Parsad

Giants win, Giants win! Quants don't know how to measure intangibles. How do you put a number on the heart of a receiver, defensive lineman or quarterback? Another great game, and now you have to put Eli Manning in the discussion for greatest quarterback of this era. He's beaten Brady over and over, and took out the current MVP to get to the Superbowl. Cheers!

I bet. If I were running a fund, I would definitely have lockups. You must have fairly savvy partners to run your fund without lockups (I think I remember you saying that you don't have any lockups). Yes, most of our partners are very good. I'm also very good on the client contact, as we keep an open door policy, and they are welcome to contact me anytime. Often at times like we've seen, they just need someone to give them a little more perspective on what is happening, because there is just an enormous amount of noise to filter through. We run the fund fairly conservatively, because we don't have lockups. It's concentrated (8-12 ideas), but we try not to have large coordinated bets. We also operate with significant liquidity. Cheers!

Yachtman made contortions to explain himself at Consuelo Mack a couple of days ago: several small positions over several banks (even Bank of America, wow). That's after saying things like this before: “With a bank you create assets with a stroke of a pen. You’ve got a black box.” You have to give it to him. He seems straight in the camp of changing his mind when things change (or they become cheap). Just watched that interview. Yacktman's new position in banks is not necessarily inconsistent with his previous statement on banks. Most likely, he was questioning before why the US big banks and i-banks were such a high percentage of the portfolio of some investors (e.g., Bruce B), given his thoughts on the "black box" nature of the banks. Tons of people on this board feel the same way, although I disagree with them. Yacktman seems to be running his investment management business quite well. His portfolio is the type that will keep his AUM fairly sticky, I think. Which really brings to the forefront the issue with Fairholme. Bruce B appears to be crafting focused portfolios for total return only, without regards to whether his investors will get spooked and pull their money out. It appear it is in his blood to maximize return using a focused approach. He must stay the course. I like that, but I also recognize that most investors -- even sophisticated ones -- suffer from perverse psychology. It's funny, because most investors on this board want their fund managers to run their fund with little consideration for short-term volatility and to maximize long-term gain. Yet, when the manager actually follows that philosophy, the same investors are the first ones running for the lifeboats. That perverse psychology is what makes running a fund very, very difficult unless you have longer term lockups. I was fielding a couple calls last October, November from clients who thought we were going over the cliff. That Great Depression II was around the bend. They were pulling money from every manager they had money with. After a couple of hours on the phone, calming them and assuring them that we weren't, they felt a bit more at ease. Sadly, they said they would leave their capital with us, but pull from every other manager they had capital with. I explained that this wasn't a good idea. I can only imagine the calamity they have created around themselves. And these are "sophisticated" investors who have owned Berkshire, etc for years. When volatility strikes, it is just so difficult for people to control their emotions. Berkowitz was down 32%, but the fund assets have dropped 70%! Those same people are now paying the price on the way back up. I can only imagine how many of Mohnish's clients would have made the God-awful move of pulling their capital at the bottom when he was down 70%. Instead, many of them were saved from themselves by the lockup in place. Cheers!

Fantastic Forbes article on Wells. Cheers! http://www.forbes.com/sites/halahtouryalai/2012/01/25/wells-fargo-the-bank-that-works/

