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Intralot has about 95% of revenues from outside Greece and Titan Cement about 75%. Autohellas has revenue tied to tourism and a car fleet that can be driven to Italy and sold for Euros. Packer

I think as you get smaller you get more potential for inefficiencies. In the sector I look at there are quite a few firms with market caps from 80 to 300m that are pretty cheap. In these same sectors I have rarely found anything as cheap with a market cap over a few billion. I sold two of my largest cap stocks today as they were closer to fair value than any of my 80 to 300 million companies. Packer

I just look at my portfolio and most US names are small cap. The only exceptions are GM warrants and Fiat. Packer

I do not how to divide risk into diversifiable and non-diversifiable portions to assess what type of risk I am getting compensated for or if the mispricing is not considered a risk (however with the new multi-factor models value and size are considered risks so the thinking on this may be in flux). I think the key is the difference between the stock price versus the firm value. For most large firms trading in more efficient markets, this difference is small. You can also see this in the mutual fund performance of value funds that widely diversify, they underperform index funds that have lower costs. One effect diversification can have is to dilute the effect of the mispricings identified. I think in many cases the number of mispriced securities is small so if you find one and diversify into fairly priced securities, I think you reducing the edge you have versus the market. So a rationale strategy would be to have a default of index funds and invest in identified mispricings when found. Packer

It is diversifiable if the stock is efficiently priced. If it is not then you can get excess returns by investing in it. I think some posters focus on those securities that are in dark corners of the market where there are pricing inefficiencies. The Kelly formula can provide a benchmark of how much you can invest in one of these to reduce the risk of ruin. Packer

You bring up an interesting question about being rewarded for company specific risk. I think you can be rewarded if you can identify the cases where the potential upside more than compensate for this risk. On average you are correct but as value investors we are suppose to differentiate when the price is reflecting this risk versus not. Packer

Thanks guys as you and the Board have been an important part of the development of many of these ideas. Packer

One consideration however IMO is indexing in selecting as an alternative if you are not there. Warren Buffet has chosen the index option for his loved ones who have little interest in investing and I think this is a reasonable benchmark to evaluate other options against. Packer

Another option is to continue your day job and do this on the side with your savings. This will allow you to see if you have an edge and provide another option if it turns out you do not. I would also encourage to benchmark yourself against an appropriate benchmark to see if you are adding value. If you are investing in the primarily distressed small value stuff we talk about here the Vanguard SCV at 8bp fees is a good benchmark. Packer

But is that comfort worth an additional 1% a year? PC reminds me of the Charles Allmon of GSO and Frank Martin, folks who over time hold so much cash that they underperform. I have yet to see someone who holds this much cash alot of the time waiting for the decline to beat an index over time (unless you are Baupost) and this guy is not Baupost. Packer

I think Tim is correct and Patient Capital is using the wrong benchmark. If Patient Capital were 100% invested in large cap stocks over the period of investment, then his record would be outstanding. However, he was not. The correct benchmark is closer to a balanced fund. In that case, Vanguard Wellington with a expense ratio of 26bp returned 314% vs. Patient's 305%. The 1.25% of fees per year turned this from a slight outperformer @ 320% (with the same fees as Wellington) to a laggard (where more than the excess return went to the manager). The 1% fee difference compounded is about 15.5%. Given that we are all know that value funds on average outperform the market, you could have bought Vanguard SCV and had a return of 446% over the same period. For most US value funds, I think this is the best benchmark, since we can all invest in it with a cost of only 8bp. In this case, it is great for the manager not so good for the investor. Packer

I think value investing makes sense. What can be a mistake is when the cost to implement it are greater than the benefits received. This can happen in efficient sectors of the market where there are many participants with a lot of capital. This IMO that is why the larger cap value managers have a tough time beating the market. In theory given their large AUMs they should be able to lower their fees (as costs for the most part are fixed) to offer a more compelling proposition to investors. Unfortunately I do not see many doing that however. Packer

I think there maybe two groups of folks interested in starting funds. First are what I would call lifestyle funds where a manager is not trying to get rich but investing enough to pay his salary and possibly a few part-time staff members, similar to lifestyle businesses. They use the fund to offset some of the investing costs they have, more akin to a co-op versus a fee generating firm. Second are emerging funds trying to perform well but they can generate more fees by maximize AUM. Marketing is a part of the first but the core of the second. The incentives in the first is to maximize performance but not in the second. A major issue with investment management is information asymmetry. There is a lot of money being spent on sub market performance in part due to marketing stories. You can say that the investors are getting what they want but the manager is acting a seller of services versus a fiduciary. This is why Bogle's low-cost argument makes a lot sense for just about everybody. I would have a hard offering a product knowing that in most cases someone would do better holding index funds. Not that marketing is not needed but is the marketing the core or the product? Packer

This is probably why doing this the Pabrai way makes sense. He responded to a questioner about how to get started and his response was something like, find a job that pays well and save and invest these funds. Once the achieve a critical mass, enough for you live off income, then find friends, family and fools to invest with you. Then you can modestly grow from there. Racemize is doing this and is something I think is more achievable to many here (without the sales skills or motivation) versus trying to raise enough OPM to feed your family. Just my 2 cents. Packer

It depends on what your goal is. A number of folks want to focus on the investment side of the business with no ambition to be the next star manager and become rich off fees charged to others but to make enough to live off of and have others share the fund expenses. BTW that was the original reason for asset management (to cover investment costs institutions incurred in research not to make large AM fees). This I think can provide some interesting advantages to investors because once the fees level reaches a level of paying for expenses they don't have to increase. So once your AUM reaches a certain level, you can refund some of your fees to your clients. Packer

Much of Eastern Europe had a mass genocide from the Communist Revolution to the times of Stalin. The book Bloodlands documents much of what happened as most of the victims had been killed in these events or were under dictatorships when the story could be told. The scale of this is just monumental. I had to put the book down many times while reading it as it was so disturbing. For me a good reminder of what freedom really is and how important it is. The things we debate now as freedom versus are not are trivial in comparison and am indebted to the soldiers who stopped this madness. Packer

If you read "The Great Crash and Its Aftermath" you will see how overvalued the segments of the market actually were. It does provide detailed valuation and interest rate data by year from 1929 to 1933. Packer

You need to look at these metrics to see the potential changes that can happen to change the firm under study. These are important considerations for future changes which can change valuation. Just looking at what a company is doing today is missing a dynamic Marty Whitman calls Asset Conversion an important aspect of investing. If difference between the value today and the asset conversion value becomes great activists become involved and pressure is put on management to change. This can occur even with entrenched management as some on this board have been personally involved in. In most cases companies that are being run efficiently already have fair valuations. Packer

Aberhound, Watsa has prepared Fairfax to thrive in an environment with the following characteristics: 1) Stocks go down and stay down for a long time (with equity hedges that appreciate more than the decline in their portfolio of equities), 2) Treasury yields keep going down (with the 10yr bond yield approaching 1%), 3) And deflation setting in. If this environment never materializes, Fairfax will make some money imo, but not much. Therefore, it is simple enough: do you think 1) + 2) + 3) might ever come to pass? Or do you think there is no risk at all? If the answer is: no risk at all, then stay away from Fairfax right now. Cheers, Gio Gio, I think in the deflationary environment you describe Fairfax will survive but not thrive. If they have to use the hedges in any major way there exposure to EM (and associated declines in markets and equities) will more than offset any gains from the hedges. If you look at there investment portfolio they have billions of equity exposure to Greece and India in addition to the businesses they own in the countries. The hedges IMO are just that, protection against adverse market movements in their distressed investments, but not a proactive bet on a decline like the CDS were. Packer

There are two factors in opposition to your thesis, namely, automation (which will reduce the need for labor and thus even if labor supply is reduced if productivity due to automation increases faster you need fewer workers) and the other emerging markets behind China that still have a lot of cheap labor (India, Vietnam and Africa). Also based upon my understanding of China there are still many places where wages are very low and few (primarily in the coastal cities) where wages have been increasing. Packer

I think both Watsa and Gross miss Buffett's point about the best place to be in this type of environment is stocks and if interest stay low (a point about which both Gross and Watsa agree) that stocks are cheap. If interest rates go up (a view which neither Gross or Watsa hold), stocks are modestly expensive. The concept of expensive stocks for both Gross and Watsa is based upon reversion to a much higher level normal interest rates. This view has cost Fairfax a good amount over the past few years and is one of the few areas I disagree with them. One inconsistency with this view is the large amount of equity holdings in emerging markets. If the scenario plays out the way they suggest, deflation leading to bankruptcies etc. , the EMs will be hurt more than anyone else as the flow funds into these countries will reverse. Packer Packer

As to news I use Bloomberg but there are announcements on DART. The specifics of the preferreds are also described in the annual filings on DART. As to Hyundai Mobius, I think they still exist but are delisted due to small size. As to SK Holdings, I would see if there is anything on DART. Packer

From a minority shareholder perspective, the savings shares do look better. When some of these have been converted to common, some have been converted at a discount (Italcementi and Fiat) or on a 1:1 basis (Exor). Exor was converted most recently so the trend does appear upward. Packer

Thanks to both Sanjeev and Norm who put together a great week of events. Packer

Same here. It would interesting to see what combinations of personality types are present in value investing duos like Buffet and Munger and Pabrai and Spier. Packer