giofranchi

Given the fact Pershing Square Holdings is selling for less than NAV, buying its shares could be a very good way of taking advantage of Ackman’s thesis on Fannie and Freddie. :) Gio

Hi Sanjeev, at which hour will the dinner start? Thank you! Gio

JEast, The Brooklyn Investor ends its post saying: Therefore, it seems the two of you are on the same page! ;) Cheers, Gio

Thank you very much! ;) Gio

Could you post a pdf? Thanks! :) Gio

I would also add that I think I am extremely transparent and clear about my way of investing and about my results. Everybody who reads my posts knows exactly the companies I am invested in, probably also the percentages I have in each of them, the amount of cash I hold, and therefore could verify the returns by him/herself. I think this might be very useful: I am not just another smart talking guy... Instead I provide anyone with the means to judge if my words are backed by actual results! I’d guess this is not very common on a public online board. ;) Gio

writser, I have nothing against the idea that bragging about investment returns isn’t healthy. Actually I agree with that 100%! My idea was simply to point out what I still consider an “anomaly” in the field of stock market investing… Saying it doesn’t mean a thing and is not repeatable exactly because I didn’t want to foster greedy behavior! Yet, I do agree with your idea… The problem is the way you and tombgrt express your thoughts! The tone you use and the words you choose are the ones of: 1) Either a very ill-behaved person, or 2) A deeply insecure one If on the other hand it is just the content of my posts that brings out the worst of you both, could you please simply ignore them from now on? ;) Thank you! Gio

Most of all because I would actually welcome a stock market crash!... Anyone who knows and cares about what I am doing knows this! I understand tombgrt and investor-man are the true gods of investing... Ahahah!!!!... But for the rest of us, mere mortals, an 11% in less than a month is an anomaly, a rare event... Nothing but a curiosity... And as a simple curiosity intelligent people would have read my post! Cheers, Gio

Thank you very much! Too kind of you! :) Cheers, Gio

My firm’s equity is up 11.33% for the first 24 days of 2015: 7% due to the EUR/USD movement, 4,33% due to my investments. It is the very first time I experience such a rapid and unexpected appreciation… therefore, I beg you to bear with me… and let me brag just a little bit! ;D ;D I am very well aware this won’t last and a sudden reversion to the mean is going to occur in the next few days! Cheers, Gio PS In fact, I do hope a reversion to the mean occurs very soon, especially in the EUR/USD exchange rate: I am really pissed off by the fact the Euros my firm will earn going forward have a much reduced buying power… especially because I use them to buy USD denominated assets! ;)

Hosington Q4 2014 Market Commentary Gio HIM2014Q4NP.pdf

+1 Gio

Yes! Maybe you are right… But I am in the camp of Mr. Munger when he says: “All I want to know is where I am going to die, so that I will never go there!” The EU situation is too difficult for me to judge and to get comfortable with… If I could never know exactly where I am going “to die”… At least I want to stir clear of all those places that might threaten my wellbeing! This being said, if I’d find a great entrepreneur in a predictable business at a good price in Italy, Spain, or Greece, I would gladly invest alongside him/her… Because imo those 11 bold words are the prescription for a long life in business! ;) Cheers, Gio

As I have said, the deleveraging in the US has already begun, in the EU it has not! It has not even stopped the piling up of new debt… Therefore, maybe the EU is only pretending to have realized to be drunk and is only pretending to have called for a taxi! After all in Europe we are very good at talking, less so at doing… Until I see a clear reversal in the full debt/GDP trend, I’ll remain a skeptic… Gio

In the latest numbers I saw there was no sign of deleveraging in the EU. On the contrary, overall debts vs GDP numbers kept increasing. And imo it all boils down to this: how will the EU cope with a debt which is 460% its GDP? Will it invert its trend towards the US level, 334% of GDP? Or will it proceed towards the Japan level, 655% of GDP? Until I don’t see enough evidence we are making good progress in this regard, I think any recovery will be based on very shaky fundamentals. Gio

Well, if you want to be original at all costs, just think the Euro will be valued 0.8 USD in 2 years, and there will be no Euro in 5 years! ;) Cheers, Gio

That's completely and utterly wrong. It's exactly the opposite. It is the US who started first to adjust and is doing better now while Europe hasn't even began to do what they should be doing. They CANNOT adjust under current system, that's the main issue. Especially as the surplus country Germany who should take upon itself higher unemployment and higher household consumption is not willing to do so something which is obviously very difficult politically to do. So they'll have years of high unemployment or maybe even some extreme political parties will rise to break it. The USA as a deficit country will get out of it faster anyhow compared to other surplus countries. But regardless, it's really the complete opposite. This European EQ or whatever is not going to help them. I agree 100% with meiroy: the European financial system is twice as levered as the US counterpart, and debts are still going up fast. Until we don’t see a reversal in this trend, I simply don’t understand how things could get better… But we don’t have the money to recapitalize our banks, therefore a trend reversal isn’t likely anytime soon… Of course, if a huge amount of money gets printed, that could help somehow… But it would also entail a further devaluation of the Euro… How should the rest of the world respond? Another EU crisis might be waiting just around the next corner! Gio

Maybe… But that’s actually the way FFH has operated for most of its existence… Of course there have been ups and downs… But overall their returns from equity investments have been very satisfactory! Moreover, recently they have begun changing their strategy, investing more funds with whom they reckon to be great managers: I remember at last year FFH dinner that both managers from Bank of Ireland and Eurobank were present, and Prem Watsa praised their abilities and said how much it made him feel comfortable to partner with such reliable people. Thomas Cook and Kennedy Wilson surely are other notable examples. I think today FFH equity portfolio is rightly balanced between a basket of deeply undervalued securities (a la “cigar butts”) and a few names they have great confidence in thinking they have top management and very bright future prospects (high quality companies). Cheers, Gio

For instance, I think I have recently found a wonderful piece of real estate downtown Milan, which might serve me very well for many years to come, both as a new better house for me and my family and as my own private office. The price is a true bargain because the counterpart is currently distressed and therefore a forced seller. I am positive it is a purchase that will both enhance the quality of my life and my family’s and turn out to be a reasonably good financial investment. Now, you can plan as much as you want… But to foresee when such an opportunity might arrive imo is almost impossible… Instead, you must be ready to act promptly and seize it. If I were fully invested and the price of my stocks were depressed, I would be faced with a dilemma I don’t want to face: should I sell my stock investments at the worst time possible… Or should I let the real estate opportunity go? This is just an example of what might happen… because it is actually happening to me right now! ;) Unfortunately, I guess we all know worst things than this might happen… :( Gio

Yes! Probably I would do something like you suggest! But I wouldn’t wait for a price below BVPS… I would start using a part of my cash reserve at 1.15 x BVPS, and keep buying as the price trends down… If the price recovers swiftly, instead, I will sell some… Gio

Ah!... Very difficult to say! Anyway, they are the best investors out there… Let me answer with Marks’ tennis analogy: the professional wins by being aggressive, the amateur wins by being defensive… One thing I am sure about: neither Buffett nor Watsa nor Munger nor Klarman would ever put themselves in the situation of being forced to sell their investments… Because imo the ability to hold on to your investments for as long as you please is key to investment success… Life might be strange and full of surprises… I remember Munger saying: “We have already been cash-strapped… And we don’t ever intend to go there again!” As far as “opportunities meeting their criteria” are concerned, I think it is not that easy: because position sizing matters too. If I hadn’t a very large investment in FFH, I would be buying it today. Instead, I am waiting for some price correction to add to my already large position. Gio

Ah!... But that would have been impolite and presumptuous! Far from me! Cheers, Gio

Ok! You are right! :) Gio

I know! That's why I have written: ;) Gio

But when I think about my cash reserve, I am happy about the optionality it gives me in regards to what the price of my investments will do, more than the price level of the general market. A concentrated portfolio like mine tends to be much more volatile than the general market, and opportunities to use my cash reserve intelligently come quite often! I surely don’t have to wait for the market to crash to make use of my cash reserve. I always have some cash reserve, but the amount of cash I hold can vary quite significantly, quite often, and quite suddenly! Gio