Parsad

Hi Ballin, Obviously Alnesh is my investment partner at CMC and the MPIC Funds. He also happens to be my cousin...so I've known him for all my life. I met Dave at the 2008 AGM, but we had spoken once before on the phone. I met Rahul through Dave last year. A disparate group perhaps, but we work very well together and both Dave & Rahul are very humble guys. Yes, I think this will become much more common place. With the new reform bill on proxies, you will see this happen quite a bit with larger companies. Small companies below $75M will have a 3-year exemption from the new rules, but after that you will see this happening with them as well. It will keep management on their toes...or they will have to own alot of stock and have a deep, vested interest in the company and its future. This is our first such attempt, but it will be far from our last. Cheers!

I don't think Markel has anyone of the caliber of David Sokol as a fixer, yet they have started up Markel Ventures and have acquired a number of companies. Why wouldn't Fairfax follow the same model of buying well-run companies with mgmt in place. Well, I think Markel would run into the same problem. If a CEO quits, then you have to find a replacement...and it almost certainly won't be someone in-house, inundated with the Fairfax/Markel culture, nor necessarily the same ideas about shareholder value or business ethics. Prem may just not want the hassle. Cheers!

In the past, I've restricted discussion on the board regarding ITEX, as we were trying to work with management on implementing some ideas. For two years, they've been hesitant to enter any discussions with us, and we've attempted to get management to institute some initiatives (share buybacks, dividends, cash compensation for executives, customer exit surveys) via the ITEX Annual General Meetings. They subsequently implemented those initiatives! It's been a very slow process but we felt we wanted to give them every opportunity to work with us. Alas things don't always work well that way, and now we are examining all of our options, as we believe the core franchise network needs to be invigorated: We filed our proxy-related materials today: http://www.sec.gov/Archives/edgar/data/860518/000138515210000018/dfan14a-1_09082010.htm As well as our press release: http://finance.yahoo.com/news/The-Committee-to-Enhance-ITEX-prnews-4181852644.html?x=0&.v=1 And you are welcome to visit our website for further information: www.enhanceitex.com I will not participate in any discussions on this board regarding ITEX, but members are now free to discuss ITEX as our intentions are completely public. Cheers!

Prem told me a long time ago that it is something they may consider some day, but there has never been any specifics about when, where, or who they may or may not acquire. Their circle of competence is insurance, so they like to stay in that field...what are they going to do if they acquire a non-insurance business and need to change management? Throw Mark Ram or another insurance executive in there? There is no David Sokol yet at Fairfax, so it will take some time for them to get comfortable with the idea of buying non-insurance businesses and having a deep enough team of managers that could step into such positions. Berkshire has always bought non-insurance businesses...they have the experience and depth in management to throw in a pinch-hitter. Cheers!

Fairfax is buying Japanese real estate through their partnership with Kennedy-Wilson. Cheers! http://finance.yahoo.com/news/Kennedy-Wilson-and-Fairfax-bw-4199763241.html?x=0&.v=1

WSJ article on the Berkshire/Wesco offer. Cheers! http://online.wsj.com/article/SB20001424052748704392104575476080692051968.html

I have no problem with the idea, other than is it really necessary and where do we draw the line? Personally, I wish people used their real names and didn't hide behind anonymity, but that would probably prevent alot of people from posting that truly like to remain anonymous and have contributed immensely to the board. I think the best thing to do is weed out the idiots and leave it at that. There are a number of investment managers and executives that want to post on occasion, but probably don't want the post attributed to their fund or company. The one thing I can tell you for sure is that the real Buffett, the real Munger, and the real Watsa do not post here. ;D Cheers!

Apparently, he purchased among other things, a full Woolly Mammoth skeleton! There's been plenty of discussion on LPHI here in the past. Cheers!

An FBR analyst is suggesting that Berkshire and/or Fairfax should buy XL Capital and improve the investment returns. I think it is pure speculation, but it would be interesting to see Berkshire and Fairfax do a joint deal, not unlike Berkadia, and work together on XL. I think that would be one of the highlights of Prem's career to finally do a substantial deal with Berkshire. He's done smaller ones where they've shared purchases of preferred shares or notes, but not something like a Berkadia. I would love to see it! Cheers! http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/09/06/bloomberg1376-L8DP831A74E901-6V0OLE3RRUBABT20QPTJ1M2BC8.DTL

Here's an interesting interview with Stormy Simon, who is VP of marketing and sales for Overstock. She talks about their "Main Street" department, which allows small entrepreneurs around the US to market their goods professionally and sell through Overstock's website. Cheers! http://finance.yahoo.com/news/Senior-Vice-President-twst-1110341942.html?x=0&.v=1

3 lean years for OSTK? The stock has gone no where for 8 years according to the chart and its not like theres a dividend either. Don't look at the stock price - that's not going to tell you anything! Fairfax's stock price went nowhere from late 1998 to 2010! That didn't mean there weren't times in that period when you could have made a killing in the stock based on improving financials. Focus on the numbers...the cash flows...the improving margins...the balance sheet...the escalation in revenues in both the direct and affiliate businesses...customer service rankings and website profile. Cheers!

