Parsad

Folks, I had to remove the original notes for a reason...as they were somebody else's private notes, but got passed around. So as much as I know you guys would like to read it, it doesn't mean somebody should copy it and post it here. Thanks very much! Cheers!

A former enforcement lawyer for the SEC plead guilty to assisting Marc Dreier in his Ponzi fraud. Cheers! http://www.cnbc.com/id/33796256

While there is no formal investigation of SAC, it seems as though the web of connections to Cohen's firm is getting wider. Cheers! http://www.bloomberg.com/apps/news?pid=20601087&sid=aqUVDRr07Vrs&pos=6

As I've suspected all along for several years, it won't be long before we find out the truth behind some of the so-called great hedge fund managers and hear about the shenanigans they've been involved with. In particular, all of those Damien Hirst collecting, Barbarian at the Gates thugs! Anyone still remember the photograph of Adam Sender and his 17 monitors? ;D Greenwich is going to get as cold as a witches tit! Cheers! http://blogs.reuters.com/columns/2009/11/06/still-on-the-hunt-for-a-big-hedgie/

Hi Folks, Sorry, David didn't take those notes. The fellow who did asked that they be taken down from various sites, as they were meant to be private. For those that read it...you were fortunate! Cheers!

The Atlanta suburbs are very nice, but downtown Atlanta is scary. I've also heard some scary things about Detroit as well, but haven't been yet. It's amazing the transformation that occurred to Manhattan over a decade. It's one of the safest large cities I've been too. And contrary to what the media has portrayed, Chicago is a very safe, comfortable city as well. Cheers!

Hi Rmitz, I totally agree with you. That's what I was trying to point out. It's not Steak'n Shake. Cheers!

David Lau has put together some truly fantastic notes from Seth Klarman's annual meeting on October 29th. We are seeing all the same things as Seth, although we think the base case for real estate is the most probable in the U.S. Some terrific quotes by Seth at the meeting! I think it will be very interesting to get Hamblin Watsa's and Munger's views on what is going on over the next few months. Cheers!

Most McDonald's restaurants, as well as most other fast food places, aren't open till 3am or 24 hours. Drive-thrus...yes...restaurants...mostly no. Alot of franchised Steak'n Shakes are open very late. I believe some company-owned restaurants in urban areas are open late as well...some 24 hours. Anybody been to downtown Atlanta? I stayed at a hotel there, and decided to go get a burger late at night at some joint. They had bars on all the windows and you couldn't go inside...it was 9pm! Afterwards, I went across the street to a gas station convenience store to grab some water and snacks for the hotel. They had bullet-proof glass from the cashier's countertop to the ceiling! You can't put that in a 24 hour Steak'n Shake, so they make for an easier target in certain areas. Cheers!

A robber got 22 years for holding up six restaurants including Steak'n Shake. The long sentence applied because prosecutors charged him in Federal Court on an Interstate robbery charge. Cheers! http://www.wibc.com/news/Story.aspx?id=1162227

Keerthi, If you go to another SNS, just take a good look at the menu and the placemats with advertising. See what new products they are trying in Peoria and let us know. Thanks very much! Man, I wish I had a Steakburger right now. ;D Cheers!

For Prem, any judgment in his favor...monetary or not...is vindication. They tarnished his reputation. That's far more important to Prem than money. Alot of these guys will also be out of business. Cheers!

Looks like the new Chair for the National Endowment of Arts took a shot at Peoria's theatres, but really likes Steak'n Shake! Cheers! http://www.ibj.com/newstalk/2009/11/05/steak-n-shake-and-the-new-nea-chief/PARAMS/post/10957

Yes often, but not always. For example, Fairfax just issued $1B in equity and another $400M in preferreds, but there was no negative credit watch for the Odyssey Re acquisition. I think Berkshire's had a bit tougher time through the last year, and they do have alot of underwriting risk and derivatives risk that the credit rating agencies may be concerned about. If Berkshire had enough cash where they didn't have to issue any debt and retained at least $25B in cash, I don't think S&P would have been concerned...or if they had issued stock, then there probably would not have been any implications as well. After Berkshire pays off the debt in three years, they'll get their AAA-rating back, if not sooner. Cheers!

FFH has long been criticized for having too small a float; and now that both ORH and NB are gone, the issue has grown worse. A modest share split at some point, has to be almost a given. Not necessarily. Berkshire has done perfectly fine and their share price went well over $100K each. There is absolutely no need to split Fairfax shares. To the extent that it encourages a dramatically higher P/B valuation, and they use the shares as a currency for acquisitions, then it does. If the acquisition were to happen anyhow, but the split allowed it to happen at a more favorable share price, then it increases IV per share. This could easily happen without a split. Remember that Fairfax once traded at four times book...$600/share...and no one was complaining that the stock needed more liquidity to enhance shareholder value in any way. Berkshire traded at two times around the same time, and the stock was almost $90K per share then. As recently as a year and a half ago, Markel was trading at over two times book. Again, liquidity is not an issue. Fairfax has not split their shares, yet they managed to increase shareholder value by nearly 180% over the last five years. Do they really need overvalued stock to make a bigger dent? Cheers!

Well Al, I think you're approaching this with a completely selfish point of view...which isn't wrong considering how much you own now! ;D You can view share splits several ways: - First and foremost in our minds is that it encourages an inferior, more speculative shareholder group - Second, it generally increases liquidity, as the share volumes will increase with more speculative trading and smaller shareholders - Third, it could possibly encourage Fairfax to be added to various market indices, which enhances price and reputation - Fourth, custodial and administrative costs go up, since the more shares issued, the higher the listing costs and custodial costs - Fifth, it promotes the idea that market price is more important than growth in intrinsic value I'm sure there are a number of other pros and cons that can be mentioned. I'm of the opinion you don't do things purely to increase marketability. Would a share split increase Fairfax's intrinsic value? Nope. It would only increase volatility and allow some shareholders to prosper at the expense of other more ignorant shareholders...which in Berkshire's case, and ultimately other companies like Fairfax or Markel, completely obliterates the premise that all shareholders are equal partners. It's like Dave Letterman and the interns. Sure there are a whole lot of other people who have done what he has done (Bob Barker comes to mind), and geez I wouldn't fault him for it entirely, but you just didn't want to hear that he had done it...not Dave! Now I can't even watch the guy. Sheesh! Cheers!

I don't think Prem would, and I truly hope he never does, split Fairfax shares. I'm actually VERY disappointed that Berkshire is doing that. You are going to attract an inferior group of shareholders, whose time horizon will now be at the same level as shareholders in any other company. It's the same reason we don't take fund of fund money in MPIC...we want individual partners who understand the culture and philosophy. And remember, for Fairfax loyalty is paramount. This company was on the precipice at one point, but their shareholders held true. You want to propagate that type of mindset, not diminish it. Cheers!

While I'm sure it really doesn't matter as long as claims get paid and Berkshire keeps printing money, the two pillars of Warren's foundation for Berkshire have been dislodged: 1) Maintain our AAA-rating 2) Never split our shares Cheers! http://www.cnbc.com/id/33621425

I believe it was the '04 meeting, as I was there. I met Ajit and started to ask him about Fairfax. We talked for a few minutes about Fairfax and then I brought up the subject of both Prem and Ajit attending IIT. He told me that Prem went to one IIT campus and he had gone to another one, but they got to know each other through the insurance industry over the years. Then some Wall Street suit type interrupted and said "Isn't Fairfax in trouble?" Ajit snapped at him "Is he IN TROUBLE, or GETTING OUT of trouble?" The guy shut up. I met Ajit again in 2005 and we spoke for about ten minutes outside of the Omaha Marriott near Borsheim's. At the end of it he was kind enough to ask for my card which I appreciated. I met him briefly again after the 2006 Press Conference with Buffett & Munger as well. Each time he was very nice to me. Cheers!

I can tell you for a fact that Prem and Ajit Jain know each other very well. I would assume with all the daily conversations Ajit and Buffett have had over the last 15 years (Ajit is the last person Buffett speaks to every night), Prem and Fairfax probably came up at least a handful of times...I would bet significantly greater than a handful of times! Buffett is not only aware of Fairfax, but he most certainly knows who one of his greatest disciples is. Cheers!

Hi Folks, Diane Francis' article "Smartest Guy In The Room On Markets" has been updated, as there were a few typos in the original. Cheers! http://network.nationalpost.com/np/blogs/francis/archive/2009/10/31/345839.aspx

Out of the multitude of businessmen out there, I hold Wilbur Ross quite high, and he had some very interesting comments about the U.S. commercial real estate market today. Cheers! http://www.bloomberg.com/apps/news?pid=20601087&sid=aoRYl03Rw1_g&pos=5

You got it square on Oec! Not only that, virtually everyone on here would have gotten their asses kicked if we weren't paying attention to what Prem and his team were talking about for the last four years in their presentations. I think we can give them some slack. Cheers!

Underwriting was 99% overall. Still very good. I'm pretty sure Fairfax pads the reserves when things are good unlike many other insurers. Thus the annual surpluses that usually appear over time as reserves are drawn down. I bet they pull a wad out of Odyssey once it is completely under their control. Cheers!

Book is now $371/share. Cheers!