Liberty

I second that. I would never invest in a company where management seemed to have forgotten its role or who the real owners are.

Thanks for sharing your thoughts, Dazel. I'm curious where you saw them say this. I probably missed it.. I know that a few months ago someone from Altius said something like that about having the chance to deploy capital if there was a "bloodbath", but I'm curious to know if they've said it again recently. Edit: nevermind, I'll answer my own question:

http://www.altiusminerals.com/files/PR%2011-13-Financials.pdf

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/record-high-household-debt-in-canada-triggers-alarm/article2269210/

Hey Tom, I think a few of the answers you are looking for are elsewhere in this thread, but I'll do my best to answer your questions below. I think the main cost is fiber, and supply came with the plant deal. They not only have access to the CAAF that Thurso had access to, but also to the CAAFs of two other closed down mills. Supply should be very secure and low cost. Apart from that, the cost of labour could go up, but the current union deal seems pretty good (15% below usual union rates, no past pensions liabilities, and new pension is defined contribution, not define benefits). Chemical costs could also go up, but I think that would impact other DP competitors too and wouldn't represent that big a % of total costs, though I can't say I know exactly what that % would be. Another potential problem is exchange rate, but that can go both ways... There are no guarantees for sure, but personally I've reached a pretty good level of confidence based on past track record and on how everything is structured. I think there's a pretty good margin of safety, so that helps, but a lot of the value in this company is management, so it all depends on how you feel about them. I think the main problem this year was that many currencies delayed big printing jobs and that while the PM was being upgraded they missed some deals (Chad mentioned in passing that they weren't in the race for the new Canadian bills because of the machine rebuilding). That sucks, but the upside with delays is that what you lose now you still get later, and now that Landquart has been upgraded, margins should be better and they should be able to bid on bigger deals. Also, cotton prices are bad for landquart, but good for Thurso, so there's a kind of hedge there, and the Swiss Franc will probably come down once the EU crisis ends at some point. No, but it's a very secretive industry so we might never get much info about exactly what they are printing... That's a good question. I'm not entirely sure, but that might explain why they tried to sell it. Buy an asset for peanuts, focus it on the highest margin product it can make, make multiple upgrades to gain economies of scale and become a low-cost producer, and when you've squeezed just about all the value out of the asset that you can, sell it. That seems to be the plan, but the EU troubles prevented a sale as per a recent press release. I think structural problems in the industry are helping FTP keep its margins. I mean, Mercer owned those two plants and they could have done exactly what FTP did, but instead they produced all kinds of low margin products at both mills (robbing each of economies of scale), the papermachines weren't upgraded, etc. I think FTP's competitors are probably like that; lacking in capital allocation skills, and hesitant to make capex in businesses that are at cyclical lows. As I said elsewhere in this thread: I think some of it - like the password-protected St-Andrews thing - is just that with success comes more invitations to speak at conferences, and he probably expected only a few people to ever see it (we FTP stalkers aren't exactly average investors), and some of it - newspaper interviews - is probably to pressure politicians. If he has a higher public profile, it's easier to get the kinds of deals that he got for Thurso, which require government action to get the fiber rights, advantageous loans and grants, union deals, etc. I also think that journalists probably like his story because he provides that unexpected twist that sells; he's a relatively young guy making money in a sector that everybody know is going badly, he's re-opening a mill and creating jobs in the forestry sector, etc.. I agree that it's high against current market cap (though earlier this year the mkt cap was more than twice as big), but it is a multi-year deal, and after a few quarters of Thurso and maybe an acquisition or two, it might not seem nearly as big against mkt cap or cash flow. But we'll have to wait and see. Personally, I don't mind too much as long as he keeps delivering. Exceptional management is worth paying extra.

http://www.bloomberg.com/news/2011-12-12/sino-forest-will-miss-earnings-deadline.html

Only have a few pages left before finishing this one. I quite liked it. Lots of short case studies. Recommended!

I read maybe 4-6 books a month, and there's still way too many that I haven't read yet to re-read much... But there are many that I know I'll re-ead someday. The first that comes to mind is 'Godël, Escher, Bach' by Douglas R. Hofstadter. I highly recommend it.

From 30 to 35m: http://www.marketwire.com/press-release/fortress-paper-announces-increase-previously-announced-public-offering-convertible-debentures-tsx-ftp-1596271.htm

AFAIK, it usually refers to capacity. So when all solar panels are converting sunlight at their peak, it's 550mw. Capacity utilisation for a solar farm is much lower than 100%, though (obviously it falls at night and on very cloudy days), but it also times pretty well with hot days, so it can be very useful to handle peak load in places with a lot of air conditioning.

The government loans + grants + equity they sold a few months ago seemed to be quite enough for Thurso's DP conversion + cogen, so I wouldn't be surprised at all if this is the first sign of an acquisition. My first guess would be LSQ, as the mayor has said that 'a deal was almost done' for his city's mill and that he would probably have news before the end of December. I think there's a small chance that they'll be announcing two acquisitions at the same time too, if they were looking at two mills in the same governmental jurisdiction and negotiated both in parallel.

