Parsad

The problem imo is very simple and clear: you are going on and on comparing Biglari to Buffett, he instead seems to suggest “if you are looking for the next Berkshire, look somewhere else!”. Then why milk the whole Buffett philosophy and image, right down to even the look and typeface of his annual report? But not live up to the ethics and shareholder-friendly standards set by him. Who knows, perhaps his "look somewhere else" statement should be taken as a precaution, rather than a goal or objective! Cheers!

The problem imo is very simple and clear: you are going on and on comparing Biglari to Buffett, he instead seems to suggest “if you are looking for the next Berkshire, look somewhere else!”. Biglari knows very well that in business each situation is different, and the right course of action each time is different. Buffett never had to deal with control. Munger referred to Buffett in the early days calling him “the serial acquirer”, but evidently to buy a very large percentage of Berkshire back then was not so expensive as to buy the same percentage of BH today. There is simply no way Biglari could get control over BH buying its equity today. Yet, control is crucial. Anyone who runs a business finds out pretty soon how crucial control actually is! And, as I have always said, I want him to be in charge and to feel safe. The less time he worries about his position and about someone buying a lot of BH and starting questioning his business decisions and actions, the more time he can devote to enhance value. Gio The problem imo is very simple and clear: you are confused on the difference between the owners and the management. You do understand what a shareholder is right? Each share of a class gives equal rights and equal control. IMO anyone trying to gain control of a company without having majority ownership would be basically stealing shareholder rights. The business belongs to the shareholders NOT THE MANAGEMENT. Management is in charge of the company but The shareholders are in charge of Management. Management is not supposed to be so "safe" that the owners (shareholders) cant remove them or are forced to pay to remove management. +1! And "safe" do what? Implement compensation packages, agreements, share classes, trademarks, name changes, etc?! He would be "safe" if he focused solely on the management side, and less about his own security. Cheers!

LOL! Not unlike Buffett, it wasn't GEICO that he managed to control, but Berkshire Hathaway. He retained the name to remind him what an awful purchase it was. Our circumstances are very similar...it wasn't Russell Breweries that we managed to control, but a distressed business where intrinsic value was considerably underwhelming like Berkshire in its original state. We will keep part or all of this company's name in the future to remind us of the same thing. I will give you one anecdote that will illustrate the culture we are trying to create. I've refused a CEO's salary, because I denied our controller a pay raise. Instead, I've told the board that I would like to get paid $500 less than our controller annually, and will not take a pay raise until he gets one. I will give you one further anecdote to illustrate the type of people we are trying to retain and hire. When I became involved with the company's finances a few months ago, our controller had not been paid for 10 weeks...in fact, none of the core employees had been paid for 10 weeks, but they kept on working! We've caught up on all of their salaries after I became involved, and retained those employees. They could not be happier and morale could not be better. I told them I cannot believe they did not leave and promised them they would always be paid every pay period going forward. Cheers!

Hey shalab, Interesting proposition. Why would you want Biglari to give up CEO to be CIO? While I wasn't initially happy about the trademark agreement, I believe it serves his long-term value enhancing plan well. Most investors want results today, but to maximize value can take a while. This allows him to implement and work his plan without disruption from outsiders. Biglari is the reason SNS has become a better brand and why BH is doing what it's doing. I view it similar to the shareholder proposal to have BRK start issuing dividends. Doing so would kill BRK's value enhancing strategy of retaining all earnings and buy operating businesses/ securities. Thx for sharing! FC Biglari has added tremendous value as CEO...CIO would not make any sense. But don't kid yourself about why the trademark agreement was put in place. It has nothing to do with long-term enhancing value and everything with entrenching himself. The greatest investor in history, who knows everything about enhancing value, never had such an agreement...nor would one ever cross his mind. Even Buffett cannot put his ego ahead of his humility, no matter how much it might improve the "Buffett" brand. Cheers!

All of the above! Will be open to Canadian and U.S. accredited investors. There is a secondary option for international investors through a capital raising we will be doing in Hong Kong...I'll explain that at the time. The private placement will get you in at a set price...the same as us and all other existing shareholders. You can buy in the open market as well, but it is unlikely you will get this price, since we and other shareholders will probably buy any stock available at the private placement price. We may increase the private placement size, as I'm being overwhelmed by responses since last night. I've got you guys all in order and the documents will be sent in that order, but it may take me a few days to confirm your email, as I'm tied up on a number of things as you can probably understand. Cheers!

Public company will be investing directly in Bermuda vehicle. MPIC Funds will be the largest shareholder in the public company. All acquisitions of private enterprises will occur through the public company, while MPIC will continue to manage assets as it does. At some point, Corner Market Capital (MPIC's general partner) will be roled into the company like Hamblin-Watsa was in Fairfax, and it will become another cash flow machine for the pubco. Already a public company. Press release will go out in the next couple of days. Will move to a larger listing in the New Year. Cheers!

Dear boardmembers and readers of Corner of Berkshire & Fairfax: Over the next few weeks, I will be providing significant information about our new public company vehicle to interested parties. Several years ago, Prem told me over lunch to just start my fund with whatever I could raise. Alnesh and I were fortunate enough to raise four hundred thousand from three unknown, but very trusting partners, and so we slowly but surely started the MPIC Funds! All three partners are still with us, and one of them is our director Andrew Cooke! Now over 8 years later, and ironically at the same time my friend Mohnish Pabrai is launching his own but far larger vehicle, we have a confluence of activity that has lead to this. The targeted distressed company is in turnaround mode where we are restoring cash flows from a portion of its business that was inactive. We have spent several months implementing absent internal controls, that were simply washing the existing cash flows into oblivion, rather than creating any value for shareholders. A complete change in culture, the board and management was required. We are also set to participate as one of the largest investors in a new Bermuda reinsurance vehicle, with at least one board seat, and it will be run by a well-known insurance executive and a very talented actuary. We've been fortunate enough to associate with good people, who complement the deficiencies within our own skillset. At the same time, we are in the process of preparing a private placement for the company to increase investment capital. The first step will be to issue rights to existing shareholders to maintain their ownership. After that, the remaining participation will come from MPIC partners who will be given the first chance to invest directly into this company, and any interest by those that contact me and ask to be put on our information list when we finally disclose all of the details. I've been very vocal about management and corporate behavior in the past. I assure you that this vehicle will be one of the few to live up to the ethical standards of those managers and mentors who we hold in such high regard. Cost efficiencies, return on investment, and a solid balance sheet will be the long-term objectives as we seek out investments and businesses with a margin of safety. We will walk the walk as we have with our funds, and we promise to talk the talk...no surprises in compensation here! And the company will never carry my name! Finally, the MPIC Funds will be the largest investor in the company, and we expect our partners to do very well over the long-term by leveraging captive capital through this enterprise. Our office address will be changing over the next few months, as I will be at the new company's head office virtually every day. I thank you all my friends, partners and board members! Sometimes you are fortunate enough to get to do exactly what you want, and I've been blessed with that luck for the last few years. Details are forthcoming, but these days...as we've often heard others say...I truly tap dance to work! If you are interested in receiving information about the company and private placement when fully drafted, please email me at cornermarketcapital@gmail.com. We hope to have the private placement fully closed by the end of November. Sanjeev Parsad

Article on China's shadow banking system: http://www.ft.com/cms/s/0/08036554-2f62-11e4-a79c-00144feabdc0.html Cheers!

Nothing new, but always fun to see the size and scope of what he's accomplished. Cheers! http://finance.yahoo.com/news/warren-buffett-facts-about-his-wealth-193006548.html

He looks like he's lost a fair amount of weight since I last saw him in April. Good for Mohnish! Interestingly enough, Allan Mecham and Ben Raybould are big cyclists too, and they are planning a trip to NYC to ride with a bunch of people in October! Cycling has regained its 1970's & 1980's popularity. Cheers!

Enjoy! Cheers!

On Sept. 13th, Mohnish and a few of his friends, are going to rendezvous on their bikes at Bryan and Peters Canyon Trail (at the lone park bench on Peters Canyon just south of Bryan) gin Irvine at exactly 9:00 AM. Then they will bike to the Starbucks at: 3601 Jamboree Road Newport Beach, CA 926602961 (949) 474-0839 They hope to get there by 9:45 AM, where they will have some refreshments and start heading back at 10:45 AM. Anyone is welcome is join them on the road bike at the Bryan and Peters Canyon Trail or for the non-bikers, can just meet at Starbucks. Cheers!

Wow, he got out of the tub pretty quick! Nice city views from his washroom. Cheers!

Hi Folks, How many would be interested in a breakfast meet-up the morning of the California Pabrai Funds meeting...September 13th? We would probably hold it somewhere in Newport. Post on here and let me know if you would like to meet-up. Cheers!

Does that mean Buffett will be in Mayweather's corner next fight with Justin Bieber! Bieber might corrupt Buffett! ;D Cheers!

But even that doesn't matter because most online stores will deliver for low-cost and often free, as quick as transferring from one store to another for on-site pickup. I ordered a printer for the office from Staples...the cost was the same or cheaper than anywhere else...they delivered it for free the next day. What is Sears going to do that will be so revolutionary to beat Staples? Or Amazon? Or even Overstock.com? I was Sears' core customer 15-20 years ago...I never go there anymore...many of the locations that were convenient have closed. Their inventory levels aren't competitive, the shopping experience is poor, customer service and staffing is low. The only thing they can compete on relatively well is price, but Loblaws, Walmart, Staples, The Brick, HBC will all match or beat them. Thus the losses and misfortune you now see at Sears Canada...which mirrors what has been happening in the U.S. for even longer. Cheers!

LOL! It's not the same. You cannot get the money out when you need it, whereas if you paid off actual debt, you could re-borrow that money or issue new debt. How hard is this for people to understand? Paying the pension from borrowed funds is not the same as paying off debt (notes, preferreds, convertible debt, debentures, lines of credit, revolvers, etc) in terms of liquidity for the company. Cheers!

Assume you have 100K in cash and a house worth 500K with a 100K mortgage on it. So, your net worth is 500K. Now, you take your cash and pay down the mortgage with it. Has your net worth changed? Have you suddenly "burned" 100K? No! Your net worth is still 500K! "Paying down the mortgage" is exactly what ESL is doing by paying down pension liabilities. He's simply shifting money from one account into another. And therefore it's simply wrong to say that SHLD is "burning cash" by funding its pension liabilities. That's not what they are doing...and that's my point. The correct example would be that the house is worth $500K, has an existing $200K mortgage, an existing $100K line of credit, and a $100K lien on the house by the subcontractor. They added another $100K to the line of credit to pay the $100K lien on the house...not pay down the mortgage! So while the home value has not changed on the financial statement, that is $100K out of the homeowner's pocket unless the subcontractor decides there was some excess funds returnable to the homeowner. Cheers!

http://searsholdings.com/invest/docs/2014_Q2_Call_transcript.pdf Can Eddie take money out of the pension plan to pay down the revolver? Cheers! Yes if interest rates go back up the pension could become overfunded in which case he can. He can sell the pension plan to an insurance company. But if interest rates stay the same for 3 months, six months, a year, two years or five years, then he can't, correct? And if the pension plan remains underfunded, how much would it be worth to an insurance company? I'm just pointing out what a crock of shit the management was trying to feed investors on that conference call. Cash is cash...debt is debt...and pensions are not simply another form of debt. If you borrow from your personal line of credit and put it into your Roth/RRSP, you can withdraw it from your Roth/RRSP, regardless of interest rates and pay down the debt. This is not the same thing with a company-funded pension plan. Cheers! This is really fuzzy thinking. You confuse losing liquidity with burning money. 1. If he took the money from the revolver and paid back bondholders, how would he get the money back from them to pay down the revolver? 2. Would you consider this money "burned" because he can't get it back? No, I think you're using the same argument that many use to support EBITDA. As if ordinary expenses in the course of business, be it one-time or continuous, don't matter. When the cash is gone, it's gone! Whether he pays the pension plan or bondholders, there is less liquidity available to support the existing businesses which are running losses. Cheers!

http://searsholdings.com/invest/docs/2014_Q2_Call_transcript.pdf Can Eddie take money out of the pension plan to pay down the revolver? Cheers! Yes if interest rates go back up the pension could become overfunded in which case he can. He can sell the pension plan to an insurance company. But if interest rates stay the same for 3 months, six months, a year, two years or five years, then he can't, correct? And if the pension plan remains underfunded, how much would it be worth to an insurance company? I'm just pointing out what a crock of shit the management was trying to feed investors on that conference call. Cash is cash...debt is debt...and pensions are not simply another form of debt. If you borrow from your personal line of credit and put it into your Roth/RRSP, you can withdraw it from your Roth/RRSP, regardless of interest rates and pay down the debt. This is not the same thing with a company-funded pension plan. Cheers!

I know Ericopoly loved the Lego Movie...Cheers! http://finance.yahoo.com/news/american-dream-illustrated-with-legos-brookings-200611923.html

http://searsholdings.com/invest/docs/2014_Q2_Call_transcript.pdf Can Eddie take money out of the pension plan to pay down the revolver? Cheers!

Hi Laxputs, Already an existing thread, so I merged yours into the original. Cheers!

I'm a little surprised by this comment coming from somebody I hold in high regard (especially given the real estate estimate quoted above). Do you mean bankruptcy? If so, how did you come to that conclusion? I think that is a highly remote possibility to happen anytime soon. No, not bankruptcy. Relevancy. Sears is very quickly going to become irrelevant even in markets where it currently is the main storefront. If you aren't getting shoppers in, then they will go somewhere where the selection, prices and experience is better. Sears management is killing off it's own stores...and this process is speeding up. Cheers!

The real estate has value, but they are just burning through cash. They aren't exploiting the value of the real estate fast enough...thus no buybacks...no excess cash for other investments. They whittle off enough real estate or other assets to plug holes. The one thing that changed my mind about the company was finally the management. Eddie has been moving way too slow for years, and I thought they were going to move faster in the last year from things they were saying and doing, but I was wrong. They spun off a couple of things, sold some real estate and that was it. You look at what Nordstrom's is doing with the same property in downtown Vancouver that was previously occupied by Sears, and you will understand that Eddie does not understand retail at all. Nordstrom's and Cadillac Fairview have totally transformed the same property...it's gorgeous and will be a shopping centerpiece attached to Pacific Center mall. Nordstrom's will occupy three floors, while another three floors are already 92% leased out to Microsoft, Sony and a top Canadian law firm. Why couldn't Sears do this...it cost about $150M...that's it! Cadillac Fairview would have eaten half the cost, while Sears could have subleased half its space and reinvented itself...which is what retail is all about. Eddie is running Sears like the dying vehicle that it is...don't spend a dime on stores...and reroute excess cash. But there is no excess cash to reroute from the stores...in fact they are consuming huge amounts of capital. The excess cash is tied up in real estate that isn't being exploited. So you have this blackhole retail business sucking any excess value out of the system! Cheers!