Recent Posts

91

Investment Ideas / Re: VLGEA - Village Supermarket

« Last post by DooDiligence on February 15, 2020, 02:37:30 PM »

"An ad hoc group of the company’s senior lenders are supportive of the sale process and have agreed to provide the company with up to $25 million in debtor in possession financing. According to court documents, Ankura Trust is serving as administrative agent and collateral agent for the DIP financing."

www.abfjournal.com/dailynews/ankura-trust-agents-25mm-dip-funding-for-fairway-market/

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https://cases.omniagentsolutions.com/?clientId=CsgAAncz%2B6a0sTEEVO2%2B31R0GJ7DUJV0%2FiYsw8rK3HbsyGyvHy6nozffohj0W6CnTTkhOTG26ec%3D

92

Fairfax Financial / Re: Fairfax 2020

« Last post by Viking on February 15, 2020, 02:34:02 PM »

Does anyone have thoughts on the RiverStone UK sale?

I think they needed capital. If the deal was intended to give RUK capital to grow, it would have been structured as a capital injection rather than a partial sale. Frustrating they can’t be more honest when they describe these things. Plus, they said they’d never sell the insurance subs and now they’ve sold (part of) two in two years.

Agree re what’s going on under the bonnet. It’s felt like that for a couple of years.

I agree, they need capital. But not to put out a fire. Rather, they need capital to take advantage of some once in 10 year opportunities:
1.) aggressively grow business in hard market at some insurance subs
2.) stock price below BV

They also need $ to buy out minority partners.

Bottom line, their need for cash today is what i would call a good problem.

Also, my guess is the market will never value the runoff businesses favourably (in the Fairfax family). In the current environment i am very much in favour of them selling/monetizing undervalued assets (like Riverstone) to fund hard market growth and share buybacks (the hard market in pricing will not last forever and when it ends we can expect Fairfax to get very aggressive on share buybacks).

It will be interesting to see what Fairfax plans to do with Seaspan. This has become such a large position. Another first class type of problem to have :-) My guess is nothing happens until after the APR aquisition which is expected to close some time in 1H 2020 if memory serves me correctly. Seaspan reports Feb 19.

93

Investment Ideas / Re: BEBE - bebe stores

« Last post by valuedontlie on February 15, 2020, 02:23:06 PM »

2Q20 results -- https://backend.otcmarkets.com/otcapi/company/financial-report/239940/content

Looking at my last post here almost nothing has changed... Still a $6 stock, still $8m+ in net cash on the B/S... bebe and Brookstone brands look to be contributing ~$10m per year in distributions... overhead running at maybe $1.2-1.5m per year... call it $0.75/share in annual earnings? Paying out $0.68/sh in dividends, still 11.3% yield...

The Charles Vogele brand completely written off but starting to get some cash back ($1m in Q2).. as a reminder they invested some $3m into this...

Still guessing (hoping?) that Brookstone has room to expand and/or another investment gets made...

94

General Discussion / Re: A company I own got bought out, but I can't cash out.

« Last post by writser on February 15, 2020, 02:03:06 PM »

I feel like that squirrel in the ‘Ice Age’ movie intro that finds a hazelnut , but soon finds out that it needs to work really hard to keep it. This also makes me consider some life choices regarding obscure stocks and so  I sold another bugger waiting for a buyout today for a 40 Euro gain. ( In case this thread doesn’t deter people, the ticker is ARTO.PA from the Bollore solar system ). I really don’t want to deal with this sort of crap ever again.

No? Because of such sentiments I think situations like this are likely to be mispriced. I suggest you try to see it as an exciting hobby like sky diving or swimming with sharks. Only instead of doing something actually dangerous you have to read tedious documents and e-mail and call with office clerks all around the world. Same adrenaline kick but much safer. And you get paid to play. Seriously, can it get any better?

95

Fairfax Financial / Re: Fairfax 2020

« Last post by petec on February 15, 2020, 01:57:54 PM »

Does anyone have thoughts on the RiverStone UK sale?

I think they needed capital. If the deal was intended to give RUK capital to grow, it would have been structured as a capital injection rather than a partial sale. Frustrating they can’t be more honest when they describe these things. Plus, they said they’d never sell the insurance subs and now they’ve sold (part of) two in two years.

Agree re what’s going on under the bonnet. It’s felt like that for a couple of years.

96

Fairfax Financial / Re: Fairfax India new issue

« Last post by Viking on February 15, 2020, 01:12:58 PM »

I think it is just due to lack of inflows funds into EM with EM being out of fashion as whole; and nothing to do with FFH management.
i am very content with the discount. Have been buying since 2017.

i think it is one of those investment, that once inflows to EM picks up some years from now, the same folks that refuse to buy it at current depressed prices would willing to pay 1.5x book. 

And i like the fact that the volatility of IIFL (it being mark to market) creates discount opportunities in the stock, with the private holdings acting as a dampener or a floor, when FIH stock falls.

Agreed. I missed this in my previous point. It looks to me like EM and India in particular was starting to come back into favour the end of Q4 and start of 2020 (before Caronavirus hit). I think this trade may come back into favour in another month or two which would help investments like FIH.

97

Investment Ideas / Re: WFC - Wells Fargo

« Last post by StubbleJumper on February 15, 2020, 01:08:49 PM »

Charles Munger, whose Berkshire Hathaway Inc. and Daily Journal Corp. are shareholders in Wells Fargo & Co., isn’t a fan of the work arrangement set up by the bank’s new chief executive officer.

“That’s outrageous,” Munger, 96, said Wednesday in an interview when asked about Charlie Scharf’s choice to live in New York while running the San Francisco-based lender. “Anybody should move for a big job like that.”

www.bloomberg.com/news/articles/2020-02-12/munger-says-wells-fargo-ceo-scharf-ought-to-be-in-san-francisco

Munger has lived in the Los Angeles area for many, many decades despite Berkshire being based in Omaha. Despite being 96 (!) years old, Munger has two jobs: Vice Chairman of Berkshire and Chairman of DJCO.

He's a lovable old curmudgeon who just realized that newspapers are dead.
Probably still has a flip phone & can't figure out how to use a Roku box.

Personally, I'm OK with Scharf doing his thing at a distance.

The move seems more than just symbolic of a necessary shakeup,
and fits well with the new organizational splits.

Charlie forgot to invert this time.

My money will probably burn for this heresy.

Wells Fargo is a huge company with a lot of trouble going on. For those who recall a disaster waiting to happen with a CEO far removed from headquarters that was out of touch, look no further than Sears.

Wasn't Eddie's investment always predicated on a sum-of-the-parts basis? The idea that you take the thing and blow it up -- sell Land's End, Craftsman, Kenmore and other brands, figure out which stores are the most valuable real estate so you can close them down, move the inventory to other stores and sell the property/leases, and then eventually once the valuable assets are liquidated you just shut down the rest.  It all would have worked fine if he could have done it more quickly, but Sears bled money for too many years before he could shut it down.  Bad implementation, but it had nothing to do with Eddie's city of residence.


SJ

98

Fairfax Financial / Re: Fairfax India new issue

« Last post by Viking on February 15, 2020, 01:01:11 PM »

I am wondering what the market sentiment for FIH is. As of this writing it is selling at 0.76 times year end book value. The assets are earning cash and are profitable. Whenever there is a relevant transaction they get marked to market. So the book value is likely a good approximation.

Why the discount? No faith in management? Fees do not justify the discount. Is the market thinking that Indian assets are overpriced on the books?

I am incredibly patient. Just wondering what the narrative is to justify the large discount to book.

I think it is safe to say sentiment in FIH is at an all time low. Same for FFH (the two are linked at the hip). My guess is a lot of the initial investors in FIH were big FFH supporters (at the time).

Although i would say i think the issues at FFH were internal; they made some bad decisions. Fortunately, i think FFH has learned some important lessons and have been moving in a better direction for about 2 years. But it will take time to right the ship and get BV growth into double digits on a consistent basis.

I think the issues with FIH are more external. INR devaluation hurt. The Indian banking crises was not their doing; however, it crushed the value of IIFL. Until recently, book value for BIAL was near cost.

Bottom line, investors were too optimistic a couple of years ago. And now they are too pessimistic. Company (FIH) has not really changed that much :-)

99

Investment Ideas / Re: WFC - Wells Fargo

« Last post by DooDiligence on February 15, 2020, 12:52:54 PM »

Charles Munger, whose Berkshire Hathaway Inc. and Daily Journal Corp. are shareholders in Wells Fargo & Co., isn’t a fan of the work arrangement set up by the bank’s new chief executive officer.

“That’s outrageous,” Munger, 96, said Wednesday in an interview when asked about Charlie Scharf’s choice to live in New York while running the San Francisco-based lender. “Anybody should move for a big job like that.”

www.bloomberg.com/news/articles/2020-02-12/munger-says-wells-fargo-ceo-scharf-ought-to-be-in-san-francisco

Munger has lived in the Los Angeles area for many, many decades despite Berkshire being based in Omaha. Despite being 96 (!) years old, Munger has two jobs: Vice Chairman of Berkshire and Chairman of DJCO.

He's a lovable old curmudgeon who just realized that newspapers are dead.
Probably still has a flip phone & can't figure out how to use a Roku box.

Personally, I'm OK with Scharf doing his thing at a distance.

The move seems more than just symbolic of a necessary shakeup,
and fits well with the new organizational splits.

Charlie forgot to invert this time.

My money will probably burn for this heresy.

Wells Fargo is a huge company with a lot of trouble going on. For those who recall a disaster waiting to happen with a CEO far removed from headquarters that was out of touch, look no further than Sears.

Sloppy implementation of haphazard offerings in stores which are barren of customers.
All run by someone with crap for experience in the business.

I don't see the analogy.

100

Berkshire Hathaway / Re: Buffett/Berkshire - general news

« Last post by alwaysinvert on February 15, 2020, 12:43:01 PM »

really horrible write-up on Berkshire in Barrons this weekend as a cover story.  Basically calling for a breakup and a dividend...one of the worst piece I've seen on Buffett and Berkshire for sometime. 

What did others thing who read it?

Can't read it, but at what point does it become anything but "horrible" to call for some action? $200b in cash? $300b? $400b? Obviously he will do whatever he wants but the option value of the next billion at this point is probably pretty close to 0.