T-bone1

+1

There was a question or two on GE. Charlie talked about how GE ran the company for a long time like the military, where executives frequently moved from division to division, burnishing their resumes and moving up the ladder. He suggested this probably contributed to a lot of short term thinking and said that he thinks you shouldn't run a company that way. He made the point that at Berkshire, executives usually stay in one business line for 30-40 years, developing both a ton of expertise and experience, but also probably having much better incentives to focus on growing long term value over short-term performance.

St. Joe has some very nice waterfront / beachfront properties already developed. The problem is that NWFL has a LOT of really CHEAP waterfront (some see this as an opportunity.) You can get a smashing pad on the H2O for less than $700K (looking 4 a 2nd home?) I still believe NWFL will eventually get a bump in values (it's too beautiful not to.) 10 years, 20 years WTFK when the area ever gets re-rated... I don't disagree, but do they really own that much developed stuff (i.e. don't they sell the stuff they develop??)

If the big "problem" with St. Joe is that almost all the land is inland, has no infrastructure, and is undeveloped, that should make them more-or-less immune from a hurricane...

I think he has specifically stated (more recently) that it would not necessarily be in the public markets. I know a number of members of this board who have been generating >50% returns on capital they have been investing in less liquid areas (real estate, resources, small businesses, etc.)

+1

Thanks as always to Sanjeev, Alnesh, Norm and the many other people who work to make this such a special and worthwhile event each year! I look forward to seeing everyone again next year and want all of the organizers to know how much their hard work is appreciated - and I know is also appreciated by the great cause they are supporting. Cheers!

Agree, this is a great event for a great cause and we are all lucky that Sanjeev and Alnesh put it on! I'm genuinely puzzled as to why "politics" was listed as a reason not to go, but maybe I wasn't paying enough attention at last year's dinner...

So you are saying it's like having a long-term below-market lease on a K-Mart??? :-)

Orchard Supply? FWIW, Eddie, Bruce, and Tommy Tisch are on the board and all would have to file within three days if they sold a single share. Someone more diligent than myself might be able to tell you how difficult/impossible it is for a board member to synthetically sell/hedge without disclosing, but I would think it is effectively impossible to do that legally with a weird stock like this without disclosure. Judging by the cratering price of the bonds, there might be some fixed income guys shorting the stock to hedge - some of which might not need to get a borrow if they are exempt as market makers (I'm not up to speed on these regs). The group that recently bought Craftsmen certainly saw the books and said on their call that they didn't believe SHLD was insolvent at the time of the sale (for fraudulent conveyance purposes). Between that and Berkowitz making recent purchases of SRG (which would almost certainly go down in price if SHLD filed), it's hard to imagine a filing is imminent. I don't necessarily see an upside case in this stock anymore, but it seems like at least in the short term, the market is being more pessimistic than the facts (assuming the falling stock price is indicating a view that the company will file near-term, as opposed to just ultimately be worthless - which is certainly possible and the much more likely outcome of the two). -Tbone1

Does anyone have any good suggestions of a well-structured and low cost fundamentally-weighted index or ETF? Thanks!

A few anecdotal observations fwiw: In the beginning (market down 20%) it was very easy to double down on things. There was a general perception that the government would step in and that the "greenspan put" protected the downside. Towards the bottom, it was very difficult to double down on things and we (like many value investors) were only allocating funds towards distressed fixed income investments that we were sure were "money good" under a very wide range of outcomes - because at the bottom the range of possible outcomes seemed very wide indeed. I think the Bear Stearns bankruptcy really shocked a lot of people - up until that point in the cycle you could do no wrong buying something at 25% of "tangible book value"... and then a lot of people lost 90% overnight doing just that. That led to the type of mentality that allowed Klarman to buy AIG paper a few days from maturity for half off (doubling his money in a few days). In general it sucked... the opportunities were great and we made money coming out of it, but it is a whole different world when things go down 80% (once in a lifetime bargain!!!) but you know they might go down 90% (you just lost half your money in a month!!!). Given the above, I'm not sure how to really do things differently. Knowing what I know now, I think I would still take the safe 40% IRR in fixed income, but possibly adding 10-15 1% positions across industries in highly distressed equities (knowing they might go down another 50% the following week).

FFH is much less hedged currently than they have been in the past - particularly with regard to the massive fixed income "hedges" they held in 2008. Even in 2008, the stock went down initially even as the intrinsic value was soaring - you would have been better holding cash.

And it looks like ESL just distributed 1.8 million shares of SHLD to redeeming partners: https://www.sec.gov/Archives/edgar/data/923727/000119312517007901/d280243dsc13da.htm

The short interest is unsurprisingly up about 1.5 million shares (as of December 30th) to 16,593,280... ...just doing my part to get this to 900 pages. T-Bone1