giofranchi

[amazonsearch]Andrew Carnegie[/amazonsearch] What Andrew Carnegie learnt when he was 16: I am reading [amazonsearch]Andrew Carnegie[/amazonsearch] by David Nasaw: a brilliant piece of financial history. Highly recommended! Cheers, Gio

;)!! Gio

I am aware Fairfax might declare a loss for Q3 2014 in a few days. If that happens and the price declines, I will buy more gladly: I have never had so much cash before! ;) Gio

Because I am getting nervous… During the last few weeks we have witnessed a short market correction… Which nonetheless was painful enough to prompt the FED into saying it is ready to stop the slow unwinding of QE and therefore to resume its stimulus… And the market promptly recovered… I like it less and less… And I demand more and more protection, meaning insulation from the general market. Gio

+1! :) Gio

I am selling other investments to buy more Fairfax today and to keep a large cash reserve. Cheers, Gio

In my mind the true risk is: with a $200 per share offer are they overpaying?! ??? Gio

http://www.marketwatch.com/story/allergan-board-skeptical-of-valeants-offer-to-improve-bid-2014-10-27 Hilarious! ;) Gio

Yes, this is clearer now… but again I don’t see what’s wrong with it…! ??? - For his job as CEO of BH he gets a compensation based on BH operating earnings, a compensation that is still capped to a maximum of $10 million, - For his work as a fund manager he gets a compensation based on how well the investments he chooses will perform, which is exactly how any fund manager gets paid! - How much does the Lion Fund charge BH for managing its investments? Where can we find that agreement? - I think (or at least I hope…) the 2% in the classical 2 & 20 formula is still not there. If it is like I think (hope), the Lion Fund remains cheaper than most hedge funds out there. - I wouldn’t underestimate the importance of operating earnings: from 2008 to 2013 they amounted to $194.3 million, while investment earnings were $269 million. In other words, operating earnings have been circa 42% of total earnings. As Biglari keeps buying whole businesses, operating earnings might even get a larger percentage of total earnings. This means the share of the compensation incentive he receives as CEO of BH, that he has to invest in BH shares, won’t be negligible. Gio

The text of the “First Amendment to Amended and Restated Incentive Agreement”: http://www.sec.gov/Archives/edgar/data/93859/000152153613000580/ex103to8k07428_07012013.htm In it there is no amendment to Section 3 “Purchase of Company Stock” of the Amended and Restated Incentive Agreement. Therefore, imo Biglari is still to purchase BH shares for an amount equal to at least 30% of his incentive compensation tied to BH operating results. Am I wrong? Gio

It seems to me the Amendment just makes a better distinction between operating earnings and investment earnings. For operating earnings the old Incentive Agreement remains in place basically unchanged. For investment earnings, instead, there is no clear evidence of the new compensation structure. What also changes, of course, is the “high water mark” of BH’s adjusted book value used to calculate Biglari’s incentive compensation. That’s all I can find… What am I missing? Thank you! :) Gio

Ragu, Today it has been a very long day… and now I am tired… probably, that's why I am encountering some difficulties in understanding the Incentive Agreement Amendment… in particular: 1) where is it written there is no more a cap to Biglari’s compensation? 2) where is it written Biglari doesn’t have to invest 30% of the incentive received in BH stocks? Thank you in advance, Gio

Ok! Thank you! :) Cheers, Gio

Ragu, if it really is like you seem to suggest, my question is: why the compensation agreement that is downloadable from the BH website is still the old one? I mean, still the same compensation agreement that was present before the sale of the Lion Fund to Biglari? And therefore we still can read there is a compensation cap and that 30% of the incentive received must be used to buy BH shares? Isn’t this misleading? ??? Thank you, Gio

I surely must have some, but don’t know where… I will have to look for them and, if I find some, I will post gladly! :) Gio

Mmm... That would spoil the magnificent sunrise and all the romantic feelings… ;D ;D ;D Cheers, Gio

Stupid, I am! But not a complete idiot! ;) Of course, if I go forward with the purchase, I plan to swap the old property for the new one, covering at least a part of its cost. Gio

But that is exactly the reason why I am so unsure! And as a consequence also the reason why I brought up the subject. And sincerely this post of yours is much more helpful to me than the previous one. Therefore, I thank you. :) Gio

It is wonderful! With a gorgeous terrace right in front of the sea, from which I have seen many beautiful sunrises! Very romantic… I think I could keep a girl more than just a few months over there… even talking about stocks all the time! ;D ;D Gio

No evidence? I am sure they know the following equation: GDP = M * V. If you put the chart of money velocity over the chart of total debt in the US since 1900, you can clearly see that both times total debt exceeded 250%-275% GDP, V started falling significantly, and didn’t recover until the debt overhang problem had been solved. Maybe 2 instances are not evidence enough. But surely there is at least some evidence! Gio

How many investors do you know with the kind of track record in attachment?! More promotional and hype than substance??!! I wish I had a bit of his substance!! ;D Gio 1995-2014.bmp

Q1 2015 Conference Call Transcript Gio frmo-Q12015-conference-call-transcript.pdf

Another good weekly letter by John Mauldin. The Return of the XIX Century Panic by Charles Gave is very interesting, as usual. :) Gio 141020_TFTF.pdf

Of course I already do that with my other apartment! ;) I don't know Airbnb, but I know a friend of mine who runs a rental agency nearby. He has followed my family's properties in Liguria for many years now. Gio

Hi Jeff! No, Nate is oddballstocks! ;) Thank you very much! :) Gio