This page has been archived and commenting is disabled.

Deep Thoughts From Leucadia

Tyler Durden's picture




 

With Leucadia coming boldly from behind the shadows, where Ian Cumming and Joe Steinberg have always enjoyed operating, and joining Buffett in a deal over Capmark's loan-servicing and mortgage business, it makes sense to introduce readers with some of the very original thinking of the Leucadia founders (and very close friends of the mellifluously named Dick Handler). We present their most recent annual investor letter, which frequently is cited as among the best hedge fund (even though they don't like to be seen as one) strategy reading material. 

 

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 09/02/2009 - 18:34 | 56842 JohnKing
JohnKing's picture

That's too truthy, feed me green shoots!

Wed, 09/02/2009 - 18:34 | 56843 Anonymous
Anonymous's picture

No love for "Revolutionary Struggle" out of Greece?

I swear to God, these guys are Project Mayhem on steroids, and we don't even give them the time of day?

They just put the fear of God back into the banksters in Greece, and we need the same medicine here in North America.

Wed, 09/02/2009 - 23:18 | 57067 spekulatn
spekulatn's picture

Revolution?? We don't need no stinkin revolution.

http://www.youtube.com/watch?v=wqcPA1ysSbw 

 


Wed, 09/02/2009 - 18:50 | 56850 KeyserSöze
KeyserSöze's picture

Tyler,

What amazes me from this report are some of the CRE holdings and also Resort Quest.  They essentially doubled down in Panama City, Florida and I have written about " CRE analyst" and "investment committees" this is a PERFECT example of analysis gone HORRIBLY wrong.

Resort Quest -What a joke, and they acquired it in 2007 at the height of the market?! To boot, the "708" acre parcel (the old airport in PC) laughable, you can find THOUSANDS of acres all owed by St. Joe (WAY better locations), nothing like availability to drive up land costs...oh it doesn't work that way does it?  I don't know much about their other CRE holdings but I know some of the holdings in their portfolio very well and they are dogs with fleas!  Alligators!

I can see now why they turned to Buffet...I can only imagine how much Buffet shook them down for....they need it and judging by some of their assets they deserve it. 

Wed, 09/02/2009 - 19:13 | 56874 Anonymous
Anonymous's picture

I ken nary afford thee gold, nor the sillistocks of Mr. Dow Jones, und bonds is jus' what the misses gots me in. In fact, I'm happy just to hold a pint now and then. Getting what ken be got from the sea and the sun, in way of fish, fruit, and vegetationables is gud eno' fer meh. But nee tragedee is so full as to make abominable me mind as lack o'...
http://www.youtube.com/watch?v=RegRn-vw4DA
Indeed, when thee man comes fer me labour, wanten to make greater und better of all, err war upoun me neighbor. Then 'e better promise me the grog. Thee sivilization depends upon 'ee.

Wed, 09/02/2009 - 19:31 | 56893 Rollerball
Rollerball's picture

Tax hedge fund ponzi scheme is what they are.  And Buffett is probably just "hedging" his GS portfolio of toxic GS assets.  I'd short BRK-A if I could get the borrow (and margin;).

Wed, 09/02/2009 - 19:46 | 56906 chumbawamba
chumbawamba's picture

Jim Willie thinks Buffet is bankrupt.  I think he's probably right.

I am Chumbawamba.

Wed, 09/02/2009 - 19:43 | 56902 Anonymous
Anonymous's picture

FYI...Ian Cumming has been far more successful in finance and investment operations than 99% of the people who have ever visited Zero Hedge, or who will in the fuure. It is easy to be a critic. Until you have attempted to deploy large amounts of capital, one should withhold opinion...

Warren Buffett's record has been desrtoyed because his "terrible" investment in COP...?

An appropriate amount of diversification allows for individual errors. The best batter of all time hit .400.

Wed, 09/02/2009 - 19:45 | 56904 chumbawamba
chumbawamba's picture

My dad lost and then gained a fortune by investing in Leucadia three times over during the past three decades.  After the last drop I finally got him to sell his shares and put it into gold.  Now he'll live a comfortable retirement.

I am Chumbawamba.

