giofranchi

IceCap Asset Management June 2013 giofranchi IceCap_Asset_Management_Limited_Global_Markets_2013.6.pdf

http://seekingalpha.com/article/1524352-sirius-xm-will-it-outperform-its-owner?source=email_rt_article_title giofranchi

David, thank you for posting this one! :) giofranchi

No… I wouldn’t put it that way… I think Mr. Watsa would neither appreciate it, nor agree with it… Instead, what I meant is that imo they are great strategic thinkers… And I like to partner with great strategists.. if I can do that at a good price!! What’s a great strategist? Well, Mr. Vanderbilt was a great strategist, long before terms like bottom-up, top-down, macro, micro, etc. had even been invented! ;) giofranchi

Very nice! Thank you! :) giofranchi

Hi muscleman, I would strongly recommend to read “The Great Depression – A Diary” by Benjamin Roth. If there is only the slight chance that the '30s in America and the '90s in Japan are similar to what we are living through today on a global scale, I really want to be aggressive, when prices are extremely cheap, while not reaching for yield (an equity portfolio that relies on the outperformance of long positions over its hedges on the indices, with ample cash reserves) the rest of the time. And I want to partner with people who behave that way. In 2005, 2006, and 2007 FFH was defensive; in 2008, 2009, and 2010 FFH became aggressive; in 2011, 2012, and 2013 it is on the defensive again. And I think we won’t have to wait a lot more to see FFH become aggressive again! What I mean is that strategically they have made no serious mistake so far, though they might have encountered some timing difficulties. Yet, timing imo is way overrated… don’t get me wrong: if your strategic view is flawed, but your timing is right, you might still end up doing very fine! Vice versa, if your strategic view is flawed and your timing is wrong, you might get killed! So, basically, if you are wrong… timing is very important! Though that sounds a lot like saying: if you are wrong, to get lucky is very important! On the other hand, if your strategic view is correct, and you possess the wherewithal to be patient and wait, even bad timing at the end won’t prevent you from achieving satisfactory results. Summing up: wrong + lucky vs. right + unlucky… guess which one I prefer? ;) I don’t follow single investments very closely, so I cannot answer your questions about BBRY or SD… giofranchi

Hi Jay, I understand what you mean, and in theory I also agree with it, though in practice please consider: a AA Municipal Bond with a maturity of 2 years last month yielded 0.56%. If your short tail contracts come due in, let’s say, 1 year, and you want to match their duration with the duration of your investments, you would be forced to accept an even lower yield… We like insurance, because it provides us with a safe mean to leverage our investments. But, if we invest our equity in stocks, and the float generated by insurance contracts in AA Municipal Bonds with a maturity of less than 2 years, the end result is we won’t enjoy any leverage at all! So, why take the pain to run insurance operations? To achieve an underwriting profit? …Well, no thank you! In fact, it is exactly when “underwriting comes first” a la LRE, that what you suggest finds a practical and true application. But LRE is an outlier and its business is unique and completely different from GLRE’s or MKL’s. I admit I don’t know the average duration of MKL’s bond portfolio, but I would be very surprised if it were less than 5 years. On the other hand, a well thought-out long/short strategy hopefully will always have some positions that are profitable (the longs in a bull market, the shorts in a correction), which could be liquidated at a profit, if the need to cover losses on poorly conceived insurance policies actually should come to pass. I very well know there will be periods of time when both the longs and the shorts will move against you, but, thanks to Mr. Einhorn’s skilled watchfulness, let’s hope they will be short, few, and far in between! ;) giofranchi

Hi longinvestor! I know and agree with all those true things about BRK... Yet, still I am not convinced... I just don't understand a business on autopilot... A business without a strong person at the helm... Just one man or woman... Not a team or a board of directors... But I know that's me, and only me! Vice versa, I am not worried at all about Mr. Watsa's succession plan. When, 20 years from now, he steps down, FFH will simply be what BRK is today. And I will sell my investment. giofranchi

Hi Jay, During the last month and a half, 10 years tresuries went from a yield of 1.7% to a yield of 2.5%, causing significant paper losses. If you would be forced to book them, because of some short-term liabilities that come due, what's the difference with a stock market loss? I don't see any. And, as far as risk is concerned, I think Mr. Einhorn is among the best risk managers I know of. giofranchi

Hi ap1234, I couldn’t have said it better! Maybe, just add some very safe means those owner operators use to leverage their game, and the picture is perfect! ;) Regarding your comparison between BRK and FFH, I agree 100%. My problems with BRK are: 1) its size, 2) Mr. Buffett’s age. Tell whatever you want about growing a $250 billion company and about the succession plan, I won’t be convinced... Because those are two things I really cannot judge. And, if I don’t understand, I don’t invest. This being said, we all know a good business and a good investment are two different things: and I have no doubt BRK is a very strong ark! Maybe, as you say, much stronger than FFH. On behalf of FFH, please consider: Mr. Watsa is 20 years younger than Mr. Buffett… was BRK 20 years ago such a strong ark as it is today? Probably not… So, just give Mr. Watsa time and let’s meet again 20 years from now! ;D Furthermore, as longinvestor rightly pointed out, So, earning power will gradually build up! :) giofranchi

