VersaillesinNY

It seems that Batista has now lost 100% of his fortune... and a Fabergé egg. "Authorities raided billionaire Eike Batista’s mansion in Rio de Janeiro this morning, impounding seven vehicles, his mobile phone and 90,000 reais in cash, among other assets, according to a police spokesman. The action came after Brazilian federal judge Flavio Roberto de Souza this week ordered the seizures of financial assets of Batista, two of his sons, his ex-wife and the mother of his third child in his trial for alleged insider trading and market manipulation. The police raid comes as the 58-year-old struggles to pay down debt he owes to banks and sovereign-wealth fund Mubadala Development Co. and threatens to plunge the fallen magnate further into the red. Four of the startups he founded as part of his EBX group have gone bankrupt, beginning with its flagship OGX -- now known as OGPar -- in October 2013, followed by shipbuilder OSX, miner MMX and energy firm Eneva, formerly known as MPX. Batista, whose fortune peaked at $35 billion in 2012 before his commodity and logistics empire collapsed, is $1.2 billion in the hole, according to the Bloomberg Billionaires Index, giving him the rare distinction of being a “negative billionaire.” “All he has left now is debt,” said Marcelo Battisti, a former credit manager at Banco Itau who now heads his own consulting firm. “In normal conditions, becoming a negative billionaire is almost impossible, because most billionaires don’t tend to take on a lot of debt. Do you think Bill Gates has a mortgage?” [...]" http://www.bloomberg.com/news/articles/2015-02-06/brazil-s-negative-billionaire-batista-faces-asset-seizures http://www.wsj.com/articles/brazil-authorities-seize-cars-documents-from-eike-batista-1423231189

Warren Buffett’s Broker to Retire From Citigroup http://www.chicagotribune.com/business/ct-confidential-john-freund-0203-biz-20150203-column.html http://blogs.wsj.com/moneybeat/2015/02/03/warren-buffetts-broker-to-retire-from-citigroup/ Some anecdotes from the man executing Warren's trades.

Fairholme 2014 annual report Fairholme+Fund+Annual+Report+2014.pdf

Unfortunately, another bad year for the duo. These guys are trying hard but redemptions will lower their ability to seize opportunities. Their well written letter covers topics such as natural gas, Ocwen and gold miners. GoodHaven annual report 2014 GoodHaven_2014_Annual_Report.pdf

Ackman Says Benefits of Oil Price Drop Outweigh Costs http://www.bloomberg.com/video/ackman-says-benefits-of-oil-price-drop-outweigh-costs-X0R_10X0SCihlcBujMXo~Q.html

Warren Buffett Dec. 2014 Letter to Berkshire Hathaway Managers ("The All-Stars"). memo-to-managers-dec-2014.pdf

A new interesting essay by George Soros. A New Policy to Rescue Ukraine - January 7, 2015 http://www.nybooks.com/articles/archives/2015/feb/05/new-policy-rescue-ukraine/?insrc=hpss

Jeffrey Gundlach’s Surprising Forecast - Jan 3rd, 2015 http://online.barrons.com/articles/jeffrey-gundlachs-surprising-forecast-1420259030

