Parsad

Hi Folks, I've been getting some complaints in recent weeks regarding the quality of posts on the message board. As such, posts that are conspiracy-based, antagonistic or completely rhetorical in nature will be removed going forward. This is an investment message board based on Ben Graham's intellectual investment framework...to generate ideas and quality discussion on the merits or folly of those ideas. I don't mind off-topic posts, but they should refrain from getting too political. The board is named "The Corner of Berkshire & Fairfax" Message Board, thus there are probably alot of investors here who hold Warren Buffett and Prem Watsa in high esteem. Posts with an antagonistic bent in reference to Buffett or Watsa will also be removed...not critical, but antagonistic...there is a difference and unfortunately your moderator is now stuck with the responsibility of drawing the line on such subtle divisions. And please, no tattle-tale emails on individual specific posts. I will review virtually every new post on the board and remove them if and when necessary. The best filter for such posts isn't yours truly, but each message board participant's own internal filter...gee, should I really post this and what will the reaction be from some other participants? Yes, unfortunately you SHOULD actually care about your fellow boardmembers. ;D If you feel that emotionally you are getting wound up...walk away and post another day. If you feel that someone is completely misguided and you must save them from their own stupidity...stop for a moment and tell yourself, maybe I don't hold ALL of the high moral ground and intellectual equity on the board. If you feel that Obama is running the country into the ground...write to your Congressman. Hopefully, the censorship will be very limited, and relegated more to board cleanup and maintenance than anything substantial. The more people stick to their better instincts and refrain from their baser instincts, the less I will have to interfere. But unfortunately, a small subsection of participants are sometimes creating an environment that is degrading the overall quality of the posts and it's original intended purpose...to talk about investing! Cheers!

Former Countrywide CEO and head insider-trading chief/mortgage flunky, Angelo Mozillo, has settled with the SEC. Cheers! http://www.theglobeandmail.com/report-on-business/countrywides-mozilo-settles-with-sec/article1759148/

Bruce Berkowitz had a nice response to Einhorn regarding St. Joe. Cheers! http://www.businessinsider.com/bruce-berkowitz-einhorns-shorting-it-i-would-buy-the-entire-company-if-i-could-2010-10#ixzz12RvbBbWb

Fantastic, fantastic interview! The best I've seen this year anywhere. If Jim Grant wasn't publishing Grant's Interest Rate Observer, he would have probably written "Field of Dreams". What an eloquent and intelligent speaker! Cheers!

I think you guys are talking about two different things. Bronco is saying that the investment is worth more monetarily, whereas Tim is saying that the "intrinsic value" has not changed. Be nice boys! Cheers!

And a 20% drop in two days sure would lift a short's position! But Einhorn wouldn't be doing anything like that would he? ;D Cheers!

Incidentally, I wish regulators would follow the Europeans and force short sellers to file their positions over a certain threshold. I sure would be interested in knowing exactly who else is short St. Joe with Einhorn. Longs have to file, why shouldn't shorts be required to as well. I've been arguing and wishing for this for about seven years now! Cheers!

Einhorn is right, but if St. Joe doesn't spend too much on developments, they can drag this on a long time by selling rural land. Anyone short could be in some trouble with any positive news around the company. And if they do take impairments, they'll do it slowly. Cheers!

Very good article on Bill Ackman and Pershing Square. I'm not a fan, but always interested. Cheers! http://www.theglobeandmail.com/globe-investor/investment-ideas/what-if-elvis-ran-a-hedge-fund/article1756629/singlepage/#articlecontent

That's accurate...and pretty funny! ;D Cheers!

The board put out a press release saying they will examine the tender offer. Cheers! http://finance.yahoo.com/news/Fremont-Michigan-InsuraCorp-prnews-3512958926.html?x=0&.v=1

Bronco, it's tough but I would recommend you just be patient...no need to go outside the US, or jump into commodities or other things that may be outside your circle. Things are better for corporate America, but there will be more shocks to the system. Investors have to feel confident enough to act when others are fearful, and then be confident enough to build the cash hoard back up again when others are optimistic. We were buying a few months ago when everyone thought Depression 2 was a day away, and now we are starting to lighten up again on some positions that have moved up closer to intrinsic value. That is the benefit of the stock market and the privilege you have as a disciplined investor - the opportunity to exploit the folly of others, when they let fear or greed influence their behavior. Cheers!

Doesn't look like it. His last 13-F: http://www.sec.gov/Archives/edgar/data/1056831/000105683110000004/0001056831-10-000004-index.htm No subsequent filings indicating he sold any of it since. Cheers!

Patrick Byrne has never been known to be subtle, and he surely lays it on thick in a few comments in this article, but he is also correct on many facets. Always interesting! Cheers! http://www.informationweek.com/news/global-cio/interviews/showArticle.jhtml?articleID=227701203&cid=RSSfeed_IWK_News

Interesting article on Quidsi, Amazon and the online retailing arena. Cheers! http://www.businessweek.com/print/magazine/content/10_42/b4199062749187.htm

Truly amazing to see how Einhorn isn't even finished with his presentation about St. Joe and shares are down almost 10%...and it's likely that many in the audience own shares. I went to the first VIC and that was it for me. Every time someone threw out an idea, you could see all these hedge fund managers on their blackberries putting in orders...I'm assuming it was orders...either that, or they were updating their Facebook pages! ;D Speaking of Facebook, the move "The Social Network" is the best movie I've seen this year...definitely worth seeing! Cheers!

Ed Asner has been cast to play Buffett in the movie based on Andrew Ross Sorkin's book "Too Big to Fail". Cheers! http://www.cnbc.com/id/39635359/

BYD was fined and had seven factories in Shaanxi province confiscated. According to the government, they were built illegally. The government is still considering possible punishment. Cheers! http://www.bloomberg.com/news/2010-10-13/byd-factories-confiscated-after-land-ministry-fine-update1-.html

There aren't too many value managers who have made that return over the last ten years. If you include Fairholme, Yacktman, Lion Fund etc., they all would probably be in the top 1% of all investment managers over that span...that's pretty darn good. I think anyone would be happy with that. Now the question is out of all those investment managers in the top 1%, what type of parameters did they operate with...leverage, maximum 10% allocated to any investment, extreme concentration at any point (100% in one investment), lockups, no lockups, MER's or incentive fees, countries they concentrated their investments in (domestic or international investments), etc. Cheers!

Did he return about 13% over the past decade? I believe another poster on here said that. He did about 18% annualized till 2008. I don't know what he did in 2009 and 2010 so far in the Lion Fund. Even if he did 13%, that is a good 12% better annually than the S&P500 since when he started in 1999. Furthermore, I hear a lot of talk about Biglari, but if we look how BH has performed over the past 3 years (about the time he took over, from my understanding), they've underperformed the restaurant category. 3.94% vs 4.17%. To be fair, Sardar didn't get control until late 2008...roughly the bottom of the chart that you linked. Since then he's killed the restaurant industry in terms of stock price and quarterly sales. Steak'n Shake's restaurant sales are probably close to the very top of the industry. I absolutely don't like the way he enacts certain changes, but in terms of execution of the business, there are few who have done better in the last couple of years. And no, I'm not and don't plan on ever being a shareholder of BH again...unless the stock plummets to well below book! ;D Cheers!

Neither index is completely accurate. Google's excludes raw material costs, etc. It will give a pretty good idea of end product inflation or deflation...thus it would be a lagging indicator to inflationary or deflationary costs at the producer/wholesale level. Cheers!

Zeke Ashton, who runs the Tilson Dividend Fund, spoke at the VIC. One of his picks was Fairfax and he discussed BH as well. Cheers! http://blogs.barrons.com/stockstowatchtoday/2010/10/12/value-investing-congress-ffh-mvc-among-centaurs-top-picks/?mod=yahoobarrons

Excellent letter! Very smart people. The one thing I've learned is that anything is possible...no matter how smart you are, or how right or wrong you've been in the past. They are assuming that the low in bond yields is yet to come. That there has never been a "bubble" in treasuries since you can just hold them to maturity and the stream of cash is guaranteed. There is a first time for everything! I think the real concern isn't whether treasuries are in a bubble or not, but the real return of treasuries long-term relative to alternatives. In that respect, I'm in the camp that says treasuries are in a bubble by that specific definition. Cheers!

Buffett's comments on recovery. Cheers! http://www.bloomberg.com/news/2010-10-12/buffett-says-pain-will-be-felt-for-a-long-time-amid-recovery.html?cmpid=yhoo

1.1 times book is a fair value for an insurer in this market...remember, Dunning is in a low interest rate environment. Insurance isn't going to be a breeze the next few years unless you can generate investment income or underwrite more efficiently. At 1.25 times book, he would be paying up for the company and it's probably not worth it unless he can guarantee himself significant investment returns. He doesn't know what contracts they have been writing in the last year and if the premiums are adequate. There would be little margin of safety at 1.25 times book. Cheers!