giofranchi

I have just read Leonard's last AL and I have found it very complete. With much emphasis on the performance of existing businesses, which of course is what you want to see in any company that relies heavily on M&A. Gio

Thank you, Liberty! :) Cheers, Gio

Is there a thread about Constellation Software? I agree its president is fantastic, but don't know much about the company yet. A thread on this board would be very useful! ;) Gio

Ok! Nothing to argue with that! Cheers, Gio

This time I have truly pulled the trigger! ;D And I have opened an 11% new position in TDG. Besides the fact of TDG being the most successful “platform company not owned by PSH”, also debt imo is not really too much of a concern: 1) they seem to be able to deleverage quite rapidly, if they want to, 2) debt seems to be a “choice” more than a necessity: much of the recent increase in debt was due to the payment of a special dividend to shareholders. Howley clearly consider TDG’s capital structure as a mean to create shareholders’ value, and I am confident he keeps adjusting it for the better. I now plan to use part of my monthly free cash to increase my TDG investment. Cheers, Gio

I have sold half my investment in BH to open an 11% position in TDG. I still think BH is the cheapest of the two (by far!), but I also agree with many comments on the board that Biglari’s actions might keep BH stock very cheap for a long time… Therefore, I now plan to use part of my monthly free cash to increase my BH investment. Cheers, Gio

+1! That's what I meant too. Cheers, Gio

1) I have great businesses that will do very well in a muddle through scenario or in an inflationary scenario, and will behave satisfactorily in a deflationary scenario; 2) I have at least one great business that will do very well in a deflationary scenario, and will behave satisfactorily in a muddle through scenario (like the last 5 years during which I have made enough money in FFH!). To acknowledge the possibility of a deflationary scenario with financial assets that might deflate in the future is as much macro as not acknowledging such a possibility. But imo it is much more cautious! While: Is simply wishful thinking... if you ask me! ;) Gio

I wouldn’t call it “a very specific view of the future”… That imo is a fact! ;) Instead, how big banks are going to do very fine, if interest rates stay low and asset prices deflate, is more difficult for me to understand… But I admit I don’t follow them closely, and therefore I might be missing something important. Cheers, Gio

+1! :) Gio

Fortunately, we can put together a “portfolio” of investments… And certainly I am not saying FFH is my only investment! But I disagree with your base scenario “because you don’t have any particular view of the world”… Instead, to be invested in big banks you must have a very clear view of how the world is going to be 10 years from now… Because in a deflationary environment big banks will suffer much! I on the contrary own both investments that I think will do well if a muddle through scenario goes on, and an investment in FFH that will do well in case of deflation. In other words, I believe FFH has a place especially in the portfolios of those who claim not to have “any particular view of the world”! ;) Cheers, Gio

That I know very well and have already pointed out myself. ;) Gio

The size of the pie is never changing. Because the pie is the business. What changes is the size I own of the pie. If Biglari is using $420 which are mine to buy 1 BH share, and yesterday I had X BH shares, today I excpect to be owning X + 1 shares, and therefore the size I own of the pie is larger. Not sure what you mean. That's exactly what I meant. He is a long way from controlling BH simply cancelling bought back shares. Cheers, Gio

;D ;D No, actually I thought I was going to, but hadn’t pulled the trigger yet… Evidently, I was still a bit uncomfortable… Now I will go back many quarters and check if they systematically disclose organic growth in revenues by sectors like you and cmlber have suggested… That would be great! Cheers, Gio

Thank you very much! Very helpful! :) Cheers, Gio

But the Lion Fund is using BH’s shareholders’ capital to buy those stocks, isn’t it? It is not using outside investors’ money. Right? Therefore, imo the Lion Fund is buying those share on behalf of BH’s "remaining" shareholders. Instead of using BH’s capital to invest in another company, the Lion Fund is using it to buy BH shares. Let’s look at it this way: I had $420, instead of keeping the money I have decided to hand it to Biglari, he now manages the money on my behalf, and he puts it into the Lion Fund, and then he buys 1 BH share with the money. That BH share is "mine", except that Biglari has the power to decide what to do with it, not me. And except I will have to give back to Biglari 25% of its appreciation above 6% annual. Gio

--Nicholas Howley, 2014 Annual Letter Very good! :) Is there a place they show organic growth in a more systematic way than the annual letter? Thank you, Gio

;) +1! Gio

Well, you are always repeating the same things… What else can I do?... Except always answering the same way?! ;) Right! And that’s exactly why I don’t think any “Biglari discount” is warranted! But it is welcomed: if the tender is successful, both Biglari and I will own 25% more of BH than what we owned before. Ah! So now you think you know which kind of business results the market is expecting from BH selling below BVPS… Come on! Wrong! Business results don’t have to improve dramatically, I just would like they remain in line with what they have been until now. Unfortunately, they most probably won't... Then you think no one should be paid that much. Ciao, Gio

original mungerville, I just post articles about the businesses I follow... to me they are simply pieces of information... it certainly doesn't mean I agree with everything that is written in those articles! ;) Cheers, Gio

What I might think is right does not matter much. What matters, instead, is what I can and cannot do. You cannot argue with Buffett, Watsa, Malone, Flatt, Gayner, nor with Howley. While you can part ways with them, if you don’t like what they are doing. The same is true for Biglari. Cheers, Gio

Actually, I have changed my mind… It is not the price at all: I think it is not cheap, but neither too expensive. Imo a fair price to open a new position leaving some room to average down. What bothers me instead is exactly what bothered me with VRX: I cannot easily find organic growth results. Therefore, I cannot easily assess the performance of all the businesses they have bought and keep on buying, after they have been acquired. Liberty, You have followed TDG for a long time now: could you help me get a clearer picture of their organic growth? I know their aim is Organic EBITDA Growth around 10-12%, but what are the metrics you are looking at to monitor how Organic EBITDA is actually growing? I like TDG very much, but without the certainty I am able to understand their business results correctly, I must watch it from the sidelines, just like I watched VRX from the sidelines for a while. Thank you! Gio

You can always sell your shares... As is the case for BRK, FFH, LMCA, BAM, MKL, TDG and many other successful companies led by an entrepreneur and founder and investor and businessman, not by a "manager"! You don't like what he/she (the entrepreneur and founder and investor and businessman) is doing? Very well, just sell your shares! Period. Cheers, Gio

Imo you are completely wrong. Probably you and I read business results in very different ways! That’s the only possible explanation… Cheers, Gio

I don’t understand what he means… What I understand, instead, is Gabelli should stop tweeting complains about BH or should tender his shares instead: to go on both tweeting complains about BH and holding his BH shares simply is inconsistent behavior, or, as Gabelli himself would say, “mindless investing”! ;) Cheers, Gio