Parsad

Looks like the merger is going quickly, as ORH has now been delisted. Cheers!

Hi Harry, Welcome to the board! Cheers!

Fantastic little interview. What an exceptional speaker as well! Every time I hear him, I become more ecstatic to have him as Chief Operating Officer of Berkshire in the future. Cheers!

Hi Sharper, Thanks very much! We'll only be matching the $5/head attendance, so if 50 people show up, we'll donate another $250. We'll also have some other stuff that will be drawn for in a raffle, and the proceeds will also be donated. What I'll do is contact the "Crohn's & Colitis Foundation" over the next month or so, and inform them of what we are doing. I'll get a direct contact and mailing number for those that knew Joann and want to make additional donations. That way they can issue a tax receipt to you guys directly who decide to make a larger contribution. Cheers!

Hi Oec, Thanks for the suggestions. Regarding the ideas: - We originally started the dinners at Joe Badali's, so there is a sense of nostalgia there for those that attended the first one with only 9 people and Francis as our guest. They can handle up to several hundred people, so we can continue to hold it there for years to come. They've always been very accomodating, and the place is disarming and easy going. - Joe Badali's can provide the mic and speaker, but for $175. I'm looking at cheaper places in the area where I could rent them. Tentatively we have the attendance price at $5/head with all proceeds going to the "Crohn's & Colitis Foundation" in Joann's name. I may increase it to $10, with $5-6 going to charity and $4-5 to cover the cost of the mic and speaker. Corner Market Capital will also match the donations from the attendance. - Regarding holding it the next evening, unfortunately alot of shareholders come in the night before and then fly out after the AGM. We would probably have less attendance holding it the next day. - In regards to the managers, I believe Sam and Francis usually get together the night before to chat about investing and life, so they started coming to our dinners together. For the most part, the dinner now fits into Fairfax's agenda for those days. If we move it, there's a chance we may be making it more difficult for Fairfax, since they have their manager meetings ongoing for the next day or two. Cheers!

Bank charge-offs of uncollectible loans are at 2.9%, which is higher than in 1932. Annualized rates are at 3.4%, which is on par with 1934. Cheers! http://www.cnbc.com/id/33481862

It's hard to tell, but I would say don't be so quick to discount the value of the $2100 tuition. There is a world of difference between great value investors and bad value investors because there is a huge divergence between practice and theory. Maybe there will be people there who are successful and you can get one good idea worth the entrance fee alone. I think that is the general idea people have when they attend. I equate it to the same perspective people use when buying a higher probability lottery ticket. You would have more luck on this board, or attending the Berkshire or Fairfax AGM's. Why? Because you are asking questions and having them answered, rather than simply listening to prepared speeches. Cheers!

I would spend $100 of the $2100 on the "Intelligent Investor" and "Securities Analysis" if you don't have them already, and then put the other $2000 away for investing. Cheers!

