giofranchi

Well, I respect your view and also thank you for expressing your doubts very clearly and in a way that is easy to understand. After reading the transcripts of all the conference calls of the last three years, I have come to appreciate very much how Mr. Pearson reasons and talks about VRX strategy and about business in general. Over and over again I have found what I look for in an owner/manager I want to partner with. Therefore, I have an hard time sharing your mistrust born out of accounting adjustments, though, as I have said, I certainly understand it. Gio

May 2014 Commentary Gio May_2014_Commentary_FINAL.pdf

;D ;D ;D Funny!! Thank you, Gio

That’s why I believe in averaging down, and I always leave some room to do so. ;) Gio

Don’t mind at all! Why should I?! Wasn’t Ben Franklin who said “Be just and truthful to anyone, and don’t worry what people know or think about you”?... Anyway, something similar! ;) I have nothing to hide. And therefore don’t bother to. Actually, you find the link to both my operating companies (for profit education and civil engineering services) in my Forum Profile. Then I have a third company that gathers the free cash of the first two and invests it (or at least tries not to throw it away!! ;D ;D). Gio

Ok! Appreciated! I am not familiar with FTP (nor the SFK/FBK fiasco), and I was wondering why it was brought up so often in this thread… Thank you for clarifying! :) Gio

The true essence of value investing, in a few lines. I am not sure I assume ALS future will resemble its past… Of course, I hope its PG part of the business will keep being as good and effective as it has been in the past… But my interest in ALS grew basically out of the change that occurred late last year, when they embarked on a journey to become a proven manager of royalties. And, truth be told, this second part of their business is still the one I am more thrilled about… though the market still seems to ignore it and its potential for growth… we will see! ;) Gio

constructive & Andy Dufrense, thank you very much for your kind words! :) Until now, just a “poca favilla” with no “gran fiamma” in sight… But you never know, right?! ;D ;D ;D Cheers, Gio

That's a scary thought. FTP has been brought up in this thread a lot of times… could someone please explain me what’s FTP business model, which kind of management is at the helm of FTP, and why the comparison to ALS should make sense? ??? Thank you! Gio

It is not the amount of looting that matters… it is the looting per se… because it tells you a lot about the people you were dealing with in Tyco. From that everything else follows. The same thing is true for leverage: I agree that leverage in the wrong hands might be extremely dangerous… in the right hands, instead, it might turn out to be a useful tool. When you invest in a business for the long term, you must judge the people you are partnering with, their motives and skills. There is no getting around this simple truth. Therefore, do you think Mr. Pearson is a good and reliable entrepreneur or you basically don’t trust him? Gio

I value invest not because I love the process but because I love the results. I value invest because I'm competitive and value investing is the best, easiest process for me to use to produce above-average results. In terms of the question "Do I have enough"...I would interpret this similarly to how I would expect Buffett would. I will keep my competitive drive for more long after recognizing that I have enough. For me having enough is only part of it. I want to do the best I possibly can and earn the most I possibly can, and see how well I can do. I will probably end up donating much of it in the end of life (similar to Buffett), but I still have a competitive drive to see how well I can do in the interim...And viewing the results of a NW poll is part of measuring how well I am doing so far. Well, not everyone can be as competitive and successful as you are… I started my company 10 years ago with $25k. Through savings, investments results, and operating earnings, my firm’s equity right now is worth $2.38 million. I am 37 years old. How would you judge me?… I tell you: just an average guy! That’s the plain truth. Period. But I guess most people are in my situation (that's the definition of "average guy" after all, isn't it?! :) )… though we cannot boast great achievements… we can certainly enjoy what we do on a daily basis, and we can try to get better and better at it… And you know what? I don’t envy all the multi-millionaires out there, precisely because I tap-dance to work each morning: any cure for envy that truly works shouldn’t be overlooked! ;) Gio

I consider “philosophy” the process of talking “abstractedly” about valuation… That’s why I asked you to be a little bit more down-to-earth, and show me how you actually value GLRE… Why “philosophy”? Because, when it comes to valuing a business, you and I can proceed along different lines, yet come to very similar conclusions! So, how are you accustomed to thinking about business? How am I accustomed to thinking about business? It is a little bit like comparing Nadal’s forehand with Djokovic’s forehand: they might be technically very different, yet in the end they both are extremely effective shots!! That’s why I always want to examine practical examples: show me your conclusions about a business’s future prospects… and I will tell you if I agree or I disagree, and why. Period. It is that easy. … Everything else is “philosophy” to me… ;) Gio

The only way this conversation could really be productive is if you tell me your assumptions about GLRE. If they are much different from mine, I will be very glad to examine them and try to understand why you think GLRE in the future won’t do as well as I believe. This I would like. Instead, I am not a great fan of philosophy! ;) Gio

;D ;D ;D I agree. And your comment reminds me of my last post on the VRX thread about Mr. Kozlowski… or the exact opposite! ;) Gio

-- http://historybusiness.org/2781-tyco-international-scandal.html?newsid=2781&seourl=tyco-international-scandal Now, whoever compares VRX to Tyco: 1) Thinks Mr. Pearson is like Mr. Kozlowski… though I don’t understand on which basis, given the fact their behavior cannot be more different! 2) Has some personal reasons to discredit Mr. Pearson and his success in business… 3) Is not serious… Gio

Wise words! I agree! And words that also have much to do with investing! 1) How much better are the results of people who enjoy the whole process of investing, instead of only seeking a financial reward! 2) How many times we have asked ourselves: “if almost nobody succeeds in getting a 15% annual result consistently, why should we expect to achieve it instead?” Gio

Ahahahahahah!!!! Ok, starmitt, if you want to know a 2.3% outperformance is my WORST case scenario! … I just thought I had been clear enough about that!! ;) As far as the S&P500 performance is concerned, just take the first page of BRK AL, and use that number… I am not interested in the next year or two… I am interested instead in the next two decades! If I were interested in the next year or two, GLRE would be the last issue on my mind… because probably I wouldn’t be able to seriously invest in any business! If you are interested in the next year or two… well, then good luck to you! ;) Gio

Well, of course also starmitt is right: that is just my own (or our own! ;)) evaluation of the business… it certainly is not a sure thing! … Therefore, we will see! ;) Gio

Well starmitt, we all are dealing with the future, right? Of course there are no certainties! But we must evaluate the prospects of a business and act accordingly. That’s what I have done with GLRE (and with any other investment of mine). Anyway, if you are more comfortable, take an outperformance of just 2.3% (if you really have read his book, and all his letters, you know he will do much better! ;))… results don’t change much! With a 100% combined ratio and some more leverage (which they can undoubtedly afford!), they will compound BVPS at a CAGR of 15%. But, of course I think they might do much better! ;) Gio

http://www.marketwatch.com/story/europe-bubble-grows-as-markets-ignore-vote-against-euro-2014-05-28?link=MW_popular As I am repeating for some time now, Europe is still a mess... ::) Gio

Ah! Ok, sorry! Then I meant pages 169 and 170! ;) Cheers, Gio

Pages 170 and 171 are very interesting! ;) Gio

Gio

Much like the game of investing! It seems to hear the late Mr. Singleton speaking! Doesn't it?! ;) Cheers, Gio

By the way starmitt, since 2004 Mr. Einhorn has done 2.3% annualized better than the S&P500. By the end of this market cycle I think he will be outperforming the S&P500 by 4-5% annualized since formation. And over the long term there is absolutely no reason why he shouldn’t go on outperforming the S&P500 by a similar amount. Do yourself the math and see which CAGR in BVPS this implies for GLRE. ...The only reality that matters! Gio