I agree 100%. But you'll probably get trashed by some on this board for saying it. They think that just because someone has done great for a while that they can never do wrong. They will sell a stock when Mr. Market pushes it stupidly high but when all that money came into Fairholme and Berkowitz decided he was going to try and be a Buffett or Lampert and it was weak money that was driving the price they would say you were stupid for selling Fairholme. He should have stuck with what he knows and what the long term investors originally bought into. No matter how great the St. Joe land development story might turn out, he should stick with what he had made his name doing. I think it was more of a matter of luck than anything else in making that decision. If things had worked out, this conversation wouldn't even be happening. So when investors think they know more than proven long-term investment managers, I'm thinking that may be the case in just a handful of situations. In most circumstance, it's because the investor was lucky. When Prem made the bet to buy TIG and C&F, no one thought that was a bad deal at the time. As big as the deal was, there was considerable protection in place...buying at 60-70% of book, a billion dollar reinsurance contract protecting against future losses, and paying with overvalued shares. Yet the deal went wrong because the losses were just far greater than the reinsurance policy could cover. Was that someone getting a big head, or just something that went wrong even though all the precautions were in place? Berkowitz didn't do anything differently than he has in his past, but the bets went the wrong way because he was early. If anyone thinks that a year or two is enough to judge a fund managers performance, than I think they are simply speaking from the obvious view of "what have you done for me lately!" Investors on this board always talk about long-term or how they will hold forever, but when things go sideways, investors rarely think about long-term. In Berkowitz's case, most of his "long-term" investors were thinking solely from a "short-term" view. And as I said at that time, they will be proven wrong in the long-term. Short-term, if they pulled their money, it was more of a matter of luck in timing, because that's exactly what it is...timing! Cheers! Well said regarding the conventional investor's view on Berkowitz and the luck of getting out at the right time. However, it's worth pointing out that the folks on this thread who have expressed pretty negative views on Berkowitz appear to be criticizing him for the investment in JOE and, specifically, for his trying to take over the company and run it better (their words, not mine). I'd like to hear more from them on why they think he's trying to run the company and whether they would have different views of him if he had not put any money into JOE. I don't think he had a whole lot of choice with JOE. He waited for management to move things forward, and they were being attacked by Einhorn, so what could he really do except shake things up. Prem is now on the board of RIMM...do we criticize him for being a little more hands on to protect his investment? JOE is doing better now with Berkowitz on there, so I think he did the right thing actually. Cheers!

I agree 100%. But you'll probably get trashed by some on this board for saying it. They think that just because someone has done great for a while that they can never do wrong. They will sell a stock when Mr. Market pushes it stupidly high but when all that money came into Fairholme and Berkowitz decided he was going to try and be a Buffett or Lampert and it was weak money that was driving the price they would say you were stupid for selling Fairholme. He should have stuck with what he knows and what the long term investors originally bought into. No matter how great the St. Joe land development story might turn out, he should stick with what he had made his name doing. I think it was more of a matter of luck than anything else in making that decision. If things had worked out, this conversation wouldn't even be happening. So when investors think they know more than proven long-term investment managers, I'm thinking that may be the case in just a handful of situations. In most circumstance, it's because the investor was lucky. When Prem made the bet to buy TIG and C&F, no one thought that was a bad deal at the time. As big as the deal was, there was considerable protection in place...buying at 60-70% of book, a billion dollar reinsurance contract protecting against future losses, and paying with overvalued shares. Yet the deal went wrong because the losses were just far greater than the reinsurance policy could cover. Was that someone getting a big head, or just something that went wrong even though all the precautions were in place? Berkowitz didn't do anything differently than he has in his past, but the bets went the wrong way because he was early. If anyone thinks that a year or two is enough to judge a fund managers performance, than I think they are simply speaking from the obvious view of "what have you done for me lately!" Investors on this board always talk about long-term or how they will hold forever, but when things go sideways, investors rarely think about long-term. In Berkowitz's case, most of his "long-term" investors were thinking solely from a "short-term" view. And as I said at that time, they will be proven wrong in the long-term. Short-term, if they pulled their money, it was more of a matter of luck in timing, because that's exactly what it is...timing! Cheers!

Probably not. But banking is actually a simple business when you keep it to the basics of deposits, lending and investments. Everyone has the same spreads. Everyone has the same target client base. The low cost operators, who stay away from esoteric and risky products, keeping their company's best interest and their client's best interest at heart, will do fine long-term. It's when the pigs get greedy you start to see problems. Moynihan strikes me as the "keep it simple, stupid" type, and he'll just run a plain old national banking business while being one of the low-cost operators in the industry. If he does just that, the bank will trade at book and grow at a very nice ROE long-term. Cheers!

Buying hand over fist! ;D Cheers!