2014: 8% 2013: 25% 2012: 32% 2011: (12%) 2010: 21% 2009: 45% 2008: (33%) I like this tread since it allows me to revisit my mistakes and challenge some ideas. This amateur portfolio’s performance is quite disappointing in 2014. Too many losers are offsetting too many winners. I need to protect the downside in order to improve returns. BRK, WFC, WMT & MDLZ are passive investments representing 50% of my portfolio with a concentration on BRK (30%). Winners: Idenix, BRK, WFC, BBRY, MSFT, VRX, FB, AAPL, POST & ZTS. Losers: DGI, LUK, BYD, AU, Tesco, SNY, Mittal, LUKOY, BP & XCO. DigitalGlobe – The lost orbit: Poorly managed since the Geoeye merger. The company has been overselling their future earnings to analysts. A buyback program is driving the stock up. Hold and see. Leucadia - The sleeping beauty: More upside than downside. Management is trying hard and time will tell if they can match expectations. A lot has been discussed on LUK by board members; I remain on the optimist side. BYD - The green dragon: Exceptional CEO, top 5 patent Chinese award, a bet on Munger & Li Lu’s Chinese electric cars in a competitive environment. I briefly met Li Lu at a BRK meeting, he is humble and brilliant, how can he be wrong on BYD? AngloGold – The gold bug: I once had a good chat with value maestro Jean-Marie Eveillard who pitched me “Invest in gold to protect your portfolio against extreme outcomes”. Ray Dalio preaches the same, but I should have paid more attention to Jim Rogers: “Buy gold, not miners, because miners can go bankrupt…”. Then came South Africans workers strikes, lower gold and uranium prices & the Ebola epidemic. AU is not the low cost gold producer; I was dead wrong on this one. Tesco – The fake moat: I believed at Tesco’s moat. It was a perpetual bond paying a stable dividend like WMT. I couldn’t see the downside, eroding market shares & margins caused by aggressive hard discounters. Then came profit warnings, management changes & accounting fraud; Terrible and probably oversold… Sanofi – The arrogant frog: With the board ousting the CEO, shareholders value was temporarily destroyed. Time and a future CEO will tell if they can grow the business. Mittal - Dhandho: I’ve been blinded by their CEO/founder’s success story. However, over recent years Lakshmi Mittal and his son have accumulated mistakes: expensive acquisitions & buybacks, high leverage followed by share dilution. Even Mohnish who pitched Mittal in his book ended up buying Posco. As a long term bet on global steel demand, I just swapped the position with the low cost Korean producer. Lukoil - Nasderovia: One of the best managed Russian companies. Privately owned (so far!), insiders buying, shares repurchases, dividend increases, operating cost in Rubles/sales in USD, Mark Mobius on the board of directors; even cheap under Professor Damodaran’s filter. I recently met Jim Grant and his classic bow tie, he told me: "Russian Oil & Gas companies are cheap even after stealing!" At least this time our opinions converge Mr Grant. I’ve been averaging down on Lukoil at $34. I will hold as long as I can keep up with the relative pain and the long term political risk. BP – Where the sun never sets: A long term bet on a beaten oil & gas producer. A cannibal repurchasing shares and delivering a stable dividend. The 20% Rosneft holding, the oil prices crash and the 2010 Gulf oil spill trial are not helping. Good things happen to cheap stocks. Exco – An illusion of resources: My wrong bet on US shale gas & oil and its value shareholders. Where is the moat? I never understood why they were burning cash by paying a dividend. A big mistake and limited carnage with a 2% initial position. Happy New Year to the board and many thanks to Sanjeev for creating this corner of value!

Byron Trott: The billionaires' banker http://fortune.com/2014/12/29/byron-trott-billionaires-banker/ Happy New Year's Eve!

Seabord [sEB] will benefit from a normalization. Any other thoughts from the Democrats & Republicans on the Board :)? Cuba’s Half Century of Isolation to End http://www.bloomberg.com/news/2014-12-17/obama-to-announce-u-s-cuba-relations-shift-as-gross-is-released.html Leon Cooperman on his vist to Cuba http://video.cnbc.com/gallery/?video=3000339967 Ana Montes did much harm spying for Cuba. Chances are, you haven’t heard of her. http://www.washingtonpost.com/sf/feature/wp/2013/04/18/ana-montes-did-much-harm-spying-for-cuba-chances-are-you-havent-heard-of-her/

