giofranchi

Good weekly commentary by Mr. David Hay. giofranchi EVA+10.4.2013+NA.pdf

"Third Point Reinsurance: Tax-Efficient Structure And Superior Management" giofranchi Oct42013-third-point-reinsurance.pdf

"Oracle Is Misunderstood and Fully Mispriced" https://sumzero.com/headlines/technology_and_software/ORCL/196-negativity-around-oracles-business-unfounded-large-upside-awaits giofranchi

Thanks. Yes! Thank you, Sportgamma! Very useful! :) giofranchi Wow, thats a very high exclamation-marks-to-words ratio. Here´s a riddle that I have been thinking about: We know the following: Equity ownership in HK: 4.95% Share of gross revenue interest in HK: 4.199% HK AUM: ~$8.6B Book value of Equity in HK: $10.97M Book value of Rev. stream: $10.2M We don´t know the following: Revenue/AUM at HK: My guess is somewhere between 0.8-1.5% (the expense ratio of the Paradigm fund is 1.78%) Operating income of HK: Compared to Legg Mason and others, I´d say 10-14% would be an appropriate estimate, perhaps lower for HK because of the revenue interest. Now, lets assume that the equity and revenue stream offer cash flows of the same quality (they don´t). You have three leavers, (1) the gross revenue/AUM ratio, (2) NOPAT% on the income statement and (3) the discount rates for the sources of cash flows (equity and revenue stream). In what kind of scenarios do you get both NPVs to match the book values at the same time? Sportgamma, are you talking to me? If so, I admit immediately, without hesitation nor excuse, that, though I tried to read and did my best to understand your riddle, I am completely lost!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! I have put all those exclamation marks, so that the exclamation-marks-to-words ratio is even higher than before! ;D ;D ;D Cheers! giofranchi

+1 giofranchi

Thanks. Yes! Thank you, Sportgamma! Very useful! :) giofranchi

September 2013 Monthly Report giofranchi 2013-9_September_Monthly_Report_TPRE.pdf

Does The Best Brookfield Come In A Small Box? http://seekingalpha.com/article/1718742-does-the-best-brookfield-come-in-a-small-box?source=email_investing_ideas&ifp=0 giofranchi

I couldn’t agree with this more!! (even though we are the only ones... ;D ;D) giofranchi

Hi hellsten, No, unfortunately I couldn’t invest in FRMO… Being listed OTC, I couldn’t invest through my firm’s bank account… Therefore, you see, we are suffering from the very same “sucking our thumbs” syndrome… I know this doesn’t make you feel better, but you are not alone! ;) Cheers! giofranchi

Thanks, ragu! This of course makes a lot of sense. Somehow, I hadn’t thought of it… ::) Cheers! giofranchi

--Benjamin Franklin Great piece by Charles Gave! :) giofranchi Daily+10.01.13.pdf

Investment Results September 2013: September: +2.5% YTD 2013: +17.0% giofranchi TPRE_Investment_Results_September_2013.pdf

Liquidations September 2013 Commentary giofranchi Liquidations_September_2013_Commentary.pdf

Kumar, I am no politician at all… believe me! And I’d much prefer to be called a “value investor” rather than a “politician”… The truth, though, is I don’t like “labels”… If you want to put a label on me, try this one: “a person who will constantly endeavor to grow the equity of his company 15% annual for the next 45 years”. And I will gladly learn anything that could help me achieve that goal! Therefore, I try to avoid prejudices like the plague. For instance, are there useful skills a value investor might learn from a politician? Of course there are! I wish I had the PR skills of a politician! They would serve me extremely well in my business. :) giofranchi

Yesterday I finished reading “High Financier: The Lives and Time of Siegmund Warburg” by Niall Ferguson. Highly recommended! giofranchi

Liberty, nothing in particular… it is just the general tone of the article… something like: “it might be true: markets are overvalued, and are at risk of coming down abruptly… anyway, disregard this piece of information, because it is not actionable.” Just give me the information, and let me be the one to decide what to do with it! The relevance of the same piece of information might be very different for me than for you. Simply because my situation is different from yours. That’s my point! But, of course, I might have misunderstood the general tone of the article. :) giofranchi

--Warren Buffett You quote WB, I quote WB. :) If you decide not to plan, in order to have cash, when all others suffer from a lack of liquidity, you not only choose to disregard WB’s advice, but also the examples of all the great and very successful financial minds that came before him. This being said, I have an extreme aversion to “rules”… because they tend to work, until they don’t… Instead, I want to stay flexible, to adapt, and to go wherever I see value. If you study Warren Buffett long enough, I think anyone would agree that he has always shown great flexibility and adaptability during his whole, very long career, searching for value. Imo, that’s also what the so-called (hey! I really don’t like it!) “Warren Buffett of Canada” is doing. --The Plateau Effect – Getting from Stuck to Success giofranchi

I usually like to read what the Brooklyn Investor has to say, and very often I agree with his point of view. Unfortunately, I think that “macro” is misunderstood by the great majority of so-called “value investors”. Let me explain: If you study the Vanderbilts, the Sages, the Mellons, and the Baruchs of the past, I think you will get more and more convinced about basically one truth: they grew steadily and moderately in times of prosperity and optimism, and they grew by leaps and bounds in times of adversity and pessimism. So, if the greatest financial minds of the past were flexible enough to adapt their strategies to the times, why instead should we invest as if the world were always the same?! The answer, as far as I am concerned, is: there is no reason. This has nothing to do with “macro bets” or “being in and out of the market”. Macro should be something purely “qualitative”, that gives you an idea of how other investors are behaving. That idea is just one of the many things anyone should take into consideration, while devising his/her strategy. A strategy that will be sometimes more aggressive, sometimes more conservative, depending on the circumstances. According to the GMO 7-Year Asset Class Real Return Forecasts, US Small Caps are to return –3.1% annual, while US Large Caps are to return –1.6% annual. Why on earth would you ignore such forecasts? Because you have found a company selling below BV? That would be like saying: I might have two pieces of information, but the first one is good enough, therefore I won’t even consider the second… Crazy, no?! I want both pieces of information, sure that my whole strategy will be stronger for that! Even Mr. Buffett has always managed to have ready cash at hand, when others instead were in trouble. Given his very long career, which do you think is more plausible? a) he devised a carefully conceived strategy to achieve such a favorable outcome, b) he is the luckiest guy on earth! I repeat: “macro” is only one of the many things that could help shaping an effective strategy. And it must be put in context with all the others. For instance, Mr. Buffett controls many recession resistant businesses, that will keep handing him tons of cash, even during difficult times, and yet holds more than $40 billion in cash & equivalents. He clearly has a strategy and, given how much resilient that strategy is, “macro” might play a very small role, almost no role at all. The question is: which is YOUR strategy? And which role “macro” plays in it? None? Well then, you better be sure your strategy is as resilient as Mr. Buffett’s… Otherwise, chances are you won’t be the one holding the coveted cash, when troubles finally arrive, as they always do. giofranchi

Yes! But it cannot go on changing so frequently, don’t you agree? I really want him to get full control over BH, so that he might stop worrying about control and concentrate only on achieving the best economic results possible. The faster we get there, the better. Then, I would want to see things stabilize! giofranchi

Yes, you might be right! But I wouldn’t swap fast-food and fast-food franchising for retailing, only because of the compensation structure. Of course, I don’t follow closely SHLD, and I cannot say how cheap the stock really is right now. Therefore, if you swapped because SHLD right now is a great bargain, that’s a completely different story! ;) giofranchi

Hi kuhndan, what a pity you won’t write Part IX… you really should! ;) Do you think Mr. Biglari wants to get control over BH and grow the company for many years to come, or is he only aiming to get rich through the compensation plan? Thank you! giofranchi

In my opinion your whole answer just proves how difficult it is to invest in technology and, I would add, in fashion too. You write: Sure! But the problem remains the same, if even the CEO or the board cannot predict the outcome accurately enough! And that is just the nature of the beast with technology and fashion. You also write: Those are good questions… in hindsight! What was BBRY to do instead? The only thing I can think of is to become a BRK: to buy new and completely different businesses, using the cash generated by operations that were going to die… Come on! Let’s face it: BBRY is (or was…) in the business of selling mobile phones, either you succeed or you don’t. If you want to run the risk, you do whatever it takes to come up with the best product you can. Vice versa, if you don’t want to run the risk, you use all the cash you generate, until you can generate some, to change business. Could have Mr. Watsa taken the decisions required to follow the second course? I don’t think so. And despite the existence of a wonderful device like the i-phone, it seems that Samsung is doing pretty well, isn’t it? Therefore, to compete with Apple might not be easy, but neither it is utterly impossible. Or so it seems. giofranchi

Hi oddballstocks, please, let me know as soon as you take your new company public: it is going to be the very first IPO I will gladly buy into! ;) Usually, I look for stable businesses, which change very slowly or better not at all, led by the shrewdest and most opportunistic strategic minds out there. But, if I could find a company with the “best tools”, that provides a “superior product”, which is "best in class" and "high margin", and which is also led by a very good capital allocator... then, oh well!, I am sure I will not only make a killing… it is going to be a true slaughter!! ;D ;D Cheers! giofranchi

Cardboard, let me ask you a question: have you ever managed a business of your own? If you have, you know at least as well as me that most technical aspects are beyond the man at the helm (furthermore, Mr. Watsa hasn’t ever been at the helm of BBRY!). I manage my businesses finding good and reliable technicians, whose work I can barely evaluate and judge... It has always been this way, it has worked pretty well, and it will always be so. Believe me: Mr. Watsa doesn’t know anything about new phones… And has never pretended otherwise… He might have made a mistake judging BBRY’s management, but I am not sure... Imo, the error here is much easier and plainer to see: he was tempted to invest in technology, when technology is so hard to predict. Period. Why did he stay on the board for so long and said nothing? Simply because he didn’t know what to say! I wouldn’t have known what to say, you wouldn’t have known either… giofranchi