Parsad

I can answer these for you based on my understanding behind the purchase. 1)What do people think is the motivation behind Francis Chou purchasing Stonetrust Insurance company from personal $s ? For many years, he has been looking for a personal vehicle...Stonetrust provided that opportunity. a)Is purpose to deploy personal wealth and make more $s for self, family, or charity? Yes to all. Remember, Francis was the one who understood Buffett's use of float and told Prem about it many, many years ago before Fairfax. He thinks that he can grow capital utilizing float and Stonetrust is his chosen vehicle to finally do that. b)Is there a view towards incorporating Stonetrust into Chou Funds or vice versa? perhaps as a way to improve results for the Chou Funds? No. There is risk in his management of Stonetrust and he's not interested in exposing investors to that risk of losing their capital. It will not be offered to the general public. The Chou Funds will fluctuate in value, but over time, he will always make money for them. The likelihood of Chou Fund investors losing capital over the long-term is low. He cannot provide the same protection in Stonetrust. 2) Is it reasonable for an investment manager to deploy such a significant amount of $s (?$70M +) in a purchase other than his own fund? Does the alignment of interests hold? Most of his wealth is still tied up in the Chou Funds, so it isn't like his interests aren't aligned with Chou Fund investors. It would be no different than if he owned a $70M apartment or commercial property outside of the Chou Funds. Am asking these questions as a longtime Chou investor (>10 yrs), with significant portion of portfolio in Chou Funds who is considering the pros and cons of staying in the Fund. His investment in Stonetrust should have zero influence on your decision to stay a Chou Funds investor. Cheers!

Yes, we use a service called "SkipTheDishes" about 2 times a week. We eat out about 2 times a week. I buy breakfast or lunch generally 2-4 times a week. I also use Save-On-Foods grocery delivery business 2 times a month. If we have guests over we may cook or barbecue, but sometimes we also use a food delivery service...be it SkipTheDishes or a restaurant's own delivery. I do not watch wrestling, but I do watch a lot of sports...I do not subscribe to any specific sports network. My last discretionary purchase were healthy wraps from Chopped Leaf today for dinner for my family...I picked them up when I dropped off my dry-cleaning. Cheers!

No, but I have to say that Sodastream has done better than I expected, and if Moore held on, then he probably has done incredibly well. The thing with Coke or Pepsi is that they will always have the capacity to buy out the "next big thing" in the beverage market. No one is going to displace them...even if people decide sugar is toxic...they will just sell other beverages. It's the distribution system Coke and Pepsi own that is so powerful and valuable. People assumed that if Sodastream is in your house, then the distribution channel is disrupted, but then how come Starbucks coffee at home has never affected sales at Starbucks cafes? And what good is Sodastream if you are out camping and want a cold beverage? Cheers! Well, if any of you bought or held on, your reward came today...Pepsi buys out Sodastream for $3.2B or $144 per share! Congratulations! Cheers! https://finance.yahoo.com/news/pepsico-buy-israels-sodastream-3-065741609.html

Thanks for this info Sanjeev. It is going to be a used one because it's against my religion to buy new cars. But it won't be anything crazy old. Something like 3 years used. Yeah, me too! 3 years old or so...go for it...she will love it! Cheers!

The Magneti spin-off has been announced. The stock is down over 35% from its peak. The legendary leader has passed away. The company has ample cash and debt is being paid off rapidly. It's trading at 6 times earnings and less than 2.5 times cash flow. Markets and most assets are priced irrationally relative to FCAU. Someone offering a 40% premium could walk away with a good deal with a bit of negotiation. Cheers!

Not quite sure what you mean on this, the level of disclosure with regards to the pension expenses seems fine with me. Other than Maserati, I wouldn't consider anything in FCAU's line-up too premium. Stock sales seem to be to cover the tax from what I can see. Not sure what you mean by this. Not sure how a dual class shareholding would help. I would question whether margins at FCAU expand beyond what they are currently at. When I look at GM and FCAU, from an operational standpoint at least, I don't see to much different, both seem to have an operating margin in the mid single digit figures. I think where they do differ is on capex, r&d, and the balance sheet. It's interesting that you talked about the agency problem. If I was to look at FCAU and without knowing who was in charge, I would probably have said that it was the one with the agency CEO in charge. When you look at capex and R&D at FCAU, it is vastly lower than what is being spent at GM. I have no dog in the race, so I simply don't know whether FCAU is being correct in restraining spending, or whether it's GM who are right opening the floodgates. One thing I would guess however, is that when you have two competitors diametrically opposed in strategy as these two are, then only one can be right. Unless GM are pissing their money against a wall (a possibility), then FCAU are going to run into serious problems trying to compete in the future should demand for auto's remain robust. On the other hand, if we were to hit a recession, then quite frankly I would be pretty fearful for GM. When you look at the huge debt and the pension deficit, also the financing business, if things got sufficiently bad in the economy, I think this would be a zero. Can't say I would sleep too easily at night knowing a CEO had bet the farm in this way, let's see how things go... Hi Ballin, I think you have two companies that are going to have two very different outcomes. No one is going to go and acquire GM...it is the acquirer in any deal. Marchionne's goal has always been to restore operational efficiency and release shareholder value while maintaining a sound balance sheet. At some point, as the size of Fiat diminishes by selling or distributing much of the assets, the remaining core brands will be acquired by someone. I would be really surprised if FCAU isn't acquired before year-end by someone. Cheers!

It's for a luxury ride. I was thinking Mercedes but Jags are NICE! So I'm thinking it would be really cool if she could have one of those :). But I also don't want to get her the car from hell. That would defeat the whole purpose. She drives a Lexus now. So of course either way it'll be a downgrade in reliability. But I don't want to go down too far. Jags built in the last 5-6 years are fairly reliable and comparable to most manufacturers. Certainly not top of JD Powers, but not the money-sucking Jags built in the 70's, 80's and 90's. Jags built between 2000-2010 have far more issues than Jags built after Tata took over. Not sure if you are talking about a new Jag or older Jag. If you are talking about the newer Jags, sure buy your Mom a really nice car. If you are talking an older car, Jags pre-2010, and she's used to driving a Lexus, don't do it. Get her an older E series Mercedes Benz, Cadillac or an older 5 Series BMW...maybe even another Lexus. Like any car, especially used, if the owner(s) took care of it, it will be a good car. If the owners didn't, then you may get stuck with a car that needs alot of updating and repairs. Cheers!

In the short-term, the market is a voting machine. In the long-term, it is a weighing machine. Quote by you know who. Cheers!

Some of you might not have heard, but the 2nd Q conference call was the last one with Prem. Paul Rivett, President of Fairfax, will be leading the calls going forward. Paul will do a fantastic job, and fear not, Prem will still be speaking at the AGM and various other engagements. Going on 33 years at the helm...what a great Canadian business leader! Here is the transcript: https://seekingalpha.com/article/4194636-fairfax-financial-holdings-ltd-frfhf-ceo-prem-watsa-q2-2018-results-earnings-call-transcript For those that want to listen to the real deal...you've got till 5pm Friday, August 17th: https://www.fairfax.ca/news/press-releases/press-release-details/2018/Fairfax-Announces-Conference-Call-d7158b57a/default.aspx Cheers and enjoy!

Berkshire subsidiary, Ben Bridge, runs and operates all of the Pandora stores in North America. I would imagine that Berkshire could take out Pandora if they wanted the whole company. Cheers!

I don't disagree with the general sentiment, but I wonder whether some of those companies will be deterred/blocked from making an offer. For instance, I can't imagine a Chinese auto company making a bid or, even if they did, passing CFIUS with the current nationalist zeitgeist. I think Toyota and Volkswagen would have a difficult time passing anti-competition guidelines, but I find it hard to believe that FCAU would fall under any CFIUS restrictions with any other buyer, including Chinese buyers. Someone like Hyundai, with the current friendly attitude towards North and South Korea, might even be encouraged to pursue a transaction. You have Renault, Peugeot, the Chinese manufacturers, Tata and a handful of others that would become global players with an FCAU acquisition. The smaller it gets, the more likely some of the smaller players will make a bid for the remaining assets. Cheers!

