giofranchi

[amazonsearch]Seeing What Others Don't - The Remarkable Ways We Gain Insights[/amazonsearch] --Gary Klein Highly recommended! Cheers, Gio

Surely the asymmetry you have been pointing at is good to have. But I own ALS because I like the business: A diversified royalty business in some basic necessities of life, with embedded future royalty growth potential with almost no development costs, led by a still very young entrepreneur who has demonstrated to know how to create much value for his shareholders during more than 15 years now. What’s not to love? ;) Until the future of Alderon is uncertain, and until the price of iron-ore remains under pressure, I guess we will witness a lot of volatility… And if ALS’s stock price keeps trending down, I will buy more. Gio

[amazonsearch]How to Read a Financial Report: Wringing Vital Signs Out of the Numbers[/amazonsearch] by John A. Tracy Cheers, Gio

In any investment of mine I require always both a great entrepreneur and a good business. I regard a chain of fast-food restaurants and fast-food franchising to be good businesses, but of course the fact I admire what Biglari has accomplished until now as an entrepreneur is also very important: I wouldn’t invest, for instance, in CBRL… But, let’s say, Biglari at the helm of an obsolete technological company? It surely wouldn’t interest me either. Gio

Well, I guess that is exactly what I meant when I said the worst part of a 2 + 20 compensation plan is imo the 2 by far... You just used different words! ;) Gio

shalab, you asked to comment, so I will do it: I am not interested in this subject at all. As I have said I judge Biglari to be a star at what he does. The only thing I am interested in is that he goes on doing what he does best, taking entrepreneurial decisions, for as long a time as possible. How could I be interested in this subject? If Biglari is forced to leave the company against his will, I will surely be gone too! BH would simply cease to be what I look for. And I will be looking somewhere else. Why should I be interested in what happens to BH afterwards? The only other thing I am interested in is that BH stock price stays near BVPS for a very long time, so that I can go on purchasing more and more! ;) Gio

I think that will surely change as the % of float vs. equity increases… at 18% of equity float is still extremely small… and I would be very surprised if its cost were lower than it actually is! Gio

Compensation is the only argument by the bears that really interests me. But even about the compensation topic we have different views. As they say, to each his own! Cheers, Gio Just to be clear: The part I like the less in a 2 + 20 compensation plan is the 2… by far! This notwithstanding I invest in GLRE and in TPRE, because they both have a long track record of outperforming the S&P500… AFTER FEES… That’s to say after their 2 + 20 compensation plans are carried out. If to that you add the benefit of float… well, nothing is for sure, but the potential there is certainly very enticing! Now: with BH you don’t have to pay the 2. This is how I think about compensation. And the argument “but he had promised to work for free!” doesn’t seem very convincing to me. PS I would also add that, though I admire Einhorn and Loeb very much, I like what Biglari is doing even better! Gio

Well, it seems it should be included. Are those deposits liabilities funds that can be retained for a certain amount of time and in the meanwhile be invested? If yes, they are float! ;) Gio

Ahahahahah!!!! You think how you type your annual report is a shenanigan?! Come on, Tom! You know to do something else, besides talking about cognitive dissonance?? Gio

Compensation is the only argument by the bears that really interests me. But even about the compensation topic we have different views. As they say, to each his own! Cheers, Gio

adesigar, sincerely I think I have contributed more than enough to the BH discussion on this board… if you are really interested to know my view about the company and about Biglari, there is a whole thread to read… Long story short: show me someone who might convince me he/she has the opportunity and the capability to create as much value as Biglari for the next 30 years, and I will start to treat Biglari less like a star… But if I think someone is a star, and I treat him like a star, and you don’t understand why a star should be treated like a star, than the problem is yours, not mine! Gio

As I imagined, you haven’t added anything I hadn’t already thought about BH… And I firmly believe you are wrong about it. Gio

I don't know and I don't care. I completely overlook those things when I think about a business. Gio