Thanks for sharing Cooperman's great speech on Singleton. Cooperman mentionned an early investor in Teledyne, Intel and Apple: Arthur Rock. Pardon my ignorance, but I'm just discovering this pioneer venture capitalist. "Teledyne I’d been introduced to Henry Singleton and George Kozmetsky before I moved to California. They were both vice presidents of Litton Industries and they ran a division focused on electronics. Henry was as intellectual as anyone I had come across. He was really brilliant. He had invented the gyroscope, which was used in airplanes and spaceships and missiles to keep them oriented, and that was a huge invention. During the war, he had invented a method for degaussing submarines, which allowed our submarines to go by German submarines without being detected. It was a huge invention and made the seas a lot safer during the war. So he was running this division of Litton with George Kozmetsky and we at Hayden Stone financed them in forming Teledyne. I became a director of Teledyne and soon after formed the partnership with Davis, and we invested in Teledyne. I then became very involved in the early stages of Teledyne. I was always more interested in building companies than in building a business for myself. I didn’t foresee how big the venture capital business would become, but I don’t think it would have ever interested me anyway to build a big venture capital investing firm. I liked to invest in just a few companies and be associated with them and help them grow. So I spent a lot of time in those days with Teledyne and also with SDS. At Teledyne, we started out by buying a defunct company that had lost all of its military contracts and was about to go broke. Teledyne bought it for very little money and then was able to get contracts and build that business up. Then during the next ten years we bought about 125 companies, most of which had something to do with scientific products. There was no general theme. This was a conglomerate of scientific companies, and most of these were allowed to operate with very little direction from corporate. Henry Singleton was this very brilliant, intellectual type who could foresee all of these problems that no one else saw, and he saw the opportunities. I was the sounding board for Henry. He’d call me up all the time. What did I think about this, what did I think about that? We went on a stock buy-back program. We reduced the number of shares by 90 percent during the period probably from 1980 to 1995. We just kept on buying back stock and that, of course, increased the value for the remaining shareholders. So we used to talk about that and whatever problems the company had. I spent a lot of time in Los Angeles and had a lot of dinners and lunches with Henry. And for the twenty-five years that he ran Teledyne, we compounded the growth at 25 percent a year for twenty-five years. But Henry, despite all his brilliance and braininess, had a tough time developing people. So after he left, things started to deteriorate quite a bit. Teledyne was eventually sold to Allegheny Corp. after we spun off the two insurance companies. And the stockholders made out extremely well." A must read - Interview with Arthur Rock - Harvard Business School, March 2001 http://www.hbs.edu/entrepreneurs/pdf/arthurrock.pdf http://video.hbs.edu/videotools/play?clip=interview_arthur_rock 2012 NVCA Annual Meeting: Mike Markula Interviews Arthur Rock https://www.youtube.com/watch?v=mgoikems0f8 Rock of Valley on New Terrain, July 2010 http://www.wsj.com/articles/SB10001424052748704293604575343074137247004 Arthur Rock - Legendary Venture Capitalist, May 2007 Transcript: http://archive.computerhistory.org/resources/access/text/2012/05/102658253-05-01-acc.pdf 2011 Movie trailer: Something Ventured – the art of venture investing/ Available on netflix Arthur Rock-Strategy vs Tactics-importance of jockey http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/arthur-rock-strategy-vs-tactics-importance-of-jockey/msg30562/#msg30562 arthurrock_HBS_profile.pdf

These guys have a good track record. IVA Funds Annual Report - September 30, 2014 IVA_Funds_Audited_Annual_Report_-_September_30_2014.pdf

For those who follow Tweedy: The lackluster results for our Funds during the quarter were driven largely by significant declines in our oil and gas related shares, as the price of oil as measured by Brent Crude declined approximately 17% during the quarter. While we had some very nice returns in a few of our pharmaceutical, financial and defense holdings, it was not enough to offset the declines in our energy related holdings. With declining oil prices driving oil shares lower, it is easy to lose sight of the longer term fundamental case for oil and gas. While we have no clue as to what will happen to oil prices in the short run, we believe over the longer term, the supply demand equation for oil and gas should remain relatively tight, due to declining production curves, increasing demand, and higher finding and development costs. At the margin, experts suggest that the marginal cost today of finding and developing a barrel of oil is approximately $80 to $100. While Saudi Arabia remains a significant unknown factor in the near term pricing of oil because of its ability to substantially increase or decrease production, longer term trends remain, in our judgment, favorable.[...] http://www.tweedy.com/resources/library_docs/quarterly/FundCommentary%20Q3%202014%20-%20Final.pdf FundCommentary_Q3_2014_-_Final.pdf

