giofranchi

Anyone here should realize and admit how much easier it is to behave "ethically" when one kills anyone who disagrees with them. Think of this: how much easier is to behave fairly and friendly towards anyone when you know for sure that, if anyone disagrees, you can simply murder them and eventually there will be nobody disagreeable left? Ah!... But that would be comunism or nazism... Capitalism, instead, always leaves you a choice: you might either hold your shares, or sell them... You have the freedom to choose what you think is best for your future financial well-being... I hope the difference is clear to anyone... Because I think it is self-evident! Gio

Yes, I have found on the prospectus Equity per share was $10 USD, but I was not sure if the $billion raised is still parked in cash or already invested… in part at least. Though I guess, if they had made an acquisition, they would also have published a press release, right? Why are prospectuses always so incredibly long?!... I will try to read this one anyway! ;) Thank you! :) Gio

Is the NAV $10 USD per share? Thank you! :) Gio

http://www.marketwatch.com/story/herbalifes-stock-pares-gains-after-ackman-says-he-wasnt-contacted-by-fbi-2015-03-13 Gio

I have just added to my VRX investment. I am really exited to see what Pearson and Ackman could engineer together next. ;) Cheers, Gio

http://www.viewfromtheblueridge.com/2015/03/12/nowhere-to-run/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+viewfromtheblueridge%2FJkgK+%28The+View+from+the+Blue+Ridge%29 Gio

You see what I meant? To any other question except CONTROL there is an easy reply. And here is my reply to Petey’s question: Biglari’s job imo is to make the best use possible of BH’s capital. If the best use is to deploy it in the stock market, he will send it to the LF; if on the other hand the best use is to buy another operating business, he will keep the cash needed at the parent company level. Because this is the behavior I demand to a rational owner/manager. And the very first time I realize Biglari’s behavior ceases to be the one of a rational owner/manager, as I have often repeated, I will change my view on the quality of an investment in BH and act accordingly. The question of CONTROL, instead, inevitably involves “ethics” and shifts the focus from “business results”, which are easy enough for me to quantify and judge, to something much more undefined and confusing (as far as I am concerned at least!). And that’s why I really would like to see the day in which Biglari finally has full control over BH. Because by then all this talk about “ethics” will have simply disappeared! Not because “ethics” won’t matter anymore… But because also Biglari will start to magically behave in an impeccable way! Anyone here should realize and admit how much easier it is to behave “ethically” when one has full control. Think of this: how much easier is it to behave fairly and friendly towards anyone, when you know for sure that, whatever other people think or wish, your decisions will always prevail in the end? Again: Buffett, for all his fairness and friendliness, has always done whatever he wanted to (if I am wrong, I am asking again an example which shows other shareholders’ will prevailing over Buffett’s). That’s when Biglari’s compensation will come down, when he will put every changes to the vote of shareholders, etc. … “ethics” won’t be a problem anymore, and all that matters will be “business results”. By the way, if you are interested in “business results”, don’t forget to read the letter published yesterday by the independent directors of BH! ;) Gio

Interesting news about Maxim: Gio

But both currencies were backed by gold until 1971, and since then (it seems to me) we have had a slow loosening of monetary policy. Confidence is a funny thing: it's there until it's not. I don’t know exactly why we are talking about this… but here I agree with Packer: I don’t see any plausible substitute for the USD in the foreseeable future. Gio

http://www.prnewswire.com/news-releases/biglari-holdings-inc-urges-shareholders-to-reject-groveland-nominations-to-board-of-directors-300049371.html Gio

What Ackman engineered last year with Pearson was great! But for VRX it got spoiled by an incredible war waged by Allergan’s management… Why not to repeat something so brilliantly conceived again? This time, though, with a company somewhat easier to deal with? For VRX it would be imo an even better deal than Salix (VRX would instantly become the n.1 company in pet health worldwide: a very strong position and a very interesting new platform on which to build through many more possible acquisitions in the future), and for Ackman it would be a double home run, first a spectacular gain in Zoetis, then another spectacular gain in VRX! ;) Gio

http://ir.valeant.com:80/investor-relations/news-releases/news-release-details/2015/Valeant-Comments-On-Endo-Offer-To-Acquire-Salix/default.aspx It doesn't seem Pearson is going to increase his offer... Gio

I was simply trying to answer Packer’s question about how much time we still have to wait before calling the deflation thesis utterly wrong… I was not saying what Watsa can or cannot do… Gio

Imo extremely low interests rates are engineered by central banks on behalf of governments around the world, simply because they cannot afford to pay higher interests on their debts. Period. And this might go on until prices stay very low or else go down. Higher interests rates will exacerbate the debt problem, therefore rendering the final outcome even more unpredictable and dangerous. Watsa has always said that in Japan the printing of a lot of money stopped deflation for 5 years after their stock market and real estate bubble burst… The US probably has printed even more money than Japan did! So I guess we still have to wait at least two or three years… And of course the next serious market correction! If financial assets start to go south, that would be very deflationary imo! After that, if we still have no deflation, I would simply let those CPI contracts expire. I don’t understand how the fact Sweden is the only example available means it should be relevant… But probably it is only me! :) Gio

This might be great imo: just walk away with the $356 million breakup fee, and then buy Zoetis with Ackman’s help! Zoetis is larger than Salix and sincerely I like it better. ;) Gio

Ok… Could you please remind me of a single instance during the last 50 years in which the shareholders of Berkshire through the BOD decided to do something Buffett didn’t want to do, and then it was actually done? Buffett has always been very charming indeed, and his behavior has always been impeccable by any standard, but don’t forget this simple truth: he has always had full control over his company. Gio

See?! In the end you too come back to what I think is the real issue here: CONTROL. Because to everything else I can think of an easy answer, but there is no easy answer for the issue of control… All I can say is this: I look forward to the day Biglari has full control and can do whatever he pleases to do. By then all other shareholders will have just two options: either hold their shares, if they like what Biglari is doing, or else sell their shares, if they don’t like what Biglari is doing. That very same day I guess the word “ethic” on this thread will be replaced by the words “business results”… And that would be fantastic! ;) Cheers, Gio

I agree there are companies in which management compensation is less than Biglari's... But you should agree with me that management compensation is only one of many parameters investors take into consideration while investing their capital... Am I wrong? The fact BH cannot be liked as much as Fairfax nor Markel, as far as management compensation is concerned, doesn't automatically mean it lacks other very interesting features which might make it an investment just as good as those other two companies. Cheers, Gio

Sanjeev, I just try to put myself in Biglari's shoes: if I were him, I would be much more concerned about control than compensation. And that's why I tend to think many actions of his are more due to a lack of control than a compensation which he would like to be higher... But you seem to be sure he has sold the LF back to himself only because of compensation, therefore I might be wrong about the importance of control... If this is so, things are even easier imo! The control issue is the one which might be truly controversial... In comparison the compensation issue is very clear! Do I, as a shareholder of BH, get enough for what I give away? That's all! And, as I have already said, my answer is YES! Because Biglari, even after selling the LF back to himself, costs BH shareholders less than the average money manager out there, while being (imo!!) much better than average. If and when I think shareholders get to pay more than they receive, I will act accordingly. Cheers, Gio

Packer, I don’t understand: in my mind low interest rates are a symptom of the market forecasting deflation to come… I also don’t understand why you keep pointing at Sweden in the 30s’: Sweden back then was a minuscule economy which simply was successful in exporting deflation… It probably had been allowed to do so given its very small size… But what does an economy of just a few million people have to do with the situation of the US, Europe, China, and Japan today, which are trying to deleverage simultaneously? Gio

Moreover: I would say that a cap in compensation makes a lot of sense for operating earnings, simply because that’s the way peers compensate their CEOs. Instead, I don’t think a cap in compensation makes sense for earnings from investments, because almost no other money manager is compensated that way. When the LF was owned by BH, there was no way to make a distinction between the two. Whenever I want to understand whether I am paying too much for an employee of mine, I always like to look at what my competitors are doing: if I am paying less than my competitors for the same kind of services, I feel fine! ;) Gio

AZ_Value, I don’t think my question has anything to do with a cap in compensation… A cap might be in place both if the LF were owned by Biglari and if the LF were owned by BH. Or it might not. Another thing I will never understand is why people enjoy writing on this thread in such a rude way… Beyond me! ::) Cheers, Gio

The answer imo is very easy: nothing has changed! But I would have done the same anyway. Let me explain: In my company I am the one entitled to have the last word on any truly important matter. As it should be! Because I am the one who built it from scratch, I am the one who is at the office each day at 7.00 am, I am the one who knows how the money flows in and out (to the last Euro!), I am the one who think about it 24 hours a day, each day of the week, and therefore I am the one who truly knows what’s in the best interest of my company for the long term. In other words, it is my brainchild, and no one cares about it like I do. Not even close! Now, let me say that, if I hadn’t control over my company, I would be just furious… The same is true for Biglari, I guess. And that forces him to find other solutions… that most people don’t like and judge unethical. I might not like them as well, but I understand the rationale behind most of them: for instance, what would happen if Biglari got ousted as CEO during the next AM and the LF still were owned by BH? Of course, Biglari would find himself with nothing to manage! Instead, with the LF in his hands, he would still suffer the greatest business defeat of his life so far, but at least he could go on managing money and could have a base from which to start anew. An entity he truly controls 100%. Why shareholders are against a double class share? Imo the simple act of introducing a double class share would solve all our issues with Biglari! ;) Cheers, Gio

Well, I am not so sure… Before: Biglari was getting a bonus based on operating results + investment results; Now: Biglari is getting a bonus based on operating results as CEO of BH + another bonus based on investment results as the owner of the Lion Fund. Why do you think Biglari is costing BH shareholders more money now than before? Gio

Yeah! Once again this doesn’t mean that, when I compare how much I pay the Lion Fund to manage BH’s capital with how much FFH charges Fairfax India’s shareholders to manage their capital, I am interested in anything else besides how much cash I give away compared to what service I receive. Period. Yet, on this thread the discourse has a bothersome habit of always shifting towards… ethics! Gio