lathinker

Do people on this board have toughts on Commercial International Bank ? It is the largest position of the "Common Stocks - Mark-To-Market" section with a value of 480m USD per end of 2023. In the annual letter, Prem states that "The key driver of value to Fairfax and other foreign investors in CIB is the stability of the Egyptian Pound." Well, last week, we learned that the stability is a thing of the past since the EGP was devalued from about 30 to 50 per USD and Egypt received an IMF package. Interest rates stand at 28%: https://www.reuters.com/world/middle-east/egypt-raises-interest-rates-by-600-bps-pound-tumbles-2024-03-06/ It is still a small position in relation to FFH and the development may not even harm CIB too much, but it underscores the risks of EM investing.

In that case, you will have paid 3.35$ and get back 5 $ (95-90) for a 50% profit. One way to bump this is a call spread. You could buy a Jan 24 80 call at 8.70 and sell a Jan24 90 call at 3.30. You are investing 5.40. If the deal closes, both options are exercised and you will get 15$ on the C80 yet lose 5$ on C90 for a return. In total you will make 10 on an investment of 5.40. Note that option trades can be very risky, in particular if there is a delay you will lose 100% of your money while the stock is still likely to be worth something.

For idea generation, I like to look at what Rubicon Stockpicker Fund is doing. They have interesting ideas somewhere between contrarian and tech. https://www.langfrist.de/rubicon-stockpicker-fund/ If you are not a German speaker, you can click "Aktuelle Berichte" and open their reports in Englisch. TOP 5 positions make up >85% of the portfolio.

Bought some BMW prefs on Monday @48.50 EUR

Cologne, Germany

This is one of my all-time favourites... One can you think that Varoufakis was not full of shit? The guy promised three days ago on BBC that the negotians would be resumed on Monday "With 100% chance of success" and that "banks will reopen for sure on Tuesday". now that the got what he campaigned for, he just disappeared. Agreed! I am having more fun watching this than Breaking bad or other TV shows. Tsipras promised that if he gets the no vote, he will get a great deal from EU within 48 hours, guaranteed. And this guy Varoufakis also said that if referendum comes out as an YES, he would resign immediately because he cannot play the hide and pretend game anymore. Now he got this NO result and he resigned right away? WTF? Now we will see how this clown Tsipras is going to pull out a better deal within 48 hours. :D It's almost as if you expected them to tell the truth? If politicians were held accountable for their lies, there'd be few left outside of prison. The majority say whatever is necessary to achieve their ends. In this case, both of them said things to help achieve a "No" vote. What actually happens after they get it is in no way tied to what was promised before they had it. I don't know why anybody would put any weight on a promise that requires multiple parties cooperate when those parties aren't controlled by the individual making the promise. That's not say a deal won't get done - it just won't be because it was promised by the PM. Not expecting that, but I think Varoufakis is still a class of his own in terms of bizarreness. This is just four days ago: http://www.bbc.com/news/world-europe-33370592 It would be a great drama to watch if it was not all so sad. Having elderly people queue for hours to withdraw a few € and starting to run our of drugs is not all that funny

This is one of my all-time favourites... One can you think that Varoufakis was not full of shit? The guy promised three days ago on BBC that the negotians would be resumed on Monday "With 100% chance of success" and that "banks will reopen for sure on Tuesday". now that the got what he campaigned for, he just disappeared.

At the time of purchase, I will normally target a 15% return per year and at least 3 years time for Mr. Market to fairly value the security. This brings me to require an MOS of 50% or more. I am fine to hold a bit longer if needed which cuts the IRR. 15% was mentioned by Buffett as his hurdle rate. Now, I think it is a fair discussion whether or when to amend your MOS requirement, in particular in times of zero interest rates. At the same time, I find it quite dangerous water down your return requirement as nobody knows, what interest rates or inflation will be in the future. Therefore, I try to resist purchasing "high quality companies" at lower margins unless I understand their moats very clearly and am confident for them to persist.

This would work from a purely financial perspective. But as the discussion is largely about dignity, pride and self-determination, it is clearly a no-go. Also, not sure if anybody in Europe wants to be too close what Saudis consider their paradise on earth ;) There should be better ways to resolve this.

Pretty interesting political situation indeed but also nerve-wrecking if you are invested. Need a good stomach for this. My perception over the last few days was that Grexit likelihood was rising. Basically, Greece was granted an extension but obliged to vote an some structural reforms and work out other measures which did not happen. Instead, there was a lot of media war including lenghty and fruitless discussion on who did what five or two years ago. Felt like both camps preparing for the blame game. More recent impression is that Germany is defo ready to compromise with Greece: Merkel, Hollande and others are meeting Tsipras tonight and Tsipras accepted Merkel's invitation to Berlin on Monday. Forget all the Schaeuble/Varoufakis pre-show, Merkel and Tsipras are the ultimate senior decision makers. Merkel downplayed any hopes for results tonight and said there will be enough time to find an agreement, reflecting Greek complaints about time pressure. Just watched a political talk show on German TV with the chairman of Merkel's parliamentary group (Mr. Kauder) who is usually well-informed. He was more open to compromise than ever before, in terms of extension, another aid package and changes to the current program if reforms get moving again. Asked if a Grexit is coming, he said "I don't think so". Kauder was also understanding of the law passed by Greek parliament ("emergency help for the poorest") Also, it was mentioned in the show that geostrategic terms, the EU does not want to lose Greece which is a NATO country, located next to Turkey and very close to Russia. Not worth creating a new Putin ally for a few billions. In essence, I think Europe (at least Germany) is prepared to give in much more than they said so far. I am less clear about how the Greece government will act. They have a good chance to get something from Europe if they return to structural reforms. What could that be? Potentially an investment program, potentially a debt restructuring. Question is if they are clear where they want to go. Slightly more optimistic than 24h ago.

Two bloggers I read, Alphavulture and Wertart Capital, recently outlined their investment thesis on Italian closed-end real estate funds. These funds own mostly Italian commercial real estate. They have a fixed maturity, in some cases with a grace period to allow for additional time to sell their real estate. Many of the funds trade at sizeable discount to their NAV, in some cases 50% or more, and can be traded at the Borsa Italiana in Milan. Given Italian real estate prices have been tanking in the last few years, the funds had to report decreases in the value of their property. While I am not a friend of most closed-end fund structures, the discounts look very big to me. See here for the http://alphavulture.com/2015/03/02/italian-real-estate-liquidating-cefs-at-a-50-discount/ http://wertartcapital.com/2015/02/03/increase-allocation-to-italian-reifs/ I would be interested to know if anybody takes a view on the real estate market in Italy. I think that the Italian economic policy has improved considerably and the government is following a reasonable course. Italy will be one of the countries to benefit from the ECB QE and of a broader European recovery (if it materializes). I also think that low rates will help the property market at some point. Are closed-end real estate investment funds a good way to play this? Are there listed companies levered to it (one firm I could think of was MOL.IM)? Generally interested in what people think here. LT

How do you guys determine when to sell these stock bought on a quantitative basis? Do you just exist after you made 30, 100, 200%? Do you have a target PE, EV/EBIT or PB ratio? To me, it occurs less straightforward to assess the companies' businesses if bought by the numbers. It would make sense to exit on a quantitative basis aswell, but I would be interested to learn how others go about it.

Noteworthy discussion of several Berkshire Letter topics on one of my favourite blogs: http://valueandopportunity.com/2015/03/01/18-observations-from-berkshires-2014-annual-report/#more-10547

Buffett has rightly said that retail is incredibly tough, but on the other hand Berkshire owns See's, Borsheim, Nebraska Furniture Mart (he might like IKEA if it was for sale ? ;) ) . Berkshire has been a long term investor in Wal-Mart. So it would be wrong to say they don't do retail. As for "cosmetics", let's rather say strong-brand consumer goods. Berkshire did own Gillette and does own Coca Cola.

As the recent acquisition proves and Buffett has stated, Berkshire is hungry to buy good European businesses. Buffett has cracked "Code Germany", so there may be more to come. I wanted to ask people (in particular the European members of this forum) if they have an idea which businesses might fit for Berkshire, both listed and unlisted. Most people will know the definition BRK target: wide and lasting moat, high return on capital, industry he can understand. Maybe the discussion results in some actionable investment ideas. A few starters from Germany: Listed: - Fuchs Petrolub - German version of Lubrizol - Rational - kitchen equipment - Pfeiffer Vacuum - special machines (vacuum pumps) - Henkel - cosmetics - Beiersdorf - cosmetics - Fielmann - Glasses/lenses - Axel Springer - media/newspapers Unlisted: - Haribo - iconic candy/sweets - Bertelsmann - media - Fischerwerke - screws, screw anchors,... - Aldi/Lidl - supermarkets Also, a reading recommendation on German "Hiden Champions" for those looking to understand better how these companies operate: http://www.amazon.de/Hidden-Champions-Twenty-First-Century-Strategies/dp/0387981462