giofranchi

Well, I know and follow just two of them: GLRE and TPRE. GLRE practically writes no cat reinsurance… its business is mostly concentrated in high frequency transactions. Severity transactions are selectively chosen and amount to only a very small percentage of its book of business. TPRE reinsurance operations are led by Mr. Berger, who has a long and very successful track-record as insurance / reinsurance underwriter. I don’t know the rest of the lot… and I tend not to speak about things I don’t know… ;) Gio

Mr. Charles Gave and Mr. Louis Gave on "The Emerging Market Panic" --John Mills Gio Daily+1.27.14.pdf

Most of the hedges are on the Russell2000. Gio

This is funny… $380 is exactly my price target for adding more FFH! ;) Cheers, Gio

Well, Sanjeev, twacowfca, Packer, oddballstocks, onyx1, SharperDingaan, and you (and others as well!) are both investors and businessmen! This only reinforces my idea your points of view are not far from those of the Prems and the Warrens of the world (albeit, probably, on a smaller scale!). :) Cheers, Gio

Let's say you just have an insurance company and nothing else in your holding company -- you'd better be pretty damn cautious about MTM losses on equities. Now, instead suppose you also have a few very high quality (and wholly owned) companies surrounding it -- companies that just throw off tons of cash.... Two things just happened by adding the very high quality wholly owned cash machines: 1) insurance ratings went up on the insurer, ultimately leading to better underwriting results (charge more for higher ratings) 2) You can invest the float a bit more aggressively given the huge amounts of earnings power across the consolidated entity I believe the insurance businesses within Berkshire would earn lower ROE as entities outside of Berkshire. The structure boosts intrinsic value. Similarly, I think an aircraft carrier is better off travelling in a convoy of destroyers. Buffett is playing a little game of fleet admiral here. That's a very good perspective, Eric. Warren had squeezed cash from BRK to buy NICO which meant that a company with lousy returns was joined to a controlled insurer with a huge pile of cash and marketable securities. BRK's ownership of NICO gave Warren optionality; if NICO had got in trouble with high intrinsic value but low market value equity holdings on its BS Warren could have squeezed or even liquidated BRK with its remaining working capital to provide relief to NICO. Things weren't all rosie. Warren's investments were such a spiderweb of cross holdings that the SEC took interest and was about to bring suit around that time. I think the key reason he took the plunge into investing almost all NICO's assets in equities was that equity holdings of insurance companies didn't have to be marked to market then. If his regulator questioned those holdings which were likely carried at purchase price, Warren could have pointed to how solid the underlying businesses were. NICO had been a homegrown Omaha success. I suspect that the regulator of that local business was not unfriendly or activist. :) I agree that operating businesses, which throw off tons of cash are very good things to possess… I think this is self-evident! But don’t forget that until the mid-90s’ almost 90% of the increase in BV for Berkshire was achieved thanks to insurance + investing. And during the 80s’ Berkshire practically only grew through insurance + investing. Even if today marked to market accounting, like twacowfca suggests, limits the amount of equities an insurance company can purchase, without running too much risk, and therefore what Berkshire achieved during the ‘80s is no more replicable, I think Dhandho Holdings might still do pretty well. Think about Markel: Mr. Gayner is surely a smart investor, but he is no outlier, nor he has a better track record than Mr. Pabrai… actually, his track record is only slightly better than the S&P500. Yet, MKL has compounded BVPS at more than 16% for the last 20 years. Dhandho Holdings imo is going to be a very good vehicle for compounding capital, even without owing operating businesses… This, of course, doesn’t exclude the fact Mr. Pabrai could very well decide to buy entire businesses in the future! :) Gio

Very interesting! :) Thank you, Sanjeev, for letting us know. And, please, keep us informed on future developments. Cheers, Gio

Hoisington Quarterly Review and Outlook - Q4 2013 Gio hoisington-investment-managment-quarterly-review-and-outlook-4q-2013.pdf

Reading your posts, I am getting more and more convinced about one simple truth: to stay with Mr. Watsa, anyone must share at least some of Mr. Watsa’s temperament. And when do you really show your temperament? Well, when things are not going well, of course! In the Altius thread FFHWatcher yesterday wrote: I disagreed with him on that thread, for the simple reason I think Dazel is one of the very few posters on the board, who truly thinks like the Prems and the Warrens of the world! But, if you instead apply FFHWatcher's sentence to this thread, it would be right on spot! And what characterizes Mr. Watsa’s temperament most of all is an iron will. I am not saying you won't make money. Because all of you most probably will. I have always said the board is full of great investors. And I think it is true! So go on! Make a lot of money! I would just suggest that you leave FFH alone… don’t ever bet against its long-term prospects… don’t ever bet against an iron will… because that’s a bet you will lose. Gio

Kennedy Wilson is among the very best in real estate. :) Gio

I have no investment in Jardine Strategic right now, but I do think it is a good choice. :) Bidvest too, but you better ask Ross! ;) Gio

Ah! Ok! I hadn’t read all those previous posts… But, of course, Packer already knew all this! ;) Gio

I would include also BH, ALS, LMCA, VRX, ENDP, TDG, GLRE, TPRE, and BAM. I know people disagree with me, but imo LRE fits the lot too. LRE is simply the most tax efficient special dividend paying company that I know of. It is amazing how much of the dividend received I get to reinvest! :) Gio

Usually I look at the board as a “disproval” or “confirmation” tool: it is a community populated by the most savvy investors I know, therefore, if they agree or disagree with any investment thesis of mine, I take notice: and I usually heed the consensus on the board. But, as far as FFH is concerned, they are so much difficult to follow, that even the board becomes imo a “contrarian” tool: and I won’t heed the consensus on the board. The more investors are completely out of FFH, the happier I am to hold on to my shares. And I haven’t sold a single one. I intend to hold my shares, and possibly to increase my ownership of FFH, for the next 20 years. We will see. :) Cheers, Gio

If and when Sanjeev gets one company of his to be traded publicly on a stock exchange, I want to be among his very first investors!! :) Gio

Gio

Well, I think the quotes that make this thread say enough about Mr. Rockefeller’s methods and character traits. I would add two things though: 1) It is important to recognize, if ever there was a right man in the right place, it was Mr. Rockefeller: the oil industry simply became the biggest thing on earth during his lifetime… Therefore, imo a very substantial component of luck cannot be ruled out… 2) The importance of “cooperation” or, in the absence of cooperation, the importance of “consolidation” in an industry without great barriers to entry. I remember that also Mr. Buffett said something similar regarding insurance: actually, he spoke about “regulation”, which in the end is nothing but a sort of “forced cooperation”. ;) Gio

Here is what I think is the simple truth: without equity hedges, we wouldn’t even be here talking about BBRY. It is as simple as that: no one here can stomach those damned equity hedges! But that’s the way they operate… And that’s the reason why it is so difficult to follow them. Gio

I hadn’t answered till now, because I think most of you already know what I do and what my background is. :) Though, I really envy your day job (besides investing, of course!)... ;D ;D ;D I don't envy that day job at all. It sounds insanely stressful. Maybe I just don't have the personality for it. I always hate giving people advice on anything of importance. If I do something and I'm wrong I can live with that. But if I give someone else advice that turns out bad, I'd have a really hard time with that. It takes a certain confidence in oneself to do that type of thing that I certainly don't have. I'll stick to designing circuits. Yes! But you know Kraven very well by now… He is full of self-confidence… Especially when matters of the heart are concerned!! ;D ;D ;D Gio

I hadn’t answered till now, because I think most of you already know what I do and what my background is. :) Though, I really envy your day job (besides investing, of course!)... ;D ;D ;D Gio

Al, of course he has his inconsistencies! Yet, he is the one who created an $8 billion company from scratch. Not me, neither you, nor anyone on the board (at least that I know of!). Therefore, the real question is: has he lost his mind? From a first class entrepreneur, has he suddenly become third tier? Gio

Why? Is it bad voodoo? ;D ;D ;D No, of course not! it is just that usually value investments do not outperform in a frothy market... Gio

I understand when all of you talk about equity hedges… They are controversial and rightly so! But I don’t understand all the fuss about BBRY… The equity portfolio of FFH has always performed very well! Recently, it has not performed as well as the Russell2000… but you don’t really want to see a portfolio of value investments outperform the Russell2000, when that index gains nearly 40% in a year… Do you? The fact their equity portfolio has performed well, despite the investment in BBRY, tells me they have been disciplined enough in position sizing. I see the BBRY investment exactly like wellmont says: as long as FFH doesn’t invest more in equity, I am fine with it. Gio

Mr. Charles Gave "On US Capital Spending" Gio Daily+1.8.14.pdf

Truth be told, the second half of the book is much less interesting than the first one. Either you want to know about philanthropy and family affairs, or you can skip it altogether… And I couldn’t care less about both philanthropy and family affairs! ;) Yet, imo, the first half is enough to make this book a fantastic read! Mr. Rockefeller has been the richest man, if compared to the size of the economy in which he operated, who ever lived: anyone interested in the accumulation of wealth should study and understand his methods. Gio