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    • Mon Jun 30th 12:21 PM | Rating: 0 0
      Commented on:
      Small Homebuilders: A Bargain vs. Book Value
      CHCI does not have real estate in Florida. You better check your facts. They are mostly around Washington, DC with smaller holdings in Atlanta and Charlotte.
      View article »
    • Tue Jun 3rd 17:21 PM | Rating: 0 0
      Commented on:
      USG Corp: Another Buffett 'Failure to Sell' Mistake
      Selling/buying options in size versus selling the stock puts you in exactly the same place. The folks that do options in size will use the stock to hedge so you are just running around in circles. Additionally, you can move the market in options prices just like you can move the stock price if enough size is done (and it will take far less size to move that market) and they will tend to move together as each can be substituted for the other through delta hedging for the most part.

      You asked me how I would value USG and my answer is, "I don't know." Then again, I didn't write the article so I would not be expected to know... You wrote the article and your thesis is that because the stock was higher at some point he should have sold it.

      Hmmmm. Does it follow logically that just because a stock is trading far from its high price that not selling it was a mistake given the information one had at the time? Of course not! 20/20 hindsight is a wonderful thing to have.

      Regarding those that criticize Buffett's record - it is pretty funny. It's only one of the best of all time. He is not perfect for sure but come on and give him his due. I wonder what it takes to get a compliment out of you folks...
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    • Wed May 28th 22:44 PM | Rating: 0 0
      Commented on:
      Battle of the Building Material Makers: Owens Corning vs. USG Corp.
      Regarding PRS I think you are totally missing the point. Market prices on PRS's liabilities reflect somewhat of a market view of the fair price of the risk that they are carrying. When prices fall it means that either expected default rates are increasing or the price of such downside risk has become more expensive. Either way, the value of those contracts is now lower and could be replaced at more favorable prices by competitors.

      Additionally, I would not want to rely on the company to give me an unbiased and accurate view of the likelihood of their current contracts costing them a lot of money. All of their incentives point in the other direction. I would be a bit suspect if there is a large gap between what the market is implying and what their management is telling investors.
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    • Wed May 28th 22:38 PM | Rating: 0 0
      Commented on:
      Battle of the Building Material Makers: Owens Corning vs. USG Corp.
      Paul, the appeal would be grounded in the likely cash flows available to USG in years to come. This may come as a surprise to you, but the majority of a company's value is usually not totally captured in the next 2 years of earnings.
      View article »
    • Wed May 28th 22:31 PM | Rating: 0 0
      Commented on:
      USG Corp: Another Buffett 'Failure to Sell' Mistake
      Paul, you make no real valuation argument regarding USG shares. Another poster has written that there were A LOT of unusual things going on with the company over the period in which you have taken your simple statistics. To put it bluntly, using such statistics over such a period is quite nutty and really not at all useful nor persuasive.

      How about we assume Warren is somewhat rational (I don't think this is too far a stretch) and work backwards from there. At what valuation point would he have sold USG when it got as high as it did? If he thought it was worth $80 per share (meaning it would continue to return pretty good returns to investors at that price going forward), for example, would he have sold it at $120? I don't think he would. Given the taxes he would have had to pay and the uncertainty of being able to reenter the stock at an equivalent after-tax price, there is a strong argument to be made that he would simply hold on. If he originally bought at $50 he would have to pay tax on $70 of appreciation and that might be almost $30 per share right there.

      Perhaps if he thought the company was worth $60 he may have sold, but he would not have invested at the prices that he did originally if he really thought it only worth that much as that would not give him all that much margin of safety.

      I find your analysis to be quite shallow and unconvincing. It seems to me that your basic argument is that since the price now is well below the stock's recent high price that not selling it was stupid. But, of course, value investors believe that stocks often trade for significantly less than their fair value - so this movement in price would not be a shock to anyone who thinks this way.

      If USG moves back up to $150 in 3 years, who would be right then?
      View article »
    • Thu Feb 7th 12:54 PM | Rating: 0 0
      Commented on:
      Thornburg Mortgage Series F Preferred: Another Way to Skin a Cat
      Technically you are correct, however the two are the same thing for all intents and purposes.

      Just keep your eye on the ball and when the stock exceeds the 130% threshold, sell the corresponding number of shares short, convert your F, and deliver the shares from the conversion to close out the short position.
      View article »
    • Thu Jan 17th 16:16 PM | Rating: 0 0
      Commented on:
      The Economics of Second Liens
      Where are you getting your default rate data from? I would love to get a look at it.
      View article »
    • Thu Jan 17th 15:48 PM | Rating: 0 0
      Commented on:
      13 Notes on Financials and Real Estate
      Regarding demographics and boomer sales in the north when they move south...

      Have you looked at:
      (1) Natural amortization of housing over time if builders are actually rational,
      (2) Normal population growth which I believe is more than 0%.

      The builders are the key here as they must act rationally. However, if they do and if (1) + (2) is greater than the loss of the boomers to the south than no problems will arise.
      View article »
    • Fri Nov 23rd 14:41 PM | Rating: 0 0
      Commented on:
      Fannie & Freddie Clobbered Over the Need to Raise Capital
      They are raising $5 billion in additional capital via an issuance of preferred stock. Given the current environment the return on this new capital will be very high. Whether or not their is value in the stock at these prices is tough to figure out - but they are not going to disappear.
      View article »
    • Wed Nov 21st 15:33 PM | Rating: 0 0
      Commented on:
      Freddie Mac: Pay No Attention To The LIA Loans Behind the Curtain
      Looks like they are marking the loans conservatively... Marking to model would almost certainly have resulted in higher prices.
      View article »
    • Mon Nov 12th 09:02 AM | Rating: 0 0
      Commented on:
      In Memory of Long Term Capital
      When banks can no longer lend because their capital is impaired one may very well enter a period where everything slows down. Businesses and individuals that are actually good risks and in the past would have gotten credit no longer have access. In the end this hurts all aspects of an economy as credit is a key component driving growth. I would be a bit more cautious here - you may see a slow down in the sales of many retail items as consumers retrench. You may see a slowdown as businesses also retrench and cut back due to more expensive or a lack of access to capital.
      View article »
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