giofranchi

Given the fact Mr. Brindle is “only” Chief Executive of Lancashire, but not its Chairman, I would like to know what people think about Mr. Martin Thomas (Chairman), and what’s his influence and true role inside the organization. twacowfca, have you ever met with him personally? :) Thank you, Gio

twacowfca, of course this is nothing but useless speculation… though, given the recent, very weak stock price, it is difficult to believe they will announce the payment of a special dividend three days from now… usually, when a special dividend was in the cards, the stock price moved up considerably days before the announcement… any thoughts? Thank you, Gio

This is important. :) Thank you, Phoenix01! Gio

;D ;D ;D Ah! Well, you have a good point!! Though, I was thinking more about something like “confidence in the management of a business”… Gio

Let me put it this way: if you truly had your “just 10 investments in life” scorecard, and you truly knew the stock market would be closed for the next 10 years, were you still interested in Citigroup? Though I know that mind frame is way too rigid and will surely make me overlook many great investment opportunities (like C probably is today), I cannot escape from it… Guess that’s just the way I am and my brain works… No wonder, Eric, my returns are so much more lackluster than yours! Gio

Al, I think Mr. Watsa & Co. will prove to be much more flexible than you assume right now. Equity hedges, for instance, are not here to stay. Should the evidence come they are no longer warranted, Mr. Watsa & Co. will remove them, even at a substantial loss. Furthermore, I don’t agree in a recession the insurers would get killed… Insurance is one of the best business to be in a recession… And insurance operations at FFH are getting better and better! Also, though not everybody believe in market cycles, the timeframe you have taken into consideration, to calculate FFH’s CAGR, is absolutely not favorable, because it doesn’t consider the fact we are today at half the present market cycle… In other words, the timeframe you have taken into consideration could be split as follows: 2002 – 2006: FFH was WRONG 2007 – 2009: FFH was RIGHT 2010 – 2013: FFH was WRONG To judge performance you lack the following: 2014 – 2016: FFH is RIGHT Then, at the end of 2016 we will calculate again FFH’s CAGR for the whole period: I guess it will be much higher than 13%! ;) Of course, I already can imagine your answer: 2014 – 2016 FFH continues to be wrong! But let me tell you, I still don’t think so… And if so, that’s when Mr. Watsa & Co. will finally remove the equity hedges, accepting the losses. Gio

Al, I don’t think I would call my point of view “faith in FFH”… I think almost any stocks portfolio assembled with a “value philosophy” is most probably bound to underperform a small-cap index in an up market, while outperforming the same index in a down or flat market… Anyway, I always read what you have to say with the greatest interest! :) Gio

Of course, if you think their stock holdings will do worse than the Russell2000 their whole strategy since the end of 2010 is the perfect recipe for losing money… I guess what Mr. Watsa had in mind was to settle for the decent profit their alpha in stock selection would guarantee FFH, in a period of both high debt burdens all around the developed world and high general asset prices... By alpha I mean he probably had in mind FFH’s stocks portfolio would outperform the Russell2000 BOTH in a bull market AND in a bear market… If to outperform the Russell2000 in a bull market is no easy thing to do, I am much more confident FFH’s stocks portfolio might succeed in outperforming that index in a bear market (or even in a market that proceeds sideways for a little while). Gio

Dazel, that’s exactly my point too! And I am ready to buy a lot more! ;) Gio

On the 2013 Broyhill Asset Management Letter Mr. Pavese writes about KMI. The whole letter is a very good read. :) Gio 2013_Broyhill_Annual_Letter.pdf

Ed Esterling's "Worst Recovery Ever" Gio ed-easterling-worst-recovery-ever.pdf

Well, JoelS said it much better than I did! ;) Welcome to the board!! :) Cheers, Gio

Gio, For me, for FFH to be "right" on the hedges, S&P 500 would have to fall significantly below (say 20% or more) the level at which they hedged (~1060). This would imply S&P 500 to go down to about the 800 level. What is your criteria for FFH to be right on the hedges? I say this not to disrespect Watsa in any way. They got 3 big macro calls right (Japan 1989, Tech bubble in 2000 and 2008 crisis). Even if they got this wrong, that would make 3 macro calls right out of 4. That is a pretty good ratio on such complex macro events. Vinod Hi Vinod, First of all the great majority of FFH’s equity hedges are on the Russell2000, not the S&P500. And small caps are much more expensive than large caps: before the recent “correction” small caps according to GMO were priced to deliver a negative –4.9% real annual return over the next 7 years… Large caps –1.7%… But that’s not really my point. I am not trying to defend an investment in FFH made 3 years ago… Instead, I am strongly advocating an investment in FFH today. As a new shareholder of FFH you absolutely don’t care if FFH will be right on its equity hedges in "absolute terms"… You won’t bear the cost of past protection and conservative behavior anymore! Instead, you are getting protection now! Therefore, let me reformulate: it is not that FFH will surely be right, but that FFH will surely be right for you as a new shareholder! I just don’t see how it could be otherwise… That’s why I am only hoping to see another leg down in its share price, after FFH discloses 2013 full year results on February 14, 2014… It would be a great chance to average down! ;) Gio

Euro jumps as Draghi dismisses deflation threat http://www.marketwatch.com/story/dollar-rises-against-euro-ahead-of-ecb-boe-decisions-2014-02-06?link=MW_home_latest_news Ok, now I know we will also see deflation... ;D ;D ;D Gio

Dazel, I think you are right. I have just finished listening to Mr. Cooperman on Bloomberg… I simply cannot buy into the bull argument… I don’t think it is because I am a pessimistic person… My nature is just the opposite… Would I be (or at least try to be) an entrepreneur otherwise? I guess not! Instead, it is because the bull argument imo lacks logical substance… Bullish forecasters always talk about earnings… ttm earnings… To say the market is “fairly valued”… But, truly, I don’t understand… If you look at Price / Sales, Market Cap / GDP, Q Ratio, and Price / Adjusted Earnings, those 4 measures not only have the best long term track record for predicting future market returns on a 10 year basis, but they also point at almost the same exact overvaluation for the market right now (or at least before this “healthy correction” of 5%... who would define a 5% move a correction?!): that is to say in 10 years the market will be little changed, if not at all. Now, this is imo what truly matters! Forget all the rest! A market that will be little changed 10 years from now… Who really think it will be an horizontal line for the next 10 years? No one, I hope. As I see it, FFH simply cannot be but right… Not only, the higher this market goes, the more correct FFH will be proven in the end. Of course this will take 10 years to play itself out… and in the meantime FFH stock price could fluctuate, even wildly. Gio

January 2014 Monthly Report Gio 2014-01_January_Monthly_Report_TPRE.pdf

No, I have no particular insight. I just sold both TPRE and GLRE, to buy what imo are more undervalued and defensive companies right now. But I will buy back both of them in the not too distant future. And I intend to hold them both for the next 20 to 30 years (reinsurance cycles don't matter all that much to me! ;) ). Anyway, a 13% premium over BVPS is a very good price to pay, to partner with someone of the caliber of Mr. Loeb. :) Gio

"Deflationary Forces Unite" by Mr. Louis Gave Gio Daily+2.5.14.pdf

;D ;D If you are interested in FFH’s long-term business prospects, imo today’s share price makes no sense… This, of course, doesn’t mean it cannot slide down even further… As with any other investment of mine, if FFH's share price should keep trending down, I will keep buying. ;) How can I do this? Two simple reasons: 1) I am interested in FFH’s long-term business prospects, and I intend to hold it for a very long time; 2) I have cash. :) Cheers! Gio

Your reasoning is correct. No doubt about that. But I have no interest in CBRL for the long term. And I buy only things that I want to hold for the long term. Instead, should BH share price keep falling, I will keep buying. :) Gio

I have just bought more BH. :) Gio

I have just bought more Lancashire. :) Gio

Thinking about PAH, and this holds true for any investment of mine, the following words by Mr. Charles Munger never leave my mind: Gio

Blue Ridge Capital Discloses Platform Specialty Products Position http://www.marketfolly.com/2014/02/blue-ridge-capital-discloses-platform.html Gio

http://www.transdigm.com/phoenix.zhtml?c=196053&p=irol-newsArticle&ID=1896533&highlight= Gio