giofranchi

A Visual History Of Asset Bubbles. giofranchi

GrizzlyRock, I think wescobrk is right. Shares held by BH shareholders plus the Lion Fund are 1,433,716. Why do you choose, instead, to use 1,333,990? Thank you, giofranchi

You really did that?! WOW!! The fact this wonderful board is attended by such outstanding investors (the Superinvestors of the Corner of Berkshire and Fairfax!) is really a unique learning experience for the rest of us! :) giofranchi

Thank you original mungerville, wonderful post!! :) giofranchi

I agree, but I don't hold it against the book. Most of the important things in investing are really obvious ("simple, but hard to do", as Munger would say), so after a while, it seems like everything I read is kind of redundant. But I still feel like I get value out of it because it reinforces what I already know and keeps me on the right path (at least, I hope). It's a bit like Free Capital. Another book of profiles that I quite enjoyed, but if you're looking for lots of non-obvious investing concepts, probably not the place to look. I disagree with nothing you said. I did enjoy the book and think people will get something out of it and enjoy it. I just don't think it's a "best" book. Agreed that it's like Free Capital. All these books of profiles are similar. Nothing wrong with that. I did think that the chapter on Buffett was gratuitous and after some pretty good profiles seemed to be thrown together at the last minute to attach his name to it. Hi Kraven, Hi Liberty! I am not sure I would call the lessons in “Outsiders” obvious… From the chapter about Dick Smith: The theme of decentralization is common to all the profiles in the book. Yet decentralization requires trust. To give autonomy, you must first trust someone. We have talked about trust before, and we know it is not easy, and it is a risk not everybody is willing to run. So, I wouldn’t call it obvious… :) And again: Also a way of investing this much concentrated on just a few big, no… huge!, ideas in 4 decades is something almost nobody is comfortable with. So, I wouldn’t call it obvious… :) Finally: Also the willingness to hold large amount of cash is a practice many investors on the board reckon to be a mistake, instead of a virtue. So, I wouldn’t call it obvious… :) If by "obvious" we mean something everybody might agree with. giofranchi

Hi ap1234! Though I cannot answer to your first question, I have argued for some time on the board that I believe FFH under the supervision of Mr. Barnard can achieve an underwriting profit in the future. He has done a wonderful job at Odyssey Re, and he will replicate that performance now he is supervising all of FFH insurance operations. When you buy troubled insurance companies, you are going to struggle fixing past mistakes for many years, either you are called Fairfax or you are called Berkshire. There is no easy way to cope with past mistakes for anyone. Though I cannot be sure about the timing, so I cannot answer to your third question either, I really think FFH has taken all the right steps to achieve a good underwriting performance in the years ahead. I want my firm to be a long-term shareholder of FFH, so I don’t dwell too much on timing, and I don’t even dwell much on quarterly or yearly results. Instead, I dwell a lot on their process. And there is nothing that I can see there, which I don’t like. :) giofranchi

Thank you very much for posting this one! :) giofranchi

Imo, not just good but great take on the state of the markets! Very good job Mr. Hay! :) giofranchi EVA+4.19.2013+NA.pdf

I liked it too! Although, I was not smart enough to have benefited from the “bubble”… :( giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

Interview with Mr. Malone: http://www.cnbc.com/id/100637283 giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes Q1_2013_CoreValueCommentary.pdf

Hoisington Quarterly Review - Q1 2013 giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes HIM2013Q1NP.pdf

Horizon Kinetics on Oaktree Capital & Others. giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes Scalablility_Mar2013.pdf

I agree. But, as Mr. Buffett has very often repeated, all other things being equal, he much prefer to buy whole businesses than parts of companies through the stock market. And the reason, imo, has much more to do with fcf redeployment than complete control over management (“we won’t provide management. If you need managerial help from us, it means we are both in trouble”, right?). Dividends in some cases might account for only 30% - 40% of earnings. And, after being distributed, they are taxed. Vice versa, fcf some years might even be higher than reported net earnings (ask Mr. Malone!), and of course it stays inside the company, so it is not taxed twice. That’s why I said that Mr. Buffett’s situation might not be so easily duplicable by others! :) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

