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Last week, I noted that Primus (PRS) announced a fairly significant “credit mitigation” transaction, which clipped the tail risk on about $1.2 billion in notional CDS. Because Primus discloses such events and credit losses as they occur, and the company not writing new CDS business, non-GAAP earnings aren’t really a surprise – economic results of $47.5 million came from CDS premiums (no credit events in Q2) and a repurchase of debt at a large discount.

Jeff, author of Circle of Competence, is a young and learning investor not yet out of college. He derives his investing framework from Superinvestors ranging from Ben Graham and John Maynard Keynes to Joel Greenblatt and Eddie Lampert. Jeff believes the most effective approach to investing is that of a business owner and entrepreneur looking for misunderstood businesses selling very cheaply with little risk of capital impairment.

Visit Circle of Competence

1. Are you a value investor?

Jeff, author of Circle of Competence, is a young and learning investor not yet out of college. He derives his investing framework from Superinvestors ranging from Ben Graham and John Maynard Keynes to Joel Greenblatt and Eddie Lampert. Jeff believes the most effective approach to investing is that of a business owner and entrepreneur looking for misunderstood businesses selling very cheaply with little risk of capital impairment.

Visit Circle of Competence

1. Are you a value investor?

Monday, Primus (PRS) CEO Tom Jasper made a presentation at a Lehman Financial Services Conference; this is an extraordinary coincidence of timing given all the questions regarding the settling of credit default swaps [CDS] on the various pieces of Fannie (FNM) and Freddie (FRE) capital. A settling of CDS contracts (which appears likely given comments by ISDA, the International Swap and Derivatives Association) would be the largest such action ever taken, and this has people nervous.