Liberty

As long as Landquart breaks even, I'll be relatively happy. I've given up trying to model it because who knows if the 13k/t revenue assumption is anywhere close to realistic since we don't know the mix that they had and how much the reinstated big order will provide (or the DuraSafe Swiss Franc order after that, or other things they have in the pipeline). On this one I'll just wait and see. It's not like I'm paying for it at current prices, and I think that if it had little chances of contributing it would have been shut down or sold by now. It is definitely the worst performing asset that they have so far. But I'm not convinced it can't be turned around. That's definitely an important point in the investment thesis and each investor will have to decide what their confidence level is with regards to this. Depends what the costs of hedging were. If they were very high, it might not have been worth it. Ditto. As in the EBIX thread a while back with Hester, I welcome contrary opinion and appreciate the discussion.

You beat me to it. I wouldn't invest in "the forestry sector", but FTP isn't the forestry sector anymore than FairFax is "the insurance sector".

So I'm listening to the Whistler talk again to refresh my memory, and a few things stood out so far: Thurso cogen should produce about 20m EBITDA/year. Nice stable source of cash, not cyclical. At the current stock price, just that cash will probably be worth a good chunk of the market cap (though of course we shouldn't double-count it if we use it on the other side on the DP production costs). If I heard right, since they bought Dresden it went from 1m EBITDA/year to about 30m EBITDA/year. Chad talked about DP spot prices, and how at the time there was some DP for sale at 1050 that was having a lot of trouble moving, but some other higher quality DP from another source was sold out "through march" (a few months ahead at the time) at a price of 1280. Looks like the "30 stringent criteria" for DP matter a lot to end users, and they won't just take whatever's cheapest if it's not what they need to fit their recipes or keeps their processes at optimal efficiency. So far the signs are good about Thurso producing some of the best DP in the world, and hopefully that turns out to be a nice competitive advantage (same is predicted for LSQ, but too early to tell) until they get certified for specialty pulp (which would be an even stronger moat and provide a few hundred $ more per ton). He says his end customers are ready to pay up to 280 in spread between low quality DP and high quality, with the alpha being the main factor (and of course their long-term contracts take quality into account, not just the basic spot price). I didn't remember that one: They've been "approached by viscose producers to set up operations in China." Seems like that's part of the reason why they are so confident about the cost structure in China; they did their homework to see if it could work for them... Says they believe cost in China for DP is probably close to 1300. Something else I had apparently forgotten: The next Swiss Franc, which was delayed, will apparently use DuraSafe. Should be some pretty high-margin production for Landquart, though probably not huge tonnage. You can even see what they'll look like here (just do a search on the page for durasafe): http://www.polymernotes.org/country_pages/che.htm Glad I listened again. It was good to refresh my memory, and if anything, I actually feel even more confident in the jockey than I did this morning when I increased my FTP sharecount by 80%.

Those are good points. No plan survives contact with reality intact. It's weird that on p.17 of that presentation the delivered cash cost seems to be 600 while on p.19 it's 536. Not sure if it's an error or what I'm missing.. In any case, I feel that for what I paid for, I'm getting a lot in return and have a very good chance of doing quite well, and that for the level of complexity of what was achieved, and the terms that were had from all the stakeholders, things went pretty well despite the increased costs and delays (some of those will also fall on competitors). There are some things that I'm not happy about (many of them out of management's control), but overall, there are a lot more things to be happy about IMHO. As I said elsewhere, it would have been great if there had been no delays, no cost overruns, etc. My average cost might have been in the 40s or 50s or 60s (if I had bought at all) rather than in the low 20s, though, so in the end, 2-3+ years from now, I'm not sure I would have done much better if it had all been clear sailing. And I think they used 1200 and 1600 in the 2011 presentation because by then they had their long-term contracts using for most of their production using those prices, and because they seem to believe that 1200 is a mid-term floor and 1600 is probably about as high as things could get over any period of time (?).

Not sure how useful that info is, btw. Landquart's product mix and capacity was very different at the time.

I'm not sure I follow you. Thurso hasn't even had a quarter of production, and the co-gen isn't done. Do you know something I don't? If this was an investment for next quarter or two maybe you'd be right, but Chad is building something for the long term (commodity DP probably isn't even the destination), and while DP prices are low right now, if you think the general thesis wrt cotton/cellulose is correct, they won't stay this low forever. We're now at a time when the whole global market is in fear mode, right after history-books-type cotton prices pushed everybody and their dog to grow more cotton, and right at the crucial inflection point in the business when they have spent the maximum amount on getting a new plant going without seeing any of the benefits yet. This is transitory. Things might not be all rainbows and puppies afterwards, but be careful about extrapolating too much from a special point in time. Maybe if FTP was still selling for 50-60 things would look tighter, but at these prices, I think there's very little downside left and tons of upside if anything good happens at all (and we know that dark clouds never stick around forever). In fact, I don't mind the dark clouds while they are gearing up if 1) it allows me to buy cheaper while the end result in a few years will probably look very similar anyway and 2) it reduces competition's animal spirits. I could be wrong about all this, but I think it's too early to tell about a lot of things, and I'm afraid that the stock price is coloring a lot of people's perceptions; if it was still selling for 45, would we get all this hand-wringing? Yet wouldn't the situation be inherently riskier at 45?

Watched it. Always fun to hear Warren speak, even though I can't say I learned too much..

Thank you!

If anyone has a link to the video archive of the whole thing, that would be great. thanks.

All right. There's some stuff I just can't resist. I kept hearing Munger's voice in my head, talking about seizing opportunities when they come and betting big when you have high conviction. I almost doubled my FTP share count today (not quite doubled... more like up by 80%).. Had to sell something else, but I think the risk/reward profile is much better here now. My average cost is now below 23. With my luck it'll now tank below $10/share, but oh well.. I think there's a very good chance that in a couple years I'll be very happy about this move. We'll see...

It would, but I think it would be quite impossible to do $100m in buybacks. ;D Even if $50m in buybacks was an option before the price shot up to the $25-30 range, I think Chad wouldn't hesitate considering how determined he is to make FTP a pure DP play. I think I'd like a spin-off more. I don't think it's likely or even possible because of how very little volumes can move the stock price a lot. Just an interesting thought experiment to put in perspective the current market cap :)

Thanks for posting. I think there's more of the interview here: http://video.cnbc.com/gallery/?video=3000102436&play=1 They also have Simpson & Bowles along with Buffett in the third segment..

Here it is. FTP_-_TD_-_12juillet2012.pdf

TD analyst reduced target from 26 to 20, still on HOLD.

I just finished the book. It was surprisingly good. I expected maybe a few useful ideas to add to a mental model, but not much... It turned out to be well argued, well written, and very motivating. A good companion to Waitzkin's The Art of Learning.

Sorry, in Dutch. It basically says that it will be able to post tweets automatically with your account and that they can change your account details. I've seen many people get it already, but I'll do this with a new account where I don't mind if they spam tweets under my name. :-X I believe that what this means is that you are authorizing one tweet, even if it is worded more broadly. I've seen many other sites (dropbox.com) use this feature. But I guess we could get confirmation from someone at MOI.

I also dislike CEOs who talk too much about the stock price, and I don't want to sound like I'm defending Chad too much, but with these interviews it can be hard to know what exactly was said. What questions the interviewer asked? How many other things that we would have liked to read about were said but didn't make it to the printed page? It's not like Chad spends any time talking about stock price in conference calls.. His thought process is probably something like: We've been having delays and have lost money for a while, and the market didn't like that. But with how things are going now, next year we should earn multiple dollars per share and the market should hopefully notice, and if not, screw it, I'll look into taking the company private. IMO there's a difference between management that speaks as if what truly matters to them is the stock price rather than generating long-term business value, and management that says that operational results should now be good enough for the market to notice. My interpretation is that what Chad said falls in the latter camp, and that he's thinking about the actual business and how to build it over many years when he's having insomnia, not about the what the stock is doing this quarter. But still, it's not my favorite thing to read in an interview.

http://www.alderonironore.com/_resources/news/2012-07-11-NewsRelease.pdf

Interesting stuff, thanks for posting.

Bloomberg: [glow=red,2,300]S&P 500 Has Longest Drop Since May[/glow] Since may? Really? And we're all the way to early July. That must be historically significant! I know why they do it, kind of, but I can't help but find it funny.

Ha! I didn't mean that I use the iPad for phonecalls, but I can see how the juxtaposition gave that impression :) I do use the iPad for Facetime with the family sometimes, though, but that doesn't look quite as silly as what you had in mind...

I'm probably the only person here who has the cheapest non-smartphone that I could find running on a prepaid card of $100 for 1 year (about $8/month, hard to beat) :) I have an iPad 3, though..

I agree with you on how it's often used, but that doesn't make the number itself BS. It is exactly what it says it is, which is earnings before interest, taxes, depreciation, and amortization. You can say that management is often full of BS. But saying that the number ITSELF is BS is itself BS, if you follow ;)

It measures what it says it does. How is that bullshit? I mean, if someone says that EBITDA is a company's owner's earnings, now that's bullshit. But if you use EBITDA a EBITDA, how is it anything other than what it is? In other words, if you pass someone's weight minus arms and legs as his total body weight, that's bullshit. But if you clearly label it as his armless and legless weight, it's accurate. How you use it, and why you'd want to use it, that's another matter. But it's just a tool, that can be used well or badly. EDIT: Kraven beat me to it while I was writing this...

It does make sense, but I think it's still not a very good excuse and that he could have said many better things in that interview.. the iPhone came out in 2007! Either they missed the switch to more bandwidth-intensive uses because they are totally blind and incompetent, or they saw it but are so clunky that they can't react fast enough to competitive threats (I mean, they already had a successful platform at the time while Android came out of almost nothing).