I try to always be as polite as I can… but that post was a very poor one! To endorse it is just as poorly done. The fact is always the same: long term investments might bear wonderful fruits in the long run, but a lot of patience might be required. Because in the short run, instead, they might look like a drag on performance. Therefore, if you think you have a great entrepreneur, who will maximize value in the long run, you want to put him in the conditions to proceed undisturbed. Cheers, Gio

adesigar, I think I know the difference between owners and management… But, as I have said, there are very few general rules in business, and each situation requires its own right course of actions. Therefore, let me ask you: do you know BH? Have you studied the company? Its businesses? Do you feel comfortable your knowledge of BH is clear and deep enough? If your answers are: yes! Then tell me why you should prefer to put Biglari in the same position as the average manager. Instead of making him feel safe and able to carry on his long term plan for value creation. Who knows? You might even tell me something I had not thought before… ;) Gio

The problem imo is very simple and clear: you are going on and on comparing Biglari to Buffett, he instead seems to suggest “if you are looking for the next Berkshire, look somewhere else!”. Biglari knows very well that in business each situation is different, and the right course of action each time is different. Buffett never had to deal with control. Munger referred to Buffett in the early days calling him “the serial acquirer”, but evidently to buy a very large percentage of Berkshire back then was not so expensive as to buy the same percentage of BH today. There is simply no way Biglari could get control over BH buying its equity today. Yet, control is crucial. Anyone who runs a business finds out pretty soon how crucial control actually is! And, as I have always said, I want him to be in charge and to feel safe. The less time he worries about his position and about someone buying a lot of BH and starting questioning his business decisions and actions, the more time he can devote to enhance value. Gio

Well… It is sometime now that I have been thinking about a really awesome patisserie in Milan… I know the owner very well and he is among the very best salespersons that I have encountered… ever! And… oh!... the extraordinary amount of cash he generates selling those delicious croissants!! ;) Cheers, Gio

Yes. But also a for-profit Master School inside the Politecnico of Milan University. That is not consulting, and it is where the bulk of my free cash is coming from these days. Of course, that business is not on auto-pilot… far from it! And I constantly take decisions and oversee its operations. But one thing is taking decisions and overseeing, another is (like I have already said) talking on the phone or sending e-mails all day long! Or whichever operation is required. Those are two very different things. And, if you are not free from performing yourself all the operations necessary to run a business, the truth is you don’t have a business, you have a job! This is an idea you find in [amazonsearch]The E-Myth Revisited[/amazonsearch], and I agree. My experience furthermore is perfectly in line: if in my daily business life, I had to take care of all the operations myself, I wouldn’t be able to put together a portfolio of stocks… nor (obviously!) to post 3266 times on this board!! ;D I take decisions and oversee, then I delegate. Gio

+1! ;) Gio

Thank you for the insight premfan. That hotel's investment is easily retuning your equity capital every year. Congrats! Hey! If this is really the best you can find in the private world… then I must acknowledge how incredibly lucky I have been until now ;D… and also that I am going to encounter great difficulties when the need to add a third business will present itself! ::) Gio

September 2014 Presentation Gio TPRE-Investor-Presentation-Sept-2014.pdf

Personally, I have found it amusing and informative. Also in the end the author finds true love and acknowledges how much more fulfilling a life with the person you truly love is than a life of continual dating without a true and deep emotional commitment. The only thing I hope is the same might be true for Ghost: now he is happily married, I hope that these are the days! ;) Gio

Exactly. The problem with the Euro is a structural one: it simply makes Germany too competitive, and leaves Italy, Spain and even France too uncompetitive. If it weakens, Italy, Spain and France can breathe more easily, but Germany’s exports go through the roof. If it gets stronger, Germany’s exports might be kept in check, but Italy, Spain and France slowly slid into depression. There obviously is no easy solution. Unless 1) a fiscal union is finally established, 2) Italy, Spain and France become like Germany… And I don’t know which among the two is more unlikely! Surely, neither 1) nor 2) will happen in a relatively short period of time. It is 6 years now the southern part of Europe has been literally suffering… and it probably is going to get a lot worse, before it gets any better. Gio

Sincerely, I hope this might never happen. Two reasons: 1) It won’t solve the Euro problem, for obvious reasons! 2) Though my cash is in USD, my free cash flow keeps coming in EUR! ;) Gio