Hugh Hendry June 2013 giofranchi Hugh_Hendry_June_2013.pdf

Because in my previous post I used an expression I never use: “I am sure”, I want to make this much clearer. With a way over leveraged economy, mired in the second slower decade of growth since the 1790s, the stock market should not be at an all time high. Mr. Grant Williams put it very clearly a few days ago: I repeat: the declaration by the Fed Chairman that the economy is gaining sufficient strength to be allowed to stand on its own two feet sent the market into a tailspin. Absurd! Isn’t it?! In such an environment you must proceed with caution, either you are finally proven right or wrong. It doesn’t really matter. You might argue: we don’t care about macro, and WEB has said this and WEB has said that... (or Peter Lynch, or whomever!)… But let me also tell you this: I don’t think general rules are of much help to asses specific risks. I mean, just because macro is useless 99% of the times, doesn’t mean that to be “stubbornly blind to macro no matter what” is a sensible course of action. Because 1 time out of 100 you will be terribly wrong. Imo, instead, the sensible course of action is to be always aware of macro, meaning what’s going on around you and your businesses, and each single time decide if it is relevant or not. That’s exactly what Mr. Watsa and his team seem to be doing. In fact, he has stated many a time that they think we are living trough a once in a lifetime period of deleveraging, much similar to the US in the ’30, or Japan in the ’90. And in such an environment I want to proceed with caution and I want to partner with people who proceed with caution. Even if in a rally caution is thrown to the winds by everybody else! This is the reason why I think until now they have made no serious mistake. Finally, I agree with beerbaron that Mr. Watsa won’t repurchase a lot of shares anytime soon. But he has also explained why: he doesn’t want to part with cash, because he believes in the near future cash will be the scarcest and the most precious of commodities! Nothing to do with his own assessment of FFH stock price… Actually, I can almost imagine this conversation between Parsad and Mr. Watsa: Parsad: “Prem, what do you think of the stock at $380?” Mr. Watsa: “Hum…! It just makes no sense!” Cheers! :) giofranchi

C’mon, beerbaron! That’s exactly Mr. Market’s thesis… There is always a reason why Mr. Market gives you an opportunity! And a repricing is never easy to foresee… What you can and do know with FFH is the price you pay and the value you get! Let a repricing unfold: I will average down gladly! ;) giofranchi It's not a thesis, the actual value of FFH went down with the bond portfolio. I like to anchor myself at a specific price/BV not a dollar value. I'll gladly buy a shipload at 90% of Q2 BV tough! BeerBaron The actual value of FFH will fluctuate a lot... Will go up and down... But I don't really care. What I care about is very simple: a company, that has increased BVPS at 20% annual for 26 years, has almost gone nowhere for 3 years now. And in the meantime it has done everything right. Someone believes they have made mistakes... But I disagree. I would have done exactely the same! And I don't think we will have to wait a lot more, to see BVPS increase very fast again. That's why I have no doubt that any price below $380 is great value! giofranchi

C’mon, beerbaron! That’s exactly Mr. Market’s thesis… There is always a reason why Mr. Market gives you an opportunity! And a repricing is never easy to foresee… What you can and do know with FFH is the price you pay and the value you get! Let a repricing unfold: I will average down gladly! ;) giofranchi

FFH is already 30% of my firm’s portfolio. If it closes below $380 today, I will buy more at the opening tomorrow! Ok, it will not get to 50% anytime soon, but whenever Mr. Market gives me the opportunity to increase my business with Mr. Watsa, I want to always jump at it! :) Cheers! giofranchi

US: Becoming a LNG exporter giofranchi EcoNote19_US_LNG_EN.pdf

Hi WhoIsWarren, maybe you are right… and mine was too selfish a wish! Anyway, what can I say? I am like a spoiled kid, and very difficult to satisfy! ;D Probably, that’s why the more I study and research, the more my “circle of competence” tends to shrink, instead of getting larger… Very few new businesses get inside, while many are thrown out! Like it is now happening with LUK… although only temporarily, I hope! ;) giofranchi

Ron, I am a romantic! And I have no problem at all to admit that I enjoyed the letter immensely… and that I even shed a tear! :'( But… when it comes to understand a business, I suddenly become as unemotional and detached as possible. That is the way I am done, and I like stories, but I find them of little use. Sincerely, I had hoped I would have found out more about the future of LUK than about its past… This was supposed to be the missive with which Mr. Cumming and Mr. Steinberg officially introduced Mr. Handler and Mr. Friedman to LUK’s shareholders. Though, in the first two pages of the letter they write about Jefferies, there is very little we didn’t already know… Then, we are left with 8 pages of “memorabilia”… don’t get me wrong: 8 wonderful pages!… But, unfortunately, not very useful (with the possible exception of “A Major Future Opportunity”). Though I would sentimentally like to say that I feel more confident now about LUK’s future prospects, I must acknowledge that it would not be based upon any new substantial piece of information… Very interesting price right now: no doubt about that, and I am sure a lot of you are buying! But I must wait. Because I require conviction first, then I look at the price! Otherwise, I know I will make mistakes. giofranchi

"Call My Bluff" by Mr. Grant Williams. giofranchi Hmmm_Jun_24_2013.pdf

Find in attachment the HDGE ETF Market Commentary for June 2013. giofranchi HDGE_PMCommentary_062013.pdf

Grazie Cristoforo! E a presto! :) Giovanni

Yes! Another very good movie, though a remake of a german movie starring Diane Kruger. Haven't seen the original. No need to, because "The Next 3 Days" is just fine! :) giofranchi

I haven't watched "This is The End" yet, but I surely agree on "Looper": excellent movie, wonderful acting! :) giofranchi

Well, cannot be sure what you mean... but... I DO AGREE!! ;D ;D ;D giofranchi

I find myself in almost the same position of twacowfca. And I am doing nothing (except watching Wimbledon and listening to the new Kanye West’s album). :) giofranchi