LakesideB

5yr starts end of 2019 - ie, valuations unaffected by COVID yeah? Markets starting tanking early 2020 with bottom in April/May and recovering ferociously so not affecting the starting valuations but sure any idiot can outperform S&P500 over that time period net of fees without owning any Mag7.

As of 2024 end, on a 5yr basis, Pif3 is up +21.4% net of fees vs S&P up by +14.5% an outperformance of +6.9%. Pif 2 is 14.6% vs 14.5%. Since inception, over 25 years, he has outperformed the index by 5.6% in Pif2. For Pif3, since its inception in 2002, the outperformance is 3.1%. I scrolled up the thread and see his Q1 numbers have been released and its down 25%. I avoid looking at quarterly numbers for such an insanely concentrated fund. Quarterly numbers are more noise than signal. For example, Reysas is a massively significant top position. Late in 2024, the Reysas CEO comes out on Bloomberg TV and states earnings will double in 2025. Yet, Reysas is down 30% YTD. Why? Who knows. It's noise. I am just saying on a 5yr basis ending 24, you have S&P whose top 7 names have hit it outside the park and are currently 35% of the index weight. At the start of the year, S&P500 traded at one of the highest multiples. History hasn't been too kind for prospective 10year returns to anyone investing in S&P 500 at its highest multiples. Yet you have Pifs, who have done well against S&P despite not having any exposure to the magnificent 7 and underforming coal bets. The portfolios trade at mid to high single digit P/Es. Probabilistically high likelihood of one outperforming the other over the next 5 to 10 years. I am out from this discussion. I have watched in amusement over the years the discussions on this thread and the previous, now closed, threads on him. I purposefully stay away as it can be a tremendous time suck. The amount of misinformation, especially regarding fees etc, was just too much to take. Good luck to all!

The discussion here seems so one-sided. It feels like whenever there is underperformance, certain individuals respond strongly. There is a lot of misinformation in this thread. These individuals know some of the details are wrong, but choose to keep quiet. To Vish_ram's point, yes, he is underperforming on the 20-year number. The underperformance is 1.7% in Pif 2, but is matching S&P500 in Pif3. The concentrated coal bets have been hit hard. Focusing on 5-year performance is instructive as it captures his evolution as a manager, for I believe he has become a better investor with time. On a 5yr basis, the performance matches to outperforms S&P500, depending on the fund. These numbers include the heavy coal bets, which were about 30% of the portfolio and are down some 50-60%. With enough time, these coal bets will likely rebound significantly, lifting the 20-year number - a significant value add to ~$1 billion in assets. Once it becomes positive, I am confident there will be no screenshots and detailed Excel analysis of his performance by individuals like Vish_ram. Looks like response is only warranted when things look good for one's agenda. There are some completely inaccurate comments, such as the person who mentions that he continues to charge a 1.5% management fee or that Buffett instructed him and Guy to charge zero fees. He started Pabrai funds in 1999 with a zero-fee model from the beginning. He met Buffett for the first time at lunch in 2007. After the blowups during the GFC, unlike the majority of managers, he kept operating for a decade+ with zero fees after the great financial crisis and only started earning fees when clients were above the high watermark. Vish_ram knows all this and can easily correct the misinformation, but chooses to stay quiet. Pif4's performance is worse than others as he couldn't include some of his best ideas due to restrictions. For example, it doesn't hold Reysas, which he invested at $16m valuation and has recently traded at $1 billion market cap. It is a restricted portfolio and a subset of his best ideas, and not one where most of the assets are. At the end of the day, he runs a highly concentrated portfolio. Some might think having 10-15 names is concentrated, but his top 2 names are more than 50% of the assets, with 4 to 5 positions doing nearly all the work. At certain times, he may seem like a poor investor, while at other times, he may look pretty good. Yes, the 20-year performance varies from an underperformance to matching s&p500, depending on the fund. There were significant blowups during the GFC, with the funds down 65% or so, as mentioned by him in several videos. All these are reflected in the 20-year number. But what happens in 2028, when the blowups from GFC aren't in the numbers any longer and coal has rebounded? Attacking him when things don't look good and remaining silent on misinformation being spewed, and when things do look good, tells me more about one's integrity. Folks saying Charlie didn't give him money to invest as some sort of negative is amusing. Never mind the fact that Charlie actively chose to become friends with him late in his life, despite being inundated with marketing finance types throughout his life. I can understand folk's frustration here. But I think instead of selectively attacking someone's work, it would be more productive to clone someone like him to try to make this world a better place.

