giofranchi

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

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

No, I don’t ever expect to have net cash flow from such a property. Therefore, the payment of any mortgage I might decide to get could not be covered by the rent. I understand I can always sell it later and redeploy the proceedings into the stocks I like… But Nate has said something interesting: no one knows the future about the markets… And that’s why I always like to keep great liquidity, meaning that I both like to always have lots of cash and easy to sell investments… To stay flexible and be ready to take advantage of any opportunity that might come our way… On the contrary, if I purchase that apartment now, I will consume a large part of my cash reserve, putting it into something hard to sell… The consequence is I will end up much more constrained than I am now. Gio

Thank you very much, Nate! Not because you agree with the purchasing of the apartment, but because of your clear reasoning! :) Cheers, Gio

What do you mean by “supportive responses”? Some responses were “Yes, I would do it!”, that is a “supportive response” to me. Other responses were “No way… You must be crazy!”, and that is a non-supportive response to me. They both are fine, and I accept them both and both make me think. You, instead, with an arrogant tone said that it is a waste of time to even ask the question I formulated in this thread… Well, I might respect your point of view, though of course I don’t share it, but still I don’t understand why you took the trouble of first reading this thread, then posting your thoughts… on a subject you have openly said to consider only a waste of time! Finally, I think I have put a decent amount of work into this board… If I have to make a decision, an investment decision, about which I still have some doubts, and I want to hear what other people on this board, whose judgment I respect a lot, have to say about it… Well, I think I have earned the right to share with them my doubts and listen to whichever good advice they might give! Not only: I would also add that it is precisely one of the most intelligent use of this board! ;) Gio

My own thoughts exactly! ;) Gio

MCN, 1) As I have said, I already own an apartment in that town. My family has been owning properties there since I was 3. Many friends of mine have bought, sold, then bought again flats in that same town. Some of them live there. The best hotel in town? Yes, you’ve got it, it is run by a friend of mine. Listen, I have been watching that market my whole life… If I say it is a great bargain, believe me… It is!! 2) My family has been renting properties in that town for more than 30 years now. If I say the rent will cover expenses but nothing more, it is out of experience and because I don’t have any reason to believe things in the future might differ much from the past. 3) Most of all, if you don’t like this thread, why did you waste your time writing such a long post? Why don’t you just leave it alone? ;) Gio

Ahahahahah!!!! Guess that’s the reason why all the supposedly women of my life have the very annoying habit of dumping me after a few months we stay together and they begin to be “intimately acquainted” with my stocks! ;) ;D ;D Gio

If by "my own thing" you mean my own business, I might agree with you (though not always... control imo has its burdens!). But here "my own thing" means my own apartment, when I don't really need it, and I like my stocks a lot... but it undoubtedly is a very good bargain... that's why I find it so hard to make up my mind! Gio

Yeah! But in my experience (and I already have another apartment in the same town!) it is just like MrB has said: Gio

This might be part of the equation, but surely it is not all that we are seeing… US public debt has gone up, hasn’t it? Two might be the causes: 1) the restructuring of the banking system, a one-time event in which private debt was transformed into public debt, 2009-2010; 2) the issuing of new debt, 2011-2012-2013. It is a very complex system… Very difficult to know with certainty… The risk I see is we might keep saying “for every borrower there must be a lender” and overlook the need for deleveraging, until we all get to a Total Debt / GDP of 655%... Then we will all look like Japan!... After all, even in Japan for every borrower there must be a lender, right? And their debt is practically all internal debt, therefore for every Japanese borrower there must be Japanese lender… So, there must be a lot of Japanese savers, right? Well, today Japanese personal savings rate is 0%. And the return they are able to get on their “past” savings is so low that could be accepted only in a deflationary environment… Just a little inflation would render a significant decrease in purchasing power unavoidable. Won’t you agree with me that is worrisome? Gio

Yeah… One thing I have omitted saying is we already own lots of real estate. Which is worth more than 50% our total assets… Gio

+1! :) Gio