giofranchi

Of course you should start a new topic on Goodwin!! skanjete… where have you been all my life??!! ;D ;D ;D Gio

Of course, it is not Mr. Tack who needs me… It is just the other way around: I need him to let me know and understand what he intends to do and how, before results speak for themselves… because by then it is usually too late! Anyway, yes!! What you are writing about this new investment thesis is just wonderful! I agree 100%. And those quotes from the AM are just music to my ears too! Very interesting investment opportunity! The sort of thing I really like. ;) Gio

Yeah! I know communication with shareholders might be time-consuming, probably a waste of time, someone would even say a promotional activity… Yet, I think that as a shareholder it is of great usefulness to me! How could I come to understand whether I want to partner with you and to make business with you, if you don’t make the effort of explaining your strategy to me, and your means to create value for both of us? … That’s basically what I have just said in the BH thread… ;) Gio

Good example, indeed! ;) The fact is what I said in my previous post: I think I understand how Mr. Biglari is going to create value and what’s his strategy to achieve worthy business goals. Instead, I don’t know anything about those very talented engineers at FNG Group… Whenever I read stories like the one of FNG Group, 100k that have turned into 100 million in a few years, without clearly understanding how the stars behind those great stories think about and do business... well, they just could be lottery tickets to me… Gio

Thank you very much for the idea! :) Where is it possible to find more information about Tack & Co? Cheers, Gio

Yeah! Sanjeev, of course you are right! But I think we are missing something very important here… SIZE!! Mr. Biglari is my age and already runs a company that is orders of magnitude larger than my own… I think it is simply impossible for him to get control over it by the means you have suggested: by building it, or by purchasing it. No way someone as young as him (without a spectacular inheritance from his family…!!) could have gotten control over such a large company simply buying a majority stake! Also building it is out of the question: those are stories that might happen in the high-tech realm… not in fast food franchising! Therefore, here we have a dilemma: either manage the company without true control over it (which I think is dangerous, because shareholders interests might sometimes be very short term…), or get control over the company in some non-traditional ways (which has its own dangers, because shareholders, who instead are long-term oriented, might not like it at all…). It is not an easy choice… but I guess by now it is clear what I prefer! ;) Gio

But I always just stick to business… I try to listen to what they say about their business strategy and about the process they employ to create value… I try to decide if I like what I hear, or if I don’t… Then I invest if I like it, I look somewhere else if I don’t like it… That’s all! I try to judge people on how clearly and effectively they think and communicate their business goals, and the means to achieve them. I know very well that “being full of oneself” is a warning sign… But why? Because it might cause someone to lose clearness of vision and to start making bad business decisions! Yet, until there is the evidence someone full of himself like Mr. Biglari truly is beginning to misjudge business opportunities, it is just extremely difficult and uncertain to predict it will happen. That’s why I said that I will take the evidence as it comes: until now I like what I see (from a business point of view) very much! When and if my business point of view changes, I will revaluate BH. I think of it this way: The evidence: Mr. Biglari has built a platform for doing business following the example of BRK, while also trying to follow in Mr. Icahn's footsteps as an activist investor, putting together the best of both worlds. The speculation: it is going to end badly, because Mr. Biglari is an arrogant fellow. The evidence: since the inception of his Lion Fund, Mr. Biglari’s shareholders have made tons of money. The speculation: he will enrich himself over the backs of his shareholders, because Mr. Biglari is an arrogant fellow. Well, I just stick with the evidence… And… Gio

Well, of course I am not saying it will work out fine all the times! As I have said, business is not easy: just look at what happened recently with Mr. Brindle at Lancashire… But generally you want to stay in between something too small (business, a start-up company), too young (management, not proven yet) and something too big (business, very large cap company), too old (management, not much time left to go on creating value). This, I repeat, if and only if you are interested in buying and holding a business for many years. Gio

+1! ;) Gio

Here you go (attached to this post). Thank you very much, Liberty! Of course, don’t think this very good presentation might come even close to scratching the bears firm resolve against VRX! After all, it is a presentation put together by management… And we all know whatever VRX’s management conceives and says is deceiving and cannot be trusted! Absolutely! ;) ;) Gio