SNS brand is terrific! Anyone who grew up eating Steak'n Shake burgers, has a real affinity for them...almost as strong as In & Out. The food and brand are good. But Sardar has made some mis-steps with the chain...adding the Biglari signature being one of them...alienating some franchisees another...ramming forced pricing down franchisee throats another...leveraging up the SNS cash cow business with debt...originally simplified the menu, but then made it to large and complex again...focusing on regions that have no affinity for the SNS brand (Cannes, Saudi Arabia, etc). It's really an iconic brand in its core regions and it should quietly grow outwardly from there...exactly how In & Out or Sees dominated California before expanding. Cheers!

If you study the controlling FCAU shareholder EXOR, again controlled by the Agnelli family holding company since its formation by the merger of IFI and IFIL some years ago, there is to me no doubt, that the long term plan for EXOR is to expand in other areas than FCAU, and EXOR therefore needs the dividends to do that, and to pay down EXOR debt at holding company level. Interesting point. Do you think this means that Exor/Agnelli family would agree to sell the entire company or the core company with MM spun-off? Almost guaranteed that FCAU is sold at some point by the Agnelli family...especially with Marchionne passing, instead of sitting as Chairman. But they will not give it away...no need, FCAU financially is one of the most solid auto companies in the world now. Strategically, there should be at least 3-4 major parties interested in a deal to continue consolidation of the industry. Cheers!

He can sell the Cracker Barrel stake and pay off all of the debt...so I think the bondholders are overreacting. That being said, my concern always was that he would over-leverage the business at some point...this really should be essentially a debt-free business based upon where they had gotten it after Sardar and his team turned it around. But his desire to get rich as quick as possible has actually added a fair amount of risk to the holding company and alot of SNS' cash flow is now going towards interest payments. What happens if we have another market crash and Cracker Barrel stock drops over 50%? Cheers!

Greg think of it from a different perspective. What if Buffett did not own SRG in his portfolio but his son or daughter did? And Berkshire does the financing for SRG which boosts SRG's stock price...there has been a beneficial increase due to his action...and an obvious conflict there. Naturally, we know Buffett would never do that, but that has what has occurred. Now there is probably a simple answer my small mind can't think of regarding what happened that Buffett already thought through...I'm just waiting for that explanation, because this is unusual for him. Cheers!

It's not about Berkshire shareholders being deprived...that would be the other side of a potential conflict, but not in this case. The conflict in this case is that the value of SRG stock in Buffett's personal portfolio went up in value because of a loan Berkshire made to SRG...essentially front-running similar to Sokol's investment in Lubrizol. In this case, Buffett had the ultimate decision, whereas in the Lubrizol case, Sokol's gain was predicated on Buffett approving a Lubrizol deal. The transgression, as minor as it seems, is best exemplified say if Buffett bought a handful of securities in his personal account, and then acquired those companies at a higher price through Berkshire...or even influenced their prices in some other way, such as a financing deal. Trivial in the grand scheme of things and probably common place, but unusual for Buffett. Cheers!

A lot has been said on this so I won't quote all of it to avoid clogging pages. But what Sokol did was essentially front running, and front running is bad. However his offense was not towards Berkshire shareholders. Sokol's offense was towards the Lubrizol shareholders whom he deprived of Berkshire's bid by buying their shares. If this is an offense to Lubrizol shareholders, then every activist manager out there who finds a buyer for a company they've invested in is doing the same thing. Sokol was thoroughly investigated by the SEC and nothing happened. In the case of Buffett and Berkshire, the situation is again different. Buffet's wealthis mainly in Berkshire. The SRG investment is a minuscule fraction of is worth. Martha Stewart would agree with you, but the Justice Department thought differently. Let me put this another way. Let's assume that that JPM somehow goes into the ditch. Should Buffett and Berkshire pass on a BofA type deal with JPM just because Buffett owns the common in his PAs? Yes, until he's disposed of any shares of JPM he owns personally. Doesn't matter if it's $1 or $1B...conflict is conflict...it's not based on a dollar amount. If you were golfing and bet someone big or small...the amount is a moot point if you aren't keeping score properly. Cheers!

If you use that logic then Amazon's moat is about as strong as Overstock's. MySpace had a peak user base of 75M...Facebook has 2.5B users and Instagram has over 800M and is still growing rapidly. Cheers!