Sanjeev, I realize that other stocks are cheaper now than they were two years ago, but I am surprised by your comment. It looks to me that FFH is trading under book value. Is likely overreserved and still has a lot of cash to deploy. If the market tanks from here FFH should be able to profitably grow its insurance book (as other insurance companies will not have the capital) . .. if the market keeps rising this company has a big equity portfolio. I realize that you probably want to err on the side of caution and certainly feel some sense of responsibility as you did create this board, but I for one would sleep like a baby if I went to the moon for ten years and had my entire net worth in FFH shares (in a safe deposit box in Switzerland). Hi T-bone, again it all depends on your tolerance for volatility. We own both Fairfax and Berkshire in our corporate accounts, but that is mainly out of loyalty, for the annual reports, and because we can handle the ups and downs. In our funds, we have no Berkshire and have reduced our Fairfax holdings considerably. If you feel comfortable answering, I am curious if you think either that FFH is not trading at or below book value or that you don't think this is a great price to pay for a company like this. I have always been firmly in the camp that a well run insurer is worth a lot more than tangible book (and I agree with the earlier comment that ICICI now negates goodwill from ORH and NB, so GAAP is roughly tangible in my mind). I think 15-20% returns on book value PLUS an eventual revaluation to above book value is something to be very excited about. No, I certainly agree that Fairfax is trading below current book value. Unfortunately, Fairfax is now also a little more exposed to the whims of the stock market...thus book will move up and down...possibly dramatically depending on what scenario you see unfolding. I'm sure Fairfax will hedge based on their views, so that volatility will be tempered, but shareholder equity will fluctuate unlike the last couple of years where they held enormous amounts of cash. To look at it another way, I think this is a great time to be a bank . . . but their aren't any big flexible banks I trust. I applaude those on the board who had the conviction to invest in WFC and others in the single digits. . . I didn't. For all I know they are still insolvent (not that it matters with government support I guess). FFH is definately solvent and able to play the same (temporarily rigged in their favor) game the banks are. Instead of cheap deposits FFH takes in low cost float, but they don't have to worry about embarassment and can buy cheap CDOs (as evidenced by the ORH NAIC filing) or anything else that the "real banks" cough up. This is a great time to be a conservative leveraged investor (safely leveraged through deposits or well-written insurance float). Other than the recent opportunity to buy $100 cheaper (which is a large psychological barrier to buying more here) . . I don't think FFH has ever been cheaper. Oh, it's been cheaper. Significantly so! At the low point, it traded at about a quarter of shareholder equity. But that's my point. It's a very different company today than even a couple of years ago. This company is now a very solid, well-run ship. We don't invest in solid ships...we invest in broken-down ships. Why? Because they protect on the downside and carry far more upside. And the solid ships we do invest in are far smaller and less well-known, so they generally have an advantage as far as future growth is concerned. Does that mean we wouldn't own Fairfax or Berkshire in the future? Of course not! If the market does something stupid, we would be the first ones on board. We don't like rosy, optimistic scenarios. We prefer fear and desperation. Cheers!

Hi Valuebuff, No worries. While we don't take any responsibility for investor's own actions, if I see something that sounds a bit worrisome, then I'll respond. 40% of your actual position allocation is fine. Cheers!

Fairfax is not a good bargain at $360 per share. It's a decent price and you'll get a 12-15% annualized return going forward with a 2% dividend kicker, but it's not a deep-discounted bargain. If you were an investor who was agnostic on the market last year, you got killed. People should invest when things are cheap, regardless of the market, but there are varying degrees of cheapness. My original comment was based on the premise that a board member had put 40% of their portfolio into Fairfax at current prices. My response was just be cautious. Cheers!

One of the great strength of Warren Buffett is not to be impressed by the recent past. For instance the fact a stock was at 4$ a couple of months ago does'nt mean necessarely that it is not a bargain at 10$ or 15$ (See Singleton too). In 1950, Even his mentor was pessimist but Buffett bought because he looked forward and not in the rearview mirror I think the greater tragedy is when investors become transfixed on a company. I'm more attached to Fairfax than anyone on this board, other than those that may work at HW or are directly related to employees there, but regardless of who is running a firm, investors always have to weigh return in value relative to market risk. In 1950, circumstances had changed significantly compared to a decade earlier. What exactly has transpired in the past 12 months that makes people think that we are past tough times and a renewed optimistic view is warranted of market prices? I just read the quarterly letter from the Baobab Fund, whose manager happens to be an analyst at Hamblin-Watsa. He certainly doesn't believe a rosy scenario is in the works. I don't know if those sentiments are shared by the rest of the team at Hamblin-Watsa, but it might be interesting to see exactly how much of their equity position Fairfax has taken gains from when the report comes out next week. I'm not quite as bearish as Martin, but I think things will get tougher for a lot longer before they get better. We may not see the lows of the recent past, but we will most certainly tread deep waters over the next couple of years. Cheers!

