Parsad

What I have noticed is that other good pure value investors - e.g. Munger, Whitman, Berkowitz, Chou, McElvaine, the people at AIC, Mark Mobius (someone mentioned Miller but I hesitate to put him in this category) - have had their otherwise outstanding returns significantly damaged by major bear markets. The question whether there is a lesson here. It is interesting, for example, to compare Francis Chou's performance versus FFH's given their close association and similarity of thinking. FFH's past performance over the past 3 and 5 years are significantly better. Why? It is likely that Francis was handicapped by his inability to make the same macro bets that FFH was able to because of his fund rules. None of the people you mentioned are leveraged. Prem is leveraged. I think Francis can ignore macro for the most part, because it would be nearly impossible to wipe him out. On the other hand...a 50% drop in Fairfax equities, a magnitude 5 hurricane hitting the Gulf Coast, and a magnitude 8 earthquake rocking Los Angeles all in the same year could do that at Fairfax...without hedges and reinsurance, of course! Francis, Buffett, Whitman, McElvaine, et al have the luxury of ignoring macro for the most part, Prem doesn't. Cheers!

Ok, both you guys...timeout...go to your corners! The next thing I want to see on this thread is constructive discussion about RIMM, or I delete your posts. Cheers!

Ah Tom, I read the same thing at the same time, and posted it in a new thread! Cheers!

Article below saying that Microsoft may take another stab at buying Yahoo, but this time with a consortium of investors. I think that would be a smart move, as I would hate to see them buy the whole damn thing. You buy with a consortium and you can then form alliances to harness the value in Yahoo's intellectual properties, without actually footing the whole damn bill for the acquisition. Cheers! http://www.foxbusiness.com/technology/2011/10/05/microsoft-mulling-yahoo-bid-report/

This question is not coming only from me either but whatever. I can just go back to ingnoring 100% of his posts instead of 95% Yeah, that works too! ;D Cheers!

This is by no means a given. Consider that he grew BRK's BVPS at an annual rate of 23.6% from 1965-2000. If he had maintained his 25% fee structure, the net return to investors would only have been in the 15-18% range. Would this have been enough to make him the biggest hedge fund, let alone the biggest investment fund? That's my point...Berkshire was a constraint on his personal wealth creation. He averaged 29.5% gross and 23.8% net to partners between 1957 and 1969 inclusive, with no single down year when the Dow had four! If he was able to achieve 20% annual returns net, and I'm a firm believer that he could have easily achieved that as he got older and better, he could have readily accumulated enough in assets as a fund manager, and would be running the largest investment fund in the world today...if he had chose to do that. He also once said that with smaller sums of money, he could return 50% a year! Cheers!

Bid is now at $530! Cheers!

Hey Folks, The lunch is up to $1,825. That's an incredible bargain compared to what others have paid, plus the stock tip is supposed to be a good one! ;D Cheers!

Smazz, you're going over the top too. We all think that we are always right, and often we think the other person can't see the forest for the trees. In the end, somebody will find out who was right and who was wrong. Just like Munger is going to be wrong about BAC! ;D Cheers!

Hey, I think the hollodeck idea would be awesome. Can you imagine, you could have dinner parties for your friends without them actually coming over to your house and making a mess! No food to cook, no booze to buy, no dishes to wash, no dude throwing up in your bathroom because he drank too much! And you could still enjoy their company as if they were right there. If anyone can do it, Jobs can! Cheers!

I'm not arguing that Apple won't be the same without Steve Jobs. You were trying to make the point that the iPhone 4S is an indication of Apple without Steve Jobs, which makes no sense. I can almost guarantee that the iPhone 4S was nearly 100% (if not completely 100%) complete long before Steve Jobs left the role of CEO. It's also important to realize that Steve Jobs is still with Apple. He is the chairman and is still involved in big decisions. He is just no longer the CEO. It's also important to note that for much of the time Apple developed the original iPhone 4, Steve Jobs was on medical leave and Tim Cook was also the CEO. Hi DCG, no I think you misunderstood my original post. It wasn't meant to slag Tim Cook or anything, or even the iPhone 4S. I was simply stating that the hype around the presentation was so huge, as if they were going to present something so revolutionary like the iPod, iPhone or iPad when they came out. Everybody was expecting at least the iPhone 5, and that it would somehow have technology that would allow us to connect intellectually with our entire network of home appliances, so that all I have to do is think about coffee and my coffee brewer would automatically make me a cup, and add the right amount of cream and sugar. That it would have a new version of Facetime, where you would be able to create a hollodeck and speak to your friends in 3-D hollographic images! It was only the next logical development of the existing iPhone 4, but Apple was able to generate so much buzz that everyone thought it would be ground-breaking. That type of hype will never be the same once Jobs is gone...that was my point, not the actual iPhone, Tim Cook or the stock price. Just that he can sell his own mother for twice what anyone thinks she may be worth, as well as a nice used bridge in Brooklyn! ;D Cheers!

...as for Vodaphone, it's likely somebody who owns too much of rimm making it up. why would a carrier buy a hardware company that lost to apple, google, and microsoft? the only buyers for rimm are likely the Japanese or Chinese, who can be conned into doing stupid things by their bankers. Because they may be looking to get into the hardware business, on a platform with established business networks, selling at 3 times operating cash flow, where they would also garner valuable patents, and finally, could expand the platform to work with Windows or Android. I think if someone, and I would prefer Microsoft, came in to do that...they would make money over time with limited downside risk based on the cash in the company and existing operating cash flows. At the very least, they would get all their money back within 4 years. Cheers!

I guess I wasn't the only one wondering this. this question was simply not welcome on this forum, yet it was an entirely legitimate question. I wonder about the motives of some of these people who seek to censor the opposing view. what kind of "true" value investor does that? It always takes two to tango, and they are probably wondering the same thing. msft would go down 10% were they to attempt such a disastrous foray. since I am a stakeholder in msft I would really have to question my commitment. No they wouldn't. Did they even go down 10% when they offered the ludicrous $40B for Yahoo? Incidentally, you did see the post by me last night, correct? And I'm not long or short RIMM...this morning it seems Vodafone is interested. http://finance.yahoo.com/news/RIM-jumps-more-than-14-rb-320014084.html?x=0&.v=6 I think there will be some sort of deal below or around $30. The dynamic duo know they won't survive long without doing a deal with someone. They just won't give it away either. Cheers!

If you want to make a comparison to Berkshire, this would be like Buffet buying stock in Pepsi (or any company) and then retiring, and then in 2 months later Pepsi's stock went down for no real reason and saying 'that's why Berkshire won't be the same without Buffett'. Not even a close comparison. Pepsi's product (excluding Frito-Lay) has basically been the same for the last 80+ years, not unlike Coca-cola. It doesn't take much innovation to hold their marketshare, but a hell of a lot of marketing. No one at Apple is remotely close, and in actuality, there aren't too many people anywhere that are as good as Jobs. They will hold their place for a few years after Jobs, but after that, those hungrier will catch up or take market share away. Think about what happened to Apple the last time Jobs left, and then when he came back. If you don't think one man was responsible for all of that, then you haven't been paying close enough attention. Cheers!

Hey guys...take a chill pill! Yes, I did just say that. 8) Like anything, you can take either side of the debate. I don't own RIMM, and I'm not particularly comfortable with what their future looks like, but at this moment, it's trading at about 2-2.5 times operating cash flows. So I can see why investors would take a flyer on it. But there is considerable risk in the business model, especially in terms of competition and market share. It's no Microsoft! But there is the distinct possibility that someone like Microsoft could step in, and buy it at a 35-40% premium for $27-29 dollars. In fact, that may be a very good idea for both Microsoft and RIMM! Cheers!

If Bill Gross or Fidelity can manage a trillion dollars, you don't think Buffett would have easily gathered that much in AUM, with his record? I don't think it would have been difficult for him to raise capital after the Buffett Partnerships. But he chose to go a different way because he was concerned about valuations. Cheers!

Munger, what you are excluding from those comments is the cost of capital. The cost of capital for companies to borrow is now at lows not seen since the 30's. Based upon economic conditions, including unemployment, it does not seem as though interest rates are going to rise anytime soon...perhaps for at least a couple of years. If the cost to borrow capital is so low, profit margins can remain elevated for several more years...maybe even a decade if they are borrowing for ten years. How many businesses do you know of that have refinanced their debt for the next 5-10 years at recent rates? How many mortgages are being refinanced today? How many new mortgages are being issued at low long-term rates? How many automobile loans are being issued at low rates? I bet 25-30% of U.S. homeowners on this board, that aren't in penalized mortgages, are refinancing if they qualify. Hundreds of businesses that can qualify, and require long-term capital for their operations, are refinancing every day. Think about banks and how they operate. What is BAC's cost of capital today? What are they lending the money out at? How about Caterpillar? Even if demand is slow, what is their cost of capital today...for the next 5 years? It is true that corporate profits will shrink significantly at some point. But probably not for at least a few years. Cheers!

Which is why I don't understand why he is out there so often adamantly saying there will be no double-dip and betting that the unemployment rate will be below 7% by next year. What is he doing if not forecasting? WEB doesn't really forecast at all. His comments are usually in response to questions people have for him...be it the economy, housing bubble or in relation to investments. In fact, he's almost always adamantly stated that he doesn't spend much time thinking about those things. Btw, absolute wealth is not a good measure of investing success since it does not take into account time in the business. If you adjust for the 10+ year headstart Buffett had on Soros, the fact that Soros has been giving billions away, and the fact that he retired from active investing some years back, Soros's $24b wealth is not too shabby. During his active time investing, I believe Soros had superior performance to Buffett even after 2+20 fees. I would go back and rethink that. Buffett gave up the hedge fund game before he turned 30, including all of the lucrative compensation for $100K a year. If Buffett had continued to run the Buffett partnerships as hedge funds, they would be by far the largest investment funds in the world today, even after his compensation. And I would guess his net worth would have eclipsed the wealth of both Bill Gates at his peak ($100B+) and the Walton family at their peak ($100B+) combined. There were only two core benefits from Berkshire...float and permanent capital...otherwise everything he did within Berkshire, he could have done inside the world's largest hedge fund or private equity fund. Berkshire was actually a constraint on personal wealth creation for Buffett considering how the financial industry developed over the last 40 years. Cheers!

Hi Ben Graham, I read it differently. I read it as he is buying the value of something that today presently is worth $1.00 for 90 cents. And obviously, that item at $1.00 will grow at a certain value for the next 20, 30, 40 years. Basically, he was saying that the sum of the parts or liquidation value (book value, minus any goodwill or intangibles, plus the fair value of those businesses if sold) is worth more than the 90 cents he is paying...let alone what the intrinsic value would be if you include the cash that those businesses would generate or the use of float. Cheers!

I definitely feel some animosity towards me, but the truth is I have been on vacation. I value all the members of this board and would occasionally read posts for many years until I decided to join. I don't have a problem admitting when I am wrong about something either or giving credit where credit is do. For example, I recently wrote to Munger privately who has been right on the Macro while I have been wrong. But that is what makes a market, both sides of the coin. I have been through this before, and am just voicing my opinions and enjoy all comments. Moore, don't perceive it as animosity. I think it's more of just heads butting during a debate...be it my head, your head or someone elses. That's why the forum works. As long as people aren't slagging each other, it's all good! ;D Cheers!

Just wondering how good his economic forecasting record has really been and whether the pulse he holds on the economy is only a coincident indicator and not very useful in forecasting? The better question is why is he richer than all of the other guys combined? He was actually richer than all of them combined 20 years ago! It's because he doesn't pay too much attention to forecasting, and pays more attention to the things he can actually control...the price he pays and his emotions. He's better than all of them at that...hands down! Cheers!

Investors do not buy until they see clarity and feel that prices will continue moving up. It's the foible that keeps on giving. We mentioned in our annual letter this year that house prices are at multi-decade lows, while gold is at multi-decade highs, and where is investment capital flowing to? It's the same thing right now. You have 10-year treasury yields at multi-decade lows, yet investors are fearful of housing and stocks. The psychology never changes. Cheers!

Moore, We've looked at Le Chateau too, as we are finally buying Canadian stocks now as well. My only concern was that they have completely changed their format and direction, moving into more upscale clothes. Their locations also seem to be of better quality, and I would suspect their leases or purchases for those properties would be significantly higher. At higher price points, combined with higher rental/ownership costs, do you think they will be able to increase revenues enough to offset those costs? Incidentally, we did buy two Canadian stocks in the Canadian fund yesterday. The first time we've owned any Canadian stocks other than Fairfax and the basket of REITS we bought in 2008/2009. Cheers!

Here are a few articles discussing Buffett's comments today: In regards to the recent drop in price of BAC shares: http://finance.yahoo.com/news/Exclusive-Buffett-not-worried-rb-69698888.html?x=0&.v=3 On the buyback being the equivalent of buying dollar bills for 90 cents: http://www.bloomberg.com/news/2011-10-04/buffett-likens-buyback-to-getting-dollar-bills-for-90-cents.html On real estate: http://www.bloomberg.com/news/2011-10-04/buffett-s-homeservices-of-america-buys-alabama-real-estate-firm.html Cheers!

The bid is now at $510 for the book! Cheers!