Parsad

Another interview with Buffett: http://money.cnn.com/video/fortune/2009/09/15/f_mpw_buffett_recession.fortune/ Cheers!

Interesting, but short, interview with Becky Quick, where Buffett discusses some of the calls he received that weekend one year ago. Part two is available tomorrow. Cheers! http://www.cnbc.com/id/32867249

They actually should open one in O'Hare with no tables, just take-out. They would be doing awesome business, because everyone can eat at a McDonald's anywhere, but if I see Steak'n Shake or an In&Out or Whitespot in an airport, I'm going to one of those three places...since they are more unique. There also aren't any Steak'n Shakes right in Chicago. They are only in the surrounding areas. It would do great business right in the heart of Chicago. Sardar told a journalist once that he would be willing to open one, but they need a franchisee, since they won't open a company store. So hopefully, they'll get one open in alot of different places over the next few years. Cheers!

Mdhousa, Your criticisms seem valid, or at least sound valid. The problem is, that if an investment manager utters one thing, then investors view it as fact. There is no room for modification, editing, context or even evolution of the idea...the manager said it, therefore it is a fixed idea. I have one investment partner who will absolutely fixate on one comment and act on it. I don’t know how many times I’ve had to corral his impulses, and his family knows that too, but he has a heart of gold and I’ve learned to deal with this. For example, you went and made a post, now some other fellow can come over to it and critique your comments, and it doesn't matter the context of what you said, or perhaps you didn't even complete your thought or discussion on the matter. - you said you were considering investing with Mohnish, yet you say that he is doing a lot of handwaving and is now swimming naked - you attended the meeting, yet you didn't ask him all the same questions you just discussed with the board - you listened to him tell a story about Munger, but did not ask any questions at that point You obviously have explanations for the three points above, and it isn't fair if I jump to a conclusion is it? Buffett talks about derivatives being weapons of mass destruction, yet he went and invested Berkshire in them. How many investors suggested that was hypocrtical? And it probably was in most respects. I don’t agree with a few of Mohnish’s ideas…for example, I absolutely believe in concentrated positions…ten or less…even if managing other people’s money. I think magic formula investing is akin to an investor looking at P/E, P/B and some other metric, and thinking they’ve necessarily got something here…phhhppphhttt! I use a mental checklist, and don’t do written ones…I probably never will. But these are my personality flaws or perhaps benefits…I don’t know yet!  An investment manager has to manage capital in the best interest of their partners. There are certain restrictions in the way they can operate and things that they can do, and that has to be counterbalanced with the emotional constitution of their partners. Mohnish suffered a tremendous loss last year, and that will automatically make an investment manager look for new and better ideas. That is Mohnish’s evolution as a manager. Some things may seem hypocritical today, because he believed them yesterday. And some of the current ideas may evolve again in the future. That is the business, that is learning, and that is making mistakes and earning your stripes. The end result is that he lost a fortune last year, and he’s made a fortune this year. The question is, where will Mohnish be relative to the indices ten years out. I’m betting he’ll do better than them, but not nearly as well as in the first ten years…simply because of size and more diversification. Cheers!

I got in from Chicago at 3am last night and am sick from all the air conditioning. I had a late breakfast, so I think that's what did it. Cheers!

Hi Sreenr, Basically, Mohnish was saying that the value of certain investments like the S&P puts contracts will not be known for many years, thus that is a question mark. So when you are doing intrinsic value calculations, make sure you are very conservative in your estimates, as that remains an underlying risk. I think everyone assumes that it will work out ok, but to protect yourself as an investor, you need a signficant margin of safety. Cheers!