Looks like BAC is going to try and sell all of their properties except NC and NYC. Hey, maybe Moynihan reads this message board! ;D Cheers! http://www.bloomberg.com/news/2012-02-03/bank-of-america-weighing-sale-of-all-properties-except-two-main-offices.html

Photos of Buffett with students. Click on the photograph in the article to start the slideshow. Some very funny, campy pictures of Buffett. You can see exactly how big of a ham he is. Loved it! Cheers! http://blogs.wsj.com/deals/2012/02/03/warren-buffett-gets-silly-a-slideshow/?mod=yahoo_hs

Article on Burlington's plans. Cheers! http://www.bizjournals.com/dallas/blog/morning_call/2012/02/burlington-northern-plans-39-billion.html?ana=yfcpc

WSJ article on Buffett and housing. Cheers! http://finance.yahoo.com/news/Buffett-Patient-Bet-Housing-tsmf-1774461908.html?x=0

Means little, but it is interesting nonetheless. Cheers! http://blogs.barrons.com/stockstowatchtoday/2012/02/02/bank-of-america-ge-insiders-buying-stock/?mod=yahoobarrons

The suit may be amended, but this is a big decision in BAC's favor if upheld and could apply to other suits against the company. Cheers! http://www.bloomberg.com/news/2012-02-03/bank-of-america-wins-dismissal-from-allstate-countrywide-suit.html?cmpid=yhoo

Article on Waterloo and how it is influenced by RIM. Cheers! http://www.theglobeandmail.com/news/technology/tech-news/as-company-struggles-waterloo-is-rims-city-of-angst/article2318797/

Both Wells and Overstock won Compuware's award. Cheers! http://www.marketwatch.com/story/wells-fargo-named-2011-compuware-best-of-the-web-award-winner-2012-02-02 http://www.marketwatch.com/story/overstockcom-wins-compuwares-2011-best-of-the-web-gold-award-2012-02-02

They never take into account six-sigma events. Alpha schmalpha! Giants knock out Patriots 27-24! http://www.bloomberg.com/news/2012-02-02/super-bowl-winning-quants-say-patriots-will-beat-giants-by-more-than-three.html Cheers!

I'll take this one. The reason is due to Zuckerberg's "comprehensive security program." The reason why you're even able to comment on it is because elsewhere in the S-1, FB has outlined the terms of its private aircraft use. They state explicitly that the CEO and COO are allowed to use the private aircraft for business purposes. Zuckerberg is allowed to use the private aircraft for any purpose because his security program requires that he doesn't fly commercial. If Zuckerberg travels with family and friends, the flight cost attributed to them is added to Zuckerberg's compensation so that everyone can see. So, not really bone chilling and it seems like an honest inclusion to me. From the S-1: You can't be this naive? Do you really believe that Zuckerberg is such a high profile human being that he needs to only fly private? While Senators and Congressman still fly first class? Moreover, if he is part of such a comprehensive security program why does he knock down pints at the local bars in Palo Alto, and where is his "security detail" I have never seen a photo of him surrounded by anybody. This is just a way to rationalize his usage of a private jet utilizing shareholder funds. Actually, I'm not bothered by this at all. I would never fly private, but then again, I would never waste a dime flying first class either...and I can't ever imagine being so well-known that anyone would ever try to kidnap me. This is no different than thousands of other executives who fly by private jet due to efficiency, security, convenience and flexibility. Buffett does...Prem does...and they are some of the most careful and prudent CEO's around with shareholder capital. Zuckerberg is probably one of the most well-known figures in business today, and probably 100 times more immediately recognizable than most senators, congressman et al. On the other subject of valuation: I would never touch this thing, but it's exact worth is something that is somewhat intangible at the moment if we go by recent history. Who thought iTunes would have such a dramatic effect on the music, video or television industry? Or Amazon on the book publishing business! How about what Netflix did to Blockbuster? I never thought Facebook would become as prominent and utilized as it is, nor did I see what Google would turn their search business into. Friggin' search alogrithm of internet websites somehow killed traditional advertising and pretty much the newspaper business which relied on the high rates for advertising. Go figure! Facebook's value isn't in the facebook social utility, but the intangible value of what that virtual monopoly will allow it to venture into and exploit its built-in base of users. Anything could happen! I'm not good at predicting the outcome of disruptive technologies, and as such I have no ability to value this thing. Cheers!