An interesting article by George Soros: Wake Up, Europe http://www.nybooks.com/articles/archives/2014/nov/20/wake-up-europe/?insrc=hpss

This is pretty sad. Mr Big Moustache will be missed, he was such a great visionary leader. RIP. Total might face some volatility in the upcoming days. "Killed by a drunk snowplow driver, possibly with the connivance of drunk air traffic controllers: a painfully Russian end for the man Putin called “a true friend to our country.”" Fortune magazine "Free spirited and deliberately provocative, this passionate debater was not afraid to defend his ideas that sometimes flirted with controversy. Supporter of shale gas and of higher tax rates." HEC ---------- Christophe de Margerie, the Total SA (FP) chief executive officer who oversaw the biggest increase in reserves at the French oil explorer in at least 15 years, died in a Moscow plane crash, Interfax reported. The 63-year-old CEO died at Moscow’s Vnukovo Airport when a business jet crashed, Interfax said, citing an unidentified law enforcement official. Four people aboard a Dassault Aviation SA Falcon jet died when it crashed into a snowplow late yesterday, Elena Krylova, a spokeswoman for the airport, said by phone, adding it’s against policy to name the victims. Russian officials started an investigation into the crash of the plane, which was headed to Paris, the Moscow regional transport prosecutor’s office said in a statement. Calls to Total spokesman Charles-Etienne Lebatard and to the French Foreign Ministry weren’t immediately returned. During a 40-year career that began in Total’s finance unit, de Margerie oversaw far-flung operations for the French petroleum giant from Indonesia to the Middle East to Kazakhstan. Earlier this year he helped negotiate the Paris-based company’s entry into Russian shale under a Siberian drilling venture with OAO Lukoil; the company also is a partner in the vast Russian gas development on the Yamal Peninsula. Nicknamed the “Big Mustache” for his ample white whiskers, de Margerie cut a larger-than-life figure at international energy conferences including IHS Inc.’s CERAWeek event in Houston earlier this year when he discussed the impact of surging exploration and drilling costs on oil producers and consumers. As CEO, de Margerie could be seen lingering with a glass of whisky in hand talking with analysts and industry representatives long after the end of conferences he addressed. Total is the world’s fourth-largest non-state energy company by market value, after Exxon Mobil Corp., Royal Dutch Shell Plc and Chevron Corp., according to data compiled by Bloomberg. The French company’s $228 billion in annual sales exceeds the economic output of nations such as Ireland and Vietnam. Under de Margerie’s reign, reserves-life, or the number of years of current production that could be replicated using existing reserves, rose in every year but one, the longest such streak for Total since at least 1998. Total was reevaluating plans to explore for shale oil in Western Siberia with partner OAO Lukoil amid economic sanctions against Russia, the company said last month. http://www.bloomberg.com/news/2014-10-20/total-ceo-de-margerie-dies-in-moscow-plane-crash-interfax-says.html http://wew.oilcareerfair.com/news/oil_gas/a/133120/Totals_CEO_Says_Successor_Will_Be_Company_Insider http://tempsreel.nouvelobs.com/l-enquete-de-l-obs/20140516.OBS7444/vodka-petrole-et-cac-40-qui-est-vraiment-le-pdg-de-total.html

Here's Bill Gross' First Letter As A Fund Manager At Janus http://finance.yahoo.com/news/bill-gross-only-dance-twice-153815259.html

Charlie Munger and the 2014 Daily Journal Annual Meeting - Part Four http://www.forbes.com/sites/phildemuth/2014/10/08/charlie-munger-and-the-2014-daily-journal-annual-meeting-part-four/

Warren Buffet On Investment Strategy | 38 min - Full Interview Fortune MPW with Carol Loomis

Published on Oct 7, 2014 Paul Anka and Warren Buffett give Carol Loomis a musical sendoff at Fortune’s Most Powerful Women summit.

Thanks ajc. As a complement: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/ge-general-electric/msg178581/#msg178581

Pretty impressive [Edit: FAKE] email from Bill Gross... And the Greek tragedy continues :( http://www.bloombergview.com/articles/2014-10-03/bill-gross-s-investor-outlook-on-palace-coups I can add colours to the chameleon, Change shapes with Proteus for advantages, And set the murderous Machiavel to school. -- Henry VI, Part III Dear Friends, Colleagues and Co-workers, For the past 43 years, Pacific Investment Management Co. has been my home, as well as my pride and joy. With great sadness, I must bid her adieu, not because I want to leave, but because I must. It is the natural order of things for all seasons to change; for the next generation must be given its chance. A new epoch is upon us. Ashes to ashes . . . . All those reasons -- plus truth be told, an imminent palace coup -- meant it was time for me to go. Before I depart, however, I offer you this final Investment Outlook, my last IO for you to consider. No cats, no "Man in the Mirror," just a few thoughts for you to reflect upon as the next era -- a newer new normal -- begins. I co-founded PIMCO in 1971, starting with a mere $12 million in assets. Who could have imagined what the company would become during the ensuing 43 years? After four decades as founder, fund manager and mostly as CIO, I guided this firm to managing more than $1.97 trillion in client assets. When I sold the 70 percent stake not held by Pacific Life Insurance Co. to Allianz SE in 2000, the company had a value of $4.7 billion. Not too shabby a track record. I daresay I must have gotten one or two things right during that period. Not that you would know it by the recent press coverage, nor by the whispers in the hallways of Pimco. The immense wealth I helped to create for my colleagues, partners and clients over all that time meant nothing, once Machiavelli’s stratagems were put into play. There is a standard sequence of events for all insurrections, and this one was no different. It included the favored tactics: A public character assassination, the quiet intimations that I had lost it (erratic behavior, dark glasses at a presentation, an elegy to my cat Bob). Add to that a break with a trusted associate, which implied something nefarious about that behavior (How did Mohamed manage to resign from Pimco, yet stay employed at Allianz? I couldn't pull that one off). These hints and allegations were easy to make, especially given my natural eccentricities. But I put this question to you: Was I so different from any other California billionaire? The TM and yoga, the occasional head stand, a well-deserved bark at a wayward underling -- these and all manner of behavior that no one ever thought about before suddenly took on all sorts of dark implications once the coup was under way. Never underestimate the impact of a whisper campaign. On ne voit bien qu'avec le cœur. L'essentiel est invisible pour les yeux. Translation: "One sees clearly only with the heart. What is essential is invisible to the eye." I must point out that these idiosyncrasies have been on display for decades, and were never looked on askance. At least, not while the alpha was piling up and the assets under management were rolling in. But alas, that chapter has come to an end; it is now time to look forward. The future of Pimco is now in your hands, a dozen or so managing directors. You represent the future of the firm. You are the new BSDs, and to you I put the following questions: • Some Pimco funds are generating what I call “perceived” alpha. This seems to be nothing more than “leverage-enhanced” beta. Discuss. • I cautioned against the wholesale expansion into equities, as fixed income was the asset class upon which the firm made its bones, built its reputation and acquired almost all of its AUM. How is that equity thing going? And whatever happened to that Kashkari kid? Seemed like a nice fellow. • Many of you seemed to resent my annual compensation (Mohamed's too). I suspect you believed that a few hundred million dollars would be better placed in your collective hands. Query: Is splitting up the big dogs’ comp among yourselves worth the fallout of a smaller asset base in the years to come? Is that in the best interests of the firm? • Speaking of assets: Who among you is going to be the firm’s rainmaker? Which of you can raise a trillion dollars? How about a $100 billion? How will you compensate the people who raise that money? Best of luck managing the resentment for whatever compensation system you arrange. • Many of you are in your 30s, 40s and 50s. How long do you plan to work here, and how much are you willing to sacrifice? I was married to this place, and gave it my all. What are you prepared to give? • Now that you have your new-found authority, what are your plans for it? As for me, I am off to my newer new normal. There will always be a special place in my heart for Pimco. I wish all of you all of the luck in the world, as I leave you in charge of her. She’s your baby now. Try not to screw it up too badly. William H. Gross Managing Director, Retired