Wed, 09/02/2009 - 20:51 | 56963 Anonymous
Anonymous's picture

Please take a moment and explain how that is possible.

http://finance.yahoo.com/echarts?s=LUK#chart1:symbol=luk;range=my;indica...

Wed, 09/02/2009 - 23:38 | 57081 chumbawamba
chumbawamba's picture

Not sure.  My dad is bat shit insane.  But now his assets are secure so it doesn't matter.

I am Chumbawamba.

Wed, 09/02/2009 - 19:45 | 56905 Anonymous
Anonymous's picture

ah leucadia - those boys spend more time flying in and out of Yampa Valley - at least they make good use of their G5

Wed, 09/02/2009 - 21:24 | 56994 Rollerball
Rollerball's picture

Drug runners with a deep basement and laundry facilities.

Wed, 09/02/2009 - 20:27 | 56945 Anonymous
Anonymous's picture

Wow. This letter is a bloodbath of investing acumen and the fact that even the "smart money" got stoopid this last go around. $20 says they're jettisoning equity positions like bad curry in this bear rally.

Wed, 09/02/2009 - 20:30 | 56948 Ben Graham Redux
Ben Graham Redux's picture

I think highly of their approach to investment, but other than their mining assets, I hate the assets they own. Finance companies, wineries, and casinos are all assets of the last cycle.  These guys are stuck with assets that I expect to decline dramatically in value.  Sometimes smart and talented people make bad decisions.  My guess is that they'll figure it out and get back in the black.

Wed, 09/02/2009 - 21:43 | 57012 John Self
John Self's picture

Don't forget the forest assets.  That's so 2006!

Wed, 09/02/2009 - 21:56 | 57022 Anonymous
Anonymous's picture

You gotta be kiddin' me. These guys still have jobs?

Thu, 09/03/2009 - 01:56 | 57121 Mediocritas
Mediocritas's picture

@TD: are you really kissing Leucadia's ass this much or are you being sarcastic? I can't tell.

My eyes started to glaze over when I saw they were long FMG, oh dear. FMG. A company that bet the farm on an unbroken China boom and very nearly went down in March. It only survived by whoring part of the company off to the Chinese and that was held up for a long time by the Oz govt to the point where it was time to shut shop. Instead of blaming an overly optimistic and aggressive business model, Forrester had a big cry about us bears targeting the stock (because of its overly optimistic and aggressive business model) in its impressive fall from $13 to $1. I've subsequently done OK with a few short-term longs on FMG, but made far more on the shorts. (Edit: another thing to add here is that FMG's mining model *depends* on high iron-ore prices because they exploit lower % ore sites with an inefficient 'scrape it all' approach. FMG's model is a scavenger model, they picked up sites that more mature miners (who've been through tough times) wouldn't touch due to viability concerns, and were able to turn a profit due to high Fe prices. Prices fall too far and FMG is history).

If TSHTF again I'll be loading up the existing short even more on FMG regardless of what Leucadia have to say. Given their crapnalysis on FMG, looks like a few more short targets just popped onto the radar.

Iron ore in oz is tapped out for now. The export pipeline is slick and refined, able to service huge quantities of ore to a Chinese market that no longer needs it. There's a surplus capacity backflow hitting the oz Fe miners and the Chinese have already showed that they will simply break overpriced contracts and say "stick it" (very bad for FMG). Stay away and head for greener pastures. Much better target is oz LNG for export to Japan & China, the moves in that sector lately have been explosive. Still, even on that front, I took profits in August and am starting to flip to speculative shorts sprinkled through the ASX, especially the REITs, of which there are so many to choose from.

The Aussies are in for a nasty real estate collapse starting in 5...4...3...

Thu, 09/03/2009 - 17:09 | 58050 Anonymous
Anonymous's picture

I've met Ian Cummings on several occasions. I used to be an IT consultant up in Jackson Hole, where he's got an office and a stupid huge house with a beautiful view of the tetons. He was an investor in the company that I worked for, so we got all his local IT business. He's got a couple of private jets and more money then god. I think I saw Dick Cheney's number in his rolodex once(Tricky Dick is also a JH resident). Ian's a smart guy... loved his mac powerbook and had a copy of richard dawkins "the god delusion" on his desk at his home office the last time I was at his house. We had a good conversation about atheism. Oddly enough he tries to portray an "invest in america" idealism(which is why he liked AAPL), even though LUK is invested all over the world. I think he's the richest person I've ever personally met, and definitely the richest person I've had extended conversations with. I've looked into investing in LUK but they're so all over the board that I didn't really feel like I had an understanding of how they're profitable or what risks were involved. Long story short he's a monstrously clever fellow, but I don't know that I'd throw any money at LUK anytime soon.