I stated this some time ago when there were questions about BAC raising capital, and said that they could easily sell and leaseback their hordes of corporate offices around the United States. A rough estimate from me says that they could raise anywhere from another $5B-$7B for some of their fantastic real estate. Glad they are now doing so! Cheers! http://online.wsj.com/article/BT-CO-20120201-720714.html

This post too falls under the conjecture bucket for me. Who's to say the day we posted the "What did everyone buy today" thread was not going to be the day stocks bottomed? The fact that stocks panicked further and we had to average down is only a testament to the fact that nobody really knows when the bottom is in. Our jobs are to buy securities when they fall below our assessment of intrinsic value, and historically, the best time to do so are during major down days. Macro should be disregarded, if enough margin of safety is presented by Mr. Market. Maybe there is more pain to come this year, but the fact that in 30 days most equities discussed on this board have risen by 30-50% indicates that they were severely undervalued. I remember my thesis was wrong in late 2008 and early 2009 too! Funny thing is, I was more concerned about macro last year, than I was in 2009, and I'm even more concerned now than I was last year. That doesn't mean I will not buy something that is undervalued. Anyone who thinks they can time it accurately, or that macro should decide when you buy and sell gives their own abilities far too much credit. Let me pose a few questions: - Was Wells Fargo a bad investment at $16 in 2008, even though it went down to $9 in 2009? - Like I said, I was buying a company through much of the last half of 2011, that traded for less than cash on the books after all liabilities. What am I going to wait for if it takes me months to accumulate a position at that price? If it goes lower, don't you think I would just buy even more? - Did Buffett stop buying investments because he was concerned about Europe or the United States debt? - For those of you that have believed for nearly four years that the world is in for a hell of a reckoning, and base your decisions on macro, politics, fiscal excess of soverign nations, etc...did Prem stop buying businesses, even though he was taking a cautionary position with the portfolio? View the world with skepticism, because that is what makes the value investor different than just any other investor. But hold fast to the credence of buying investments that are undervalued and provide a margin of safety. You toss that away because of macro views and you may be making a significant long-term mistake. None of us are buying the market! Cheers!

I plan on using the Buffett model - Plenty of great ideas already out there, by people who have the drive, energy and passion to see it through, so if and when I'm blessed to be in Mohnish's position, I will simply give some of the money to people like Mohnish. Already doing so in a much smaller scale, but eventually hope to do it in a more significant fashion. Cheers!

We still had a chunk of cash, but all the positions we took are up about 18-20%+ since the middle of December. Our financial equity positions have made up for more than the losses on the original warrants we bought earlier in the year. OSTK is the only thing still keeping us from going above our high watermark from June. Hopefully, they've been working on turning around revenues and that changes after the 4th Q and 1st Q reports come out. We have alot of cash from ideas that weren't long-term positions and went up alot. Also, we sold our Winn-Dixie position when it was bought out. I think things will get very choppy again through the year and we have plenty of liquidity. Have not and will not sell a single share in BAC or WFC. Cheers!

Hi Folks, We are 80% sold out, so please get your orders for tickets in soon! Go to www.cornerofberkshireandfairfax.ca and the ticket purchase box is on the right hand side. Thanks very much! Sanjeev

Looks like they have tape recorded conversations on these guys, but us Fairfax and Overstock shareholders know it's a hell of alot bigger than this. Cheers!

Article on Buffett told Debbie Bosanek that now is a great time for her to buy a home. Cheers! http://www.forbes.com/sites/janetnovack/2012/01/27/warren-buffetts-advice-to-a-boomer-buy-your-sunbelt-retirement-home-now/?partner=yahootix