Parsad

Parsad: Hope you take no offense at my rather pointed concerns and vexation. Really like the board and have been a long time FFH fan but am definitely frustrated with some of the recent decisions and this filing's disclosure quality has me a bit more frustrated. Realize this may not pass the worth your time test: but if Prem does care to hear from shareholders that think they have legitimate issue(s) to raise, feel free to pass it along if it is appropriate or worth your time. Nope, no worries...that's what the board is for. By the way, that's why they read the board...right up to the top! They want to know what you guys think, how you feel and if there are any concerns they can address in future reports. Regarding your questions...these are my answers naturally: 1. The NYSE delisting which I viewed as a bit arrogant and peevish and unnecessarily limiting. The savings I think this was the exact opposite of arrogance. It was an admission of error or miscalculation. They realized the stress and expense related with what happened from 2003 to 2007 was extremely painful and just not worth it. Plain and simple! Investors can still buy the stock, and it has no effect on operations or intrinsic value. I think it was the right move in light of how clearing houses operated before the credit crisis. It's every company's ambition to be big-board listed in New York. Prem came to the view that he's fine with being a Canadian insurance company listed in Canada. 2. Very disappointed with their MD&A and numerical presentation here in this filing. After all FFH and Prem has been through, thought they would be over detailed when you have a really bad quarter even if it is only bad "looking/short-term" mark to market/ short term etc. It's kind of why I said everyone should just wait to the annual report comes out. There is an immense amount of disclosure in there. Prem will probably incorporate a few more things within the letter in light of how shareholders feel after the press release and quarterly. 3. The way too early time of the conference call imho has been making for too few questions especially quality ones C'mon on this one Ok22! ;D If people want to ask a question, they should be able to set an alarm clock. I used to always wake up at like 5:20am PST to listen. Now I don't because things are running smoothly at the company and I can ask all the questions I want in Toronto each year. 4. The decision to hedge 80%+ of your portfolio. Why not then just be 20% long invested and in cash? Long term oriented shareholders should be ok with having dry powder and waiting for FFH to pull the trigger. Feel like they are being overly cute and complex with the hedge/swap/derivate maneuver and mathematically don't think it makes sense at such a large percentage? Again, if I am wrong would love to hear a detailed explanation on how you can invest $100 and then hedge $80 and then still make money if the s I'm no fan of hedging. I think often they just increase your frictional costs, and if you hit one out of the park...it's often just dumb luck with the timing. Our hedge is just straight up cash in short-term T-bills. But Fairfax is an insurance company and one with only an A-rating. With their levered portfolio, any signficant swing (one that you and I could easily handle) could affect their statuatory capital, and reduce their ability to underwrite. At the same time, any significant drop in shareholder equity can also increase their debt/equity ratio and affect their credit rating. Remember, for a property casualty insurer...anything less than an A-rating and you're pretty much out of business. The hedges would not be as important if they held an AA or AAA-rating...but they don't. 5. Unnecessary high bar jump investments like Abiti, canadian retailer turnaround, messy regional airline situation, Level 3, Overstock, usg, dell etc. They were liquid when lots of higher quality companies/business models were cheap, why stretch for these higher bars to jump over. Is there something in the DNA that says we like to buy messy insurance companies and fix them so they are attracted to messy equity investments. fyi, i see and hear their JNJ in the portfolio response but dont consider the price they bought it at to be that great. JNJ is going to have issues if the stent business has issues as that was masking the growth and margin problems in the rest of the business and with their recent consumer product issues and medical device issues that I see could occur, I don't think that JNJ is at a sufficient margin of safety. Almost impossible now for JNJ to find a small Neutrogena for a great price and grow it into a large business to make up for medical device revenue/margin issues. Hey, this is where it would pay for you and anyone else to come to Toronto. You can ask all these questions there. A couple of years ago I asked them who the genius was that bought Canwest and Torstar! ;D Hamblin-Watsa's team are pure Ben Graham students. They buy distressed stuff that no one wants. That's what Prem, Roger, Brian et al have always focused on from their early days and really what they still do...think Walter Schloss, not Warren Buffett. At the same time, they do buy the higher quality businesses that are trading at relatively cheap prices. For example, they loaded up on financials including WFC, USB, JNJ, WMT, GE all near the bottom of 2009. They also made a number of similiar investments in high-yielding preferreds like Berkshire. In regards to OSTK and LVLT...the story isn't over there yet. With LVLT, I think they aren't that far from recouping all of their investment simply from the interest LVLT has had to pay over the last few years to them...anything else will be icing. 6. CDS gains caused inflated head syndrome at FFH with respect to investment process? Believe me, there are no inflated heads at Hamblin-Watsa. The CDS was a one-off attributed to Brian Bradstreet and Francis Chou...no one else. They were out of ideas back in late 2004, early 2005, and Prem just said in a meeting..."Anyone have any good ideas?" Brian and Francis had briefly talked about CDS' between the two of them, and then they sheepishly answered "Well, there are these credit default swaps...". That was it! They started with a small bet, and as things progressed, or perhaps regressed, in the credit markets, they upped their bet. These guys all love their jobs...they just enjoy doing what they are doing. They really don't care about the accolades, but appreciate the respect that any of you guys show to them. In regards to questions about underwriting, etc. Because premiums have been soft and continue to be soft, Fairfax's combined ratio alongs certain lines will increase dramatically as expenses cannot be cut as fast...that's what you see primarily at Northbridge and C&F...I don't expect Berkshire's business to be much different. The U.S. combined ratio was so high because of Zenith's 154% combined ratio for the quarter. I don't have a problem with the high combined ratios at the moment, because I don't want them writing unprofitable business. When the market turns, you will see Fairfax's subs write large amounts of new business at better rates. But the returns from these decisions won't be apparent for years. Cheers!

