Vancouver Value Investors Club

1. Vancouver Value Investors Club November 27, 2008

2. Goals and Objectives • A forum to: • Network with other local investors. • Learn how to become a better investor. • Discover high-quality investment opportunities. • The philosophy of the club is to apply reason and thoughtful analysis to the ideas presented. • “You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.” • The focus is on viewing stocks as part-ownership in a business. • Finding and interpreting the value of an investment. • Trying to stay away from speculative ideas, IPO’s, charting, market timing, fancy Greek letters like alpha, beta, gamma, and excessive trading.

3. Ryan Irvine, Keystone Financial Publishing • KeyStone Financial is an independent financial advisor offering specific BUY/SELL research reports through our respected library of Canadian and U.S stock market investment publications. • Both a product of our solid track record and a sign of standing in the small- to mid-cap market, KeyStone analysts are frequently quoted in respected publications, including the National Post, Calgary Herald, Investor's Digest of Canada, and Canadian Money Saver, and make regular appearances on CKNW's Money Talks with Michael Campbell, CBC Radio, ROBTV, as well as headline speaking engagements at several national conferences • Our independent research publications focus on uncovering companies that display "GARP" or Growth at a Reasonable Price. • A hallmark of our research is independence. KeyStone is not affiliated with any bank or brokerage company, nor do its research publications accept any remuneration (cash or shares) for the inclusion of a company.

4. “Mean Markets and Lizard Brains” by Terry Burnham • An amazing investment book that every aspiring investor should read! • For $18.95 CDN you get “million-dollar making” insights and education. • Terry is a leader in the application of biology to economics and finance. He has a PHD in economics from Harvard, BS in biophysics, MS in computer science, and masters degree in finance from MIT. • Well researched and documented, providing evidence and experiments about why our nature is hard-wired to lose at investing and how we can subvert that process so that we can win. • Deserves a spot in your investment book library.

5. Linda is 31 years old, single, outspoken, and very bright. She majored in philosophy. As a student she was deeply concerned with issues of discrimination and social justice, and also participated in antinuclear demonstrations.Which of these two alternatives is more probable?1. Linda is a bank teller.2. Linda is a bank teller and is active in the feminist movement.

6. How many people were employed by Wal-Mart in January 2004, around the world? Without looking up any information, write down a specific estimate. That may not seem fair, as different people know more or less about Wal-Mart. To make the question fair, in addition to your guess, write down an upper-bound and a lower-bound number. Pick these bounds so that you are 90% sure that the actual number of employees is between your extreme high and your extreme low guesses. • YOUR ESTIMATE - ? • LOWER BOUND - ? • UPPER BOUND - ?

8. Roundtable Debate & Discussion • If you had to invest in just 1 stock and go away for 5 years, which stock would it be and why? • What lessons have you learnt (1 thing you did well, 1 mistake)? •  What anecdotal real-life stories have you heard of others' experience in the markets recently?  •  What luxuries/other items will you keep spending on, no matter how bad things get? • What scares you most about the future? • What investment would you NOT invest in and why? • Do you have any other questions or concerns that fellow members may have some suggestions?

9. Some stocks I’ve looked at… • Interactive Brokers Group (IBKR)-a market maker and discount online broker allows trading in 8 currencies, over 80 markets, futures, options, stocks. Run by Thomas Peterffy who built the business from scratch over 30 years. Free cash flow was close to $1 billion last 12 months. • Elbit Imaging (EMITF)- an Israeli conglomerate traded on the NASDAQ, trading way below Net Asset Value. Run by Motti Zisser, a well known Israeli real estate developer. Has exposure to emerging markets like Eastern Europe and India where they are building malls, hotels, and other mixed use properties. Strangely, the company also has two bio-tech developments, one is a very interesting treatment for cancer involving ultrasound guided by MRI to burn tumours. • Enstar Group (ESGR)- a Bermuda-based run-off insurance manager. Run-off is an interesting field. You buy insurance companies that failed to reserve properly and "run-off" or settle the claims below stated value. You get to keep the cash invested while you settle and earn both investment income and release of reserves. The capital allocator at the helm is JC Flowers, a well known value investor in financial services industry. • GeoResources (GEOI) - a gas and oil producer that has a conservative and well financed growth plan. They are profitable, earning about $20-$25 million per year and has a market cap of only $130 million. Over 20% returns apparently even with low oil prices. Growth strategy is only to grow in a way that is profitable. • Brookfield Asset Manager (BAM) - this conglomerate run by Bruce Flatt boasts Jimmy Patterson as a director. It is a very stable and principled investment holding company owns some of the most valuable office towers in big downtown centers, hydroelectric dams, timber, and other hard assets that may do well in an inflationary future. Company has great free cash-flows financed by long-term, non-recourse, low cost permanent capital. Also has stated principle of investments on their website. • International Asset Holdings (IAAC)- a market maker and investment firm specializing in emerging markets including Africa and Latin America. Has tanked due to falling commodity prices but has a very disciplined management.Other deeply discounted large caps: Goldman Sachs, General Electric, Leucadia National, Berkshire Hathaway, American Express.

10. Agenda for the next Meet-Up • Looking for presenters who would like to do a brief 15 minute presentation on an investing subject of their interest. • Alternatively, a question to be presented to the Group for debate where you provide the background to the question. • Informal and friendly context, no need to be scared to share your thoughts! • Email me at roman.alex@gmail.com if interested. We’ll have the next meet-up as soon as we get two or three such ideas on the table.

11. Some History…