Thursday, February 08, 2007

10th Columbia Conference 2007

Abyli3 of MSN BRK board has kindly permitted me to post his wonderful sharing on this blog.

Abyli3 said.....

I went there with one question in mind for Bruce Berkowitz: how to valuate energy stock since FAIRX has 25% in energy stocks.

Bruce recommended one stock: CNQ. He said: if you do not know horse, then find a good jockey. Property & Casualty insurance is a commodity business, but in Warren Buffett's hand, it became a fantanstic business. Oil is also a commodity business, but CNQ vice chairman N. Murray Edwards knows oil and how to allocate capital. He could be the next Buffett and the good news is he is still in his 40s. I do not know where the oil price in the short term, but in the long run, China and India will need more oil, $25 oil is long gone. CNQ can triple production without buying any other companies and you have great manager who can focus and knows how to allocate capital. And at around $50, it is trading at 5 times cashflow.

I checked FAIRX's portfolio, CNQ is #2 position right after BRK. He also has big stake in PWE and Ensign Resource Service. N. Murray Edwards happens to be the chairman of ESI.

As to Home Builders, Bill Miller said he likes home builders and actually they are #1 or #2 shareholders of some big home builders, but they bought the shares too early.

Bruce said: we checked home builders, but we could not figure out a way to count their cash. (my comment: no free cash flow?) So instead of buying home builders, we bought shares of suppliers to them. Great companies, great management team.

I checked FAIRX's portfolio. They bought and sold MDC last year. He built positions in MHK and USG last year.

In the conference, Bruce also mentioned that his recent mistake was USG. He bought USG around $5-$7 and sold the shares about cost and saw the price going up all the way to $120.

Thank you Abyli3,

No comments: