giofranchi Posted July 16, 2015 Author Share Posted July 16, 2015 A year! Oh no ;) Well, $98 million were paid in a year, weren’t they? If they have created so much value, shareholders are waiting for that value to be recognized by the market… why shouldn’t Maffei? I am fine with Maffei’s compensation. Nothing to say about it! I just wanted to understand if you think he is putting himself at the same level of other shareholders. Saying that Franklin doesn't do it for the money is ridiculous, just like saying that Biglari isn't acting greedily. Of course, you might think whatever you like to think. Once again what’s ridiculous imo is the certainty with which some people speak about the behavior of mangers they know practically nothing about… It will remain a mystery to me… Anyway, even if you were right, and Franklin’s paycheck is only for the money (money for what?!... How many yachts do you think he is going to buy with all the money he has made during the last 15 years?!... Or is it money for status? If it is money for status, don’t you think he would also be mindful about how people think of him as a businessman?), 45x at JAH in 15 years was achieved after all compensation, right? I am not expecting him to duplicate such an amazing result, but I see a huge margin of safety there! As you had once said in the VRX thread, to each one his own. Cheers, Gio Link to comment Share on other sites More sharing options...
Liberty Posted July 16, 2015 Share Posted July 16, 2015 A year! Oh no ;) Well, $98 million were paid in a year, weren’t they? If they have created so much value, shareholders are waiting for that value to be recognized by the market… why shouldn’t Maffei? The man is running like 5-6 companies! Consider it 20 million per company or whatever. How much would Franklin be making by that standard? As I said, I think it's a little high, but the scale of the Liberty empire means that Maffei's compensation isn't too material to shareholders, and he's not pushing for weird schemes where he's skimming 20% of profits off the top or anything (imagine his take after he brought the SIRI deal if he had been getting a cut). Franklin's companies are much smaller yet his compensation is much bigger and structured in very non-conventional ways, which is definitely material to shareholders. Of course, you might think whatever you like to think. Once again what’s ridiculous imo is the certainty with which some people speak about the behavior of mangers they know practically nothing about… It will remain a mystery to me… Know practically nothing about? What is there to know? Franklin is extracting a quarter of a billion in cash in one year from a company that has no track record and is barely a small cap. Some of his options are valued at zero yet they're quite valuable, etc. This isn't some super nuanced thing that I can't possibly understand. Anyway, even if you were right, and Franklin’s paycheck is only for the money (money for what?!... How many yachts do you think he is going to buy with all the money he has made during the last 15 years?!... Or is it money for status? If it is money for status, don’t you think he would also be mindful about how people think of him as a businessman?), 45x at JAH in 15 years was achieved after all compensation, right? I am not expecting him to duplicate such an amazing result, but I see a huge margin of safety there! I didn't say it was only for the money, another strawman. I'm sure he also loves his job and is very good at it, etc. But you don't structure your own compensation that way if getting as much money as possible out of the company isn't your goal. As I said, he's also a shareholder. Wouldn't that money from the preferreds be better compounding inside the company for the benefit of all shareholders? If he's not doing it for the money, as you claim, why is he trying to take so much of the shareholders' profits (or the potential profits, at this point, as the company hasn't been operating long enough to generate much) for himself rather than leaving it for all shareholders? I understand that Ackman is friends with Franklin and they go scuba diving together and all that, but Prem Watsa also had tremendous things to say about Tom Ward, yet after reading the Frackers I would never put my capital into that man's hands, even if he's been really successful in the past. Link to comment Share on other sites More sharing options...
giofranchi Posted July 16, 2015 Author Share Posted July 16, 2015 The man is running like 5-6 companies! Consider it 20 million per company or whatever. How much would Franklin be making by that standard? Probably, I have not been able to explain myself... But the comparison with Franklin misses what I was asking. Know practically nothing about? What is there to know? Franklin is extracting a quarter of a billion in cash in one year from a company that has no track record and is barely a small cap. Some of his options are valued at zero yet they're quite valuable, etc. This isn't some super nuanced thing that I can't possibly understand. It is not what is obvious that you cannot understand of course... It is what you seem to infer from Franklin's paycheck that I don't agree with. Franklin's track record says he works very reliably for his shareholders, you are inferring from his paycheck that he is not reliable instead. Imo the first is much more important than the latter. If he's not doing it for the money, as you claim, why is he trying to take so much of the shareholders' profits (or the potential profits, at this point, as the company hasn't been operating long enough to generate much) for himself rather than leaving it for all shareholders? I am guessing: maybe to be paid what he thinks he deserves, and to build the capital for a new venture? Just a guess based on what I would be doing! I understand that Ackman is friends with Franklin and they go scuba diving together and all that, but Prem Watsa also had tremendous things to say about Tom Ward, yet after reading the Frackers I would never put my capital into that man's hands, even if he's been really successful in the past. Have you an investment in FRMO? Last time I checked Stahl's largest and more profitable position was JAH... Evidently, Ackman is not the only manager who thinks Franklin is a great owner-operator! Cheers, Gio Link to comment Share on other sites More sharing options...
