19 2018 $4.23 million[11] 18 2017 $2.68 million 17 2016 $3.46 million 16 2015 $2.35 million 15 2014 $2.16 million 14 2013 $1 million 13 2012 $3.46 million 12 2011 $2.63 million 11 2010 $2.63 million 10 2009 $1.68 million 9 2008 $2.1 million 8 2007 $650,100 7 2006 $620,100 6 2005 $351,100 5 2004 $202,100 4 2003 $250,100 3 2002 $25,000 2 2001 $18,000 1 2000 $25,000 The first 3 guys who had lunch with Buffet between 2000 and 2002 belong in the hall of fame of value investing. What the heck ever happen to the 2019 lunch? Did that crypto guy ever had a steak lunch with Buffet at Smith and Wollensky? Even Mohnish and Guy Spiers are at #8 and paid $650,100...a relative bargain compared to the going rate. Better use of money than paying off people to correct your child's SAT score or get them on a rowing/swimming team at college! :o Cheers!

Im just kidding... relax. Im just shocked at the prices people pay for investing advice. I doubt that anyone mainly pays for an investment advice or as some one else indicated, to get their name in papers when it comes to having lunch with Pabrai. Most people want to donate for a good cause when money is used wisely and if it comes with a lunch with him, it's even better. Wallet, investment etc are just bonus. I will highly recommend reading Dakshana Foundation's annual report. Exactly right rranjan! I personally paid $21K to play a round of golf and lunch with Wayne Gretzky. I'm not going to meet him to show off or become the next Gretzky...well past my prime, as well as my best before date! I wanted to donate the money, and in turn I get to have lunch with someone I marveled at when he played hockey and as a statesman for the sport. Certainly a better use than buying an expensive car! Cheers!

Only COBF members would shit on a guy for raising money to help others! Nice! Cheers!

For a good cause...Mohnish's non-profit "Dakshana". Bidding is at $15K currently and ends tomorrow! Cheers! https://www.ebay.com/itm/Power-Lunch-with-Mohnish-Pabrai/123928887750?hash=item1cdabcc1c6:g:PKAAAOSwX-Zdl6~L

Parsad, I never told you or anyone for that matter that the items I listed in my previous post were the reasons for Fairfax underperformance during the last decade. I can only assume that you are mixing up my comments with someone else's. Added: I also don't understand how you can claim their equities have done well by excluding puts and derivatives. That is like saying a long/short hedge fund did well on the long side if you ignore their short positions. Doesn't make much sense to me. -MD I'm not saying their overall portfolio did well. I'm saying that they made macro bets on the market and economy, including those puts and derivatives, which hurt their equity picks. Prem has said as much in the annual letters. And for all intents and purposes, those macro bets were a mistake. But if you are using 3.5-1 asset to equity leverage, plus debt, plus float, then you may be hamstrung by having to make macro bets to ensure you don't suffer catastrophic losses that reduce statutory surplus when you are writing insurance business. My point was, that if they have learned from those mistakes, their portfolio should do better over time. If they haven't learned from those mistakes, their portfolio could continue to suffer from macro bets. Investors should decide what they are comfortable with before buying Fairfax. Cheers!

Out of those five items, only really the macro calls affected performance. Their equity positions overall have done reasonably well since 2008, excluding the puts and derivatives. That's what really killed about $2B in gains. As for the Watsa family involvement, Ben has only been involved for the last 3 years, while Christine has been involved for one year...are you going to tell me that was the reason Fairfax underperformed for the last decade? Fairfax is not buying the market...be it value or growth. So that's not an excuse, nor the reason why it underperformed. We all know clearly from the letters that the macro calls since after 2009 offset about $2B in gains. And that extremely conservative position left them holding a ton of cash and a ton of bonds, when equities were priced at 50 year lows. So if shareholders want to blame anything, I would say they should be blaming the macro calls on what might happen. - Going back to shareholders holding the stock or considering buying...if you think that Fairfax has learned their lesson on macro calls, Fairfax will probably do well in the future. - If you think that Fairfax will continue to try and make these macro bets, then yes, it is possible Fairfax will be out of step. I personally am betting on the former, but at the same time, I manage a considerable amount of my own portfolio and only a portion is in Fairfax. Cheers!

You have so much cash sloshing around that it is hard to find undervalued investments or write insurance business that is priced correctly. Look at the hurricanes the market has seen for the last 5 years, yet pricing pressure isn't even close to what we saw after Hugo 15-16 years ago. Fairfax doesn't have to do well every year, or year to year. All Fairfax has to do is wait for when liquidity is at a premium again. Do we really think that such low interest rates will persist on a global basis? Asset prices as a whole are all hitting highs or close to highs...inflation is non-existent at this point in time. Both elections in the U.S. and Canada...not one person, including Republican/Conservatives are talking about balanced budgets or reducing debt relative to GDP! I've never seen that! The day of reckoning for all of this easy money will come. Only a handful of countries are below 90% debt to GDP...and it ain't any of the large economies! You wait for the fat pitch! Cheers!

