Valuebo

No, I don't own LMCA. Was going to read the letter later this week, always a great read! There are so many things investing-related that are worth reading that it tends to pile up at times. I should mention that you won't get much value from me. I just started investing in late 2010 (I'm really nowhere yet) and am actually still a student. Hope to graduate in a month tho. ;) The hunt for the bargain and thirst for knowledge make my clock tick!

Ah I remember again. Credit goes to frog03 for bringing Bestinver to my attention. :) Correct. On the second comment I'd like to add that I wonder how much of an effect their Spanish exposure had to Bestinver's returns. Until 2007, Paramés CAGR was extremely high. Well it still is of course. What do people think of their Spanish equities only fund? Something to pick up if we see lower lows for the IBEX35?

Makes sense Giofranchi. You obviously have other people's capital to look after as well. All I need to do is take care of my capital and expectations. Big difference. :)

Well Giofranchi, many owner-operator companies like LUK are reasonably to very cheap today. I recommend the annual letter of FRMO, released two days ago: http://www.frmocorp.com/_content/letters/2012.pdf (Thanks to oddballstocks for mentioning it on Twitter). While I think you are too aggressive with 20% CAGR for the next 7 years for LUK, you are forgetting that it is very very likely that LUK will trade much higher than 0,87xBV somewhere in that time period. Thus, this will boost eventual returns in a major way. If for example LUK trades at 1,4xBV somewhere between year 5 and 7, and compounds at only 12%, your return will already be +- as high as with a 20% CAGR and no price appreciation against BV. I also believe this will be the case for other owner-operator companies. At some point investors will recognize their superiority once more and pay a premium, not a discount. In this regard I also don't believe hedging is needed as those owner-operators will take advantage of major market corrections while you sit on your ass! Future CAGR will be higher because of short-term declines in valuation, not lower! :)

I learned about Pamarés last year through another board member and am considering an investment in it (not for myself at this point). In the spirit of sharing, I thought this resource page from Valuewalk was very informative: http://www.valuewalk.com/francisco-garcia-parames-resource-page/#.TzBR9Fx4keU Txitxo, could you explain how this fund in Luxembourg works? Are there any differences in rights, costs, obligations, returns,...? It does seem easier to keep it in a portfolio with the rest of the equities rather than going through the hassle of sending money over to Spain.

I do not agree. 1) Mr. Watsa is 20 years younger than Mr. Buffett: FFH > BRK, 2) Mr. Watsa has to work with much less capital than Mr. Buffett: FFH > BRK, 3) Mr. Watsa is fully hedged: don’t get me wrong, it is not that “value investing” doesn’t work, value investing is the only way of investing, but, in a secular bear market, when valuations are high, and there is a mountain of debt in the system ($70 trillion of G10 debt is the collateral for $700 trillion in derivatives… 1200% of global GDP… mind numbing!), it is “INVESTING” that does not work! FFH > BRK, 4) FFH relies on insurance much more than BRK: and I like insurance in a bear market, people always need protection, in good and in bad times, what saved the day at BRK in 2008 were the insurance operations: “Most of the Berkshire businesses whose results are significantly affected by the economy earned below their potential last year, and that will be true in 2009 as well. Our retailers were hit particularly hard, as were our operations tied to residential construction. In aggregate, however, our manufacturing, service and retail businesses earned substantial sums and most of them – particularly the larger ones – continue to strengthen their competitive positions. Moreover, we are fortunate that Berkshire’s two most important businesses – our insurance and utility groups – produce earnings that are not correlated to those of the general economy. Both businesses delivered outstanding results in 2008 and have excellent prospects.” Warren Buffett. And I like what Mr. Watsa said in the most recent Q2 2012 Earnings Call: “As I said in the first quarter call, we are growing again. The large catastrophe losses in 2011, very low interest rates and the reduced reserve redundancies means that there is no place to hide in the industry. Combined ratios have to drop well below 100% for the industry to make a single-digit return on equity with these low interest rates.” FFH > BRK, 5) FFH trades at 1,2 x book value, while FFH trades at 1,05 x book value: FFH > BRK, 6) BRK is less leveraged, and therefore less risky than BRK: BRK > FFH. Where does this leave us? FFH 5, BRK 1. Of course, you might object it is too simple a thesis. Quoting Sam Zell: “I philosophically believe that if you can't delineate your idea in one or two sentences, it's not worth doing. I'm the Chairman of everything and the CEO of nothing, which means that the people who work for me come to see me with ideas all day long. My criterion is if they can't concisely explain their idea, then I throw them out of my office and tell them to come back when they can. Simplicity is critical.” giofranchi 1) Don't care about that. In fact, today Buffett has only "limited" influence on the future BV growth that BRK will achieve. I can also sell my stake and put it in FFH at any time or the other way around. I don't have to be in one of the two for 20 years. (But I also don't pay taxes on return.) 2) Sure. But it's not like Prem is working with a 9-numbers figure either. He has billions to look after as well. 3) Can't really compare both in that way. FFH is more leveraged and needs the hedges in this environnement, it's not just a macro bet. And I'd say that BRK's mountain of cash is a nice hedge as well. 4) This is hard to quantify. I believe that BRK will do just fine in almost any market. Sure, they would suffer more in a recession or market downturn but would it really matter for intrinsic value in 10 years? 5) One is almost completely insurance, the other also has many operations like BNSF, Marmon, Lubrizol, Netjets, See's Candies, ... Hardly comparable based on BV! Even without Buffett, BRK is worth much more than 1xBV. I'm not sure how much FFH would be worth without Watsa. I also know for a fact that BRK's future growth is far more certain than FFH's. FFH's growth is more sensitive to Prem's future successes and failures.