Liberty Posted July 16, 2015 Share Posted July 16, 2015 The man is running like 5-6 companies! Consider it 20 million per company or whatever. How much would Franklin be making by that standard? Probably, I have not been able to explain myself... But the comparison with Franklin misses what I was asking. You really like taking this down the rabbit hole, eh? I explained in a part that you didn't quote that I thought Maffei's compensation was a little high, but that it wasn't anywhere near as high as Franklin's if you look at the size of the companies involved/portion of shareholder capital involved, and that his compensation was structured in a much saner way. It is not what is obvious that you cannot understand of course... It is what you seem to infer from Franklin's paycheck that I don't agree with. Franklin's track record says he works very reliably for his shareholders, you are inferring from his paycheck that he is not reliable instead. Imo the first is much more important than the latter. I'm not willing to take the risk of putting my capital in the hands of someone who seems to think that my capital is really his. I am guessing: maybe to be paid what he thinks he deserves, and to build the capital for a new venture? Just a guess based on what I would be doing! He can think that if he wants, and I can think that it's excessive and stay away. I wouldn't invest with you either if you took such a large portion of profits and things were structured in such a way that your short-term outcomes were very different from shareholders outcomes. But I'm guessing that at your companies you take a very modest salary and just reinvest within the company... Not sure if that's a good guess. Have you an investment in FRMO? Last time I checked Stahl's largest and more profitable position was JAH... Evidently, Ackman is not the only manager who thinks Franklin is a great owner-operator! I've very aware that many people like him. But trying to do independent thinking means sometimes having your own opinion and not just following others. JAH is an immaterial part of FRMO, in any case. They have an index of owner-operators, so they own pretty much all of them in small quantities, including SHLD and TSLA. Doesn't mean all FRMO owners like Sears and Tesla (two companies with shareholders that tend to be at opposite ends of the spectrum). Link to comment Share on other sites More sharing options...
giofranchi Posted July 16, 2015 Author Share Posted July 16, 2015 You really like taking this down the rabbit hole, eh? I explained in a part that you didn't quote that I thought Maffei's compensation was a little high, but that it wasn't anywhere near as high as Franklin's if you look at the size of the companies involved/portion of shareholder capital involved, and that his compensation was structured in a much saner way. Ok, doesn’t really matter! I'm not willing to take the risk of putting my capital in the hands of someone who seems to think that my capital is really his. That’s what you inferred and what I think is wrong. Of course you might be right though! But I'm guessing that at your companies you take a very modest salary and just reinvest within the company... Not sure if that's a good guess. Unfortunately, I don’t have business results that are remotely comparable to his… But yes! I reinvest almost everything within the company… If you ask me, I would suggest the following: invest with someone with Franklin’s results and compensation, instead of investing with someone who has my business results and reinvest everything in the company! ;) I've very aware that many people like him. But trying to do independent thinking means sometimes having your own opinion and not just following others. With this I agree of course! Cheers, Gio Link to comment Share on other sites More sharing options...
giofranchi Posted July 16, 2015 Author Share Posted July 16, 2015 By the way, I am not familiar with Tom Ward... Would you tell me which kind of track-record of building wealth for his shareholders he has? The business of fracking is not something I judge to be predictable enough. Therefore, I would not have invested with him... But not because of compensation! Instead, simply because the business he is in imo lacks predictability. Imo it is not people who are or behave in untrustworthy ways... It is the circumstances they put themselves in that force them to do things they otherwise wouldn't be doing! Cheers, Gio Link to comment Share on other sites More sharing options...
Liberty Posted July 16, 2015 Share Posted July 16, 2015 By the way, I am not familiar with Tom Ward... Would you tell me which kind of track-record of building wealth for his shareholders he has? It was fantastic until it wasn't. Link to comment Share on other sites More sharing options...
giofranchi Posted July 16, 2015 Author Share Posted July 16, 2015 By the way, I am not familiar with Tom Ward... Would you tell me which kind of track-record of building wealth for his shareholders he has? It was fantastic until it wasn't. Well... Can you elaborate a little further? Thank you, Gio Link to comment Share on other sites More sharing options...
Liberty Posted July 16, 2015 Share Posted July 16, 2015 By the way, I am not familiar with Tom Ward... Would you tell me which kind of track-record of building wealth for his shareholders he has? It was fantastic until it wasn't. Well... Can you elaborate a little further? Thank you, Gio Read The Frackers by Greg Zuckerman (not the best book, but the second half is good). Ward co-founded CHK with Aubrey McLendon (and later founded SandRidge, a Fairfax investment); they built it up from basically nothing into a massive multi-billion company that changed the energy landscape in the US and gobbled more land faster than almost anyone. From 1999 to early 2008, the stock did maybe 60x (in less than 10 years) without counting the dividends, and for a while they were considered gods in their industry, people who could do no wrong, they ran the thing as their fiefdom with huge perks and compensation, and then it all unravelled. Link to comment Share on other sites More sharing options...
giofranchi Posted July 16, 2015 Author Share Posted July 16, 2015 Ok, that tells something about their track-record... What about their method? Was it repeatable? What about their business? Was it predictable? Of course I don't know... But I would bet things unravelled because either their method stoped being repeatable or their business became unpredictable... Gio Link to comment Share on other sites More sharing options...
Liberty Posted July 16, 2015 Share Posted July 16, 2015 Ok, that tells something about their track-record... What about their method? Was it repeatable? What about their business? Was it predictable? Of course I don't know... But I would bet things unravelled because either their method stoped being repeatable or their business became unpredictable... Gio If it interests you, it's fairly easy to look up. I never said I thought Martin Franklin was Tom Ward, I just said made the comparison that Ackman praises Franklin like Prem Watsa praised Tom Ward, but that this doesn't automatically make me trust these people. Link to comment Share on other sites More sharing options...
giofranchi Posted July 16, 2015 Author Share Posted July 16, 2015 Well... I repeat: you shouldn't trust people you have never met, never talked to, let alone work with... Imo it simply makes no sense. What you could trust, instead, are their abilities, their methods, and the quality of the businesses they have chosen for themselves. Everything else imo simply cannot be judged by outside investors. Of course it is clear that your point of view is a different one! Cheers, Gio Link to comment Share on other sites More sharing options...
Liberty Posted July 16, 2015 Share Posted July 16, 2015 Well... I repeat: you shouldn't trust people you have never met, never talked to, let alone work with... Imo it simply makes no sense. What you could trust, instead, are their abilities, their methods, and the quality of the businesses they have chosen for themselves. Everything else imo simply cannot be judged by outside investors. Of course it is clear that your point of view is a different one! Cheers, Gio Of course I don't personally trust these people like Buffett and Pearson in the way that I trust people I know; I trust their abilities, methods, etc, based on what can be known about them, exactly as you say. I don't see how we can be different here, unless you have a lot more personal connections than I do. Link to comment Share on other sites More sharing options...
giofranchi Posted July 17, 2015 Author Share Posted July 17, 2015 Ok, so let me be clear once and for all about how I view compensation. I look at compensation for what it really is: a cost. And as a cost the lower the better, of course… But I don’t try to read something else more “subtle” about compensation… Those who do imo run the risk of never being able to distinguish between the Icahns of this world from the rest. In other words, there are lots of people who work for low salaries and do a very poor job, just as there are some outstanding people who create lots of value while demanding to be paid a lot for their services. I choose the second ones everytime. What about people who create lots of value and work for low salaries? Well, easy enough: they are my first choice of course! And I already have an investment with everyone I know among that rarest of species… But it does not mean they are the only people I am willing to invest with. Finally, as far as Franklin is concerned, I would say the following: Nothing has changed from JAH, Justice Holdings, or PAH: his compensation has always been devised the same way; his method of buying mismanaged, undervalued things and fixing them, using some leverage, but with a keen eye on organic growth, is the same for Nomad as it has been for all other ventures of his during the last 15 years; Nomad’s industry (food) shares many features with JAH’s industry (consumer products), a very high level of predictability first of all. Nothing has really changed, therefore I do not see why results should change meaningfully. He keeps for himself 10% (he holds ½ of the Founder Preferred Shares) of the increase in stock price above the highest price previously reached… So be it! Cheers, Gio Link to comment Share on other sites More sharing options...
premfan Posted July 17, 2015 Share Posted July 17, 2015 No need to reinvent the wheel Gio. Reread the buffett letters to get views on compensation and incentives. Compare his views with yours. Fill in the missing pieces to get some clarity. When in doubt go with buffett the man with a 50 plus year track record of decoding human behaviors and incentives. Link to comment Share on other sites More sharing options...
giofranchi Posted July 17, 2015 Author Share Posted July 17, 2015 No need to reinvent the wheel Gio. Reread the buffett letters to get views on compensation and incentives. Compare his views with yours. Fill in the missing pieces to get some clarity. When in doubt go with buffett the man with a 50 plus year track record of decoding human behaviors and incentives. Ahah!!!! Buffett says and writes whatever he wants… But don’t attack KO on compensation! Otherwise you are going to be ridiculed by "the man with a 50 plus track record of decoding human behaviors and incentives" on TV!! ;) Cheers, Gio Link to comment Share on other sites More sharing options...
Liberty Posted July 17, 2015 Share Posted July 17, 2015 No need to reinvent the wheel Gio. Reread the buffett letters to get views on compensation and incentives. Compare his views with yours. Fill in the missing pieces to get some clarity. When in doubt go with buffett the man with a 50 plus year track record of decoding human behaviors and incentives. Ahah!!!! Buffett says and writes whatever he wants… But don’t attack KO on compensation! Otherwise you are going to be ridiculed by "the man with a 50 plus track record of decoding human behaviors and incentives" on TV!! ;) Cheers, Gio Buffett won't publicly attack KO. But you have no idea what he told them behind closed doors ;) In the past he's already participated in the ousting of management there... I'm sure it could happen again if they do stupid things for too long. Link to comment Share on other sites More sharing options...
giofranchi Posted July 17, 2015 Author Share Posted July 17, 2015 Buffett won't publicly attack KO. But you have no idea what he told them behind closed doors ;) My point was simply that he writes “general rules of mindful investing”… Then it is up to each one of us to discern from situation to situation, and in real business no situation is alike the previous one nor the next one. As always God is in the details! I was trying to reason about the details of Nomad & Franklin… and I was answered sarcastically with a generalization. Not very useful. Gio Link to comment Share on other sites More sharing options...
Liberty Posted July 17, 2015 Share Posted July 17, 2015 Buffett won't publicly attack KO. But you have no idea what he told them behind closed doors ;) My point was simply that he writes “general rules of mindful investing”… Then it is up to each one of us to discern from situation to situation, and in real business no situation is alike the previous one nor the next one. As always God is in the details! I was trying to reason about the details of Nomad & Franklin… and I was answered sarcastically with a generalization. Not very useful. Gio I wasn't being sarcastic, you misread that smiley. I was pointing out that Buffett has been quite clear that he doesn't criticize publicly except in general, but that doesn't mean that he can't be quite tough in private. As for Franklin, I've said what I had to say. Link to comment Share on other sites More sharing options...
giofranchi Posted July 17, 2015 Author Share Posted July 17, 2015 I wasn't being sarcastic, you misread that smiley. I wasn't referring to your answer! ;) Cheers, Gio Link to comment Share on other sites More sharing options...
Liberty Posted July 17, 2015 Share Posted July 17, 2015 I wasn't being sarcastic, you misread that smiley. I wasn't referring to your answer! ;) Cheers, Gio Ah, but you quoted me when you said that.. Nevermind then :) Link to comment Share on other sites More sharing options...
giofranchi Posted July 17, 2015 Author Share Posted July 17, 2015 Cost Obsession Franklin brings to Jarden an obsession with containing costs. Some companies spend millions hiring a branding firm to come up with a name. Franklin combined “jar” and “den” -- as in the room where a customer might use a mason jar or other consumer products. Inelegant perhaps, but cheap. For years, the company’s office in Rye, New York, lacked a private bathroom and fridge. New digs in Norwalk, Connecticut, feature a kitchen and dining room, but no full-time receptionist, just a phone in the lobby and a company directory. “To have a receptionist just sitting there probably on Facebook?” said CEO Jim Lillie. “Martin, Ian and I have always had the philosophy of spend it like it’s your own money.” Lillie, who joined Jarden in 2003 and succeeded Franklin as CEO in 2011, demands discipline from his division heads. Jarden uses a form of zero-based budgeting -- an accounting approach deployed successfully by 3G Capital, the private-equity shop that owns Burger King and Heinz. Annual budgets typically start at zero, and managers must justify expenses versus the more common method of adjusting from the previous year’s spending. Keeping costs under wraps allows Jarden brands to invest in growth. Mmm... Not sure, but my idea of a fiefdom is a bit different! ;) Cheers, Gio Link to comment Share on other sites More sharing options...
giofranchi Posted July 21, 2015 Author Share Posted July 21, 2015 I have just bought more NHL this morning. I am slowly building a meaningful position. Still lots of room for averaging down. Cheers, Gio Link to comment Share on other sites More sharing options...
Phaceliacapital Posted July 22, 2015 Share Posted July 22, 2015 Has anyone ever found a prospectus for the share offering (first or second)? Link to comment Share on other sites More sharing options...
giofranchi Posted July 22, 2015 Author Share Posted July 22, 2015 Has anyone ever found a prospectus for the share offering (first or second)? Not sure if this is what you are looking for... Gioprospectus-final.pdf Link to comment Share on other sites More sharing options...
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