This is very interesting: though I don’t keep a physical watchlist, probably I have one in my head! ;) Cheers, Gio

I always read letters to shareholders and conference call transcripts: that’s where you can find the most qualitative information about a business: both its model, if it is predictable enough or otherwise, and its management, if they are and behave as owners. If I like what I see from a qualitatively point of view, I start looking at numbers: usually I look at the three financial statements, the Income Statement, the Balance Sheet, and the Cash Flow Statement. If then everything is clear to me also from a quantitative point of view, I invest… always leaving some room to average down. If, on the contrary, I have some doubts about the numbers, I scan the Notes to the three financial statements, searching for some answers. How long it takes me to find those answers obviously depends and might vary a lot. Usually, I am the most comfortable when I find a company that has passed all my qualitative requisites, and also presents financial statements that speak for themselves. :) Gio

I don’t disagree. You are obviously right. And the proof is in plain sight for everyone to see. Who said business is supposed to be easy?! ;) Yet, when it comes to do business, or to invest in a business for the long run, that’s to say for the value that business is going to create over many years, I simply know of no other way than looking for those people I would like to do business with. Or at least to try! Therefore, if I cannot rely on a track record of many decades, because then they have become obviously too old, I must be satisfied with a track record of 15 to 20 years and a process that I understand and like. A 50 years old owner/manager, who has created much value for the past 20 years, has treated his/her shareholders right, is in a predictable enough business, and strategically says and does things I understand and like… That’s exactly what I am looking for! :) Then, of course I know there is “deep value investing”, technical analysis, etc. I know the existence of those things, I know they might be more effective than what I look for… but I don’t do them. I also agree with you we won’t see another bull market in commodities like the one we have witnessed during the last 10 years…Result: during the next 20 years I am assuming an annual growth rate for ALS that is half what it has been in the past 20 years. Gio

When it comes to business, I don’t think I am a fan of anything. As I have often repeated: “just show me something better, and I am gone in a second!” ;) The fact, when it comes to BH, is that all the criticism I hear and read about always concern Mr. Biglari’s character peculiarities… I know them by now… and sincerely, I don’t care… at least until there is some evidence those peculiarities start hindering his business acumen. If you think they already do, then I would really like to know why and how: until now the arguments I have heard against BH business model are very weak indeed (actually, I would say they are non-existent!). Gio

Well, of course I give the same interpretation Sanjeev gives about this trademark license agreement: it probably is all about control. But I don’t understand who really cares… I want him to feel comfortably in charge and to have full control… That way it will be easier for him to think and to plan for the long run, won’t it? One thing I know for sure: if I hadn’t full control over my company, I wouldn’t be able to do half the things I am doing… which might be a very good outcome, after all!! But that’s another story!! ;D ;D ;D Gio

Well, show me a small cap company run by its young founder, that would qualify as “high quality” as WFC… I don’t know of any in the world… Yet, small cap, with a sound business model, huge prospects for growth, and a young, able, and reliable founder to take care of that growth is imo the place to be. I am not in love with ALS: just show me something better with those same characteristics, and I will take it seriously into consideration! ;) Gio

--Robert Graves “I, Claudius”, describing Emperor Augustus and his wife Livia, after the Civil Wars WOW… after all, it seems there had been in history at least one very successful person, who was a bigger rogue than Mr. Biglari!! ;D ;D ;D No, seriously: I understand all the skepticism about Mr. Biglari… but, as I have always said, I will take the evidence as it comes. If and when his behavioral eccentricities start getting in the way of his business judgment and acumen, I will reconsider my view about BH. Now I still think it is one of the best platform for doing business I know of. Gio PS Whoever has not read “I, Claudius” yet, please do so! Very highly recommended!! :)

Yeah! Of course, but… Carbon?!… Potash?!… Really?? Either we stop using electricity, or carbon will still be needed, no matter what the economy does. Either we stop eating, or potash will still be needed, no matter what the economy does. Iron-ore might be different, but in my NAV calculation assets related to iron-ore already are valued at ZERO… Gio

Thank you! :) That, of course, makes sense… it doesn’t solve my problem though! ALS is becoming a royalty company, and the cash flow from many of those royalties is not tied to commodity prices… yet the market goes on correlating commodity prices with ALS? Why? The market isn’t stupid! What am I missing? ??? Gio

It is almost a 12% position for me. I will resume gradually buying below $12.5, with the goal of making this a 15% position. In my NAV calculation I assumed all their iron-ore related assets to be worthless… Is there someone who doesn’t agree that is a worst case scenario?! ??? And yet I still get an undervalued share price… So, clearly there must be something I am missing here, or that I don’t understand… the share price behavior is just too baffling… and I won’t push it beyond a 15% position. Gio

lu_hawk, unfortunately I don’t think numbers are useful to make a good judgment about VRX. VRX, like any business, should be understood first of all qualitatively. Then, of course, if possible we would like to see the numbers support our thesis about the business… but with VRX it still is not possible. All of your quotes from VRX’s annual reports can be found almost exactly the same in the annual reports of the great majority of pharma companies around the world! Their business is constantly changing, and therefore their managers constantly make adjustments to portray a picture they think is the less misleading… If you blame VRX for this, just forget investing in the pharma industry! When I asked you if you had read all the conference call transcripts from the last 3 years, it was because that is the place where you truly find management talking qualitatively about VRX strategy. And, if you want to really understand the business model they are trying to implement, those conference call transcripts are the place to start. Have you read them? If you have, and still don’t trust management, then we simply think about what’s important in business too differently… it is just obvious then we come to different conclusions! For instance, you go on repeating that I quote from management… but let me ask you: would you ever even consider investing in a company, if your view about the business differs from the one of management?! Or if you think you know more about the business than management does?! If I quote from management, it is because I have listened extensively to management talking qualitatively about their business, I have reasoned a long time about what I have heard them say, and I have found what I always look for in the people I partner with. If and when I start having opinions about a business which are different from how its owners/managers talk about it, that’s the reason I sell! Not because I know better! I couldn’t care less about knowing better! Numbers are not the place to look for, if you want to form a strong opinion about the people you do business with… Business is still done by human beings, not computers… Let me ask you: besides investing, in your daily business life how important are the people you have to deal with? How do you judge them? Do you talk to them, ask them questions, examine their answers, try to understand how they reason, come to know what their cultural background is, what their values are, etc. Or do you ask them “show me the numbers”? Good business is always based on trust, at least in my experience, and trust is based on qualitative features… after all, if it were based on something quantitative, we couldn’t call it trust anymore, could we?! ;) I admit “good investing” might be somehow different from “good business”, but as far as VRX is concerned, they seem to be the very same thing! Being their business model what’s attacked or defended. I have still to find a business owner (and I know lots of them!), who think about business differently… therefore, more than our discussion about VRX, now I am curious to know what your business experience actually is… Do you own and run some businesses? If so, which kind of businesses? And for how long have you been owning them? I would really like to know! Gio

I don’t believe the way I think about a business I have studied and followed should change much, whether I own its stock or not… I don’t work that way… It has never happened to me… The way I think about VRX is the result of having read many many questions about its business model, having heard the answers, and having thought about both questions and answers. This is basically how I form my own ideas about any business… Let me ask you: have you done this work with VRX? We have already talked extensively enough about both debt and declining assets… no need to repeat the same ideas another time! ;) Sorry, but I don’t understand what you mean! ;D Gio

Yeah! At the end of course it had become a monopoly… But no business is a monopoly at the beginning… ;) And Mr. Rockefeller, while building Standard Oil, had been willing many times to pay up for strategic assets… The image of a monopolist forcing people to sell assets below market prices is at least partially false! Gio

Parsad is absolutely right, and in this case, WEB is also in the wrong ... consider he admitted during the KO compensation debacle that in his many years on 17 Boards he never ONCE saw a compensation plan NOT approved ... I felt sick when I heard this ... makes me admire Richard Kinder all the more Yeah! Maybe… But you must be realistic and pragmatic: Is BH a wonderful platform for doing business? Yes, it is. Would I like to pay Mr. Biglari somewhat less? Yes, I would. Would I quit a wonderful platform for doing business, because I think Mr. Biglari is paid too much? No, I wouldn’t. Perhaps, I have simply misunderstood Sanjeev’s point… ;) Gio

--Wikipedia Gio