http://www.bloomberg.com/news/2014-09-17/buffett-s-salty-steak-draws-warning-from-wells-fargo-ceo.html?cmpid=yhoo Wells Fargo & Co. Chief Executive Officer John Stumpf talks about the role of financial services in the real economy at a National Press Club luncheon on Wednesday, September 17. Wells Fargo is the U.S. top home lender and also world's largest bank by market value. Video link @ NPC Luncheon with John Stumpf, CEO, Wells Fargo & Co. http://press.org/events/npc-luncheon-john-stumpf-ceo-wells-fargo-co Full transcript: http://press.org/sites/default/files/20140917_stumpf.pdf [...]But once I became CEO, we started doing a home and home dinner or lunch. So, my first time to Omaha to have dinner with him, we went to-- I can't remember, it was Piccolo Pete’s or Gorash’s [?], and Warren eats a full meal, let me tell you. He has a T-bone steak, medium rare, side of chicken parmesan, mashed potatoes, cherry Coke and when the food comes, Warren grabs a saltshaker in his left hand, one in his right hand and it’s a snowstorm. And I know a snowstorm when I see one because I'm from Minnesota. And I said, “Warren, what does your doctor say about all the sodium?” He looks at me like, “Doctor, really?” No doctor, no directions. So I said, “Warren, seriously, this is not good.” I said, “Is health a strength in your family? What's your genealogy like?” He said, “Well, really,” he said, his father I think passed away early, I can't remember exactly what the time was. But we started talking about colon issues and colon cancer. And he said-- I said, “Warren, that's really important. You got to get a colonoscopy. That's an absolute requirement.” He said, “Well, I did. A few years ago, ten years ago.” He said, “And they actually took a foot out.” He said, “I'm great now,” but he said, “I went into the hospital with a colon, I came out with a semicolon.” And he laughed at that, so Warren had me. Now, how much of this is all true, but he had me going the whole time. But here's about Warren. I remember another story, we were at an event last fall where we had 500 of our bankers together and he was kind enough to come, which is a rare occasion. And we were sitting next to one another on the stage. We were doing an hour, hour and a half, side by side-- if you're old enough to remember Huntley Brinkley, we were kind of doing that side by side thing. And one of our team members, these are all of our team members, somebody from the audience says to him, “Mr. Buffett, how do you decide what companies to invest in?” Because Warren is very disciplined about-- he’s got an in basket that says yes, one says no and one says too difficult. So he says you only do what you know. And without missing a beat, Warren-- I'm sitting right next to him-- and Warren says, “I like to invest in companies that are so simple to run even an idiot can do it because sooner or later one will.” (Laughter) But Warren, what's so special about Warren, he takes the long view. And he understands culture, he understands risk, he understands the human nature. And we are so fortunate to have him as our largest investor and for us to be one of his largest holdings, from the best investor the world’s ever known. And for those who don’t know him, the best person the world’s ever known. So I can't be objective, he’s that good a person.[...]

I attended the meeting; it was excellent. The analysts, management and directors are la crème de la crème. Answers were sharp, Sequoia's investing standards are high. They covered Valeant a lot; too bad that Greg Alexander didn’t talk much. The crowd was composed of fund managers, analysts, veterans investors and old money from the Upper East Side. I couldn't find Tom Murphy’s three hours long video interview. Any luck out there?

He will be missed! RIP.