Parsad

Watermelon Webworks updated the SMF software on the weekend, but they didn't install the modules. Once they installed the modules, for some reason the ads started duplicating. They are working on it as we speak...just taking longer than expected. Should be fixed some time today hopefully! Cheers!

You guys...don't read too much into the investment. This is as much an investment to see exactly how Kingswood operates, as much as it is an investment with a respectable rate of return we expect if the environment stays the same or deteriorates slightly. How Kingswood executes will decide our relationship with them long-term. This is a small investment and we may do a couple of these with them staggered over 18-24 months or so. Overall, I've thought real estate in Vancouver has been in a bubble for years, but like any bubble...it can continue for many years past common sense! We are preparing for the current environment, as well as what I expect to happen in the future at some point in time (just don't know when). Our belief is that a partnership with Kingswood (presently as an investor, possibly as an equity stake in the future) would be good in this environment and even better if things become far cheaper. Real estate when done right can be a very good investment long-term, simply due to the underlying leverage involved. Finding people who really understand real estate through cycles, like we understand equities through cycles, is tough. You guys should view this not that differently than Fairfax's investment in Kennedy Wilson...a long-term partnership with some smart people with very good skill sets. Cheers!

Watsa! Rawraw, if you are posting, then you've already registered and it was approved. You don't need to register again. Cheers!

Answers to your questions: Yes, ILS market is one of the fastest growing sectors of the insurance market. Completely uncorrelated to other asset classes. Yes, there is some risk to the investor, but remember that the ILS portfolios Sequant designs have multiple (generally 10-15) reinsurance contracts so that they are not terribly correlated. Not unlike say buying a basket of stocks, mixed duration and types of bonds, etc...you can have losses in one or two of the contracts, but losses in all is very unlikely. In terms of unloading the risk, the cells are fully collateralized, and are not held by Sequant...so no counterparty risk at all to Sequant...we are essentially the broker. Yes, there are multiple types of insurance linked securities out there, and you can buy counter-party insurance for those securities...catastrophe bonds are an example of existing ILS's. But no one is doing what Sequant is doing, where the portfolios are in investment cells, fully collateralized, and eventually will have a tradeable platform in the future, not unlike investors simply buying ETF's on exchanges. Cheers! Forgive me if this question is a little basic but for an investor buying ILS's, do they have a choice in which risks to participate (i.e. construct a portfolio of just say hurricane related cat insurance) or is it just a diversified basket approach. If the latter, can the investor view the component insurance contracts of an ILS to make comparisons between different ILS's? No problem! The answer is either. Sequant can assemble a specific basket for you, or if you want specific exposures, they will customize it based on your request. In terms of the components and inspecting them...Redskin212...know the answer? I suspect there is a certain amount of confidentiality around the insurer that is looking for reinsurance, so the identity would not be provided, but the quality of the insurer (AA, A, B, etc) could probably be disclosed. Cheers!

Answers to your questions: Yes, ILS market is one of the fastest growing sectors of the insurance market. Completely uncorrelated to other asset classes. Yes, there is some risk to the investor, but remember that the ILS portfolios Sequant designs have multiple (generally 10-15) reinsurance contracts so that they are not terribly correlated. Not unlike say buying a basket of stocks, mixed duration and types of bonds, etc...you can have losses in one or two of the contracts, but losses in all is very unlikely. In terms of unloading the risk, the cells are fully collateralized, and are not held by Sequant...so no counterparty risk at all to Sequant...we are essentially the broker. Yes, there are multiple types of insurance linked securities out there, and you can buy counter-party insurance for those securities...catastrophe bonds are an example of existing ILS's. But no one is doing what Sequant is doing, where the portfolios are in investment cells, fully collateralized, and eventually will have a tradeable platform in the future, not unlike investors simply buying ETF's on exchanges. Cheers!

Guy will most likely be at our dinner again next April. I encourage you all to meet him and ask him all about insurance. He's one of the most knowledgeable people I know in the industry, and you'll see why we jumped at the chance to build Sequant Re with him! He would fit in perfectly at Berkshire or Fairfax...glad he picked us! Cheers!

Looks like a capital commitment to help grow the business. Probably a minority stake and start to get the brand across Canada like Vij's. I sure hope they have gift cards at next year's AGM for the McEwen Group...their lobster grill cheese at Bymark is amazing! ;D Cheers!

I would suggest that CONeal is absolutely correct here! I was asked to speak to some engineers at Google, and I said that I don't deserve to speak at Google until I've done something noteworthy. I've seen other managers write books about how to be like Buffett, yet their funds or businesses flounder or fail. I've seen a manager I praised highly fall mightily in terms of ethics and respecting shareholders. Shareholders will see us announce many new things over the next 5 months, next 5 years and as long as I can run the company. You are just at the very tip of the beginning...the 1st batter, of the 1st inning of a 9 inning game. Let's get through the first few innings before you think I deserve any sort of section for Premier. I'll do my best to get one though! ;D Cheers and thanks for your support!

No, our website will be relatively cheap...perhaps cheap looking if that's what it looks like! :) The links to the subsidiaries will have their higher quality corporate sites, generally done by 3rd parties. No reason to spend a lot of money at the corporate holding company level. If you come to our office, Cystic Fibrosis has a prominent sign on the wall that can be seen from the elevator. Unless you looked at the building listing on the main level and our floor, you would not know we are even here. The only thing I just did a couple of days ago, is to get our logo etched in frosted glass on our door, and the Clinic logo will be etched on its door...but both are relatively low key. Even if you walk up to the head office outside (see picture attached), you'll see four prominent signs of the tenants in the building...Garda, Monarch House, Dollar Tree...Premier Diagnostic Center! Not Premier Diversified Holdings. I don't care if people can't find us, but I want them to find the Clinic. Many of you may wonder what we are modelling ourselves after...Berkshire, Fairfax, Markel...the model is really Leucadia. We will buy undervalued assets, preferably at distressed prices, and may have to turn them around. We will keep a very low profile, as lean as we can at head office, and we'll be as upfront as we can with you all, without tipping our hands. We won't be a glamour stock, but one that will hopefully make a lot of money for you over time. Sometimes you'll wonder what we are doing, what is wrong with us, or why did we buy that. Always be assured that we are weighing risk and reward, and will make some concentrated bets from time to time. Unlike Berkshire, if the economics of a business change, we may sell. But if we own 51% or better, it makes good money, we will keep it as long as we can. We like tax losses...we have a pile of them...we plan to maximize that asset. So we worry about those things, and we probably won't spend money on a better corporate website. Here are some nicer sites that are worth visiting: www.petscan.ca www.sequantre.com www.russellbeer.com www.fortgarry.com We're working on some more nice sites for our shareholders to visit over the next 6-12 months! :) Cheers!

Junto, The emotion is there because it is mind-numbing when people speculate on things without knowing what is happening underneath the hood. Without discussing anything not already in filings, press releases, monthly filings on the CSE, etc, here is what has happened in the last 12 months...and over 90% of it in the last 9 months: - The Burnaby Clinic was completely shut down and behind on all payables by 10 weeks, including employee salaries...that was all taken care of - The company's rent was six months behind with the bailiff picking up the rent check...that was taken care of - The Burnaby Clinic hired a full-time tech as we started again from scratch with a tattered reputation - Completed the Asset Purchase Agreement for the Clinic - We did a huge private placement at zero cost other than legal and filing fees - Huge undertaking of properly documenting the company's operations, corporate governance policies, internal controls, missed regulatory filings, missed financial filings and tax filings - Hired a new auditor - Changed the company from a medical issuer to a holding company/investment issuer - Replaced half the board of directors - Head office hired a company receptionist/admin...we pay about half the salary, the other half is covered by our sub-lease Cystic Fibrosis Canada - Notice how payables are down $700K in the last 9 months...part of that was roughly 7 significant settlements, including one for over $430K in the last quarter that was settled for 43 cents on the dollar; settled with the former CEO; settled with Siemens; dealt with HK tax summons - Complete revamp of how the financials are presented to shareholders, including the MD&A and all disclosures - Push to grow China business, including hiring a highly qualified General Manager and implementing the same controls and policies as head office - We launched Sequant Re from scratch...literally zero - We made a bid for control of Russell Breweries, including significant legal, regulatory and filing costs These are just the major issues...doesn't include many of the more trivial minor issues that still have costs associated with them. So let me ask you Junto, with all of that happening, how much do you think are one-time costs in legal, consulting, professional fees, regulatory filings costs, press release fees, Computershare, Broadridge fees, transitional accounting and audit fees, printing costs, settlements, etc? Any idea? Can you pinpoint that number? Of course not. Not without sitting at my desk or being a fly on the wall in my office. In terms of Sequant Re, it is a complete start-up from scratch. We are essentially building a reinsurer/ILS entity from a standing start. And remember, Bermuda is not cheap! You have to hire staff, pay them adequately, subsidize their housing, set up an office, equipment, software, legal (enormous), statutory and regulatory documents, filings, website, advertising, travel, meetings, etc...the list is endless. We aren't building some half-assed $5M insurance business! Ask yourself how long it would take any of Berkshire's or Fairfax's insurance businesses to have launched from scratch? Sequant will run losses until gross premiums scale to break-even. I don't know if you read Mohnish's latest letter on Dhandho, but Stonetrust had a $4.2M underwriting loss last year. We are trying to build an insurance business from scratch that will do more in premiums than Stonetrust in less than five years for what Stonetrust lost in one year! Stonetrust also is replacing their in-house actuary...showing how tough the insurance business is in terms of recruiting talent. We have two of the best actuaries in the business already in-house in Guy Cloutier and David Lalonde! These guys are working relentlessly to build this out and scale the business. Like Berkshire, Fairfax, Markel, Leucadia or any other holding company type of structure, we have built-in monthly fixed costs at head office...salaries, rent, benefits, corporate costs, accounting, filings, press releases, listing costs, legal, etc. This is fixed at a certain amount, and our operating business net revenues and investment income (gains, dividends, interest) have to cover those costs or preferably surpass them. For a very small company, that is tough to do, but I've always had people count me out. Even long-time friends and partners close to me had doubts about whether we would succeed or not...that was very disheartening and disappointing! Investors should be focused on two things: Is our net operating revenue growing when one-time costs are removed? Is book/value per share increasing over time? As one-time costs dissipate and our operating businesses continue to grow, we expect that to happen. Take a look at our growth in revenues at the Burnaby Clinic. That business has about a 60% gross margin, but 28% net profit margin now at the levels it is running at! It's not even running at 40% of capacity yet! This was doing nothing last year and had a massive burden of payables. It's reputation was a laughingstock! Recently, we were the only clinic in Western Canada selected for an Alzheimer's drug trial. We have about 70-80 different doctors referring to us now with patients from BC, Alberta and Vancouver Island. I would encourage our shareholders to talk to our employees, directors, business operators, and even service providers and ask them where this company is today compared to last year. And where they think it will be five years from now! Personally, the best thing I could have done for myself and Corner Market Capital was to invest in Premier...even though it was never planned to pan out this way in terms of our vehicle. I cannot explain how big an advantage captive capital is, and both our shareholders and Corner Market Capital partners will benefit enormously from that over time! Cheers!

Ah, what "optics" and what "lessons"? Stock price will fluctuate on supply/demand and how markets value the company. We have no control over that, nor is there any lesson to be learned. Your orders are not being filled because the sellers are not willing to sell below a certain price. The quote is irrelevant...orders are filled based on the ask. As for the Russell deal, there was nothing fuzzy about the "optics". It was about as clear as we could make it without meeting each shareholder and talking to them for an hour! The tender price if completed would have been very good for Premier shareholders, and the price was by far the best offer Russell had. We're not going to blow a wad of shareholder capital to win a war that destroys the underlying asset or it's intrinsic value. What would we gain from that? Our egos never get in the way of doing the right thing. Cheers! Optics - Like 5 posts above our posts is an explanation from you about the deal. Hard to see why that would be needed if everything was super clear and there were no optical issues.. Again to be clear - I don't think there was any actual unfair dealing. I do think there was the appearance of potential issues that you explained satisfactorily. Heck, I am looking to buy more reflecting my trust in your stewardship of investor capital. I was just conjecturing as to why the stock price had been drifting so much lower when I referred to optical issues scaring off some holders but you are right it could have been anything. Regarding lessons - How far management will go to keep their position entrenched. Also would have thought going through the tender acquisition process would have been somewhat educational in itself, but maybe you already knew all there was to know about a hostile tender offer to take over a public company.. I suspect based on some of your other posts, your investment hero's and reputation on this board that you actually learned lessons from the process. Either way I phrased it poorly - Apologies if it came across the wrong way. Didn't mean to imply you did something shady here mate. No worries! There's only so much we can put into filings, financial notes, MD&A's, before thinking it's overkill. So what I can clarify, I try to, thus the post. One thing I will say, and this isn't a reflection on you, but really all investors including myself in the past...there is so much that armchair quarterbacks do not know about the underpinnings of the day to day operations of any business, acquisition, etc. Even many boards have no clue about all of the company's inner workings unless they are directly involved with management on a weekly basis. When Buffett says he's a better investor because he's a businessman, and a better businessman because he's an investor, it is absolutely true. A lot of times, shareholders formulate theories from bits and pieces of information or conjecture, when there is much more going on that it is at times indescribable in a couple of paragraphs in a press release or even a page of the MD&A. It would literally take an hour of sitting down and talking to you to explain everything that happened during the tender process...many regulations, securities laws and even actions that are absurd, but we had to deal with. And then play out the various scenarios under that environment, and their various outcomes, to come to the best possible risk/reward result for shareholders. Far more detailed and complex than simply running a discount cash flow statement and buying with a margin of safety. Cheers!

Ah, what "optics" and what "lessons"? Stock price will fluctuate on supply/demand and how markets value the company. We have no control over that, nor is there any lesson to be learned. Your orders are not being filled because the sellers are not willing to sell below a certain price. The quote is irrelevant...orders are filled based on the ask. As for the Russell deal, there was nothing fuzzy about the "optics". It was about as clear as we could make it without meeting each shareholder and talking to them for an hour! The tender price if completed would have been very good for Premier shareholders, and the price was by far the best offer Russell had. We're not going to blow a wad of shareholder capital to win a war that destroys the underlying asset or it's intrinsic value. What would we gain from that? Our egos never get in the way of doing the right thing. Cheers!