Spekulatius, interesting comment on CVNA. Superficially can see why CVNA : large amount of debt + no free cashflow + prior actions of senior Garcia. Curious to know if you had an opportunity to look under the hood and you found something that gave you a pause or you hold that sentiment due to the above mentioned factors? Txs.

Wow! On other hand, Bruce Flatt is going diametrically opposite with cash hoard!

My bad, I mistook what you meant. Agreed.

A 1% to 2% move is non-trivial. On a 30yr it translates to a -19% to -28% return due to its approx 19yr duration. The 30bps to 35bps move in US 10yr and 30yr in the past two days is a huuge move with much higher implications on actual returns. The other issue is for a P&C, the investment leverage is always >1 and in FFH's case, its around 3x, so the implications on ROE for FFH are even more dire due to this. Kudos for him to have had the sense to come out of them.

Look its pretty straightforward. If you think Trump wins two adverse things will happen that will affect US treasuries : decreased corp tax rate and increased infrastructure spending. Prem says as much. Decreasing corp tax rate to 15% and decreasing highest individual tax rates and lowering number of tax brackets means decreased tax revenue for the gov. I have seen estimate of lost tax revenue of upwards of $9 trillion by 2026. Increased infrastructure spending (military, infrastructure - building of Wall, etc) will be financed by huge bond auctions. When you suddenly triple the size of bond auctions to finance the increased deficit, what do you think happens to IR? Who has the appetite to come for a bid in today's environment (the last time that high a deficit as a % of GDP that needed to be finance was in 2008 ... and everyone participated due to safe heaven status of treasuries during those times)? Avg duration of 30yr treasury is 19 years, so 1% moves results in 19% loss. He wants to take the risk off in-case Trump get elected. Given the depth of US treasury market, he can easily do that and he can always come back in once he has certainty. Trump getting elected may result in other 'un-intended' events which he can capitalize on with his newly acquired $10b+ cash war chest. Makes perfect sense with what he did.

Could anyone post a pdf file of the transcript? Thank you! :) Gio FFH_Buys_Brit_Transcript.pdf

from transcript "We have partners who in the past have been – have suggested that they would like to be partners with us and – in these insurance operations, and we may consider that, if it's a partner that we're really comfortable with. And all of that just to say, in terms of our common stock, we think our common stock with a book value of $400 a share and a stock price – with a market stock price to book value of about 1.3 times, we think is inexpensive. We're selling – we had a very good year last year. Our earnings are well protected. Our underwriting is – and our insurance operations are very good. Our investment portfolios are very conservative, as you know. We went through it last week. Our equities are hedged. We got 25% cash, low corporate bond. We've got deflation swaps. So we just think that we have many ways of financing this, and one of the last alternatives will be a stock issue."

I agree and that's why the current FCF is depressed in my mind. Although I am curious to see that capex this quarter was probably the highest in the last 8 quarters with very little debt repayment. In fact they used cash to buy additional RE (I believe a nicer office building near their location). Somehow, I don't see the urgency to attack the debt that aggressively. Either they have a good visibility on how things will progress from here on or they are being extra confident about things. In the end however, I have confidence in what they are doing and believe this mgmt. Without this belief you would probably stay clear as a 25% FCF number is meaningless if you have a liquidity crisis.

Early part of this year they thought their investment in Post Media would start paying off. Its been a hole for them with close to 0 ebitda to show for. The investment in that asset continues and these dollars could have been spent growing their 'essential information' business. So a huge opportunity cost as well. This acquisition has been a disaster so far. For all the leverage the company took, it has very little to show for it. But I guess that's the reason why the opportunity exists ... so in a perverse way its good all this is happening. You have to believe in the mgmt at the end of the day.

They are well aware the circumstances they are facing. You can see it that this quarter they have started selling some non-core real estate to repay some of the debt. The problem is the rapidly dropping EBITDA has the potential to breach covenants before they have the opportunity to sell their RE. Also if u notice, Q3 and Q1 are the weakest quarters due to cyclicality of the business. So the next quarter will be very important in accessing how things are progressing.

I agree to your statement. Simply put, that is one of the biggest difference I find between this and the fate of yellow media. I should also state that the land is about $16m on their balance sheet or about 15% or so of mkt cap . The BV of that land is truly outdated. I recon the land value in itself is about half the the market cap.

I agree to your statement. Simply put, that is one of the biggest difference I find between this and the fate of yellow media.