In effect, Sokol bought knowing he will be selling to brk at higher price after Web make the offer. He is doing a trade in the opposite direction, at the cost of brk. In this case, who got hurt ? Nobody. Conflicts of interest do not occur solely if a party is hurt. The definition is "a situation in which a person is in a position to derive personal benefit from actions or decisions made in their official capacity." If that is the definition most people use, then both Sokol and Buffett had a conflict in their positions...Sokol would benefit if Berkshire bought Lubrizol at a higher price...Buffett benefited as SRG's stock price increased 15% based on the news that SRG refinanced their loan through Berkshire subsidiaries. How the hell does no one see this? Cheers!

What given2invest said about Tilson is all valid so I won't dive into that again. Also, please don't lump Cohen - the insider trading king - in the same category as Buffett. Regarding Ackman, at first sight he seems like the real deal. But if you follow him for a while you realize that he's just a fantastic salesman and a great bullshit artist. That's why he has the 100+ slide decks. He looks great on CNBC and all that adds up to a lot of AUM. The fact that he probably lucked into some good trades also helps with the cult of personality. On the flip side despite all that's happened I think Einhorn is a great investor but he is being harmed by the hedge fund model. Basically the whole long short thing. The aura around hedge funds being that they have to be long and short at the same time and make money on both. That's what sold and you have to go with it if you wanna make money. It doesn't help Einhorn given that he got notoriety for his shorts. I think he's a great long stock picker, but he's forced to be short by the model. Let me elaborate a bit and get a little academic. If you assume the markets are efficient and you're a long/short fund with equal exposure then you'll make risk free. Now I don't think that the markets are efficient and these guys are not perfectly long/short. But still, given the market inefficiency and you being good, you'll generate some alpha. Maybe you do it on both sides. But alpha is hard, and in a raging bull market there's no way you generate enough alpha to beat the market. So the system is setup to make you fail as a hedgie. But hey, that's what sold AUM! The rest of your post about rich kids and real jobs doesn't make much sense. Buffett was basically a rich kid and he turned into a great investor. Working on the street is not a real job and you don't learn anything about investing by working on the street either (you do learn a lot about Excel though). Plumber, mechanic, doctor, those are real jobs. But I don't see the legions of great plumber-investors. Investing is just like any other craft. You get good through much study and practice. I'd also say that in this discipline, like many others, being a rich kid helps. But I think in investing it helps more. Also, there's a very big difference between being a good investor and being a good fund manager. Einhorn is a brilliant guy, even though I'm not a fan of his antics. Ackman is smart, charming but reckless. Tilson was great at running with their ideas, and if their ideas weren't plentiful...his buy Berkshire below intrinsic value analysis would usually come out...his philanthropic work was more notable. Cheers!

But if we are talking about beneficial interest and that interest increasing because of a financing investment by Berkshire, I think that is an obvious conflict with SRG and the term loan. Again, I expect an explanation, because that does not seem like Buffett's normal modus operandi. Cheers! Besides, if he owns a third of BRK, then ~$630 million of the share of the money was "his", so are you we to believe that he risked $600+ million of his own money so he wouldn't lose money on the original $72 million investment? Even if you reverse that statement...that he put $72M from Berkshire into the loan and held $600M in SRG shares...is that a conflict? So why would it not be if the numbers are reversed? The fact that Buffett doesn't own 100% of Berkshire...that he's the CEO, a fiduciary to the shareholders...means that there has to be a firewall in how he operates his personal accounts that he owns 100% of and how he operates a corporation that he owns 30% of. I can't own stock in my friend's public or private company in my personal account, and then give him a loan through the company I'm running which would solidify the value of that underlying stock. That's just common sense. Yes, I could do that if the company I was running held the stock...but not personally. And I would still be doing exactly the same as Buffett...risking more capital I own indirectly for a small equity position that I hold personally...that conflict hasn't disappeared, has it? I am not a paragon of virtue, nor would I throw shade at Buffett...but we do run into the occasional hypocritical behavior or action by Buffett...which we should recognize as well as his genius and humanity. Again, I await an explanation that makes more sense to me from Berkshire...at the moment, it doesn't pass the old smell test. Cheers! What I would like to see is that he either disposed of the SRG stock before the transaction or sold it to Berkshire or SRG at his original cost. Either of those would live up to the ethical standards he's set. Cheers!

But if we are talking about beneficial interest and that interest increasing because of a financing investment by Berkshire, I think that is an obvious conflict with SRG and the term loan. Again, I expect an explanation, because that does not seem like Buffett's normal modus operandi. Cheers! Besides, if he owns a third of BRK, then ~$630 million of the share of the money was "his", so are you we to believe that he risked $600+ million of his own money so he wouldn't lose money on the original $72 million investment? Even if you reverse that statement...that he put $72M from Berkshire into the loan and held $600M in SRG shares...is that a conflict? So why would it not be if the numbers are reversed? The fact that Buffett doesn't own 100% of Berkshire...that he's the CEO, a fiduciary to the shareholders...means that there has to be a firewall in how he operates his personal accounts that he owns 100% of and how he operates a corporation that he owns 30% of. I can't own stock in my friend's public or private company in my personal account, and then give him a loan through the company I'm running which would solidify the value of that underlying stock. That's just common sense. Yes, I could do that if the company I was running held the stock...but not personally. And I would still be doing exactly the same as Buffett...risking more capital I own indirectly for a small equity position that I hold personally...that conflict hasn't disappeared, has it? I am not a paragon of virtue, nor would I throw shade at Buffett...but we do run into the occasional hypocritical behavior or action by Buffett...which we should recognize as well as his genius and humanity. Again, I await an explanation that makes more sense to me from Berkshire...at the moment, it doesn't pass the old smell test. Cheers!

Buffett still made the ultimate decision to either approve or nix the deal. Sokol could have been left with a boatload of stock. Yes, the probability was better that Berkshire might buy Lubrizol with Sokol pitching the idea, but would anyone say that Buffett would approve a deal without doing all of his own analysis? If Sokol was terminated because he didn't disclose all of his holdings in Lubrizol and it breached the company's bylaws and investment policy...that's fine. They were justified in terminating him. But if we are talking about beneficial interest and that interest increasing because of a financing investment by Berkshire, I think that is an obvious conflict with SRG and the term loan. Again, I expect an explanation, because that does not seem like Buffett's normal modus operandi. Cheers!

Buffett always had the ultimate say on the Lubrizol deal...if it was nixed, Sokol was left holding Lubrizol stock. Sokol was not guaranteed that Lubrizol would be bought by Berkshire. Buffett holds SRG directly in his personal account. Whether he held those shares for 1 year or 10 years is irrelevant, as he holds the decision to fund the SRG term loan. It's not about disclosure, it's about the stock moving likely upwards as financing risk is removed. If the SRG stock had been held by Berkshire, then that's perfectly fine. It's pretty clear as the nose on your face that this deal actually holds more conflict than the Sokol/Lubrizol deal. I expect there is something that has not been disclosed, because I think the conflict here would be very discernable to Buffett and Munger. Someone commented on the JPM investment, but that is less relevant, because Berkshire may already have held too much in bank-related stocks with their large positions in WFC and BAC. We know Buffett buys small amounts of many stocks, simply to receive the annual reports, and that he was a big fan of Dimon's. JPM's stock movement was not predicated on any influence by Berkshire, so while it may have annoyed shareholders that he didn't buy any JPM for Berkshire, it also isn't really a conflict. Cheers!

I think the key factor working against Sokol was that he played his conflict a bit too close to the vest a little too long for everybody's comfort. Buffett's position in Seritage was disclosed years ago and is pretty much known by 100% of the people on this planet who know what"Seritage" and "Warren Buffett" are. Something being done in broad daylight like this, with almost maximum transparency doesn't trigger any concerns for me. I'm sure that won't stop Sokol from stomping around about it though. I run a small holding company and an investment fund...I can tell you with 100% certainty that I would not invest in debt or equity in something personally, and then finance it through the holding company or fund, unless they already held such debt or equity and were benefiting equally to me. Buffett's my hero, so I'm giving him the benefit of the doubt on this, but if this is the scenario of what occurred...then it is a bit close to that line. I have not seen any EDGAR filing saying Buffett disposed of Seritage shares, nor have I seen any EDGAR filings indicating Berkshire has bought Seritage shares. Let's see how they explain it at some point. Cheers!