Lol he means more than double from today's level of earnings. So about $1 now should turn into $2+ EPS by 2019. Wouldn't focus too much on Berkowitz's numbers in today's market. And I agree with twacowfca; BRK > FFH at this point in time, although it was much clearer in the 1,15xBV range. I don't see BRK going under the lows of last summer anymore, even if the market drops 35% from here. If it does, you'd probably have a very safe 3/4-bagger by 2020.

[amazonsearch]The Indomitable Investor[/amazonsearch] I bought this book based on a review on The Aleph Blog. Steve Sears isn't the most efficient writer imo. He gibbers about various topics in short intervals without making the whole sufficiently coherent and seems unable to go into any reasonable depth. Some of 'his' insights, for example on selling discipline (stop-losses are mentioned...), are very hard to read through. Other insights are just too obvious or miss additional comments to be of any value for the seasoned investor (which I most certainly am not!). Maybe this book is fine for beginners, but I'd recommend other books to them in any case. The mix just isn't working for me.

There is definitely something to be said about risk management if you can't make rent after investing $180m of your own money in new ventures. ;D But hey, it worked out for him and I'm in no position to judge a person with such conviction, courage and passion.

I'd rate it with a B or 4/5, not quite an A but close. Chapter 10 and 11 where indeed of little use for a student just starting his carreer. ;) Will reread part 1 somewhere in the next 3-4 years.

Hm maybe, but I've seen automatic tweets from things like Foursquare and 'twitterstats' from others quite regularly for some people I follow so I'm just a bit suspicious.

Yeah, only a tweet... and possible spam afterwards. Sorry, in Dutch. It basically says that it will be able to post tweets automatically with your account and that they can change your account details. I've seen many people get it already, but I'll do this with a new account where I don't mind if they spam tweets under my name. :-X

Yes. Buffett and Munger, being fully aware of the fact that a lot of "wannabe" investors listen to every word they say, are imo exaggerating in order to avoid confusion with a certain crowd of less-educated investors. They probably feel that it's safer and more valuable to warn people for something that is bullshit most of the time instead of exactly eplaining in what ways something like EBITDA can be useful in company analysis. The latter would only confuse some investors and prevent them from being suspicious of management using metrics like EBITDA etc. One of Buffett's m.o.'s with his letters to shareholders has always been to educate a broad crowd of people and offering important basic insights and wisdom. Going into the details would make the lessons much less understandable to most and thus less valuable. Buffett's teachings are so valuable because he can filter out the noise and explain things in plain English. This is obviously just my personal interpretation of how Buffett (and Munger) look at this.

Yes, why not put in some rule like Buffett did himself for the share buyback program? Obviously limited by various additional factors in time, amount and circumstances.

Great. I'm curious to know what you think when you are farther along. I'm on p. 118 and so far so good. Well, I didn't have much time (or make time..) to read during the week, but am now at page 170 (chapter 7) after a short 'Sunday afternoon reading marathon'. I should finish it any day now. :) It is indeed well researched with a lot of business history and great examples (as far as I can judge). I'm in my early twenties so I missed the epic business failures of companies like Kodak, Motorola and Loewen. This is a great way of learning about them and their mistakes. I particularly like the structure of the book. Should be helpful later when I pick it up again. Also love all the additional info you get with these kind of books. For example the part on Moore's, Metcalfe's and Reed's Law and their effects and implications on business. Such things always get me thinking, slowly connecting the dots from things I previously read elsewhere and gaining new insights.

Again, some of us are only saying that we think it is unethical and that we regret his decision to head this way, young guy with a family or not. If you don't care for opinions on a public forum, you can always leave. No one forces you to read this thread. Maybe I'm sounding harsher than I think, idk. Off to the gym to lose some stress! ;)

I have no dog in the fight and couldn't give a crap about it other than the fact that I hate hypocrisy. I don't know the stock, I don't know the article he wrote. Is it a proven scam? This is a fact? Maybe it is, I don't know. I guess, sure, if it's a scam then he shouldn't have written it. But I would ask too, why is some random guy coming to a different message board to start a thread condemning some guy somewhere else? That strikes me as odd. And the the subject line about a "Value Investor" implies that Jacob Wolinsky is some superstar in the investing world instead of a young guy trying to support his family. The whole thing is very weird. On the other hand... You are making it sound as if he had no choice. "If you "need" to support your family (that you may or may not have) it is "oke" to post bullshit misleading others to make a quick buck." "Value investor" implies nothing in my mind, but English is my third language so that could be it. But it adds to the gravity of the issue as he has some public profile in the value investing community online. The source (TS) is irrelevant to the facts lol? Jup, not a proven scam but even if it isn't, I think we can agree that is was misleading (imo, even if "promotional") and obviously under his true skills as an investor. This last observation isn't proven either but come on... Look at what he wrote and what he generally knows and writes on the subject of value investing.

It's not about the site but about his decision to promote a company that is close to a scam. No one here is saying he did something criminal, just unethical. At least that is the perspective of some here. This also has nothing to do with hypocrisy as the ultimate effect of Prem and Warren talking their book is very different than what is achieved here. They aren't deliberately hanging up a big bs story that misleads others. I think it's fair to say that it wasn't "unbiased" or"focused on "preventing the long side", he's just trying to save face. I still think he's a bright guy with a great entrepreneurial spirit and it would be a waste if he continued doing this stuff, which is far below his capabilities. This was a misstep imo but I wish him the best of luck.

I feel the same way alwaysinvert. The article offers plenty of noise and meaningless generalities on the sector while offering little useful insight in the company itself. I'd say that's fairly typical in these kind of pump and dump stories. Ver hard to call this research "preventing to take the long side" with a straight face. And unbiased? Forget it! I hope he gained the insight that this is ethically wrong. The responsability lies with him.

Just read the preface and introduction tonight, seems promising. Agree with your first impressions Liberty, think it should be very useful for investors to avoid pitfalls.

In essence Buffett is just saying that there is a point of diminishing returns for IQ where other factors like temperament will be much more important. You can't make up for laziness or bad processes with higher intelligence! I think he said something like "if you can sell your IQ points above 130, do it!"*. 125-130 should be more than enough to understand simple businesses, their processes, accounting, etc. With that score you should also be able to deduce and reason quite a bit. Smarter people might be faster in obtaining insights but it's a matter of practice. And being too smart can be a curse as well (overconfidence, over-analysing, general issues with complexity of things/risk taking,...). *Author in link above says it was 120 points, not 130. My mistake. I agree that a score of 130 should give some advantage over 120. But of course it remains a very limited tool.

I always forget about that. Luckily I'm not taxed on it here. :)

Depends on your time horizon imo. 2-3% outperformance is enough as long as your time horizon is 30-40 years. Obviously you shouldn't start with $5,000 if you want to make it worthwhile. ;D

Lol, I didn't make any statement about my beliefs. All I said is that it got me thinking. I've never thought about the issue from such a perspective. I never said you did. But obviously you think he at least makes some sense and I wonder what you think that is. If you happen to belief the same things, that's fine by me. ;) And what perspective do you mean? The one where he couples the holocaust with abortion?

Hahaha. Seriously bmichaud? I honestly hope you just didn't see the entire thing before you posted it here. I say this because I doubt that someone who is intelligent enough to critically analyze companies (which I'm sure you can) can actually be convinced by the reasoning (if you can call it that) of this guy. (But obviously you are entitled to your own opinion and beliefs.)