frommi

Shorted more XBI, VRX and TIME.

Interesting view on china and biotech stocks: http://www.brontecapital.com/files/amalthea/Amalthea_Letter_201503.pdf Maybe i should increase my short exposure a little bit more.

Perhaps i do it wrong, but thats the way i can sleep at night. I will probably never post a year with a return of >50%, but i am pretty sure that i will never post a year with a 30-50% loss either. With Intralot i fear the GR-Exit and the loss of the high margin contracts in Romania?/Greece they mentioned in the last call. Made me think about what i really understand of that business. AIQ may be worth holding, but i didn`t want to lose my profits and i was not sure if i am mentally able to hold it when they tank below 19$ and they are not able to grow EBITDA. (or even worse) And i really hate how the stock price has moved, there is a big barrier around 25/26$ now. The next stocks i buy will be better businesses with growth, a moat and where i truly understand the business, that gives me a lot more confidence to hold for longer. (And especially over the summer).

Sold Intralot and AIQ and started my summer hedging program. Bought Gold, TLT, IWM Puts and shorted XBI. Still hold FFH, OUTR and NWH.AX. I just can`t get rid of the bear inside of me, i have that nagging feeling that the bull market ends this summer with at least a 20% correction. Its about time.

Yes sorry i have a skittish mind.

frommi, Just curious why sold out of SEC.TO? Regarding QVAL, do you have a % of your assets in quantitative value funds? Have you looked at other funds? Thanks, AtlCDore Because after the discussion and looking at historically P/B ratios for SEC.TO i see a P/B of ~0.6 as fair value of SEC.TO and because it is now close to that number and the stock is so illiquid i wanted to get out on the way up. QVAL is only a small part of my portfolio at the moment, but i can imagine buying more of it because i can compound tax efficient and with a small TER there with a tested value strategy that is proven to beat the market. But in the first place i bought it because i had no other good idea at the moment. But that can change daily.

Sold out of SEC.TO and bought QVAL.

I think the argument that stocks are not expensive because the yields on treasuries are low is a bit dangerous. Low yields on treasuries imply that we are close to deflation and this means that growth rates in the future will be a lot lower than we are used to. If the bond markets in the world are pricing the bonds correctly we are going the japanese way in the world economy and i am not sure if this is a good sign for equity markets. The question is only when the stock market will realize this.

Perhaps they just wanted control of BRIT`s investment portfolio and now want to reduce debt or they found some compelling things in india. I am pretty sure Prem is doing a good job in managing my money.

ENTJ

Yes but that is history, you can`t be sure to get these results in the future.

Gio by your logic Senvest Capital should trade at 1.5-1.8x bookvalue, too. But it doesn`t, has never and probably will never, despite the fact that it has a similar fee/expense structure and CAGR like FIH.

One in five years. So 0.005 to 0.4 5 to 80 It has to drop that much in 1-2 months, so that happened not that often. When you do it every month you are sure to lose money in the long run, because implied volatility is higher than realized volatility. So to be effective you have to have rules in place to not do it every time, but then of course you are market timing.

Maybe :)

And who doesn`t know that? :) Anyway its irrelevant for the pricing of FFI relative to its NAV. What should matter is the fees, arbitrage and the possibility to sell it any day and based on that it deserves to trade a slight discount to NAV or at NAV. Its the same reason Ackman can talk all day long that PSH deserves a premium to NAV, but probably will never get it. (Except in times of exuberance)

Yeah thats fine, after some years of operating and buying private businesses it might trade at a premium to NAV because NAV doesn`t reflect the reality anymore. But not in the first years of operating and surely not before they bought the first business.

No, sorry. :)

Can FFI only invest in public stock holdings in India?... or does their prospectus say they can also buy private businesses and do joint-ventures, etc? Does it matter? They will certainly pay a premium for growth and that is already reflected in the NAV. A premium on FFI is like a premium on a premium. (And you pay fees for that luxury, so in reality it should trade at a slight discount to NAV.). Otherwise FFH could just setup a hedgefund on a hedgefund on a hedgefund on a hedgefund and in the end you pay a 1000x premium on the original business. The stock market crash of 1929 came through this type of packaging.

I can understand that there is some premium (3-5%) because its hard to invest yourself in india without being an indian person yourself, but a premium for public stock holdings? For me this sounds like wishful thinking and FFI looks at the moment like a hyped investment that comes down to NAV when the first official report is public.

Don`t you think this is a bit expensive since the market has to fall at least 12% from here just to bring you to beak even?

There are different ways to use leverage. 1) Buy companies with debt, that way is most similar to a mortgage. 2) Buy call options/warrants 3) Use margin with puts to create synthetic call options, the Eric way. This is similar to a barbell strategy, Nassim Taleb describes this very well in Antifragility. 4) Use margin without protection, probably the dumbest method. I use method 1 and 2, but limit 2) to 5% of the portfolio.

Sold my PKX stake and bought more SEC.TO. I want more exposure in businesses that i can hold for the long term and short term prospects for SEC look more promising, too. Munger, Pabrai selling PKX have influenced me and its possible that their low cost advantage is eroded by the currency wars. I feel that my insight/edge into SEC is a lot better than in PKX. SEC is now a 20% position.

I share your opinion about germany, but in the case of italy i think a default in a number of steps with a central bank program to support the banks is the most probable outcome. No country really wants to leave the EU, you can see this in the case of greece. The politicians will try to kick the can down the road for the next decades, because all they are interested in is that the next bomb doesn`t explode in their legislative period. There is no incentive for a politician to think long term.

Thanks, good questions! Looks like i have to read more.

Try thinking in probabilities, regarding the future nothing is certain. And valuation is always about the future.