I got in at 3am last night from Seattle, and didn't have time to put up my last SNS visit yesterday either, so here it is: I decided to hit Steak’n Shake after I left the Pabrai Funds meeting. I wasn’t going to have time to go to the Elk Grove Village one on Sunday, so I decided to check out the take-out service at the Rosemont location near my hotel. Would be my 3rd visit in 48 hours! Got there around 11:40pm in a cab. Restaurant was steady, but a bit slower than the visit on Thursday night about an hour earlier. Kitchen was still non-stop and making burgers, so I wonder what it is like when the place is really busy. Again the location was clean and very inviting. My order from start to finish took less than five minutes. I ordered the “Double Steakburger and fries” with a Coke to go. I believe the bill came to $6.65, which was very reasonable. The burger is made fresh from start to finish. The order seems to always be checked twice like McDonalds before the customer receives it. I took the meal back to the hotel. The bag is a black-white combination and the drink comes with the same sort of colors, writing and logo, but in an awesome foam cup. These cups are terrific! My Coke stayed really, really cold for over an hour, as it was too large for me to drink right away. The burger actually tastes better when you get take-out. I don’t know why, but unwrapping that messy burger, and devouring it like that enhances the experience. Believe it or not, those skinny fries also taste better as take-out. I believe it may be partly psychological, because they look so thin on the plate. But in a small take-out cup, they don’t look so thin. I’m not sure how busy the drive-thru gets at various locations, but they should be milking it. You go to In&Out at 3am, and the drive-thru is still lined up because people are there for takeout. The Steak’n Shake drive-thrus I saw were steady, but not busy like an In&Out or even most McDonalds. I’m sure the average check is higher at sit-down meals, but take-out does a lot more volume, since customers aren’t sitting there taking up a table for an hour and a half. All in all, the Steak’n Shake model is terrific. The cult of personality is there, but they need to get it national. Food quality, service, cleanliness and execution are very good. Sardar has it going in the right direction! Cheers!

Mohnish was very funny! I told him in another life he was either a very well-liked professor or a stand-up comedian, as his ability to transfer knowledge with terrific analogies and humor is very good. A few things he said: - They are net sellers of stocks presently, and he feels retail and consumer spending will be tough for a few years. - Pabrai funds have done over 100% this year, but have a bit more to do to get back up to the peak levels. - On the question of how to raise capital for a fund: You have to convince your partners that it is their sole purpose in life to raise money for you! I was cracking up laughing after hearing that one. - On a question regarding one of his mistakes...I believe Compucredit: I was stupid! Again the audience roared in laughter. - As dcollon mentioned, checklists have become important to the Pabrai Funds...but they don't decide on an investment. They just give an overview of how deficient or acceptable the idea is. - On the idea of a less concentrated portfolio when he brought it up with Munger, who interrupted him and said: You are going in the complete opposite direction of my thought process on this matter. He said Munger accepted his proposal once he explained that it was because he was managing other people's capital, rather than his own money. - Mohnish experiments with strategies in his own portfolio. - Believes Berkshire’s value should be calculated in the most conservative manner possible at this point, as the range has widened significantly due to the long-term and incalculable investments Buffett has made recently…primarily the derivatives bets. Anyone who has read “The Snowball” knows that one of Buffett’s strongest characteristics is his ability to make others feel better about themselves. Mohnish seems to be learning this little philosophy, because regardless of the questions asked, he always made the individual feel as though that question was the best one asked yet. His presentation skills have become incredibly polished, as is his delivery. He also recalls name after name of people coming up to him without having to look at their nametags. Pretty impressive stuff considering how many people he meets these days all over the world! Even Mohnish’s wife Harina remarkably keeps up with all the names and faces, and greets everyone so warmly with great interest. The atmosphere at Carlucci’s is very intimate, so it is easier to move from table to table than say the meeting in California which is in a gigantic ballroom. About 200 people or so came to the Chicago meeting, whereas California has around 300-350 people attend. We had about 15 people or so show up to the lounge before the meeting, and it was nice to meet them all. I really enjoyed my brief time in Chicago…beautiful architecture, restaurants, people, sights…very nice! Plus I hit three Steak’n Shakes in 48 hours! Cheers!

It's great to own the market, but I like businesses that actually make money. Hopefully Sokol gets this thing making a regular profit one day. Cheers! http://www.bloomberg.com/apps/news?pid=20601087&sid=aAEFzKSadxTg

Meeting isn't till tonight. We'll let you know tomorrow or Monday. Cheers!

It was great to meet Wabuffo. That's why I really enjoy these trips...meeting all the boardmembers in so many locations. Tomorrow night, a bunch more will join me in a discussion about investing and then the Pabrai Funds meeting. I didn't realize Wabuffo and his wife are both fellow Canucks, but have worked and lived in the U.S. for many years! Cheers!

Second visit to a Steak'n Shake today. I met Wabuffo at the one in Glenview. Nice area, with a small mall of shops across the parking lot from it...Target, Kohl's, Michaels, etc. This Steak'n Shake was very nice to look at as well. Very, very clean as well in virtually every area I saw...restaurant, kitchen, back area and washroom. Again staff was very pleasant. Didn't get the "Welcome to Steak'n Shake..." greeting as much this time, but staff was good. It was steady, but not quite as busy as the one I visited in Rosemont the night before. Wabuffo told me that usually it’s pretty busy and the drive-thru always has a car or two in it. Wabuffo had the Spicy Chipotle Burger and really enjoyed it. He had a chocolate shake as well which he really liked too. This was his first visit to a Steak'n Shake since 2006, and he did not enjoy his last visit. This visit was very different. He really liked the burger. We both agree that skinny fries aren’t for us. We like wedge cut fries, or even the thicker McDonalds thin fries. We split a "Frisco Melt". Tasty, but very much for those that love meat, cheese and sauce smothered all over. Very much a comfort food...something you would probably crave late at night after getting hammered with your buddies! ;D I'm sure many enjoy this, but I'm more of a burger guy. I also had a “split shake” of vanilla and chocolate. Very good looking and tasting shake. I ordered the Chilli on the side, as I know many people enjoy this chilli. Not my cup of tea also. I'm used to a Southwestern type, with lots of green & red peppers, onions, jalapenos and a touch of cilantro. This is more like chilli you may eat over an open fire while on a cattle drive! Beans, ground meat, chunks of steak meat in a watery tomato sauce. Again, for those that grew up on this type of chilli, I can understand why they buy it...but not for me. I also sampled a couple of the "Shooters"...plain with ketchup and frisco. They are good, but the small, thin single mini-patty isn't as tasty as the larger patties. But still this mini-burger was head and shoulders above some of their fast-food competitors like Burger King. The Burger King mini-burgers are God-awful! Wabuffo admits that he’s drunk the Kool-aid. He’s impressed with the turnaround and likes what is happening with the restaurants. I’ll let him give more details. In reality, it doesn’t matter whether we like the products or not. As long as other people like them and need to buy them…and they are in droves! In regards to Lethean’s question, we don’t have any Steak’n Shakes on the west coast, so that’s why I’ve never eaten at one until now. I’ve been really anxious to eat at one, and finally have…two in 24 hours! If they had these in Vancouver, it would be my number one choice for a fast-food burger. Grab and go! And I don’t like Steak’n Shake because I’m a shareholder. That’s just icing on the cake. The burgers are far tastier than In & Out’s. What they do is keep it simple, fresh, execute and be consistent. They’ve developed a cult following because they haven’t saturated the brand with too many stores…kind of like See’s. I think SNS can do the same, as the product is superior. Perhaps, SNS will be more like Chik-Fil-A, which would be terrific. But it will be all about the execution going forward. Cheers!

Also, for anyone else who will be visiting a Chicago Steak'n Shake this weekend during the Pabrai Funds AGM, please post your experiences within this thread, and that will make it easier for Sardar to get all our feedback. Cheers!

