Arlington Value · 2020. 6. 20. · Bank of America (BAC) continued to make steady strides in 2013,...

FIRST WESTERN ADVISORSC O N S E C U T I V E Y E A R S I N B U S I N E S S33

Arlington ValueDra f t Repo r t

Fo r t he yea r endedDecembe r 3 1 , 2 0 1 3

Prepared by: First Western Advisors

May 28, 2015

March 14, 2014 !!Dear Partners, !We had a great 2013. I’m happy to report for the year ended December 31, 2013, AVM Ranger gained 51.5% (42.6% net) versus 32.4% for the S&P 500. Though a sharply rising market put wind in our sails, we’ll take 51.5% in any year. For us, 51.5% is rarified air, having only topped it a few times over Arlington’s fourteen-year history. !While we’re happy with our 2013 return, we’re thrilled with our returns since inception (five and ½ years ): compounding at 39% versus 9% for the S&P 500. Unfortunately, both our one-year 1

and five-year results are certain to come down. !Though returns are sure to decrease, they won’t decline because of poor incentives or lack of engagement—both Ben and I have 99% of our liquid net worth invested alongside yours. !Let’s review the portfolio to see what affected our collective net worths in 2013. !!The major theme driving 2013 results—and those of the last fourteen years for that matter—was a lack of major losses. We didn’t have a single holding register a meaningful decline...perhaps not a great feat in a market that rose 32%. !Berkshire Hathaway (BRK) Our largest holding, Berkshire Hathaway (BRK), galloped to a 33% gain in 2013. The business performed well, and the stock followed suit. Though our comfort and enthusiasm has changed only slightly, we opted to pare back our BRK position in the name of prudence and flexibility as the discount to intrinsic value narrowed. Some managers are pleased with performance in light of their cash holdings; we feel similarly satisfied with our performance considering our huge BRK position. BRK is hunting-dog healthy (harboring roughly $50 billion in cash and spitting out $15+ billion annually) and a solid rudder to the portfolio. !Bank of America (BAC) !Bank of America (BAC) continued to make steady strides in 2013, executing the plan they articulated over three years ago. Though the legal issues can seem never ending, Moynihan’s efforts have paid off, with BAC now sitting on a solid foundation. Not only is BAC on solid footing, it continues to look cheap based on the thesis we laid out in last year’s letter. !

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" AVM Ranger, LP began on July 23, 20081

BAC’s conservative culture and increasingly strong balance sheet underpin our confidence in our hefty 15% position. The combination of strong capital levels and conservative practices led the FED to approve a $10.5 billion capital return program in March ($5.5 billion redeeming preferred stock and $5 billion buying in common stock). We expect another FED stamp of approval in 2014 with increased provisions for returning capital to shareholders. !Investors frequently question how we can invest in banks, inevitably referencing 2008–2009 as proof that banks are equivalent to “black boxes.” Indeed, there is no way for us to know all the underwriting risks within a bank. However, we can gain insight and a solid view by scrutinizing the filings and applying critical thought to both the numbers and management’s actions. To us it’s crystal clear that today’s BAC is much stronger than the BAC heading into 2008. The asset side of the balance sheet has healed, while underwriting standards have tightened considerably. A few statistics can help show BAC’s freewheeling days of extreme leverage and loose credit are a thing of the past. !Looking at BAC’s tangible asset–to–tangible equity ratio, a crude and simple look at leverage, though difficult to manipulate (unlike other measures), reveals dramatic change at BAC. In 2007, this ratio stood at twenty-seven, while today it sits at thirteen. And while leverage has decreased, asset quality has improved. BAC’s latest 10-K reveals credit quality improvements since current CEO Brian Moynihan took over in 2009. For brevity I’ll highlight just a few important loan buckets. !

• In late 2009, 23% of BAC’s residential mortgages had loan-to-values greater than 100%, meaning that nearly a quarter of homeowners were upside down on their homes. Today only 10% are underwater. Furthermore, 40% of BAC’s $250 billion residential mortgage portfolio is FHA insured, up from 10% in late 2009. !

• BAC’s credit card portfolio also tells a credit improvement story: At the end of 2009, 16% of credit card customers had FICO scores (a reliable indicator of default rates) under 620, while today it’s less than 5.5%. This is a massive improvement, a point driven home by the fact that FICO scores between 600 and 649 experience a six-fold increase in delinquency rates compared to scores of 700 to 749. !

Similar improvements can be found in BAC’s home equity portfolio, evidence that Moynihan has succeeded in instilling a conservative culture throughout the company. Additionally, the funding mix has trended toward stable, low-cost retail deposits, while long-term debt has been cut by $250 billion. !Though some investors’ behavior toward bank investing mimics Mark Twain’s cat that sat on the stove, we view the environment today as low risk in light of buffered capital levels and tight scrutiny by investors, regulators, and Washington. We’re very comfortable with our BAC position and applaud Moynihan’s stewardship. !

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Vistaprint (VPRT) !Last year I played coy with a company we were buying. The company, Vistaprint (VPRT), performed well in 2013, resulting in solid gains for Arlington as we were able to acquire a sizable position (15%) at an average cost of around $31 per share. !After a little work, VPRT’s appeal became apparent: a strong track record, compelling economics, intelligent management with significant ownership, and our favorite, a dominant market position with powerful competitive advantages. !Robert Keane founded VPRT in 1996 with the idea of serving the small business market by selling business cards on the cheap. Keane’s intuition proved savvy as VPRT grew from zero to over $500 million in sales by 2009. Today, VPRT revenue tops $1 billion, selling an array of custom products from business cards to T-shirts, and the VPRT brand is increasingly first of mind among small business owners. !Key to any good business analysis is identifying levers of competitive advantage (i.e., the moat) and figuring out if they’re durable. In VPRT’s case, the moat appears deep and durable and is based upon scale. As VPRT grows, unit costs decline. !VPRT’s dominant market position, being magnitudes larger than local print shops, produces a powerful cost advantage (manifest by 65% gross margins versus 35% for the industry) that’s difficult for competitors to match. Imagine trying to compete against a competitor that invests fifteen times more on efforts to improve quality and efficiency than you have in sales (VPRT spent $164 million in 2013 on tech and development versus industry average sales of $11 million). VPRT’s advantages combine to produce a compelling value proposition via quality custom products at low prices. !In early 2012, management shifted strategies slightly, moving from a deep discount model intended to drive traffic and scale—a sensible “land grab” in the early years—to a heightened focus on quality, service, and the lifetime value of customers. This shift in strategy increased investments, which in turn depressed margins and slowed growth (a deadly combination for the fast-money crowd focused on steady earnings growth), though it hasn’t altered VPRT’s moat. We believe the hiccup to earnings is temporary, and we support management’s decision to sacrifice near-term earnings for greater long-term value. !Like any investment, VPRT carries risks. Most prominent to us is the risk that technological innovations change consumer habits and cause chunks of VPRT’s business to decline or disappear. For instance, consumers exchanging contact information through cell phones rather than business cards. !It’s also no secret that print marketing has long been in decline, a trend that both scares investors and is likely to continue—though we don’t believe this trend mutes investment success. While

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industry headwinds have ravaged weaker competitors, VPRT has thrived, growing smartly over the past seventeen years. Just as Starbucks has flourished amid declining per capita coffee consumption (which dropped roughly 30% over the past thirty years and 50% since 1950), VPRT has done well amid print marketing headwinds. !We take comfort being co-owners with VPRT’s management team. Keane and company are large shareholders and have demonstrated savvy capital allocation decisions, balancing the long-term investment needs of the business with outside opportunities, such as acquisitions and share buybacks. VPRT is a nice addition to the portfolio and has a long runway ahead of it. !C.H. Robinson (CHRW) !Another notable addition to the portfolio is C.H. Robinson (CHRW). CHRW is a competitor to XPO Logistics, though it’s much larger and operates globally. Similar to XPO, CHRW employs an asset-light model with a variable cost structure, allowing flexibility amid challenging times. The business has low capital requirements and generates true free cash flow, which management has been delivering to shareholders via share buybacks and dividends. CHRW holds an impressive track record, generating consistently high returns on capital and growing earnings at a rapid clip over the past twenty years. !Lately however, margins have narrowed and earnings growth has stalled. Many question if new entrants, like XPO, and breakthroughs in technology haven’t permanently altered the industry’s economics, producing lower margins for both CHRW and competitors alike. Others point to the placid economic environment as the culprit for the industry’s struggles. We can’t say for sure, though we lean more toward the latter and believe CHRW’s size and global footprint remain advantages over smaller competitors. !We view the risk/reward as attractive. Buying in at depressed margins and with a weak economic backdrop gives us confidence that the downside is limited. Yet if margins revert to the mean or the economy picks up steam, while free cash continues to be intelligently deployed, earnings growth could rise sharply. !Sandridge Energy (SD) !Shortly after writing last year’s letter, we sold out of SD completely. In our office we’ve filed SD under “Lessons Learned...Again”—fortunately SD was an inexpensive lesson. While some fund managers tout the virtues of “constantly reassessing their theses,” we’ve found frequent reassessing often signals we’ve waded into murky (too risky) waters. !A final insight nudged us to exit: the combination of ambiguous asset values and a heavy debt load can sedate conservative thinking and force management into overoptimistic projections under pressure to sell assets and raise capital. !