I think the mark to market losses aren't really ugly, but just the reality of what happened in the last year. The munis are insured by Berkshire so they are fine. The cost of hedging your portfolio if you're wrong...be it short-term or long-term...is the potential loss in gains. Underwriting was hit hard in North America during the 4th Q. I'm guessing the cold snap had quite an impact, and that should probably carry into Q1. The new businesses should have more of an impact going forward. More interested in the annual report and letter, and exactly what Prem sees going forward. Cheers!

Hi Josh, He's exactly the way you saw in the presentation...not one bit of difference. I've known him for nearly a decade and he's as humble and self-effacing as he's always been. Whatever he says, he does! A great friend and a great person...just like Francis...they are brothers from another mother! ;D Here is the interview, as well as a few of the other ones done in the past. Cheers!

My thinking has generally been in line with your excerpt. At the end of the day the future appreciation for a richly valued stock is potentially quite poor or mediocre even if the business does well (see MSFT over the last 10 years). So, I'm comfortable with the notion that even if I like the business, if I can't justify the price (would you buy it today?), then selling needs to be strongly considered. I'm curious about how strategy-wise or tactically, how people approach the problem. Well you're correct here. In particular when it is based on the stock market. While you should perceive each investment as a partial piece of ownership, the fact remains that the market allows you to exploit inefficiencies in valuation. You buy something at significantly less than intrinsic value and then sell that as it approaches intrinsic value. Where you sell is completely based on your level of comfort with the risk involved in holding something as it appreciates. An individual's own private portfolio would allow them to hold a stock significantly longer, since there are no outside forces demanding their capital back. A portfolio manager may have to sell earlier, simply because the risk of volatility in the fund could cause an exodus of capital. Ideally both would be the same, but unfortunately that's not the way it works unless you have captured capital through a corporation, or very long lock-ups. For any individual, sell based on your comfort level with where the price is relative to intrinsic value. There is no hard and fast rule. Cheers!

The question is Parsad when are we going to see you up there speaking? If and when I earn it! You have to pay your dues...and everyone so far that has spoken has. They just don't let anyone into the club! ;D Cheers!

Well, I'm glad they had Tim speak. I've been bugging George for a while to have Tim present to his students, so I'm glad the opportunity came up. Congrats Tim! Cheers!

As some of you know, Mohnish started Dakshana a few years ago, and he's had great success. We are supporters and Corner Market Capital started with a small donation last year, which we hope to double each year. Prem, his wife Nalini, and I believe their daughter Christine and her husband, visited one of the Dakshana schools and met with the students and program leaders. Mohnish has put some photographs up on Dakshana's site: http://www.dakshana.org/bigimage.asp?ID=176&yearid=2010 Click the "double backwards" arrows to move to each slide. Cheers!