Yup! The other problem is that he doubled his position right at the peak! I don't know how you face your partners after something like that...I guess that's why he closed it and is waiting for it to get back up to par again. Cheers!

wasn't this guy going on and on a couple years back about the sith lord trying to bring down his company or something? The Sith Lord definitely exists. Whether you believe it to be one of the individuals Byrne has mentioned, or what I believe to be multiple hedge fund managers working together is another matter. I think there will be more visibility on this issue as the cases for Overstock.com and Fairfax against the hedgies hit the courts. but imo byrne has so far not yet demonstrated the ability to methodically build a value-creating business, one sustainable incremental brick & click at a time. their efforts have always been sabotaged by some festering problem or other that suddenly rises to the surface & causes them to have to back pedal & regroup. I would pay more attention to this business as we hit the 3rd and 4th quarters. You'll have a clearer picture of what is happening there soon enough. While the investment at the moment is relatively small for Fairfax shareholders and Chou unitholders, I expect Overstock.com to be a significant contributor to the net worth of both. The "three lean years" for Overstock.com are now as over as the "seven lean years" are for Fairfax! Cheers!

Terrific little interview with Patrick Byrne on investing. Cheers! http://www.forbes.com/2010/09/03/risktaking-deals-patience-intelligent-technology-overstockcom.html?boxes=techchannelsections

Roubini, who is flipping and flopping like a fish, is now saying that the dollar and franc may beat gold in a double-dip recession. http://www.bloomberg.com/news/2010-09-03/roubini-says-swiss-franc-and-dollar-may-beat-gold-in-any-new-recession.html We had said this already in the MPIC Fund's 2009 2nd Quarter Letter: Our perennial need to be in fear as value investors, has now moved from fear of the financial system and consumer debt, to one of fear of national balance sheets and budget deficits. The nagging question now regularly in our mind is, “What is the likelihood that other countries could lose confidence in the U.S. dollar?” This is an enormously difficult proposition to ponder. One that we don’t believe we are qualified to answer, yet we find ourselves having to debate this as stewards of investor capital. If we were in normal circumstances, then the conclusion would be a very simple…yes, quite likely! But these are not normal times. The strongest rebuttal we have for that question is “If not the U.S., then which currency would or could supplant it?” The Yen, the Euro? Not a chance, as their economic circumstances are even worse than the U.S. Without some confluence of Asian governments combining currencies, which could very well happen, we do not know of any reasonable substitute for the U.S. dollar that could be purchased in quantity by foreign nations. The largest holders of U.S. currency are Japan and China - the two largest exporters to the United States! It just isn’t in their best interest to see a very weak U.S. dollar as it will only stifle demand for their exports. What are some other alternatives then…gold…other hard assets such as timber or real estate? What about currency hedges? None of these fall into our circle of competence or are truly quantifiable investments. What about Treasury Inflation Protected Securities (TIPS)? They will not provide above average long-term returns and we pay a premium for the insurance protection against inflation. We believe buying things that you have little understanding of, simply out of fear of not buying, is one of the most foolish things an investor could do. We are not speculators! As such, we have no legitimate alternative for our dilemma that would supplant our existing philosophy of seeking out undervalued investments. Cheers!

That is pretty damn funny...and accurate! Cheers!

Goldman has joined JP Morgan in shutting down their proprietary trading desks. About friggin' time! Cheers! http://www.theglobeandmail.com/globe-investor/goldman-shutting-proprietary-trading/article1695839/

The full article is here for non-registered users: http://online.wsj.com/article/SB20001424052748703618504575459583913373278.html Cheers!

I think many of these large hedge funds working together in coordination is a dangerous thing. Ackman is a very smart fellow and has a remarkable disposition. But just like institutions that are "too big to fail" and cause imbalances that are difficult for even the government to handle, I think large hedge funds pose the same threat when they are working together. Unfortunately, regulation is a necessary evil that is a result of abilities to reap such economic destruction. Cheers!

Still no idea what caused the flash crash, regulators now examine quote stuffing. Cheers! http://www.cnbc.com/id/38975788

Article in Forbes discussing the possibility Buffett is buying land in Brazil, and the rapid improvement in farming techniques and yield over there. Cheers! http://blogs.forbes.com/kerenblankfeld/2010/09/02/is-billionaire-warren-buffett-buying-up-land-in-brazil/?partner=yahootix

Call options surged the weeks before Burger King announced their deal with 3G. Somebody spilled the beans and somebody was trying to make a killing. Cheers! http://www.businessweek.com/news/2010-09-02/burger-king-call-option-trading-surged-before-takeover-offer.html

Article on Sal Khan, hedge fund manager turned online tutor to the masses. Pretty neat, and shows the leverage the internet can have with education, and you wouldn't need alot of money. Cheers! http://money.cnn.com/2010/08/23/technology/sal_khan_academy.fortune/index.htm?source=cnn_bin&hpt=Sbin

Another email: Summer is almost over. The mosquito's are back in Winnipeg now. They never really left, but the weather this year did not allow them procreate. At anyrate, why not drop the FFH Dinner portion. Start at 7:30-7:45. Call it something other than a wine and cheese. Maybe a smoker ( http://dictionary.reference.com/browse/smoker an informal gathering, esp. of men, for entertainment, discussion, or the like). The content is worth more than the food. Cheers!

While he understands investors' hesitation today, Schloss doesn't think our current situation compares with the Depression. Back then, he says, the economy was dependent on only a handful of businesses, like banks, railroads, utilities and oil companies. Today economic growth comes from a much broader array of industries, many of them fueled by the huge gains in technological development we've seen over the past eight decades — including communications, biotechnology and the Internet. Sure, General Electric is still a powerhouse, but so are Google and Amgen. That means a much wider array of job possibilities — and more engines of growth for our economy. If investors today "were a little less emotional, they would see that this could be a good opportunity, so long as they move carefully and keep an eye on balance sheets," he says. I couldn't agree more with Schloss' comments. Cheers!