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As an aside, we’ve found investments based on asset values, as opposed to earnings and free cash, can lead to mistakes. All too often, asset-plays being sold as yachts heading to St. Tropez turn out to be Higgins boats headed toward Omaha Beach. !Rounding out the portfolio are a handful of smaller positions whose collective performance added modestly to our 2013 return. Most notably, XPO Logistics gained 51% as Bradley Jacob’s rollup strategy kicked into high gear, growing sales at triple-digit rates. Though only nine positions account for 99% of the portfolio, we feel confident in the businesses, management teams, and valuations. !!GENERAL MUSINGS !“The only man who never makes mistakes is the man who never does anything.”

–Theodore Roosevelt !Longtime partners familiar with our investing style may wonder if we’ve taken up Roosevelt’s quote as a challenge. !In today’s environment it’s increasingly difficult for managers tasked with managing to embrace inactivity. Perhaps many of us have been reared under the Christian creed that teaches idleness is the hand of Satan (clearly the ecclesiastic person responsible for that nugget of wisdom was not a successful fund manager). Or more likely, managers manage to how they’re measured—quarterly, monthly, or daily. Or maybe to help raise assets, “timely” strategies are created, teams are assembled, stratagem meetings are held, and eager managers spring into action. Granted, a bustling office filled with people and energy lends an air of legitimacy. !Our office feels more like an abandoned library with a couple of bums loitering around. We have yet to be swayed by the virtues of analyst teams and investment meetings. We’re old school. We mostly just sit around reading, thinking, and waiting. A quip by Stanley Druckenmiller describes our process best: “I like to be very patient and then when I see something, go a little bit crazy.” !In truth, we like a little action like anyone else; we just don’t find ideas worthy of action on a regular basis. !In meeting with potential investors, Ben and I rarely miss an opportunity to emphasize the importance of partners, as compatible LPs allow a properly assembled portfolio to unleash its biggest weapon: sheer inertia. Our all-star LPs (you), backing us with confidence and patient capital, are an enormous asset. You allow us to ignore two common pitfalls that routinely tempt managers: market timing and hugging benchmarks. In contrast, the typical mutual fund can’t afford to time markets (safer to closet index), and the typical hedge fund can’t resist it (hello, 2 and 20). !

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The environment we’ve collectively created puts very little pressure on me to keep up with benchmarks on a short-term basis, nor does it cause me to carry a risky bat and swing for the fences. I’m afforded the freedom to run the portfolio exactly like I’d run my own money. Ben and I couldn’t be more pleased with the results, and thankful for our partners. Strong returns have caused our band of partners to grow, swelling assets to $400 million at year-end 2013. Though we’re still a small fund, a growing asset base is unequivocally bad news for partners. So far our asset growth hasn’t caused noticeable ill effects, though a different environment could accentuate the penalty of size. We think we’ve got a good deal of headroom before size imposes meaningful pain. !More than likely, we will close the fund in the not-too-distant future and reopen when opportunity allows capital to be deployed. In the meantime we’ll candidly asses the effects of our size with you as the years roll by. !We’re honored to be partnered with such a great group of LPs and appreciate your continued trust and capital commitments. I look forward to reporting to you again next year. !Sincerely, !!!!Allan Mecham !

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problems as wreaking havoc tomorrow. However, the stark reality is that most problems - and solutions - of the future are not recognized by the throng of economic seers today. Clearly the economy faces near-term challenges and certainly there will be unintended consequences from dramatic policy actions, but I believe it’s a mistake to ignore America’s 220+ year track record of resilience. Underneath ongoing challenges is a vibrant ecosystem bubbling with creative talent and energy that is certain to produce happy surprises in the future; my conviction is not diluted just because the precise form and nature are not apparent today.

In years past I have highlighted unnerving market issues, and thought caution was the better part of valor. But in part, this attitude is deep-rooted in the culture of Arlington; we think vigilance towards risk is the plow-horse to harvesting solid investment returns.

Going forward I will stay focused on buying mispriced securities where success does not depend on buoyant economic conditions. Crucial to adopting this favorable approach is maintaining a long-term focus and making sure future partners share our long-term perspective. Like-minded business partners understand that our mindset is one of buying entire businesses outright and retaining management; therefore, forecasting GDP growth rates, interest rate levels, and other macro variables are not the salient factors to get right in order for us to succeed.

Although we have learned much over the past decade, our underlying principles have not deviated since AVM’s inception. While some funds talk about adjusting strategies as a result of the financial crisis (incorporating more macro views, paying closer attention to valuation, shorting, diversifying more, etc.) we have maintained our hedgehog-like approach, being stubborn in our criteria and worrywarts toward risk and folly. We are certain to make mistakes in the future, but the guiding principles won’t change, functioning as a stable beacon in times of distress. Without a clear focus and sound philosophy, price fluctuations become the bugle that stampedes the cavalry. Our first decade of operation is satisfying beyond appeasing our competitive spirit and meeting our economic needs. Equally fulfilling is adding value to partners in exchange for your trust. We appreciate you for being savvy, patient partners and for entrusting us with your capital.