Not sure if he meant to do it, or it was just a Freudian slip, but Jonathan Heller's (a shareholder in BH) article title seems apropro! Notice the spelling of Sardar's last name. Cheers! http://finance.yahoo.com/news/More-Controversy-for-tsmp-1930634001.html?x=0&.v=1

Tell it like it is Dazel! ;D Sanjeev...I too would like to see Vancouver win..however, you are short on the backend and it makes Luongo look bad sometimes...but you need more horses on D! You know, we had the best defensive core of any team, and now four of our top seven are hurt. - #1 Defenceman - Edler...out with surgery...maybe back for the playoffs. - #2 Defencemen - Hamhuis...concussion...day to day, but could be weeks like Crosby. - #6 Defencemen - Ballard...out with MCL sprain...could be weeks. - #7 Defencemen - Alberts...went down yesterday with a broken wrist...long-term, maybe playoffs. - Lea Sweatt...rookie call-up is out with a broken foot The only fortunate thing is that our #3 (Salo) is back, and our #4 (Erhoff) & #5 (Bieksa) are still ok. We've had to call up another minor leaguer so we can have five defencemen tonight against Minnesota! Cheers!

Yup, thanks you are correct. Cheers!

The 13G/A shows 3,672,822 in common stock ownership. The 13-F shows 3,388,774 of common stock. Value, I don't see any notation that some of the convertibles are included in the 13G/A. Cheers!

Looks like they've added another 300,000 shares of Overstock.com. Cheers! http://www.sec.gov/Archives/edgar/data/915191/000095012311013863/o68572bsc13gza.htm

The constant whining drives me crazy. Compare him to Gretzky, Lemieux, Yzerman or Messier if you want, but the last thing any one of those guys is, is a whiner. Do any of you guys remember what the atmosphere was like, when all those mentioned above were young, except for Messier? - Gretzky was called as big a whiner as Crosby is today, and Cherry used to make fun of him all the time because Semenko and McSorley had to fight for him. Today, he's the greatest player ever to play, and virtually everyone, including Cherry, hold him in the highest esteem. - Lemieux was a class-A a-hole when he was younger. People thought his attitude was atrocious. It wasn't until he became a bit older that this whole love-affair with Lemieux began...especially after he was diagnosed with Hodgkins, and later in life when he became a statesman for the game. - And the guy that most people consider the greatest captain in hockey history...Yzerman...was considered a perennial loser. I can remember how so many in the media used to say that he had all the skill in the world, but couldn't win anything. Guess what? He not only won three Stanley Cups, he won the last one with only one leg functioning and broken ribs, while carrying the team on his back. It will be the same way for Crosby. He's almost guaranteed to a be Hall-of-Famer, and he's on pace barring injury to surpass Messier's points total if he stays healthy. At the very least he'll be up there with Sakic and Yzerman. Call him whiner if you want now...in ten years you'll be calling him one of the greatest players ever. Cheers!

Guys, please stop being dicks to one another, otherwise somebody is going to have to go. Cheers!

I won't comment anymore - since there are a lot of Canadians here I just wanted to stir the pot. You East Coast guys are such muckrakers! I'm glad Cooke, Pronger and Avery are all over there. By the way, we've pulled away from Detroit and are slowly pulling away from Philly. Our top three defencemen are all hurt, and we still have the best goals for/against differential by a country mile! Canucks to take the cup baby! 40 years of frustration will be wiped away in a few months. Cheers!

Anyone want to take a stab at why they hold so many insignificant stakes in so many companies? They buy through their various subs, so some portfolios are signficantly smaller than others. That small position, may actually be fairly significant within the subs portfolio. Also, some positions are testing the waters and nibbling, but the price may never have gotten to a point where they loaded up. Cheers!

Ahh, the warm fuzzy feeling of confirmation bias. It would be if we actually bought some, but we never did. We didn't understand it well enough...thus never touched it. Cheers!

