giofranchi

My family owns it (me, my parents, and my sister). :) Gio

Well, that is easy to answer: good luck!! Two operating businesses that require almost no capital and generate very satisfactory levels of free cash flow. :) Gio

Yes, of course I have continued adding operating earnings to my investments! But since 2011 operating earnings and investment returns are of comparable amounts. ;) Gio

I started my company in 2004 with 25,000 Euros in equity. Until the end of 2010 operating earnings were much larger than investments. At the end of 2010 investments reached 1 million Euros for the first time, and truly started to matter. I have zero debt. Yesterday the value of my firm’s investments exceeded 2 million Euros for the first time. Little more than a 20% cagr during the last 3 years and 10 months. I am particularly satisfied by the way I have reached such a goal. Always behaving very conservatively and keeping as detached from stock market gyrations as possible. 30% of my capital has always remained invested in Fairfax, and another 20%-30% always in cash. On the contrary, of course, if I had been more aggressive, by now I would probably be at 2.5 or 3 million Euros! ;) Cheers, Gio

Yes… Obvious… Then why when I asked if it were time to buy FFH again I got almost ridiculed??! ;) Gio

I think we have been witnessing more than 10 years of disciplined underwriting by now, that have been basically unrecognized because of acquisitions which suffered from problems of the past. Anyway, I agree: just keep behaving carefully and avoid becoming complacent! ;) Gio

Instead I simply thought that the assets of a company as reported on the books might have been undervalued for whichever reason, while instead Carnegie knew the value of its shares was worth far more because of the earnings the company was going to generate… But I admit it is not very clear… Gio

Of course I had the same thought! ;) At the end I decided NOT to buy the apartment... So, no more need to know what Carnegie would have done! ;D Gio

As I was saying, it doesn’t seem Mr. Market is punishing GLRE too much for its Q3 2014 results… ;) Gio

Gio

I don't know what Mr. Market is going to do today... But for what I can read, GLRE has beaten Mr. Market expectations for Q3 2014: http://seekingalpha.com/news/2087535-greenlight-capital-beats-by-0_07-beats-on-revenue?source=email_rt_mc_title&uprof=25 ;) Gio

Ok, I have just swapped back again from LMCK to LMCA! ;D Gio

I get this. But I had previously swapped my LMCA shares for LMCK shares, because I wanted a larger number of shares for the same price in view of the spin-off. Now I would have to swap again from LMCK to LMCA… The problem is I know the cost of swapping, while I basically ignore how much more valuable LMCA shares are than LMCK shares… Gio

I am really tempted to sell my LMCK and buy the same amount of LMCA… But why should I incur transaction costs? What will be the benefit I’d enjoy making the swap? Gio

Gio

Gio

Yes, exactly! They could be using retained earnings to invest in the stock market, instead they are using them to buy whole insurance businesses. That will most probably change, but right now it seems to me a good strategy. Gio We're saying different things. I'm saying the strategy is unchanged by the market level of stocks. They buy the company, then buy more stocks with the float. If market is high, they hedge. It might be... But: 1) it seems to me the trend of purchasing wholly owned insurance companies has accelerated in the last few years, expecially in emerging markets; 2) many seem to think FFH is much more static than I think it will turn out to be: if the P/E of the S&P500 were 10, I highly doubt they would be using earnings to buy insurance companies... Gio

Yes, exactly! They could be using retained earnings to invest in the stock market, instead they are using them to buy whole insurance businesses. That will most probably change, but right now it seems to me a good strategy. Gio

I love their strategy of concentrating more on buying whole insurance businesses rather than investing in the stock market right now. Especially emerging market insurance companies, where insurance penetration is still much lower than in developed countries and therefore revenue growth might be much faster and margins more satisfactory. Just look at Fairfax Asia with a 74% combined ratio in Q3 2014. If it builds scale, Fairfax Asia could become an very valuable source of both float and operating earnings to Fairfax shareholders. Gio

Conference Call Transcript Gio fairfax-financial-holdings-Q3-2014-conference-call-transcript.pdf

+1! ;) And I have just bought more today. Cheers, Gio

I think the fact is there is still a very real possibility of a melt up in stock prices, before the bubble bursts. Think of a Shiller P/E for the S&P500 that goes from 26 to 30. This is how bubbles usually behave towards their end. And I guess this is the reason Fairfax is keeping its hedges, but not increasing them. Btw, I am doing the same! ;) Gio

I believe you are right! :) Gio

I agree, and it is exactly what I was saying a few days ago in another thread about FFH. Also Q4 looks good until now, with US government rates that have come down substantially since the end of Q3. Gio

I could not agree more! ;) Gio