giofranchi

I have sent the interview to a bunch of friends and colleagues with the following comment: Gio

It's already in the price of the stock. The general consensus is for $1.80 per share of earning in two years. That's a $21.60 stock price at 12x earnings -- that's 38.4% higher than today's price. You get to that price even if every dollar of capital generated between now and then goes towards loan losses -- that's more than $20 billion per year of capital generation, multiplied by two years... in addition to their loan loss reserves! That's a tremendous amount of safety discounted in the price. I am covering some short positions today and I will use the proceeds to buy BAC. I still think I don’t understand BAC, but it is just too much difficult to stay short right now… And I respect Eric’s work and point of view very much. Let’s see how this will play itself out! ;) Cheers, Gio

Thank you very much for the recommendation! Here in Italy we always get movies with a little bit of delay… But, as soon as the DVD is out, I will purchase it and enjoy what looks like a stunning picture! ;) Gio

Gio

Gio

This is the full letter by Mr. Hendry and imo a must read. Enjoy! Gio Hugh-Hendry-Eclectica-December-2013-Letter.pdf

As far as I am concerned, I think that Mr. Shiller’s definition of stock market bubble is very much understandable and agreeable with, and it is summed up in Figure 11 on page 5: another 20% rise in stock prices and finally will get to the “Red Zone”. Gio EVA+12.6..2013+NA.pdf

Generally, I agree. Though, it seems a bit difficult to believe that a huge bank could escape the popping of asset bubbles unscathed… Of course, you may say that asset bubbles are still years away, and you’ll worry about them, when you see them. That’s fine! I was not arguing about timing. Instead, I was trying to point out what I think might be the single largest limitation Keynesian policies suffer from. Gio

+1 Thank you, David, for sharing! :) Gio

Look, my idea is very simple (and maybe very wrong! ;D ;D): it is not that Keynesian policies are ineffective in stimulating growth and the economy… because they most certainly are! The problem, instead, is the discrepancy between their effectiveness in increasing values and their effectiveness in increasing prices. Specifically, of course, I think they are much better tools for increasing prices than values. Therefore, the longer they go on, the larger the overvaluation becomes. And overvaluation always ends the same way: deflation. Gio

Gio Comstock-Partners-Why-We-Are-Still-Bearish-Dcember052013.pdf

LOL! ;D ;D ;D Gio

Yes, I am! She has told me: “You must take me to Canada someday…!!”. And has followed that with a disarming smile! ;D ;D ;D But… she didn’t specify exactly which day… and I obviously already had a very specific day in my mind!! ;) Cheers! Gio

Sanjeev, I have just purchased two tickets for both the dinner and the presentation. One for me, one for a beautiful girl! ;D ;D I want her to meet 140 of the most astute investors in the world!! ;) I truly look forward to meeting you and other board members next April in Toronto! Cheers, Gio

THE UNINTENDED CONSEQUENCES OF ULTRA‐EASY MONETARY POLICY Gio Nov+2013_SED+Profile.pdf

Wonderful presentation that can be dowloaded from the following link: http://fundooprofessor.wordpress.com/2013/12/01/why-i-bought-thomas-cook/ WOW! Maybe, a good investment by Mr. Watsa & Co. at last?!?! ;D ;D ;D Cheers, Gio

Dazel, now I will print your words and hang them on the shelf in front of my desk!! ;D ;D ;D Seriously, thank you! I read with carefulness all posts of yours and I respect your ideas very much. :) Cheers, Gio

I don't have a bearish view necessarily on FFH. I just think it's currently at best fairly valued and probably overvalued. I never buy something hoping for or expecting growth. Today I think it's not a bargain. That's it. Ok! Got it! Thank you, Kraven. Cheers, Gio

Well, I would also add that he is actually holding a lot of cash (30% of portfolio!). So, he has opted both to retain some exposure to his alpha and to get some of the stability cash provides. At least, this is how I see it. :) Gio As many of us observed during FFH's lean years, when you are dealing with a holding company that is an umbrella for several subsidiaries, sometimes cash is not located exactly where you need it. When you look at the consolidated balance sheet, there might appear to be plenty of liquidity but the holdco might be a wee bit short. During the lean years, one of the uncertainties was the extent to which the regulators would permit FFH to dividend funds up from its subsidiaries to the holdco. And then there was the black box of subsidiary capital adequacy, particularly for the run-off group. Prem pulled a number of rabbits out of his hat to keep the ship afloat, including IPOs of ORH and NB, a little financial wizardry to allow him to consolidate ORH for income tax purposes, and a couple of timely private placements of FFH shares (notably to Sir John). Having learned this lesson rather painfully, Prem is not allowing the holdco cash balance to be pressured. SJ Thank you!!! :) Gio

Well, I would also add that he is actually holding a lot of cash (30% of portfolio!). So, he has opted both to retain some exposure to his alpha and to get some of the stability cash provides. At least, this is how I see it. :) Gio

Thank you very much, shalab! It has been my pleasure to make your acquaintance and to meet other outstanding people on this wonderful board! Hoping for many more decades of reasonings and discussions about investments and what’s truly important in life with all of you! :) Cheers, Gio

Kraven, I agree with you! It was just a polite way to say: don’t ever expect a stock tip from me… and, if by chance you get one, DON’T act on it!! The first reason I write on the board is to get to know very interesting people. But the second reason is to get to know very interesting people who disagree with me. It forces me to think harder and to always question my thesis. And that is priceless! ;) I respect your thought so much, that I really need to know your bearish view on FFH. If you would briefly expose it, I would be very thankful! And, by the way, my post was accurate, but incomplete… I should have written: I will never achieve Eric’s or Packer’s or Kraven’s returns. ;D ;D Cheers! Gio

Simply enough, here we have 3 possibilities: 1) Mr. Watsa is right: today’s BVPS makes absolutely no sense… FFH will create great value. 2) Mr. Watsa is wrong, and will recognize the evidence of his mistake, when that evidence comes: he will take losses on FFH’s hedges and use a stupendous amount of cash to restart from there… FFH will create good enough value. 3) Mr. Watsa is wrong, and he will never recognize the evidence of his mistake… FFH will cease creating value. Practically anybody on the board believes either in 2) or in 3)… I still believe in 1)… ;D ;D ;D Gio Let's say the market goes up 20% in 2014 and then drops 20% in 2015. Is Prem right? No. That would be possibility n.2 or n.3 (let's hope n.2!!) Gio

No, I am certainly not as good as other board members… I am very well aware of that! I just wanted to point out that I don’t need to do things I don’t understand… because, although I will never achieve Eric’s or Packer’s returns, I can live quite comfortably with mine! And I sleep soundly at night! ;) Gio

I understand what you mean… It is just that a business which doesn’t depend on management is UTTERLY outside my experience, and therefore outside my circle of competence… Especially if it is a financial business… (for what I know, even KO could be killed by bad management… but Mr. Buffett seems to disagree… therefore, who am I to judge?). Of course, I am no one, but I don’t understand why I should do something I don’t understand… I can live without the BAC of this world very well indeed: I have bought OAK at $36 and sold it at $57, my investment in TPOU doubled before I sold it, I bought ENDP at $37 and now it is worth $67, I bought LMCA at $95 now it is at $154 (and also gave me more money with the STRZA spin-off), I have bought VRX at $75 now it is at $108, etc. I am making a lot of money even with BH!!!!!! ;D ;D ;D ;D Gio