giofranchi

Mr. Loeb's Q1 2013 Letter. giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes Third-Point-Q1-2013-Investor-Letter-TPOI.pdf

Golden Ratio Infographic. giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

Interview with Mr. Zell: http://www.zerohedge.com/news/2013-04-10/sam-zell-stock-market-feels-housing-market-2006 Enjoy! giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

--Warren Buffett --Warren Buffett, 2012AL rukawa, I disagree with your view. Also investing is very hard and competitive. And success both in investing and in insurance depends on the same thing: temperament. Mr. Buffett and Mr. Watsa have the right temperament to be extremely successful both as investment managers and as insurance underwriters. You might argue that Mr. Einhorn is different and, therefore, won’t be as successful. I clearly think otherwise and have a lot of respect for Mr. Einhorn’s skills. giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

My firm got incorporated in 2004, and I started investing its fcf in 2006. :) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

Hi racemize, ok, that’s how I see it: I started some years ago with a capital of $1 million. My goal was to increase capital 15% each year for 50 years. To achieve that goal, I rely both on the operating earnings of the businesses my firm controls, and on the results of my favorite businesses which my firm possesses little pieces of. That way, by the time I retire, I would be a billionaire. And throughout my whole career I would have earned on average $1.6666667 million each month! If you could find a reliable way to achieve that result, why stray far from the sure formula?! Aren’t you satisfied with $1.6 million a month?! Won’t it be proof enough that you really have done things intelligently, and you really have succeeded in creating wealth over time? The surest formula I know of is to partner with outstanding capital allocators, and to constantly keep generating the cash that enables you to double down on them, when the market gives you the chance to do that. Like Kraven is used to saying “you don’t know, what you cannot know”. So, be aware of the “man at the helm” risk, as I like to put it. And spread your bets among 10 to 15 compounders. Otherwise, I really don’t see how you can fail to achieve your “$1.6 million a month” and “billionaire at the end” status! ;) PS Until now I have increased capital at a 17% annual rate… so far so good! ;D giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

[amazonsearch]A Universe From Nothing[/amazonsearch] txitxo, I have started reading A UNIVERSE FROM NOTHING, because Mr. Munger suggested it as a wonderful read. From the Preface I was immediately hooked and I find it pretty amazing! Do you think it is because of my devastating ignorance of the subject treated in the book, or you judge Mr. Krauss to actually be a serious and highly competent theoretical physicist? Thank you! :) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

Good interview with Mr. Kyle Bass: http://www.gurufocus.com/news/216094/detailed-recap-of-kyle-bass-on-bloomberg giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

Hi David! That would be a great conference! I really envy you! :) I am well aware of the fact that macro is usually not very useful for investing… But, paraphrasing Mr. Kyle Bass (who will be at Mauldin’s conference!), when you find yourself at the end of a 70 years old debt super cycle, even if you cannot time precisely how events will unfold, it might be useful to pay some attention. So, always buy good quality when it is on sale and don’t worry about macro. Except at the end of a secular cycle, when you should also pay some attention to what is happening around you! At least, that is how I see it. :) Take care, Giovanni

+1 giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

The latest article by Mr. Easterling. giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes Article-Game-Changer.pdf

--Charles Gave giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes France_On_The_Brink_Of_A_Secondary_Depression.pdf

Vinod, sincerely I hope this doesn’t happen. It would simply mean that profit margins will be 25% higher for the next 10 years than they were on average during the second half of last century: probably the best time for capitalists in the whole history of mankind . Imo, if it actually comes to pass, social unrest will ensue. I wouldn’t run such a risk… even if its probability were very thin… I don’t think it is enough to understand how businesses work, I think we should never lose sight of how people behave too. Furthermore, I don’t think “fair value” for the S&P500 is very useful here. If and when people realize that profit margins are unsustainable at the current level, they will sell. And when people start selling, they have the nasty habit to shoot on the downside. Once again the late Mr. Gary Shilling is the one I agree with. $80 in earnings for the S&P500 and a multiple of 10: S&P500 at 800 is where we might be heading (almost another –50% correction). Because I am a chronic optimist, let’s say I think a –40% correction is possible! :) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

Thank you very much for posting this! Happy to see you used my favorite quote from one of the truly great economists and investment brains of last century!! :) Even though you left out the last sentence which, imo, is very important! ;) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence." - John Maynard Keynes

Absolute Return Partners Letter April 2013 giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence." - John Maynard Keynes The_Absolute_Return_Letter_04131.pdf

Kyle Bass and Dylan Grice on Japan: http://www.zerohedge.com/news/2013-04-07/kyle-bass-japanese-retirees-will-lose-half-their-life-savings giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence." - John Maynard Keynes Dylan-Grice-Japan.pdf

RECANTATION by Charles Gave giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence." - John Maynard Keynes EVA+4.5.2013+NA.pdf

Probably you are right (well, I guess it depends on how old you are…). Anyway, that doesn’t automatically mean other good capital allocators and compounders won’t be there to find and to partner with. Actually, all the companies mentioned in this thread have already proven to be good at creating much value for their shareholders. Even if they will never be as good as BRK! :) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence." - John Maynard Keynes

--Chaz Ebert (Mr. Ebert’s wife) I don’t remember a single movie rated 4 stars by Mr. Ebert that I didn’t like. I think he was among the very best movie critics and his departure is a great loss for everyone who loves cinema and its history. giofranchi

When it comes to capital allocation, small or huge have meaning only in the right context. And, imo, the right context is the following question: are opportunities still many and frequent, or the capital they manage is already so large that opportunities have become hard to find? Think about the markets BAM operates in: real estate all over the globe, one of the largest market out there; infrastructures and renewable energy all over the globe, two of the fastest growing markets out there. I think there are still many opportunities to be found and still much room for growth. :) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes

Thank you very much for posting this! I will read your analysis with much attention and interest! :) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes

Cheers! :) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes Distressed-Debt-Presentation.pdf

OAK and LRE are respectively my second and third largest positions. LMCA and BAM are not huge and can go on compounding capital for many years. :) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes

March 2013 performance. giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes 2013-3-March-Monthly-Report-TPOI.pdf

Well, thanks for posting this report. However , is it supposed to be distributed freely in the forum? Sanjeev has asked numberous times to not put any copyright materials here.And I just saw this at the end of report. It is a breach of international copyright laws to reproduce all or part of this report by email, fax or any other means. The Short Side of Long’s report is provided on fortnightly basis to paid subscription members only. If you are not a paid subscriber and receive emailed, faxed or copied versions of the reports from a source other than Short Side of Long, you are violating the Copyright Act. THE SHORT SIDE OF LONG theshortsideoflong.blogspot.com Copyright © 2013 All rights reserved. I only post material that I receive directly from the author and that is for free. The only exception has been the Gary Shilling Insight… Parsad, I apologize for having posted some work by Mr. Shilling, and I will certainly do it no more in the future! giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes