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1
Investment Ideas / Re: BEBE - bebe stores
« Last post by capitalg on Today at 03:09:31 PM »
Thatís what I thought, but couldnít remember where I had seen that...do you know if they are still involved with Sharper Image?
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Fairfax Financial / Re: Fairfax India new issue
« Last post by StubbleJumper on Today at 02:51:54 PM »
Totally agree this is possible. Donít think it likely.


I don't think it's likely either.  But pardon my French, why does FFH always seem to fuck-up the handling, communication and disclosure of these sorts of things? 

First off, is there, or is there not, a conflict of interest between Fairfax India unit holders and the FFH Holdco shareholders on that BIAL deal?  If that BIAL deal was overvalued, I would make out like a bandit because I currently only hold FFH and not Fairfax India, but the Fairfax India holder would be screwed.  Given that situation, how should FFH have dealt with it?  Well, first and foremost, having a temporal separation (say 6 or 12 months) between those deals would have been a good start.  Alternately, disclose the hell out of BOTH transactions to attempt to have some level of transparency, AND release an independent valuation opinion for both assets.  Instead, what we got were a couple of news releases that didn't tell us much -- one of them didn't even reveal the counterparty!  If you have a set of circumstances that could give the appearance of the possibility of a conflict of interest, you either need to take a pass, or you need to bend over backwards to be transparent.

It's the same story over and over again.  Hard to believe that they are not getting better about these things.


SJ
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Fairfax Financial / Re: Fairfax India new issue
« Last post by petec on Today at 02:43:09 PM »
Possible but I highly doubt an investment group like FFH will burn their reputation in such a manner. I believe, given the state of the investments, Fairfax India would have truly EARNED their fees in the long run.

More persuasively - given SJ clearly doesnít trust FFH to start with - it would require OMERS to risk their reputation, which is possible but unlikely.
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Politics / Re: State of the Nation
« Last post by LC on Today at 02:28:46 PM »
Quote
Do you have any evidence that a restaurant owner allowed someone to use a water fountain but would not serve them food?

It was a hypothetical but I can do you one better:

https://www.npr.org/2014/12/13/370470745/forced-to-seat-blacks-ala-restaurant-complied-with-history

The majority of Ollie's employees were black, and McClung says they had some regular black customers, but as was the norm when segregation was the law, they were only served take-out. When the Civil Rights Act went into effect, McClung and his dad were concerned that seating blacks would drive away white patrons. So they sued.


I guess this was OK in your eyes because these restaurants would still serve black customers, they were just protesting the action of blacks and whites sitting and eating together.

What a load of racist and bigoted crap that you are trying to defend. It is frankly disgusting and beneath you!

Quote
Their morality drives their behavior. Are you telling me that if you had kids and your teacher was attracted to your child you would be totally okay with it as long as they didn't do anything to your child?  :o
I think as a general course of action, pedophiles should not be around kids. You might want to pass up that message to the Catholic church.

BUT - sexual attraction is not morality!
Take the case of homosexuality - are gay people MORALLY different than straight people just because they have different sexual attractions? Of course not - and anyone who says differently is a bigot!
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Investment Ideas / Re: BEBE - bebe stores
« Last post by valuedontlie on Today at 02:25:24 PM »
Bluestar Alliance (operator of Brookstone) was part of the acquisition/turnaround of Sharper Image as well...
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I don't understand how this new gravity energy storage plan can be so much cheaper than pumping water to the top of the mountain as a gravity storage? It seems far more reliable to use water than these concrete blocks. Imagine what happens in a windy day.
My guess is that because you don't need the land for the reservoirs.
I read somewhere that new hydro developments are discouraged now due to its environmental damage from large area flooding (dam) & carbon release (drowned trees).
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Politics / Re: State of the Nation
« Last post by ERICOPOLY on Today at 02:19:08 PM »
Paul,
I believe you said that your empathy comes from God.  Are the narcissist and psychopath then merely Godless people?

And would then an autistic person with empathy difficulties also merely suffer from Godlessness?

Eric

Pyschopaths know right from wrong but they don't have the emotional attachment that we peons do.


You previously said that they have as much 'insight' as others do.  I believe that they are lacking insight without experiencing emotions as others do.  If everyone were psychopath society would break down and there would be no morality, for morality is based upon what is good not just for oneself but for society as a whole.  And not just what is good for the Christians, but for everyone (including the gay married couple).

Having a society within a society is problematic and this is one of the problems:  when somebody wishes to live by the morals of their Christian society instead of the morals of their American society.  Such as taking a child bride or protesting  the marriage of gays.

I'm not finding any articles saying that atheism is behind child brides.  I will posit that morality comes from society, and the society of Christianity is different from secular society, and different from Muslim society.
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The meaning is very precise.
P2P NPV(10) is the Net Present Value of the future net cash flow of the proven and probable reserve, at the point-in-time price deck specified, at the specified 10% discount rate. It assumes the reserve is put into immediate runoff, the o/g is extracted at the proven (mostly last 12 months) historic cost/bbl, and is the un-hedged discounted cash flow at the well head.

P2P NPV(10) is a requirement of all listed o/g companies, and is an independent appraisal of the NPV of the reserve, prepared by qualified reservoir engineers familiar with the geology of the various reservoirs being assessed. No different to the Auditors Report confirming that year-end numbers are fairly presented.

10% is the industry standard, as is the price deck. As a result, all Reserve Reports in the same year are directly comparable.
The cowboys bitch is that it makes poor operation way too visible. Hence everyone screaming that the discount rate is too high, and the price deck is too optimistic/conservative - to avoid anyone looking too closely at their sh1te rock, and low inventory of high-quality drill targets.

SD



   
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Fairfax Financial / Re: Fairfax India new issue
« Last post by hobbit on Today at 01:43:53 PM »
I think the valuation of the sale of a noncontrol stake to a third party validates even the most expensive of the FFH transactions.


That might be true, but it is better to withhold an opinion until we understand who the buyer is and what sort of incentives may have come into play. 

I raised an eyebrow about this transaction because it seems strange that a 5% stake of a long-term asset would be sold.  So, why did Fairfax sell it?  Did they need to drop their stake to 49% to keep the nationalists at bay?  Were they desperate for an infusion of $134m of cash?  Did they find a partner with specific expertise that they wanted to bring aboard?  Was there some other strategic motivation that was not articulated in the presser?

One potential motivation that needs to be kept in the back of our head is that this minor transaction gives Fairfax the latitude to re-value that asset on its books.  Fairfax India will book a gain of $500m based on a transaction of only $134m.  And then what happens?  Well, the Fairfax India's booked assets will suddenly be pumped up, which gives FFH a nice little boost to its annual management fee as well as the likelihood of a 20% performance fee in 2020.  So, how much wealth will be extracted from Fairfax India unit holders from that little transaction?  I'm guessing that the buyer's price for the 5% slice of that airport will be somewhat similar to the amount of money that FFH extracts from unit-holders.


Maybe Prem will expand on this transaction in his annual letter and the annual report to provide more disclosure?  For now, I am wary, but keeping an open mind.


SJ

https://www.vccircle.com/north-american-pension-fund-backs-fairfax-s-india-airport-investment-plan

OMERS infrastrucure - strategic investor , this was probably done to get outside validation of big mark up in book value


Okay, that makes me yet a little more uncomfortable.  I had been holding out hope that it was a completely new player to the FFH world.  FFH sold a chunk of the airport at roughly the same time as they sold a chunk of Riverstone runoff.  I just hope to hell that there was no quid pro quo on those two deals and that the BIAL transaction was done at true fair market value rather than an inflated value designed to get a favourable mark on the value of the assets.  There really should be no question about this, but unfortunately on more than one occasion, Prem has been too cute by half.


SJ

The quid pro quo being a sweet deal on Riverstone? Canít see why that benefits FFH.


Okay, so this is all hypothetical and nothing more. We have no knowledge that would support the existence of any quid pro quo between the two transactions.  We have no actual knowledge of any wrong-doing or any other nefarious behaviour.  But, the math is pretty basic and that's what creates the risk:  The primary impact is that for every dollar that the value of that 5% BIAL deal is overestimated, the mark for Fairfax India goes up by $10.  The secondary impact is that the annual management fee (1.5%) to FFH goes up by $0.15 based on the $10 mark and, possibly the performance bonus (20% of everything over the hurdle) could go up by $2 based on the $10 mark.  So if you have the same buyer for two deals being conducted more or less simultaneously, and if you could convince the buyer to over-value one asset and under-value the other, you could create value for yourself.  There's an argument that the buyer would only care about the combined value of the two cheques that he must write and wouldn't much care about the specific amounts on each cheque, so maybe it wouldn't be so hard to twist his arm.  A portion of the $1 overvaluation would be attributable to minority Fairfax India holders, but that would be swamped by the secondary impact.

So yes, I am a little uncomfortable with the idea of there being two transactions made to the same buyer at roughly the same time.  If it true that the buyers are the same for both transactions, I wonder why there hasn't been better disclosure.  And once again, to my knowledge, there is no evidence that anything like this has actually occurred.


SJ

Possible but I highly doubt an investment group like FFH will burn their reputation in such a manner. I believe, given the state of the investments, Fairfax India would have truly EARNED their fees in the long run.
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Fairfax Financial / Re: Fairfax India new issue
« Last post by hobbit on Today at 01:38:37 PM »
I think the valuation of the sale of a noncontrol stake to a third party validates even the most expensive of the FFH transactions.


That might be true, but it is better to withhold an opinion until we understand who the buyer is and what sort of incentives may have come into play. 

I raised an eyebrow about this transaction because it seems strange that a 5% stake of a long-term asset would be sold.  So, why did Fairfax sell it?  Did they need to drop their stake to 49% to keep the nationalists at bay?  Were they desperate for an infusion of $134m of cash?  Did they find a partner with specific expertise that they wanted to bring aboard?  Was there some other strategic motivation that was not articulated in the presser?

One potential motivation that needs to be kept in the back of our head is that this minor transaction gives Fairfax the latitude to re-value that asset on its books.  Fairfax India will book a gain of $500m based on a transaction of only $134m.  And then what happens?  Well, the Fairfax India's booked assets will suddenly be pumped up, which gives FFH a nice little boost to its annual management fee as well as the likelihood of a 20% performance fee in 2020.  So, how much wealth will be extracted from Fairfax India unit holders from that little transaction?  I'm guessing that the buyer's price for the 5% slice of that airport will be somewhat similar to the amount of money that FFH extracts from unit-holders.


Maybe Prem will expand on this transaction in his annual letter and the annual report to provide more disclosure?  For now, I am wary, but keeping an open mind.


SJ

https://www.vccircle.com/north-american-pension-fund-backs-fairfax-s-india-airport-investment-plan

OMERS infrastrucure - strategic investor , this was probably done to get outside validation of big mark up in book value

Iím not a subscriber so canít read the article. How well-sourced is it? Only asking because Fairfax deliberately arenít disclosing the buyer and I canít imagine why they wouldnít if it was OMERS.

VCcircle has been pretty reliable in my experience so I would say there is decent chance of OMERS being the investor. OMERS has made other bets in infrastructure space in India and also is a part of consortium that acquired London airport. It also bid for brussels airport.
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