Wed, 11/10/2010 - 06:12 | 715588 cheap uggs for sale
cheap uggs for sale's picture

It’s a interesting news,i like it.Additionally,wellcome to my website prettyboots.org ,here are so many UGGS On Sale such as:UGG Elsey wedge|UGG Elsey wedge black|UGG Elsey wedge chestnut|UGG Elsey wedge espresso|UGG Langley|UGG Langley black|UGG Langley chestnut|UGG Lo Pro Button|UGG Lo Pro Button black|UGG Lo Pro Button blue|UGG Lo Pro Button cream|UGG Mayfaire|UGG Mayfaire black|UGG Mayfaire chestnut|UGG Mayfaire chocolate|UGG Mayfaire sand|UGG Mayfaire red|UGG Nightfall|UGG Nightfall black|UGG Nightfall chestnut|UGG Nightfall chocolate|UGG Nightfall sand|UGG Sundance II|UGG Sundance II black|UGG Sundance II chestnut|UGG Sundance II chocolate|UGG Sundance II sand|UGG Ultimate Bind|UGG Ultimate Bind black|UGG Ultimate Bind chestnut|UGG Ultimate Bind chocolate|UGG Ultimate Bind sand|UGG Ultra Short|UGG Ultra Short chocolate|UGG Ultra Short sand|UGG Ultra Short black|UGG Ultra Tall|UGG Ultra Tall chestnut|UGG Ultra Tall sand|UGG Ultra Tall balck|UGG Ultra Tall chocolate|UGG Suede|UGG Suede black|UGG Suede chestnut|UGG Suede sand|UGG upside|UGG upside black|UGG upside chestnut|UGG upside mocha|UGG Roxy Tall|UGG Roxy Tall black|UGG Roxy Tall chestnut|UGG Roxy Tall chocolate|UGG Roxy Tall sand|UGG seline|UGG seline black|UGG seline chestnut|UGG Corinth Boots|UGG Liberty|UGG Liberty black|UGG Liberty cigar|UGG Highkoo|UGG Highkoo amber brown|UGG Highkoo espresso|UGG Highkoo grey|UGG Highkoo black|UGG Knightsbridge|UGG Knightsbridge black|UGG Knightsbridge chestnut|UGG Knightsbridge grey|UGG Knightsbridge sand|UGG Knightsbridge chocolate|UGG Adirondack|UGG Adirondack brown|UGG Adirondack chocolate|UGG Suburb Crochet|UGG Suburb Crochet black|UGG Suburb Crochet chestnut|UGG Suburb Crochet chocolate|UGG Suburb Crochet grey|UGG Suburb Crochet white|UGG Kensington|UGG Kensington black|UGG Kensington chestnut|UGG Roseberry|UGG Roseberry black|UGG Roseberry sand|UGG Gaviota|UGG Gaviota black|UGG Gaviota chestnut|UGG Gaviota chocolate|UGG Desoto|UGG Desoto black|UGG Desoto chestnut|UGG Desoto chocolate|UGG Brookfield Tall|UGG Brookfield Tall black|UGG Brookfield Tall chocolate|UGG Gissella|UGG Gissella black|UGG Gissella chestnut|UGG Gissella espresso|UGG Payton|UGG Payton black|UGG Payton chestnut|UGG Payton red|UGG Bailey Button Triplet|UGG Bailey Button Triplet black|UGG Bailey Button Triplet chestnut|UGG Bailey Button Triplet chocolate|UGG Bailey Button Triplet grey|UGG Bailey Button Triplet sand|There are so much style of cheap uggs for sale ,so once you go to my website you will be very surprise.

Do NOT follow this link or you will be banned from the site!