+1 Unfortunately, when you buy insurance (I think that’s exactly how Mr. Einhorn looks at Gold) and then disaster doesn’t happen, you are going to look foolish to the great majority of people… You might argue that Mr. Buffett never buys insurance, and you would be right… if you don’t look at the $1 billion in free cash BRK’s businesses send to Omaha each month as the very best and most effective of insurance policies! ;) So, do learn from Mr. Buffett, but always keep in mind that your situation is not, and probably won’t ever be, even close to his. giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes Imo, the real question is: does Gold qualify as an effective insurance policy? On not? If it actually can fluctuate that much, I have come to the conclusion that it doesn’t qualify. That’s what I have asked Moore, because he undoubtedly knows a lot about the precious metals market and to hear from him would be great! (Though I know he is very busy!) :) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

+1 Unfortunately, when you buy insurance (I think that’s exactly how Mr. Einhorn looks at Gold) and then disaster doesn’t happen, you are going to look foolish to the great majority of people… You might argue that Mr. Buffett never buys insurance, and you would be right… if you don’t look at the $1 billion in free cash BRK’s businesses send to Omaha each month as the very best and most effective of insurance policies! ;) So, do learn from Mr. Buffett, but always keep in mind that your situation is not, and probably won’t ever be, even close to his. giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

What Are Gold Prices Saying? giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes What_Are_Gold_Prices_Saying.pdf

If that is so, and probably it actually is, the reason is that almost nobody understands the importance of a sound currency, of a currency that ultimately makes real economic sense. Mr. Keynes showed us its importance and insisted on how political reasons should never interfere. The Euro simply doesn’t make any economic sense for Italy, Spain, Greece, or even France, and the result is that from 2000 onward all those countries are continuously losing in competitiveness against Germany and northern countries in general. And the longer it lasts, the larger that gap will become. Those who view the Euro “as a guarantee against the poor administration of their own politicians” imo are day-dreaming. As soon as you choose a currency for political reasons, instead of economic ones, you know you are in serious trouble. giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

Great! Really fascinating stuff!! I am deeply humbled by my ignorance… You do a wonderful job and I am positive there is a lot more to be known and discovered out there! :) --Albert Einstein giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

Eric, I must admit I am not a tax expert. I have one who works for me and my partners. And we trust him (maybe, not the best of policies!). What we have done is that we have never distributed a dividend for the first 7 years, while for the last two years I have agreed to pay at least a “symbolic” dividend. :) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

Well, I don’t know, yet the last time I checked, MKL had a common stock portfolio worth 62% of shareholder’s equity, without any hedges in place. So, I guess FFH has much room to get more aggressive in common stocks. :) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

Yup. Adams was no dummy, but a big reason he was successful was that he listened to Abigail, at least some of the time. :) I am skeptical… Europe IS NOT the US. It has never been, and I don’t understand why it should ever become to resemble the US… Like Mrs. Thatcher was used to saying: “In my lifetime all the problems have come from continental Europe, and all the solutions have come from outside continental Europe.” Eurobonds without giving up state sovereignty? Wouldn’t it be for Germany like assuming all the duties without any right attached? Why should they accept? If I give you money, I also want some control on how you spend money, right? Mr. Hamilton founded a Treasury, right? Which would decide how to allocate capital for the whole nation, right? Then, of course, you can decide to give money to indebted states. Because you know you have at least some control. Even without a Treasury, imo, it could be done… provided that there really is the will to become a true nation! I can trust you, if I am sure we want the same thing, and we are striving together towards that goal: to give up in time each single state sovereignty, in the name of a truly new and united nation. Unfortunately, I don’t see that happen. A single nation with 20+ different languages…?!? C’mon!! It really is as simple as that! I don’t see a United States of Europe without Germany either. If Germany leaves, the rest of the north will follow suit… what would then be the point of keeping France, Italy, Spain, and Greece together? I don’t understand. As always, paraphrasing Mr. Keynes, when the facts change, I will change my mind. :) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

I think a sum of the parts analysis might be the best way to value OAK. The Brooklin Investor gets to a fair value of $66 per unit, while Broyhill Asset Management gets to $56 per unit. Please, find both analysis in attachment. giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes Solid-As-An-OAK.pdf solid-results-at-oak-but.pdf

I couldn't agree more!! ;) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes

Don’t ask me! It befuddles me as well!! ::) And welcome to the board! :) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes