Parsad

Some interesting events over the last two months regarding the board of directors at SNS. - First in January, Dr. Ryan said that he would not stand for re-election. He had served since 1996. - In mid-February, David Milne resigned. - Followed by Ed Wilhelm and Steven Schmidt. Wilhelm and Schmidt joined the board in 2006 and 2005 respectively. - On March 16th, Dr. Ryan suddenly changed his mind and decided to stand for re-election. - Immediately following that on the 17th, Wayne Kelley said he would not stand for re-election. Kelley had served since 2003. - On the 22nd, Kelley decided to submit his letter of resignation. What's clearly obvious is that the board has remained somewhat fractured, even with the number of previous resignations and Sardar, Phil and a couple of new directors on board. It looks like some of the old-time boardmembers supported Sardar, while others had a different agenda perhaps in line with Kelley's. While a good board encourages different views, I'm guessing it wasn't just views, but the direction of the company including how cash flows should be allocated. Not going to happen! I would expect the board to spend less time bickering now, and more time focusing on increasing customer traffic. Cheers!

The list above has been updated. Please RSVP if you have not yet. Cheers!

Just to quell the rumors... In spite of my heritage, I am no tire deflating mafioso... (just bugging Sanj - I'm in!) I didn't even think about your Italian heritage when I said it. I was just thinking we could do it on the way to the Steak'n Shake in Pennsylvania! Perhaps, with respect to Prem's heritage and mine, we'll just throw "Butter Chicken" at Alec Scott's vehicle...or perhaps some really oily samosas! ;D Cheers!

That $4.16B number is either a mistake or a typo...perhaps $416M. Maybe Scott doesn't know how to a use a calculator and multiply the share price by the number of shares owned. :D Cheers!

The point is that you have Mr. Kelley's opinion now about Sardar Biglari, a "new card in your hand", and you should see if your opinion on Sardar Biglari has changed or not, and if so how. Actually I'm more relieved that Kelley is out. He was part of the board that resisted Sardar's request for board seats originally. They implemented changes to shareholder policy that prevented a special meeting of shareholders. Kelley was part of that action. That was completely to save their own hides and prevent the meeting. I was actually more concerned that he was staying on when Sardar first took over, so I'm actually quite happy he is out. Cheers!

I think the $2B comment is in relation to Fairfax's earnings in 2008, not his net worth. Am I correct in the context of the title? Cheers!

Outside of that lisp comment, I thought the article was balanced and fair...so I guess we'll take what we can get. Hell of alot better than those days when they were trying to pretty much lynch Fairfax. Cheers!

I don't think the market is going to sell off. Kelley was there when the ship was going down and when it rose. Sardar was there when it rose and if he isn't listening to Kelley (who is on the board), then I'm guessing the company is going in the right direction. If you were a shareholder, would you rather keep Kelley or Sardar running the company. Pretty easy choice! Cheers!

I don't think anyone cares whether he has a lisp or not. I'm pretty certain it doesn't bother Prem or anyone who knows him. Kind of stupid of the writer to say that. I spoke to the writer Alec Scott for 45 minutes and gave him some terrific quotes when he asked me about Prem: "Prem is a superb leader. At that time when those reports were coming out, it was really tough for everyone at Fairfax. Yet not a single executive quit. Prem has their trust because he gives them respect." "This isn't the first time he's made a call like this. If you go back and read the 2000 Annual Letter, you'll see he made one of the greatest market calls ever about technology stocks." "He's like an old friend or uncle when you meet him. It feels like you've always known him." "If there was anyone to ever take over the torch from Buffett as an investor, it could very well be him." "He's incredibly humble. Fairfax's office is like any other office. Nothing ostentatious." "If you ever get the opportunity, whether it is at the AGM or at Fairfax's office, you should meet him. He's a terrific human being." At the end of the conversation, he asked me if there was anything unusual about Prem or Fairfax. I said I've pretty much told you everything. He then said, anything you noticed or found interesting. So I said, "Well, they've got this room which is a library where they keep thousands of annual reports and articles." "Anything else?" "Um, his office his messy." "Messy?" "Yeah, you know like the absent-minded professor who has a pile of stuff on his desk. He knows where everything is, but it's messy. I keep a messy desk too, but I know where everything is all the time." "Oh, ok." "Ok, thanks Sanjeev. Somebody from the fact-checking department will get back to you." "Ok, thanks Alec." Guess which quotes they decided to use...the library quote and the messy desk quote. Nice! I never did get a call from the fact-checking department. Probably the first and last time Fairfax ever gives my name out for an interview! ;D When I go to Toronto, I'm going to find Scott's car and let the air out of his tires. Maybe Calonego can go with me! Cheers!

Toronto Life Magazine did a very good story on Prem and Fairfax. Cheers! http://www.torontolife.com/features/2-billion-man/

Steak'n Shake's board is now pretty much entirely in line with Sardar and his team. Wayne Kelley resigned on March 22nd. http://www.sec.gov/Archives/edgar/data/93859/000009385909000020/form8k32609.htm In regards to the Form D Filing from January that some were inquiring about, I received a copy of the filing under the SEC Public Disclosure request guidelines. It is definitely related to aligning interests of certain service providers (marketers, restaurant consultants) at SNS with shareholder interests. The total dollar amount of the offering is allocated at $2.499M, but they've only issued $170.5K so far. Nothing to be concerned about in the slightest. I would post the PDF, but I'm not sure exactly what the laws are against releasing copies of the filing. Cheers!

Thanks Redskin! Now I want to go to one and try the mini burgers. Cheers!

How about Squirts! I'll take three of the Steak'n Shake Squirts! No? Cheers!

How about Junior Steakburgers? Baby Steakburgers...I'll have three of the Baby Steakburgers? Any other suggestions? Cheers!

Hey Folks, These debates often can get heated based on the subject matter, and sometimes just on the minor difference in context in which individuals read the writings of others...I'm as guilty of that as the next guy! Time to let your cooler heads prevail on the subject. Next topic please! ;D Cheers!

I've never held a margin account, but does anyone know for sure if all of those account holders would get the proxy materials? Even if just two did, that would be an issue, but I'm just wondering if several of them would get the documents. Cheers!

With all the 'know thy client' rules out there now --- how does someone like this become a client without being aware of the risks. What is a 75-year old investor doing with his life savings exposed to the market -- particularly if he has a short term purpose for these funds. I own a small bit of Tims fund --- when I signed up there was something in the documents that said 'I could lose ALL my money' ---- it was not in small print either --- very bold. There was also some bolded out language that stated to 'read the document'. If after the fact this 75 year old still signs on what can you say --- he was prepared to take the risk just like anyone else. Informing the client of the risks before hand is very controllable. Not all investors have the same investment acumen or emotional constitution. The "Know Your Client Rules" are a joke! Virtually every questionnaire is standardized with a few simple questions, and millions of investors each year get into products they probably shouldn't. When I play hockey on Monday nights there are still a lot of guys that don't wear face shields - I don't know how informed they are but if they were --- they certainly are doing so at their own risk. And so am I by simply playing the game. You can't control all the hazards but you sure can control the information. If one of those guys playing with you gets hit in the eye with a puck, you're not going to tell him "you should have worn a visor" while he's lying on the ice writhing in pain, thinking he may lose his eyesight, right? There are alot of investment managers out there looking their clients in the face, many of whom are close to retirement, and telling them that eventually markets rebound. Sound advice, but probably not much help to those clients. The point I was making was with your theoretcial ten-year 20% note bought in the 1982 period and the 3x pe's available at the time that Buffett was also buying. I just pointed out that during this time he also bought or added to KO -- and I would guess that the return over 10 years probably beat the 20% total return on the theoretical note. 10 years later would have been around 1992 --- so the KO investment could have cumulated tax free for another 6 years before Buffett in hindsight would have sold it. He did. Well over 24% annualized till 1998 or so. Tell me how much it has grown since. :o How many investors, even die hard Buffett/Fisher acolytes, would hold for 11 years with a 50% loss, and then still hold another 5-6 years to get to breakeven...perhaps longer! Cheers!

The median home in California fell 41% year over year. http://www.bloomberg.com/apps/news?pid=20601213&sid=aUnHHxyqfsyA&refer=home Cheers!

I am sure it happened --- but for those that were loyal they would have been quite pleased by the end of '76 (and beyond) -- quite the oppositie of your worries at present. Ruane as leader and captain knew what was best for the clients. Would he retain them all? Of course not -- you never do. Could GM have retained all their clients over the years? No -- but they sure could have done a better job by developing products that were in the client's long term interest rather than the client's short sighted ones. Doing what is best for the client (even if they don't know it at the time) works -- even for money managers!! Doing what's best for the client is to not lose money. How do you explain to a 75-year old investor that his life savings is now diminished by 50%? Wait five years...you should have known better than to put so much with us...you've invested for the long-term...I feel really bad for you...I'm closing access to your money to protect you from it! Buffett did not sell Coca Cola in that early 1980 era --- in fact he added significantly. I would bet that his investment in KO outperformed the theoretical ten-year 20% return note. And the beauty was he avoided a lot of taxes compared to the gains that would have had to be claimed on the note. Look, I am not saying there is not a time to sell -- but investor's ought to have a long term core strategy. I am not saying to buy KO -- and in fact I have never owned it -- but I will say that over the 17 years of doing this, KO is certainly the best bargain I have seen it at. Buffett as recently as a few years ago said that he should have sold Coca-cola in 1998 when it was overvalued. He just sold JNJ after holding it for a short period of time. I'm not sure how this discussion has devolved into me being a buy & trade investor where I have no core holdings. I just said that at times I am willing to sell even my core holdings, if I find things significantly cheaper relative to their quality and after paying taxes. That is no different than what Buffett does. And per Berkshire's mandate not to ever sell a private business they buy, he cannot sell any of their businesses regardless of the price they are offered...otherwise you might see a different outcome. They lost great wealth because they focussed on wealth accumulation rather than what was important. They invested in risky ventures --- we know the result. I beg to differ. While AIG's CDS business was overly leveraged, many of their other businesses would have fit in nicely inside Berkshire, Fairfax or many other companies. Some of Citi's businesses are also of the utmost quality. What about the guy who built a terrific business over his lifetime, but lost it all because the investment bank he dealt with put his company's cash into AAA-rated credit obligations? He did what he thought was correct...yet he suffered! Are you going to simplify it and say that he was focused on wealth accumulation and not what was important? He got caught up in a mess that was not entirely of his own making. Everything he built from day one, was lost in a few months. Doesn't Buffett focus on the right things? Yet, he made a mistake buying COP early, as well as the amount of exposure they have in the S&P puts he sold. Berkshire's AAA-rating was the crown jewel of the company, yet there is a distinct possiblity they may now lose it. Focusing on the right things and the long-term reduces risk, but it never completely eliminates it. Cheers!

GEICO has decided to enter the Massachusetts auto insurance market. Cheers! http://www.gurufocus.com/news.php?id=51765

OEC2000 It's hard to hold a conversation or debate a topic if people keep lobbing out non sequiturs and strawman arguments at you. Yours Jack River That's a two way street Jack. Generally, I find that everyone does a pretty good job of respecting others and debating a topic, while providing real arguments on subjects here. Best advice, engage if you find the discussion worthwhile, otherwise ignore it. Cheers!

Judd Bagley of Antisocialmedia did a terrific little documentary entitled "Short Selling Hedge Funds and The Global Economic Meltdown". Definitely worth a watch. Cheers! http://antisocialmedia.net/

Well, it looks like the rating agencies could not have gotten their timing any better. S&P may cut Berkshire's AAA-rating now that the markets have already tanked 50%, and Moody's cut WFC's preferreds into junk territory now that lending and deposit spreads are the widest in nearly 100 years! Cheers! http://www.marketwatch.com/news/story/sp-says-may-cut-berkshire/story.aspx?guid=%7B2C5C12BB%2DEE6A%2D4308%2D8430%2DF69251F111F1%7D&siteid=yhoof http://finance.yahoo.com/news/Moodys-cuts-key-ratings-of-apf-14744415.html