If we could all stay out of consenting adults' bedrooms, the world would be a much better place.

I totally agree it's very important. What I meant is that I'm always careful not to fall into what some in the startup world call the 'maserati problem'. ie. Two guys in an apartment start a business and they start by wondering where they're going to park the maseratis. Best make the money first and then have these high-class problems :) Personally, I expect Chad to stick around FTP for 4-6 years. It's going to take a few years to do all the acquisitions that he wants to do, and then convert them to DP, maybe build cogen, de-bottleneck, bio-refineries for even more added value, etc.. Then add to that a random amount of time for the world economy to get back in high gear and for DP demand to be high, for valuations to be high, etc.. And then at that point, when he's acquired all that he wants, everything is firing on all cylinders, and demand is in the upcycle, he'll probably sell and move on to an undervalued sector or wait for a bear market to buy into something else. I'd love it if he did it with a public investment vehicle.. Maybe turning FTP into a kind of Leucadia. Sell everything, pay a huge special dividend but keep enough capital to start a new hunt, maybe change the name to Fortress Holdings, and then start again!

http://www.prnewswire.com/news-releases/markel-announces-agreement-to-acquire-thomco-135161588.html

I found a library branch that carries Value Line, so I'm going to go check it out and see if it would be worth it for me to subscribe.

I can't remember where I saw/heard that, but I think it was Chad who said it... I'm paraphrasing, but it basically amounted to: all of FTP's assets are always for sale at the right price. I don't think they're too sentimental about what they own. If someone is willing to overpay, they'll probably make a deal. What I'm wondering, though, is what they would do if, say, in a few years they sold the whole DP division (let's say 3 DP mills) at a cyclical high for a couple billions. Would they try to invest it back into forestry? Would they turn into Fortress Holdings and look at other industries for deep value opportunities? Would they do a huge special dividend? Liquidate completely? It's not an immediate concern, and it's pointless to count your chickens before they have hatched, but it's something I've been wondering about for a while.

Thanks, I understand your process better now.

Cool. I know a guy form Sutton. Ça semble être un beau coin! :)

As long as US takes immigrants, pop shouldn't decline. update: In fact, a great policy would be to give more visa to entrepreneurs who want to start businesses in the US and invest X amount of capital.

RIM! (just kidding ;) )

Welcome to the board, Québec! I'm not a FBK shareholder, but I can understand your frustration -- I would hate it if one of the companies that I hold was acquired way below what I thought it was worth. I'm close to Ottawa. In what region are your located?

Fair enough, but one question remains in my mind: Why do you feel you have to be in those sectors at all? I see two options: Either you think they'll perform as well (risk/reward) as the stocks you are hand-picking, or you are doing it as a way to diversify broadly. I kind of doubt #1, otherwise why even go to the trouble of picking stocks at all if you can get the same risk/reward with indices. #2 is a personal preference. I'm the exact opposite of diversified. I focus very heavily on the few securities that I feel are the safest and most undervalued and/or have the best potential for growth. I could certainly reduce volatility by diversifying, but I think I would also reduce returns significantly, and not really increase safety much over the long-term. Anyway, I don't want to seem like the spanish inquisition or anything, I just like to understand people's approach to see if they're doing something that I should be doing.

I'm pretty sure their analyst was at the analyst day visit of Thurso last week. Doubt it's random. If I was a conspiracy theory type, I'd say that they were trying to depress the price to allow some other party to load up... But who knows? Occam's razor says that it's probably just an analyst who sincerely believes that FTP is worth 33 based on some model. All I can do is disagree with it and buy more :)

I'd also love to have more details on it. Do you subscribe to the paper or electronic version? How's the paper version? Do you get a small phonebook every week, or just a few pages of highlights? Also, is VL just for US stocks or do they also cover Canadian companies? Is anyone a subscriber to Gurufocus? They seem to also have lots of info and screens and such. I'm only a free user, but I'm wonder if maybe they cover a lot of the same data as VL, maybe at a cheaper price. (no paper version, though)

If there is actually a secular movement toward more demand for Rayon/DP and for Cotton, and if there are really pressures that keep cotton production from expanding rapidly to meet that demand in the future, I would expect Chinese rayon producers to be very aware of that and not wanting to screw a potential long-term supplier to save a few bucks in the short term when prices are depressed. In other words, let's say that DP prices remain low for 6 months or a year. Will Chinese producers want to break their long-term contracts to save a few hundred $/ton for a few months and then take the risk of having to find supply for the remaining 9 years at potentially higher prices? Maybe, but it seems like quite a gamble.. If they were willing to sign 5-10 year contracts in the first place, it seems to be a sign that safety of supply is quite important to them.