QUE? I guess it depends on whether your implicit goal is wealth creation or maintaining wealth...long term wealth creation usually comes from concentration of assets. And if the goal is wealth preservation, you'd be perfectly fine putting 40% or more in Berkshire at these prices... It's all dependent on the individual's tolerance. As I mentioned, if he's comfortable holding long-term and can handle the volatility then that is fine. I'd beg to differ on the definition of wealth creation and wealth preservation...they are intertwined...you cannot have long-term wealth creation without wealth preservation in mind. Concentration is only useful if the assets are undervalued. Unfortunately, we have 680+ members, and I would say that their psychological make-up, regardless of how much Ben Graham they've ingested, isn't probably that far off the psychological representation of the general public. There were alot of people on this board who weren't interested in WFC at $9 or GE at $7. Even after everything Buffett said, they still weren't interested. How many here wanted to buy Steak'n Shake under $5? You can probably count them on one hand. I remember alot of people who did not want to touch Fairfax at $60 a share in 2003. At $360 a share, Fairfax is no longer the deep-discounted value stock most of us have owned in the past...neither is Berkshire at $100K compared to what else is available. They are businesses that are in great shape, and their market value is representative as such. As Francis said last year, never underestimate how cheap things can get. Cheers!

Be careful Valuebuff! It's not a 40% allocation stock right now (are there any?), unless you are comfortable with volatility and consider holding it for the long-term...or your name is Prem Watsa and you own the company. Cheers!

Fairfax should complete the merger in short-order and delist ORH. Cheers! http://www.sec.gov/Archives/edgar/data/915191/000095012309052126/o57503a6sctovtza.htm

I think with Fairfax, the institutions that bought up the offering at $345 or whatever, have finished flogging them to their clients at $360+. Cheers!

Warren attended a special ceremony at George School, where David Dodd's daughter Barbera dedicated a new library. You have to go about half way through the presentation to get to Buffett's speech. Cheers! http://www.georgeschool.org/NewsAndEvents/Dedication%20Ceremony%20Press%20Kit.aspx http://www.philly.com/inquirer/local/20091018_George_School_donor_appears_with_Warren_Buffett.html

Good article in the NY Times. Cheers! http://www.nytimes.com/2009/10/17/business/17nocera.html?_r=4&8dpc=&pagewanted=all

Hi Savant, Unfortunately the interview was delayed due to personal and business time constraints for Amitabh, but we expect to redo it at some point in the future. I've also been quite busy, but I'll try and put together another interview with someone else in the next month as well. Thanks!

Yeah, that seems more congruent to me. What was Greenblatt's actual hedgefund results when he operated one relative to the S&P500? And did he use any sort of leverage or hedges? Did he short stocks? How much cash did he carry? The one set of numbers that I think weigh both return and risk is Seth Klarman's. I'm sure some of you have his numbers, but for the last decade, he carried huge amounts of cash and still killed the S&P since inception. Anyone have Lou Simpson's numbers over the last few years since Buffett posted his numbers in the BRK annual report? Cheers!

Another name I often hear these days is Joel Greenblatt and his magic formula investing. I'm no fan of these types of investment philsophies, so I'm naturally very skeptical. I found this article discussing how magic formula would have done last year: http://www.magicdiligence.com/articles/how-is-joel-greenblatt-performing I'm sure Joel's partners over the years can attest to his success, but again, I'm wondering exactly how the returns were generated...concentration, cash positions, hedges, leverage, currency bets, etc. Cheers!

Sorry guys, I went back and looked at the original post and noticed there was a graph there showing Paulson's performance. I actually used that graph and recalculated his numbers from 1994-2006, before he enjoyed the huge gains from his macro-bet. His annualized return over 12 years was around 15%, while the S&P500 would have been about 10% during the same period. So yes, his numbers before his macro-bet were significantly lower and on par with many other excellent managers. I still would like more details on Brookdale. Unfortunately, I think making these types of lists are hardly ever an apples to apples comparison. Short-term events, leverage, etc often are the reason. Long-term, I think the actual disparity and margins between the best managers is far narrower than most investors think, especially when you equate the types of holdings, regionality, cash, concentration and such. Cheers!

Hi Ben, that's what I originally thought, but Paulson must have done better than 3 times the market cumulative since 1994. Bruce Berkowitz at Fairholme has done 4 times better since 2000, so there's no way Paulson has only done 3 times better since 1994, unless he had very low returns previous to the last few years. Cheers!

Hi Mpauls, Can you clarify? Paulson did 17% and the markets did 8.8%...isn't that 2 times better, not 3? Also, what are Brookdales numbers like and how do they operate their fund? Cheers!

Galleon has two funds on that list. The founder has been charged with insider trading, along with five other people. Buyer beware! Cheers!