I enjoy the investment process as much today as I did when I started AVM ten years ago, and don’t consider my job work at all. I feel fortunate and agree with president Reagan when he said, “Hard work never killed anyone, but why risk it.” I look forward to reporting to you again next year. As always, don’t hesitate to call or email with questions or comments.

Sincerely,

Allan Mecham

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The information contained herein is a reflection of the opinions of Arlington Value Capital (Arlington) as of the date of publication, and is subject to change without notice at any time subsequent to the date of issue. Arlington does not represent that any opinion or projection will be realized. All the information provided is for informational purposes only and should not be considered as investment advice or a recommendation to purchase or sell any specific security. While it is believed that the information presented herein is reliable, no representation or warranty is made concerning the accuracy of any data presented. This communication is confidential and may not be reproduced without Arlington’s prior written consent.

Indices are provided as market indicators only. It should not be assumed that holdings, volatility or management style of any Arlington investment vehicle will, or is intended to, resemble that of the mentioned indices. The comparison of this performance data to a single market index or other index is imperfect because the former may contain options and other derivative securities, may include margin trading and other leverage, and may not be as diversified as the S&P 500 Index or other indices. Index returns supplied by various sources are believed to be accurate and reliable.

Past performance is not indicative of future performance. Inherent in any investment is the possibility of loss.

This performance reporting is not an offer to sell or a solicitation of an offer to buy an interest in any Arlington investment vehicle. Such an offer may only be made after you receive the investment vehicle's Confidential Offering Memorandum and have had the opportunity to review its contents. This reporting does not include certain information that should be considered relevant to an investment in Arlington’s investment vehicles, including, but not limited to, significant risk factors and complex tax considerations. For more information, please refer to the appropriate Memorandum and read it carefully before you invest.

Arlington Value

13F

12/31/2012

Stock Symbol Shares Held - 12/31/2012 Market Value - 12/31/2012 % of Portfolio Previous % of Portfolio Ranking Change in shares % Change

Berkshire hathaway inc class b BRK.B 1282599 115,049,000.00$ 60.4853 1 1282599

Bank of america corp. BAC 2891937 33,575,000.00$ 17.6515 2 2891937

Cimpress n v CMPR 439826 14,453,000.00$ 7.5984 3 439826

Sandridge energy inc SD 1806134 11,469,000.00$ 6.0297 4 1806134

Xpo logistics XPO 382599 6,650,000.00$ 3.4961 5 382599

Fairfax financial holdings ltd. FRFHF 11821 4,267,000.00$ 2.2433 6 11821

Berkshire hathaway inc class a BRK.A 26 3,486,000.00$ 1.8327 7 26

Barry (r.g.) corporation DFZ 35099 497,000.00$ 0.2613 8 35099

Sandridge energy inc SD CALL 74800 475,000.00$ 0.2497 9 74800

Deswell industries inc DSWL 121243 289,000.00$ 0.1519 10 121243

Total 190,210,000.00$ 100.00$

Information contained herein is gathered from sources deemed reliable but is not guaranteed

Arlington Value

13F

03/31/2013


Berkshire hathaway inc class b BRK.B 1247145 129,953,000.00$ 55.1932 60.4853 1 -35454 -2.7642

Bank of america corp. BAC 3341210 40,696,000.00$ 17.2843 17.6515 2 449273 15.5354

Cimpress n v CMPR 790586 30,564,000.00$ 12.981 7.5984 3 350760 79.7497

Berkshire hathaway inc class a BRK.A 107 16,722,000.00$ 7.1021 1.8327 4 81 311.5385

Xpo logistics XPO 639389 10,767,000.00$ 4.5729 3.4961 5 256790 67.1173

Leucadia national corp. LUK 170095 4,666,000.00$ 1.9817 6 170095

Barry (r.g.) corporation DFZ 135099 1,809,000.00$ 0.7683 0.2613 7 100000 284.9084

Deswell industries inc DSWL 108744 274,000.00$ 0.1164 0.1519 8 -12499 -10.309

Sandridge energy inc SD CALL 0 -$ 0.2497 -74800 -100

Fairfax financial holdings ltd. FRFHF 0 -$ 2.2433 -11821 -100

Sandridge energy inc SD 0 -$ 6.0297 -1806134 -100

Total 235,451,000.00$ 100.00


Arlington Value

13F

06/31/2013



Cimpress n v CMPR 913826 45,116,000.00$ 16.5469 12.981 2 123240 15.5884


Berkshire hathaway inc class a BRK.A 95 16,017,000.00$ 5.8745 7.1021 4 -12 -11.215


C.h. robinson worldwide CHRW 217647 12,256,000.00$ 4.4951 6 217647

Innerworkings inc INWK 676114 7,336,000.00$ 2.6906 7 676114

Leucadia national corp. LUK 100638 2,639,000.00$ 0.9679 1.9817 8 -69457 -40.8342

Barry (r.g.) corporation DFZ 135099 2,194,000.00$ 0.8047 0.7683 9 0 0

Deswell industries inc DSWL 108744 269,000.00$ 0.0987 0.1164 10 0 0

Total 272,655,000.00$ 100.0002


Arlington Value

13F

09/31/2013



Cimpress n v CMPR 1034089 58,527,000.00$ 19.2218 16.5469 2 120263 13.1604


C.h. robinson worldwide CHRW 400644 23,874,000.00$ 7.8409 4.4951 4 182997 84.0797

Berkshire hathaway inc class a BRK.A 140 23,857,000.00$ 7.8353 5.8745 5 45 47.3684


Rue21 inc RUE 356520 14,378,000.00$ 4.7221 7 356520

Leucadia national corp. LUK 116132 3,163,000.00$ 1.0388 0.9679 8 15494 15.3958

Barry (r.g.) corporation DFZ 135099 2,555,000.00$ 0.8391 0.8047 9 0 0

Innerworkings inc INWK 185729 1,824,000.00$ 0.5991 2.6906 10 -490385 -72.5299


Total 304,482,000.00$ 100.0001


Arlington Value

13F

12/31/2013


Berkshire hathaway inc class b BRK.B 974700 115,560,000.00$ 33.1926 35.2481 1 29200 3.0883

Cimpress n v CMPR 1064549 60,520,000.00$ 17.3833 19.2218 2 30460 2.9456


Berkshire hathaway inc class a BRK.A 140 24,906,000.00$ 7.1538 7.8353 4 0 0

C.h. robinson worldwide CHRW 422301 24,641,000.00$ 7.0777 7.8409 5 21657 5.4055

International business machines IBM 128521 24,107,000.00$ 6.9243 6 128521


Ritchie brothers auctioneers inc. RBA 325676 7,468,000.00$ 2.1451 8 325676

Leucadia national corp. LUK 122501 3,472,000.00$ 0.9973 1.0388 9 6369 5.4843

Barry (r.g.) corporation DFZ 176897 3,414,000.00$ 0.9806 0.8391 10 41798 30.9388

Innerworkings inc INWK 155079 1,208,000.00$ 0.347 0.5991 11 -30650 -16.5025


Rue21 inc RUE 0 -$ 4.7221 -356520 -100

Total 348,150,000.00$ 100


Arlington Value

Stock Positions Held

Jan - Dec 2013

Name Ticker Annual Ret 2013 USD

Cimpress NV (VistaPrint) CMPR 73.01

XPO Logistics Inc XPO 51.27

RG Barry Corp DFZ 36.30

Bank of America Corporation BAC 34.45

Berkshire Hathaway Inc Class A BRK.A 32.70

Berkshire Hathaway Inc Class B BRK.B 32.17

Leucadia National Corp LUK 23.53

Fairfax Financial Holdings Ltd FRFHF 13.59

Ritchie Bros Auctioneers Inc RBA 12.18

Rue21 Inc RUE 4.14

Deswell Industries Inc DSWL 2.50

SandRidge Energy Inc Call 0.00

International Business Machines Corp IBM (0.15)

SandRidge Energy Inc SD (4.41)

CH Robinson Worldwide Inc CHRW (5.49)

InnerWorkings Inc INWK (43.47)

ß©2015 Morningstar.All Rights Reserved. All Data and information is gathered from accurate sources but is not warranted to be correct, complete, or accurate.

Arlington Value

Est Performance

1st Quarter 2013

12/31/2012 3/31/2013 3/31/2013 12/31/2012 3/31/2013 1st Qtr 12/31/2012-03/31/2013 1st Qtr 2013

Stock Symbol Shares Shares Share Change Share Price Share Price Price Change Unchanged Shares (1) $ Gain/Loss (2)

Berkshire Hathaway Inc Class B BRK.B 1,282,599.00 1,247,145.00 (35,454.00) 89.70$ 104.20$ 14.50$ 1,247,145.00 18,083,729.20$

Bank of America Corp. BAC 2,891,937.00 3,341,210.00 449,273.00 11.61$ 12.18$ 0.57$ 2,891,937.00 1,648,792.66$

Cimpress N V (VistaPrint) CMPR 439,826.00 790,586.00 350,760.00 32.86$ 38.66$ 5.80$ 439,826.00 2,550,673.16$

Sandridge Energy Inc SD 1,806,134.00 0.00 (1,806,134.00) 6.35$ 5.27$ (1.08)$ 0.00 -$

XPO Logistics XPO 382,599.00 639,389.00 256,790.00 17.38$ 16.84$ (0.54)$ 382,599.00 (207,032.84)$

Fairfax Financial Holdings Ltd. FRFHF 11,821.00 0.00 (11,821.00) 360.97$ 373.74$ 12.77$ 0.00 -$

Berkshire Hathaway Inc Class A BRK.A 26.00 107.00 81.00 134,076.92$ 156,280.37$ 22,203.45$ 26.00 577,289.62$

Barry R. G. Corporation DFZ 35,099.00 135,099.00 100,000.00 14.16$ 13.39$ (0.77)$ 35,099.00 (27,024.39)$

Sandridge Energy Inc SD CALL 74,800.00 0.00 (74,800.00) 6.35$ -$ (6.35)$ 0.00 -$

Deswell industries inc DSWL 121,243.00 108,744.00 (12,499.00) 2.38$ 2.12$ (0.26)$ 108,744.00 (28,669.57)$

Leucadia National Corp. LUK 0.00 170,095.00 170,095.00 22.66$ 26.90$ 0.00 -$

SubTotal 22,597,757.84$

12/31/2012-03/31/2013 1st Qtr 2013

Changed Shares (3) $ Gain/Loss (4)

Berkshire Hathaway Inc Class B BRK.B 1,282,599.00 1,247,145.00 (35,454.00) 89.70$ 104.20$ 14.50$ (35,454.00) 257,041.50$

Bank of America Corp. BAC 2,891,937.00 3,341,210.00 449,273.00 11.61$ 12.18$ 0.57$ 449,273.00 128,042.81$


Sandridge Energy Inc SD 1,806,134.00 0.00 (1,806,134.00) 6.35$ 5.27$ (1.08)$ (1,806,134.00) (975,312.36)$

XPO Logistics XPO 382,599.00 639,389.00 256,790.00 17.38$ 16.84$ (0.54)$ 256,790.00 (69,333.30)$

Fairfax Financial Holdings Ltd. FRFHF 11,821.00 0.00 (11,821.00) 360.97$ 373.74$ 12.77$ (11,821.00) 75,477.08$


Barry R. G. Corporation DFZ 35,099.00 135,099.00 100,000.00 14.16$ 13.39$ (0.77)$ 100,000.00 (38,500.00)$

Sandridge Energy Inc SD CALL 74,800.00 0.00 (74,800.00) 6.35$ -$ (6.35)$ (74,800.00) (74,800.00)$

Deswell industries inc DSWL 121,243.00 108,744.00 (12,499.00) 2.38$ 2.12$ (0.26)$ (12,499.00) (1,624.87)$

Leucadia National Corp. LUK 0.00 170,095.00 170,095.00 22.66$ 26.90$ 4.24 170,095.00 360,601.40$

SubTotal 1,578,035.99$

Total Gains/Losses 24,175,793.82$

Cummulative Returns

% Quarterly Est 11.36%

% YTD Cummulative Return 11.36%

Beginning Balance 190,210,000.00$

Estimated Gains 24,175,793.82$

Estimated New Money 21,065,206.18$

Ending Balance 235,451,000.00$

(1) Portion of Stock Position that Remained Constant

(2) Constant Stock Position X Quarterly Price Change

(3) Portion of Stock Position that Changed

(4) Changed Stock Position X Avg Price Change During Quarter


Arlington Value

Est Performance

2nd Quarter 2013

3/31/2013 6/30/2013 2nd Qtr 3/31/2013 6/30/2013 2nd Qtr 03/31/2013-06/30/2013 1st Qtr 2013


Berkshire Hathaway Inc Class B BRK.B 1,247,145.00 1,141,747.00 (105,398.00) 104.20$ 111.92$ 7.72$ 1,141,747.00 8,814,286.84$



Sandridge Energy Inc SD 0.00 0.00 0.00 5.27$ -$ (5.27)$ 0.00 -$

XPO Logistics XPO 639,389.00 815,396.00 176,007.00 16.84$ 18.09$ 1.25$ 639,389.00 799,236.25$

C.h. robinson worldwide CHRW 0.00 217,647.00 217,647.00 56.75$ 54.08$ (2.67)$ 0.00 -$

Innerworkings inc INWK 0.00 676,114.00 676,114.00 15.14$ 10.85$ (4.29)$ 0.00 -$

Fairfax Financial Holdings Ltd. FRFHF 0.00 0.00 0.00 -$ -$ -$ 0.00 -$

Berkshire Hathaway Inc Class A BRK.A 107.00 95.00 (12.00) 156,280.37$ 168,600.00$ 12,319.63$ 95.00 1,170,364.85$

Barry R. G. Corporation DFZ 135,099.00 135,099.00 0.00 13.39$ 16.24$ 2.85$ 35,099.00 100,032.15$

Sandridge Energy Inc SD CALL 0.00 0.00 0.00 -$ -$ -$ 0.00 -$

Deswell industries inc DSWL 108,744.00 108,744.00 0.00 2.12$ 2.47$ 0.35$ 108,744.00 38,060.40$

Leucadia National Corp. LUK 170,095.00 100,638.00 (69,457.00) 26.90$ 25.77$ (1.13)$ 100,638.00 (113,720.94)$

SubTotal 21,617,519.49$

03/31/2013-06/30/2013 2nd Qtr 2013


Berkshire Hathaway Inc Class B BRK.B 1,247,145.00 1,141,747.00 (105,398.00) 104.20$ 111.92$ 7.72$ (105,398.00) 406,836.28$


Cimpress N V (VistaPrint) CMPR 790,586.00 913,826.00 123,240.00 38.66$ 49.37$ 10.71$ 123,240.00 659,950.20$

Sandridge Energy Inc SD 0.00 0.00 0.00 5.27$ -$ (5.27)$ 0.00 -$


C.h. robinson worldwide CHRW 0.00 217,647.00 217,647.00 56.75$ 54.08$ (2.67)$ 217,647.00 (290,558.75)$

Innerworkings inc INWK 0.00 676,114.00 676,114.00 15.14$ 10.85$ (4.29)$ 676,114.00 (1,450,264.53)$


Berkshire Hathaway Inc Class A BRK.A 107.00 95.00 (12.00) 156,280.37$ 168,600.00$ 12,319.63$ (12.00) 73,917.78$

Barry R. G. Corporation DFZ 135,099.00 135,099.00 0.00 13.39$ 16.24$ 2.85$ 0.00 -$


Deswell industries inc DSWL 108,744.00 108,744.00 0.00 2.12$ 2.47$ 0.35$ 0.00 -$

Leucadia National Corp. LUK 170,095.00 100,638.00 (69,457.00) 26.90$ 25.77$ (1.13)$ (69,457.00) (39,243.21)$

SubTotal (494,327.31)$













Arlington Value

Est Performance

3rd Quarter 2013

6/30/2013 9/30/2013 3rd Qtr 6/30/2013 9/30/2013 3rd Qtr 06/30/2013-09/30/2013 3rd Qtr 2013


Berkshire Hathaway Inc Class B BRK.B 1,141,747.00 945,500.00 (196,247.00) 111.92$ 113.51$ 1.59$ 945,500.00 1,503,345.00$


Cimpress N V (VistaPrint) CMPR 913,826.00 1,034,089.00 120,263.00 49.37$ 56.60$ 7.23$ 913,826.00 6,606,961.98$

Sandridge Energy Inc SD 0.00 0.00 0.00 -$ -$ -$ 0.00 -$

XPO Logistics XPO 815,396.00 834,640.00 19,244.00 18.09$ 21.67$ 3.58$ 815,396.00 2,919,117.68$

C.h. robinson worldwide CHRW 217,647.00 400,644.00 182,997.00 54.08$ 59.59$ 5.51$ 217,647.00 1,199,234.97$

Innerworkings inc INWK 676,114.00 185,729.00 (490,385.00) 10.85$ 9.82$ (1.03)$ 185,729.00 (191,300.87)$



Barry R. G. Corporation DFZ 135,099.00 135,099.00 0.00 16.24$ 18.91$ 2.67$ 135,099.00 360,714.33$


Deswell industries inc DSWL 108,744.00 107,881.00 (863.00) 2.47$ 2.45$ (0.02)$ 107,881.00 (2,157.62)$

Leucadia National Corp. LUK 100,638.00 116,132.00 15,494.00 25.77$ 27.24$ 1.47$ 100,638.00 147,937.86$

Rue21 Inc RUE 0.00 356,520.00 356,520.00 41.61$ 40.33$ (1.28)$ -$ -$

SubTotal 7,785,135.00 231,588.00 1,827.80 15,953,118.17$

06/30/2013-09/30/2013 3rd Qtr 2013


Berkshire Hathaway Inc Class B BRK.B 1,141,747.00 945,500.00 (196,247.00) 111.92$ 113.51$ 1.59$ (196,247.00) 156,016.37$


Cimpress N V (VistaPrint) CMPR 913,826.00 1,034,089.00 120,263.00 49.37$ 56.60$ 7.23$ 120,263.00 434,750.75$



C.h. robinson worldwide CHRW 217,647.00 400,644.00 182,997.00 54.08$ 59.59$ 5.51$ 182,997.00 504,156.74$

Innerworkings inc INWK 676,114.00 185,729.00 (490,385.00) 10.85$ 9.82$ (1.03)$ (490,385.00) (252,548.28)$


Berkshire Hathaway Inc Class A BRK.A 95.00 140.00 45.00 168,600.00$ 170,407.14$ 1,807.14$ 45.00 (40,660.65)$

Barry R. G. Corporation DFZ 135,099.00 135,099.00 0.00 16.24$ 18.91$ 2.67$ 0.00 -$


Deswell industries inc DSWL 108,744.00 107,881.00 (863.00) 2.47$ 2.45$ (0.02)$ (863.00) (8.63)$


Rue21 Inc RUE 0.00 356,520.00 356,520.00 41.61$ 40.33$ (1.28)$ 356,520.00 (228,172.80)$

SubTotal 1,827.80 724,892.74$













Arlington Value

Est Performance

4th Quarter 2013

9/30/2013 12/31/2014 4th Qtr 9/30/2013 12/31/2013 4th Qtr 09/30/2013-12/31/2013 4th Qtr 2013


Berkshire Hathaway Inc Class B BRK.B 945,500.00 974,700.00 29,200.00 113.51$ 118.56$ 5.05$ 945,500.00 4,774,775.00$


Cimpress N V (VistaPrint) CMPR 1,034,089.00 1,064,549.00 30,460.00 56.60$ 56.85$ 0.25$ 1,034,089.00 258,522.25$


XPO Logistics XPO 834,640.00 849,664.00 15,024.00 21.67$ 26.29$ 4.62$ 834,640.00 3,856,036.80$

C.h. robinson worldwide CHRW 400,644.00 422,301.00 21,657.00 59.59$ 58.35$ (1.24)$ 400,644.00 (496,798.56)$

Innerworkings inc INWK 185,729.00 155,079.00 (30,650.00) 9.82$ 7.79$ (2.03)$ 155,079.00 (314,810.37)$


Berkshire Hathaway Inc Class A BRK.A 140.00 140.00 0.00 170,407.14$ 177,900.00$ 7,492.86$ 140.00 1,049,000.40$

Barry R. G. Corporation DFZ 135,099.00 176,897.00 41,798.00 18.91$ 19.30$ 0.39$ 135,099.00 52,688.61$


Deswell industries inc DSWL 107,881.00 100,981.00 (6,900.00) 2.45$ 2.24$ (0.21)$ 100,981.00 (21,206.01)$


Rue21 Inc RUE 356,520.00 0.00 (356,520.00) 40.33$ 42.00$ 1.67$ 356,520.00$ 595,388.40$

Ritchie brothers auctioneers inc. RBA 0.00 325,676.00 325,676.00 19.40$ 22.93$ 3.53$ -$ -$

International business machines IBM 0.00 128,521.00 128,521.00 177.23$ 187.57$ 10.34$ -$ -$

SubTotal 16,375,048.69$

09/30/2013-12/31/2013 4th Qtr 2013


Berkshire Hathaway Inc Class B BRK.B 945,500.00 974,700.00 29,200.00 113.51$ 118.56$ 5.05$ 29,200.00 73,730.00$


Cimpress N V (VistaPrint) CMPR 1,034,089.00 1,064,549.00 30,460.00 56.60$ 56.85$ 0.25$ 30,460.00 3,807.50$



C.h. robinson worldwide CHRW 400,644.00 422,301.00 21,657.00 59.59$ 58.35$ (1.24)$ 21,657.00 (13,427.34)$

Innerworkings inc INWK 185,729.00 155,079.00 (30,650.00) 9.82$ 7.79$ (2.03)$ (30,650.00) (31,109.75)$


Berkshire Hathaway Inc Class A BRK.A 140.00 140.00 0.00 170,407.14$ 177,900.00$ 7,492.86$ 0.00 -$

Barry R. G. Corporation DFZ 135,099.00 176,897.00 41,798.00 18.91$ 19.30$ 0.39$ 41,798.00 8,150.61$


Deswell industries inc DSWL 107,881.00 100,981.00 (6,900.00) 2.45$ 2.24$ (0.21)$ (6,900.00) (724.50)$


Rue21 Inc RUE 356,520.00 0.00 (356,520.00) 40.33$ 42.00$ 1.67$ (356,520.00) 297,694.20$

Ritchie brothers auctioneers inc. RBA 0.00 325,676.00 325,676.00 19.40$ 22.93$ 3.53$ 325,676.00 574,818.14$

International business machines IBM 0.00 128,521.00 128,521.00 177.23$ 187.57$ 10.34$ 128,521.00 664,453.57$

SubTotal 1,795,650.53$



% YTD Cummulative Return 31.02%Beginning Balance 304,482,000.00$









Arlington Value · 2020. 6. 20. · Bank of America (BAC) continued to make steady strides in 2013,...

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