Liberty

Here's the one from March: http://depositfiles.com/files/huorxb4rw

I'm always afraid of that, but I try to actively seek out contrary opinion and so far I haven't found much that was convincing (most of it is just chartists and technical people, and that's when they even give a reason for being bearish). But if anyone here has something, please post!

Here's how I look at this, let me know if you think I'm off-base :) Like investing, running a business is a lot about having a good process. It's dangerous to judge yourself or others only on outcome because in the short-term some people with bad process are lucky and some people with good process are unlucky. But over the long-term, those with good process usually come out on top (in the long-term, the market is a process-vetting machine?). So while it's true that there were cost overruns and delays, let's look at the kinds we faced: Out of mgmt's control -Unfavorable currency changes (Canadian dollar, Swiss Franc... but currency doesn't move in the same direction forever, as we saw with the CAD this week, and this could eventually help FTP) -Lower cotton/DP prices (not surprising considering the macro environment + the fact that after record highs, lots of farmers will plant more cotton, but the pendulum should swing back, and FTP never projected these high prices to continue, so not a surprise) -Delayed security paper orders (I don't think there's much management can do about it. The good news is that it appears that once printing has begun, series can last for many years) -Spontaneous province-wide strike for about a week (not much to do here) -Change in the mood of the Canadian market from greed to fear (TSX down 15% in past year, TSX venture down 35%). Even with good news, FTP was bound to be dragged down at least some. Maybe under mgmt's control -Engineering firm's screw up for co-gen (maybe there was something they could do to avoid this one, hard to say) -Used parts for cogen not available so they had to buy new, more expensive ones (maybe they could have locked those down better, but without knowing what happened exactly, it's hard to tell. Maybe they did things right and got screwed by a counter-party, who knows?) Mgmt is to blame -Publicly announcing aggressive targets for conversion, rather than average or conservative targets (afaik, the thurso conversion is currently pretty on target compared to industry averages, though it is behind the aggressive timeline that was originally given. Maybe being aggressive lit a fire under them and helped them perform better because of the accountability of a public statement, or maybe they should have kept that target private and instead under-promised) -When journalists ask for projections, it's best to say nothing (because even if all you give is your best estimate based on current information, people will interpret it as a promise and blame you if it doesn't happen exactly the way you said, leading to disappointment. When speaking to someone rational, you can make predictions with uncertain outcomes, but the general public looks at things in a binary way) I'm probably forgetting something.. Anyway. My point is that if most of the bad stuff had happened because of the way management did things, I would be more critical. But as it is, I think they had mostly a good process and did things right, but they still had somewhat unfavorable outcomes. Since I'm not seeing any problems that aren't surmountable and/or temporary, I think we should be fine. But as Geoff Gannon says, investing is ultimately a cash to cash transaction. And since you can't change just one thing (ceteris paribus is a nice construct in theory, but doesn't happen in practice), the question is, how much will these problems matter in the end all things considered? If FTP had hit every single aggressive milestone and currency had never moved against them and the macro environment was better-looking (higher cotton/DP prices) and central banks hadn't delayed currency series, etc.. Things would certainly look much better, but my average cost would probably be at least in the 40s, probably in the 50s or 60s, maybe higher, rather than in the 20s as it is now. So from a cash to cash perspective, would I actually have done better in the end in that rosier scenario? Maybe, but maybe not. Bad stuff happened, but the price went down to more than compensate for it, IMO, and most of it didn't shake my confidence in management because a lot of times there wasn't much they could do about it. With hindsight, we can no doubt find things they could have done differently, but overall I feel they are being prudent enough (the way they structure their deals and the prices they pay for their assets provide them a good margin of safety, IMO. They aren't building from scratch billion-dollar plants that will end up high-cost producers) and their good process should lead to good outcomes over time. I agree that at this point what this company needs is a bit of time to allow things to unfold. I've heard from a few people who sold their shares before the conversion of Thurso was completed and others who sold before the ramp up was complete. I understand that dropping share prices can be scary, but if shareholders lack the patience to wait for a company's biggest asset to be up and running, they may lack the patience required to do well as investors. It's not for nothing that Buffett and Munger say that the hardest thing is sitting on your ass and doing nothing.

Good overview: http://online.wsj.com/article/SB10001424052702304840904577426042171703270.html That guy really doesn't quit:

http://www.bloomberg.com/news/2012-05-25/facebook-ipo-fallout-deepens-investor-distrust-of-stocks.html Pendulum is swinging pretty far away from "greed" and towards "fear" lately. The FB IPO certainly isn't helping, as it had great media visibility and probably affected sentiment disproportionally with its actual economic weight.

It's tighter than I would like, but as it is, I don't think it's that bad (and it's more than priced in anyway), and it's a problem that is eminently surmountable and temporary (it's not as if Thurso is years away from full production). Who knows, maybe other big problems could surface and compound it... But based on what is currently known, I don't think it'll be a big problem, and they have lots of ways to deal with it (with dillution as a last resort - but even that wouldn't be the end of the world since you are paying such a low price and have such a big margin of safety, IMO). I'm also taking into account that this is a very big transition for the company, and because of the planning fallacy*, stuff is going to take longer and cost more. But if the end result is worth it, I can be patient, and it's not as if this was normal operations and liquidity was a bit tight. If they get to normal production, liquidity shouldn't be a problem at all (we're not talking about a business that has paper thin margins and lots of leverage during normal operations). They are more vulnerable now, but it's not the normal state of this animal. Some people might want to wait for the vulnerable phase to end before investing, and that's understandable, but as Buffett says, you pay a high price for a rosy consensus, and by the time it's clear that the transition period is successfully over, price could be much higher. * http://en.wikipedia.org/wiki/Planning_fallacy

Analyst projections are pretty worthless. I sometimes find the reports useful for factual due diligence that I can't always do myself (ie. "we went to the plant and saw that it was running well...", construction is progressing well, etc). But other projections? Meh. Go back a year or two ago and see if they predicted what's happening now. So now they can predict what'll happen in a year? I was reading some Howard Marks early memos today, and he's spot on on this. Analysts just predict more of the same, whatever that is. When things are going great, it'll keep going great, and when it's going badly, it'll keep going badly. Less risk to their jobs predicting like that. They pretty much miss all the inflections, reversals and changes of direction, which is what would be useful to know in advance... Bottom line for me is, I believe these assets are worth a lot more than what I'm paying for, and I trust management to execute and keep adding value, and be a good stewart of capital. Doesn't mean it'll always move in a straight line without any setback, but I think the probability of permanent loss of capital is extremely low and the probability of a great outcome is very high. But that's just my 2 ounces of dissolved cellulose...

Ha! Sadly, my few thousands of shares don't qualify. Maybe someday if price keeps going down...

The thing is, soon SpaceX will do launches for significantly less money than anyone else, and they'll prove the safety of their design over time (it was impressive they could shut down the rocket without damage half a second befre launch last week... A lot of other designs would either have been damaged or would have needed to be self destructed --- solid fuel rockets can't be stopped once lit).

http://www.bloomberg.com/news/2012-05-25/spacex-becomes-first-company-to-dock-ship-at-space-station-1-.html 8)

Bought a few hundreds more. Guess we'll see if that was a good move in a couple years..

Not sure if it's available for free to non-subscribers, but if not, worth buying a copy of this issue. Kind of the anti-Chanos. Here are all the articles from the feature: http://www.economist.com/node/21555762 http://www.economist.com/node/21555767 http://www.economist.com/node/21555761 http://www.economist.com/node/21555772 http://www.economist.com/node/21555766 http://www.economist.com/node/21555763 http://www.economist.com/node/21555769 http://www.economist.com/node/21555770 http://www.economist.com/node/21555765

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/ft-markets-out-of-stock/

http://www.gurufocus.com/news/177946/the-death-of-equities-again

http://www.bloomberg.com/news/2012-05-25/china-cotton-planting-may-fall-by-10-on-increasing-labor-costs.html

http://www.gurufocus.com/news/177812/nassim-taleb-and-david-cameron-building-a-black-swanrobust-society Note: a few years old, but first time i saw it.

Added 800 shares at 18.55.

http://www.google.com/hostednews/ap/article/ALeqM5jvmL14diIBVB9Mehb3yfYqRVb-VA?docId=1cd9a80e03ca40c38d87f216b8d550fe

I bet Chad wishes he wasn't blocked from buying FTP stock (he mentioned it in an interview -- he constantly has information about new deals, so he can't buy)... This price is truly crazy. But I have to stop being surprised by Mr. Market..

Well, you guys who like DELL just got a nice opportunity. Down over 16% right now.

http://www.snl.com/irweblinkx/file.aspx?IID=103386&FID=13177456 Another good quarter.

CEO exercised 1.2 million options he accumulated over the past decade. http://www.sec.gov/Archives/edgar/data/814549/000118143112031758/xslF345X03/rrd346327.xml

This is always something I feel kind of bad about. Sometimes people post an idea and I'm really happy to see a new idea, and I check it out, but it doesn't quite get through my first line of filters so I never research it quite deeply enough to have something to say about it. So on one hand I wish I could post and start a conversation and make it clear that I really appreciate people posting ideas and encourage more, but on the other, I can't really motivate myself to look deeply into things that I don't feel are what I'm looking for. I wish I had a way out of this dilemma. Maybe I just need to start reading more about stuff that doesn't appeal to me just to get more exposure to a variety of things and build up more experience researching companies... That sounds very good in the abstract, but in practice, I find it tough...

I'm just taking guesses here as I don't know much about currencies, but isn't any starting point kind of arbitrary? I'd say that on average currencies with very high multiples to most other currencies probably had high inflation, but I don't see why it would have to be so. A currency could be created at a value of 1 million to 1 dollar yet be inflated less rapidly than the dollar from that point on. In other words: It's possible you are correct, but not for reasons that can be discovered just by looking at the conversion rate. Just my guess, though.

http://dealbook.nytimes.com/2012/05/22/sino-forest-and-executives-charged-with-fraud-in-canada/