As a practical matter, am I correct to assume that you think that buy and trade will produce superior returns to buy and hold? If true, I'm curious to know how you arrive at this conclusion. I don't think either one necessarily provides better returns than the other. George Soros, Peter Lynch, James Simmons...Buffett, Schloss, Fisher...there are examples of both types that have provided great returns. My point is that you don't use a driver, when you are sitting in sand forty feet from the hole. More importantly, the overriding point I was trying to make was that instead of taking such an antagonistic approach, the two camps should try and empathise with each other's views. We do come from the same value school, after all, and the only difference seemed to me to be that Jack's camp was happy to accept higher volatility and Sanjeev's camp wanted to try and dampen volatility. Instead of each camp claiming "I'm right, you're wrong. Show me your returns and I'll prove that you are wrong," (which is the direction the discussion seemed to be headed), I was trying to get both sides to see the validity of the other's point of view. I agree with you on this point wholeheartedly! One should quit active management altogether if one cannot determine any approximate valuations when anticipating a purchase. Truth is, every day you hold the stock you carry the same risk as the person buying it from cash. Absolutely correct...outside of the issue of taxes. Sanjeev, this is rear view mirror thinking. I have mentioned this before -- one of the best/honest long term investor's was Bill Ruane. If we were having this discussion at the beginning of 1975 --- you would have been saying the same thing: that Ruane and other long term value types had 'gotten completely hammered'. After all a $10,000 investment in Sequoia on Dec 31/72 would have been worth $6,355 on Dec 31/74. The S&P 500 would have been worth about $6,270. Looking in the mirror, there was little evidence that Ruane's strategy was working at that point in time. However, two years later (Dec 31, 1976) that $6,270 turned into $17,730 ---- the S&P 500 had barely returned to it's value 4 years previous (it would have been worth about $10,675). Hi Uncommon, I'm not suggesting that what Ruane did, or any buy & hold investor does, is incorrect. Not in the slightest. I'm a buy & hold investor myself...through and through. But I bet you Ruane, like many investment managers today, lost a significant number of clients during that period. And that is not his fault, since he was adhering to the philosophy he completely subscribes to...partners be damned. The system works and it works very well over long periods of time. But there is nothing wrong with selling a position, paying the taxes and holding cash until you can find more undervalued investments. If the market is trading at six times earnings, why would you own a business that is valued at twelve times earnings? Buffett was selling investments trading at three times earnings to buy stuff trading at two times earnings in the early 80's. Recently he sold JNJ because he found more undervalued investments. If you want to mitigate portfolio risk, then it is pure folly to hold onto investments trading at a significantly higher valuation than other available investments. If you found a ten-year note selling at a discount that would give you a 20% return over the next ten years, and there was a high certainty of return on capital, why would you not sell Coca-cola to buy it? If you would do that, then why not an equity investment providing the same return? The bottom line is that all great wealth accumulators in this world did so by holding longer term. Some held longer than others --- but no one has proved to make a lot of money by doing quick flips. Yes, there are special situation plays that can be shorter term and have proved very profitable .... but the core strategy for the very successful has been thinking long term -- it's a common theme. I don't disagree with that at all. Although, there have been as many people who have lost great wealth by doing the same thing...think Hank Greenberg right now with his decimated investment in AIG, or anyone who held Citigroup stock like Prince Al-Walid. Those are just a couple of the larger, more glaring and recent examples. Sanj, This may have been said above already. I dont think it is appropriate to handicap yourself by taking the FFH options out of your pre-partnership investment results. They are an intrinsic part of what makes us better than average investors. We didn't just indentify an under priced company, we also leveraged via options to make those mouth-watering returns. If it hadn't worked out you wouldn't have been saying my past results aren't accurate because I lost 100% on my FFH investment. Al, you're correct but it depends on what you are comparing your results to. If you are comparing your numbers against any investor, then fine you can include it. But if you are comparing your results to mutual funds, where they are handicapped by how much they can put into any one idea, then it probably isn't fair. Apples to apples, oranges to oranges. Mark Sellers returned almost 25% a year since 2003, yet he put nearly 100% of his fund in Contago last year and look what happened. Risk of the portfolio go hand in hand with how results are achieved. Cheers!

though, maybe the lawsuit press will be good press. Perhaps! I think that is from the Pabrai school of marketing. Bid on a lunch with Buffett for years, always coming in second, while reaping tons of media coverage. Then finally just bid and win the damn thing, and get more press coverage than you could ever imagine! He paid $600K for the lunch, but he probably had $10M in free media coverage over the years. Cheers!