Lost more respect than when the stock dropped from $590 to $68 between 1999 and 2003? Now that was a sign the company had lost respect! This is value investing being out of fashion. Unless Ben Graham was wrong, eventually value will become fashionable as people pay attention to fundamentals. But when 1/2 of all capital is moving into index stocks, it's kind of hard to love value stocks. As for the silly comment by Gregmal about "nepotism"...how is it different than Howard Buffett sitting on Berkshire's board? Or the Desmarais family, Thompson family or Weston family? At least both Ben and Christine have finance backgrounds...what the heck is a photographer/farmer doing on Berkshire's board? And I know the Watsa kids quite well...they have learned carefully from their mother and father on what is ethical, what Fairfax means, how to treat shareholders, etc. I'm much more comfortable with the two of them on there than Howard Buffett on Berkshire's board...as nice a guy as Howard is! Cheers!

It's usually at such depths, when investors start to reconsider their investment in Fairfax, when it is ultimately gets rewarded. That being said, there are a handful of things that investors need to understand about Fairfax currently and going forward: - It is no longer really just an insurance company...so any portfolio decisions made are going to have a significant impact...BB, Recipe, SSW, India, Africa, etc. - It's insurance division is far superior to the insurance companies it owned in the past...this is more comparable to Berkshire now...well run, consistent, quality insurers. - Prem has handed over significant responsibilities to others now...the team at Hamblin-Watsa is considerably different and will continue to change when Brian is gone...so results will be different over the next 20 years...equity decisions could be actually better, but I would expect bond/fixed income investments will be worse. - Leadership is young outside of the old core guard...if they picked the team right, this could actually be a better investment than Fairfax itself was over the last decade, so you could be making a big mistake...Paul Rivett is as capable as Prem as a leader. - As long as they get most of it right, the natural asset/equity leverage and long-term float will provide great returns to shareholders...so they don't have to shoot for the moon, just get 4% on the whole portfolio and write 100% CR. - They are now the go to buyer in Canada for assets, alongside Brookfield, and their reputation gets them offers that many other investors wouldn't get. - You don't need to put everything into Fairfax...if you have time to manage assets yourself, you can probably put part with them, part with someone else, and manage a portion yourself...as long as they are not overlapping strategies. Cheers!

Might be because of the rotation going on right now. Anything that has done well in the past year (factor: momentum) is down and most of the things that have done badly (factor: value) are up today. Absolutely! It had to happen eventually and value stocks are benefiting today. Hopefully, this is a longer-term prognosis! Cheers!

Not fun fact...known fact for oh...50 years. ;D Cheers!

The man is a brilliant, amazing guy, but where reality meets fiction...the line has become deeply lost...I'm not sure Patrick knows where that line is any more. If he had spent half as much energy on Overstock as he did on everything else, there would be no Wayfair.com right now, and Overstock.com would be Pepsi to Amazon's Coca-cola. Alot of the stuff that happened earlier with the hedge funds and covered in Deep Capture was real. He was getting threats up the ying-yang and was messing with alot of people that most would not. Even I was warned by a couple of people not to write about the whole Fairfax/Overstock.com/hedge fund saga...that these people were dangerous and could hurt me. The Patrick I'm watching in this interview seems dangerously close to a nervous breakdown, if not in the middle of one. I'm feeling deeply sorry for him at this moment, and his friends need to rally around him right now...regardless of the whole Deep State comments, etc. Good luck to him! I know Jonathan Johnson won't be able to make Patrick do anything, but as one of his closest friends, make sure he's ok. As for the other stuff, it will get dealt with and the chips will fall where they may. Incidentally, calling that jackass who commented on the Canadian lawsuit a fool was the most accurate thing Patrick said...the journalist/interviewer was a clown! Cheers!

+1! Totally agree. Cheers!

Herald Square alone is $4B...they can also build an 80 story tower above Herald Square if they wanted. We bought a ton of Macy's around $19 nearly two years ago, saw it go back up to $39, but we were waiting for long-term gains to kick in before selling. It started dropping about 2 months before long-term gains would have kicked in, and has kept falling till today. When we bought it just under two years ago it had $6B in net debt, $1.4M CF, P/E of 6, 7.5% dividend yield, real estate worth about $12-15B conservatively. Today, is has $4B in net debt, $1.3M CF, P/E of 5, 9.2% dividend yield, real estate still worth $12-15B conservatively. All you have to do is a Sears/Seritage split here, and you unlock $30-40 per share in real estate value with the retail business trading at another $10-12. Because they would be paying close to market rent, the retail business would trade at only 4-5 times CF after increased rent expense. But you free up the extremely valuable real estate which will go up in value, and let the retail business fight or die. Cheers!