This is the purpose behind the whole section we have on books. I would recommend that you post a book, analysis of the book, and recommendation individually in that section. That way it is far more useful and is permanent. This thread will get lost in a few weeks and will serve no purpose. Cheers!

He changed my whole life, as well as the lives of many of my friends....what more can I say? Cheers!

Ah, yes...Russ Hannahman! Cheers!

Hi Wesco, The date probably won't be announced for a few more weeks. Most likely late February or early March. Will provide the exact date towards the end of September or so. Cheers!

Nothing right now, but over the summer I have enjoyed 5 Montecristo #5's I bought in Hong Kong Duty Free in late June. Really were fantastic cigars. Now I won't have any until I go to China again next year and bring some back. Cheers!

I was at the AGM about 18 months ago and argued that cutting the dividend only made common sense. It seemed to me that management agreed, but they were being held hostage by two institutional investors. I got into an argument with one of the institutional idiots, but the board ending up siding with him. I sold our shares over the next week. Now they go and cut the dividend after wasting 7 quarters of dividend payments that they could have retained. You cannot have good management and governance, if management is catering to the whims of a couple of large shareholders, when that capital could be used to turn the company around. Cheers! I remember a few years ago you had a post asking people to guess the best idea at that time. People said it was GVC. It is a bit disappointing that this didn't work out. But it happens. It is impossible to win every investment. :) I think it had the potential to be a very good investment at that time, but unfortunately I couldn't persuade the board to consider something as simple as a dividend cut. That would have been followed by significant asset sales, focus the remaining business, and turn it into a holding company looking for better, growing businesses. But if management agrees with an institutional investor who wants the dividend to remain in place, and modest changes quarter after quarter...well that's a problem. Maybe Tim has them realizing that changes have to come quicker now...I don't know. But they weren't interested in that 18 months ago. Cheers!

+1! I was a bear when Jeff Rubin was predicting and writing about $200/barrel oil. People told me I was wrong then. Today, I'm watching people pour out of oil, and it has done nothing except to get me titillated and excited. If you think oil will be permanently at $40 or less per barrel, you are out of your mind. Cheers!

Yup, had two mojitos with dinner and then had an espresso with dessert at CinCin's. My dinner companions had two Negronis, four G&T's, a mocha, cappuccino and Americano. There you go! Cheers!

I'm going to dinner and drinks in the next half hour. Will let you know what I consumed later tonight! Most likely a mojito or OJ/Grey Goose. Cheers!

I was at the AGM about 18 months ago and argued that cutting the dividend only made common sense. It seemed to me that management agreed, but they were being held hostage by two institutional investors. I got into an argument with one of the institutional idiots, but the board ending up siding with him. I sold our shares over the next week. Now they go and cut the dividend after wasting 7 quarters of dividend payments that they could have retained. You cannot have good management and governance, if management is catering to the whims of a couple of large shareholders, when that capital could be used to turn the company around. Cheers!

Smart, frugal athlete...he's a baller who plans on not being broke after the NFL! http://finance.yahoo.com/news/308-pound-nfl-player-explains-184313572.html Cheers!

No. Ben cannot be an officer of the company. In fact, no Watsa family member will be an officer of Fairfax. In Prem's demise, The Sixty Two Foundation controls the multiple voting shares, but there are safeguards in place so that no single family member, or even the entire Watsa clan, can influence any single decision. Just cannot happen based on how it is structured. Cheers!

Hi Everyone, Just wanted to thank you for any support you showed or planned on showing for the tender! I cannot discuss things too much, but I wanted to give a bit of clarity on how things transpired. We had to conduct the private sale between MPIC Fund I, LP and Andrew first, because of archaic U.S. regulations and exemptions that would have limited us from conducting the transaction after the tender. Even though Russell is a Canadian security, U.S. securities law came into effect due to MPIC Fund I, LP's ownership. We also had every intention of completing the tender at the same conversion, but the chances of us defeating the cease trade order and having the shareholder rights plan removed were low based on Canadian securities case history. This was also not going to be a cheap endeavour for Russell shareholders and management was going to war...probably would have dragged out well past this year's AGM in terms of things being stuck in court. They had less than half a million in cash, and they would have burned well through that if we pushed it. While we certainly would have liked to increase our ownership of Russell, we decided that the long-term goal of increasing shareholder value for everyone by being on the board and facilitating that any way we can, was the better alternative than destroying shareholder capital in a lengthy proxy. This also forces Russell's existing management to prove their value over the next 16 months. Once again, thanks for your support and we will do everything we can to increase shareholder value at Russell and Premier! Cheers!