giofranchi

I concentrate 80% on finding a few good individual investments and 20% on never running out of cash. ;) Gio

I surely won’t let you down! And I will keep buying all the way down to 1xBV! :) Cheers, Gio

Yes! That's what I meant! ;) Gio

It is not. It is supposed to be insurance. I don’t like it much. But I guess a small percentage of a portfolio might be justified at these prices. lessthaniv might have simply meant that what works for lessthaniv should work for muchmorethaniv too: that is regressiontoiv! ;D Gio

I own it. ;) Gio

Exactly! This is crucial! Make sure you always have cash when things are cheap. How… don’t ask me! ;) Gio

Great!!! ;D ;D ;D Thank you! Gio

Actually I keep buying cheap stuff: I have bought more LRE this morning, and I will buy more ALS at market open. But… I also increase my cash level! Simply because I have not used all the cash that’s coming in for my purchases. ;) Gio

Hi guys! I know a lot of you will attend the FFH dinner next week, and the AGM the next day. I will be there too. Therefore, I asked myself: how shall I recognize you? After all, we constantly exchange our views on business and other matters, but we have never seen each other… My solution: I will be recognized instead! I attach a recent picture of mine, so that you might recognize Gio at once! ;) I look forward to having a great time with you all in Toronto! :) Cheers, Gio PS Sanjeev, tell me that I can take a picture with you, Mr. Watsa, and Mr. Pabrai next week… three great value investors and a fan!! ;D ;D

+1 Gio

The more I think about it, the better I like Altius’ business model: the first part, the project generator, is where growth might be pursued and achieved; the second part, the royalty portfolio manager, is where the free cash flow might be generated. This two parts business model enjoys some peculiar and very rare to find advantage: it might distribute to shareholders all the free cash it generates and still be able to grow. If you think about it, we either have a business which distributes all its earnings, or a business which retains them and invest in growth opportunities (of course, these are the extremes: we might have businesses that retain some of their earnings and distribute the rest, or we might even have businesses that distribute all their earnings and constantly raise new equity to invest in growth opportunities, see for instance MLPs). What I think I have never found before is a business which can do both things: to distribute all its earnings and to grow at the same time. Because Altius clearly doesn’t need the cash produced by the royalty portfolio to grow. As long as the first part of the business keeps working well, the capital it needs to develop new ideas and projects is quite limited. Practically all the cash produced by the royalty portfolio might be distributed to shareholders and still grow over time, because of new projects that will bring in new royalties or new equity investments, that eventually become royalties themselves. Imo what we have got here is an outlier: a business that might pay out all its earnings and still grow handsomely… think of a Lancashire that could grow fast too! Wow! ;) What do you think? Gio

Of course, I hope so, though I don’t know and I cannot say… What I do know is that, after two "valuation peaks" gone extremely bad (2000 and 2007), if we ever learn something, people shouldn’t feel comfortable about being at the peak again! I have written “valuation peaks”, because this has very little to do with macro (I am pretty agnostic about what Mr. Putin in going to do!). Instead, it is a case of prices being out of whack with values once again… And, if we ever learn something, its outcome imo is quite predictable. ;) Cheers, Gio

Page 7: The Russell 2000 is as much overvalued as it was in 2000 and in 2007. Gio 3.28.2014_NApdf.pdf

The Euthanasia Of Pensioners In Peoria by Charles Gave Gio Daily+3.28.14.pdf

;D ;D Me too! Some new funds arrive next monday, and I will buy more ALS and LRE. :) Cheers, Gio

Right now I am really concentrating on LRE and ALS. Practically all my new funds get invested in those two businesses as soon as they come in… Anyway, my target price to pull the trigger and add more ENDP is 15 x 2014 Cash EPS, which is around $55. Gio

I try and keep my eyes open on the major risks, but I agree with the statement above. :) Gio

Even more controversial imo is to use the NPV of assets that have yet to commence pay-out… In a NAV calculation those assets should be included only for what they could actually be sold in the market today. Their market value should be considered, not the NPV of streams of cash tied to some future production that might never materialize… No discount rate (certainly not 8.76%!!) can account satisfactorily for such an uncertainty. This being said, yesterday, even after the big jump of the day before, I added more. :) Gio

Thank you for posting. :) They get to a NAV more than double the one I had calculated... Gio Dazel & others, any comment on the NAV calculated by Salman Partners? Thanks, Gio

This is one of the reasons why I deem the possession of a cash flow machine to be so much important in business: it is the best remedy I know of against “anxiety”. ;) Gio

+1 Thanks for posting, Nnejad! :) Gio

Thank you for posting. :) They get to a NAV more than double the one I had calculated... Gio

Gio

Sincerely, I have no idea… It has been some years now with a soft market… But I guess a sort of catalyst must happen, before it reverses course and a true hard market develops. I mean a “scare event” that forces a lot of capital to leave the business right away… then other capital will follow, and the market will consequently harden… But this you already know! And I cannot be of more help. Maybe twacowfca might answer your question with much more insight into the dynamics of the insurance cycle. What I think of is Mr. Brindle who has often said: “We create our own hard market”. And so they have done during the last few years! Therefore, even if results stay somewhat compressed for a couple more years, that doesn’t trouble me too much. ;) Gio

havingheart, why should these two things be mutually exclusive? For instance, I started a 7% position almost right away, then averaged down till I got to a 10% position. I want to build a significant enough position in a business I like a lot, when the price is right. But I also want to leave some room to average down. Because the simple truth is in the market you never know… ;) Gio