Well, I just got back from my first visit to a Steak'n Shake. I walked from my hotel about half a mile to the Steak'n Shake in Rosemont. It's near a bunch of stores, not far from a stadium. A few restaurants in the area, including a Starbucks, Chipotle, Chilli's, McDonalds and a few others. I've got to say, Steak'n Shake is a very nice looking fast food restaurant. The checkered squares, combined with the black, white and red booths, and the neon red highlighting the restaurant is very sharp. The restaurant was very clean, as was the kitchen and back room area, and the bathroom. The landscaping outside was also simple and crisp. I walked in and was seated by a attractive young hostess with a headset on. A young fellow came around and took my order. His name was Ron. Every time I saw Ron greet any customer, he always said the "Welcome to Steak'n Shake..." greeting. Even when his friends came in, he still said it. Boy, I didn't even get to the menu. Wow, what a selection! While narrowed from the previous menu, the new additions are a terrific blend of the comfort hamburger/hotdog/chilli core. They had a couple of different paper table mats on each table, and the big new products right now are a "Guacamole Steakburger" and "Spicy Chipotle Steakburger". I ordered the Guacamole one with fries and a coke. Ron came back and apologized, but they were out of Guacamole. I ordered the "Chipotle" one instead. The restaurant was relatively busy for 10:30pm. Maybe 14-15 people in the restaurant with a couple of cars going through the drive thru every few minutes. Everyone was really enjoying themselves, the food, their conversations. Almost everyone I saw inside was eating in the restaurant and not ordering take-out. After a few minutes, the hostess brought my burger over. It was a very nice looking burger, served with skinny fries on a china plate. Not a huge burger, but a very good size. I’m not a fan of the skinny fries, but they do have several other alternatives including salad, baked beans, cottage cheese & fruit, and a couple of other things. Now to the important part…the Steakburger! I’m a burger connoisseur and I have to tell you, without a doubt, that Steak’n Shake’s Steakburger is one of the best fast food burgers around. Why? To me, a great burger is all about the quality and taste of the meat patty, and the quality and texture of the bun. You can take a mediocre patty or bun, and juice it up with toppings and sauces, but a great burger is one where you can really taste the quality of the meat and you get a comfortable feel from the bun. Steak’n Shake has got it perfect! My favorite burgers in Vancouver are at an old family chain called Whitespot and at a higher-tier restaurant chain called Earl’s. They are head and shoulders above any other burgers I’ve eaten in Vancouver at chain restaurants, and in fact would rank on top of any chain burgers I’ve eaten elsewhere in North America. The Whitespot burger is all about comfort…the bun, their triple’O sauce, and the meat patty. The Earl’s burger is all about quality…the type of meat used, the toppings and the bun…the sauces play second fiddle. The Earl’s burger with fries costs about $14 CDN. The Whitespot burger with fries costs about $9 CDN. My “Spicy Chipotle Steakburger” with fries cost $4.99! It was better than the Whitespot burger and not far off the quality of the Earl’s burger. I was incredibly impressed by that Steakburger! I saw a few people order the shakes, and they’ve got several new flavours. They looked damn good! But I didn’t want to stuff myself tonight. They should think about making a small version of the shake or a sundae. I would have gotten one if they were half the size. The service was excellent for a fast food restaurant/diner. Ron apologized for running out of Guacamole, took great interest to see if I liked the Spicy Chipotle, and asked if I wanted a free Coke refill for the road. My total bill came to $7.94, but I left $10 because Ron did a great job! That was for a “Spicy Chipotle Steakburger” with fries and a Coke. Some might say that is a bit on the high end for a fast food restaurant, especially if you add in a small tip. But I would suggest that there are a few things at work here: First, there is no need for diners to sit down and eat. Steak’n Shake has that option, like say a Johnny Rockets or a Red Robin, but you can always order take out. Second, you don’t have to leave a tip. You don’t at McDonalds, nor at alot of other fast food restaurants, and it’s not mandatory to leave one here. Third, unlike Johnny Rockets or Red Robin, Steak’n Shake has the drive-thru operations, which do not require tipping the server. You can order a terrific Steakburger, fries and Coke for about $5.75 through take-out or drive-thru. Fourth, Sardar has executed his plan to increase customer traffic by providing significant value propositions relative to his competitors. In other words, he drove traffic in by offering the “4 meals for $4”, “Kids eat free”, “Half-price happy hour” and “$2.89 Value Pack” deals. Now you’ve got increased customer traffic and they’ve noticed the changes at the restaurant level. In these times, the customer at SNS is finding tremendous quality for the price. Fifth, with increased traffic, Sardar is now offering higher-end value meals, such as the two new Steakburgers and a new “Spicy Chipotle Melt” sandwich. The new and existing customers see, that for a dollar or two more, they get a new, pretty damn good burger to try. The successful higher-end meals will probably become permanent additions where he will drive the average customer check slightly higher. I’m looking forward to eating at a couple more Steak’n Shakes while in Chicago. Tomorrow (the 11th) I’m meeting up with Wabuffo at the Glenview Steak’n Shake around 3pm. If anyone wants to join us, you’re more than welcome. It’s hard to find great businesses where you have a truly successful product, as well as a business that generates regular cash flow. Often, good products disappear by the wayside, because inferior management cannot sell the product. Or you have an inferior product become enormously successful, simply because management or the industry made it so. Steak’n Shake, like See’s or a number of other rare companies, seems like it is creating a significant, albeit small (at this time) moat. Cheers!

Gurufocus corrected their previous article that implied Fairfax was buying ORH above the $60 offer price. I have it from the horse's mouth that the implication was completely erroneous. Cheers! http://www.gurufocus.com/news.php?id=68897

Article from China Daily on Buffett's congratulatory video for Li Guilian, clothier Dayang Trands Chairwoman. Cheers! http://www.chinadaily.com.cn/bizchina/2009-09/10/content_8675012.htm

Hi Folks, So after talking to Joe, it's all set for Saturday in Chicago. We will meet at 2pm at the Marriott Suites O'Hare (6155 North River Road, Rosemont, IL (847)696-4400). From there, we'll just walk over to the Pabrai Funds AGM at Carlucci's around 4pm. See you all there! Cheers!

I'm also impressed by all the other positive comments. Especially from those people who stopped going to Steak'n Shake because of issues, and are now very impressed after their last visit. Cheers!

Only 12% of those eligible for loan modifications have been helped. Cheers! http://finance.yahoo.com/news/Treasury-says-millions-more-rb-1620457917.html;_ylt=AqdYntKIuOhUrMF6XI4bkoa7YWsA;_ylu=X3oDMTE1MmM5cWxnBHBvcwM1BHNlYwN0b3BTdG9yaWVzBHNsawN0cmVhc3VyeXNheXM-?x=0&sec=topStories&pos=3&asset=&ccode=

Interesting! Five years ago, Prem couldn't get anyone to lend him money other than a few close friends (Cundill, Southeastern, Markel, et al) and today the institutions are giving him discounts to do business with them. Why not raise a crapload of equity and buy back Odyssey! Cheers!

Study indicating HSBC and Berkshire Hathaway executives should receive the largest bonuses for performance since they did the best over the 2002-2009 cycle. http://www.reuters.com/article/pressReleasesMolt/idUSTRE5872ZR20090908 I think these studies are usually somewhat useless, since virtually any large firm can make their executives look the best over very specific time periods. I would much rather see executives have to invest half their income or bonuses into the shares of the companies they work for, and they cannot sell them for five years after their term or career is finished! Cheers!

Tightening credit standards leads to a record drop in consumer credit. Not necessarily a bad thing, since standards were previously so lax, but it does mean that lower leverage means lower consumer purchases. Cheers! http://www.bloomberg.com/apps/news?pid=20601068&sid=aAYZpSNGocVM

They could probably use him at Burger King or Wendys! Cheers!

Wall Street Journal article discussing healthcare for India's impoverished weavers. ICICI Lombard is one of the primary carriers of insurance for this category of workers, and it discusses the successes and failures of getting the weavers to accept and use the program. Cheers! http://online.wsj.com/article/SB125211458177588203.html?ru=yahoo&mod=yahoo_hs

From the New York Times: http://www.nytimes.com/2009/09/08/business/economy/08buffett.html?hp Cheers!