Yeah, he turned, but the player hit him in the head with his shoulder when he was vulnerable. I believe in big hockey hits, but not when the puck is nowhere near the player, and not when they are vulnerable. You throw a big open ice hit when the guy is trying to skate through the other team...fine. You hit shoulder to shoulder on the boards...fine. But hits when the player is facing the glass, rushing to tag the icing, away from the play...nope! Look at the hit by Getzlaf on Hamhuis last week, and Hamhuis was completely knocked out. I don't think that was a bad hit...it was more of an accident as Hamhuis turned...and I'm a Vancouver fan. But cheapshots to the head, especially on the star players...it's bad for the game! And yes, guys like Cooke have to go, or get rid of the instigator penalty so players can patrol and control the cheap shot artists. I think guys like Cooke, Pronger, etc...they should have to fight after a dirty hit. Cheers!

Here is Fairfax's recent 13F: http://www.sec.gov/Archives/edgar/data/915191/000095012311013427/o68556ae13fvhr.txt Just like Sam said at last year's AGM. They really like Sandridge and loaded up big time. Cheers!

Hey, you guys watch your mouth about Sid the Kid! No one has done more in the NHL in less time since Gretzky and Lemieux. The guy is a winner, has won everything already, and will win a whole lot more with his work ethic and humility. If he didn't receive the headshot in mid-ice during the Winter Classic, he'd be 20 points or more ahead of Stamkos, as well as the Sedins who are my guys. I don't think Lemieux was talking only about the Islander players...he's talking about his own guys as well. It was a freakshow! There should have been more suspensions. And yes, I agree that no one is going to support Lemieux when the biggest cheap shot artist (Matt Cooke) is on his payroll. But Bettman is an idiot, who caters to the 13 East Coast governnors that get everything they want. He'll let a team drown in a city just to prove a point, while underserved cities that could support a profitable team get ignored. Cheers!

With the passing of Peter Cundill, some of you may enjoy reading Christopher Risso-Gill's book. Thanks Mark for sending me the link! Cheers! http://www.chapters.indigo.ca/books/Theres-Always-Something-Do-Peter-Christopher-Risso-Gill/9780773538634-item.html?ikwid=cundill&ikwsec=Home&cookieCheck=1

Hmmm, seems like exactly the type of partner/shareholder any long-term value manager or CEO would like to have. Good letter, but I don't expect any reversal in decision. Cheers!

Bloomberg article on Buffett's comments regarding "too big to fail" institutions. Cheers! http://journalstar.com/business/local/article_7030eaa4-3bb6-5986-94b4-fd8a4b21acff.html

Paul, I think value investors these days have too many articles and too many investment managers around. Only 1% of managers beat the indices by 3% of more over the long-run, so there aren't that many that can beat the market period. Maida's clients are probably investors who cannot handle significant volatility, are closer to retirement age, and would rather invest with a manager who provides a modest advantage but with minimal risk. That's rare! For example, look at Mark Sellers...nice guy, good investor, has killer numbers for a few years and then boom...puts the whole thing in Contango and closes his fund. There are a number of value investors like this...many would have closed their funds if world governments did not stimulate aggressively and boost asset prices. They just would not have been able to continue to manage money when they were 50% below their high watermark. It's just fortunate for many that the market recovered so rapidly. Investors are spoiled today...most think they are geniuses after this run-up...yet I remember that very few at the bottom in February 2009 were buying aggressively or even buying at all. Cheers!

You should see how nuts it is in the commodities and resource sector. It's like the internet bubble! A friggin' joke! You want an easy way to make money right now in Vancouver? Start a junior exploration company in gold or rare elements, get Canaccord or somebody to underwrite it, issue a bunch of options to yourself, your executives, family and friends, and then sit back! You don't even have to have a real mineral property. Just throw a couple of geologists onto your board and pay a few thousand dollars to some idiotic newsletter writer. In the meantime, you can blow some of the capital raised in financing on management fees, consulting fees, travel, promotion and stock option expenses. Perhaps, you can blow 80% of the raised financing on those things, and spend less than 10% in exploration like many juniors do! And don't worry, once you're down to your last $100K, just go back to one of the underwriters here and they'll do a reverse split for you and re-underwrite the whole thing all over again. Hey, it's all part of the cost of doing business when you're in resource exploration! Cheers!