Valuebo

Hi all. As a European-based investor I try to be only 40-50% invested in US based companies. Atm I trying to find more jockey/strong moat stocks based in Europe but I can hardly find any company that has all of the requirements I am setting for this particular part of my portfolio. I am focussed on investments that I can own for a (very) long term, have a strong competitive advantage and/or (but if 'or' -> stronger moat!) a management team with good allocation skills and a long track record. Currently my list has two names (KINVB & LRE) that I am considering to add and a bunch of large caps that I just consider average but have somewhat predictable earnings. If anyone has some ideas to share or even better, can give me good ways to uncover more of them myself, shoot! Tom

Am I the only one wondering what the market is doing? $120000 price for BRK.A would imply you pay +-$20000 for rougly $7000-$10000 in normalized pre-tax earnings, not giving any value to the track record, the safety of the business as a whole, the kind of businesses that are owned. Comparing price vs value of investments + EPS, the same undervaluation was present at the start of 1997. Helped by the general stock market the stock soared for almost 2 years. Would Buffett almost consider buybacks?

Amusing! But seriously, I don't mind. Hell, let Mr Market act this way for a bit longer and soon enough we will be able to buy brk at investments / share and get the operating earnings for free.

Bing is one opportunity. What about cloud computing? Do they stand any chance here? 36 000 engineers working on cloud computing (more than $5 billion R&D expenses for cloud computing are being spen) should bring out some new opportunities in the future. Who are their major competitors in this area for the future?

Seems like I picked a great time to buy my first ever FFH shares months ago at around 380. ::) Well, still hoping to get more under BV any time! =)

SJ, I think what Harry meant on price was clear enough multiple times... Quality > price, especially in insurance where being conservative is a must to survive in the long run. In insurance I prefer having a small MOS for something safe in comparison with getting an extra 30-40% discount on something average or just bad. And because some insurer is at 0,6x BV doesn't mean it will ever get to that 1,5xBV or more just because times are better. Given his knowledge and will to explain and share things, I really don't care much about how Harry sounds. Especially if he has to make things clear over and over when he has explained it a couple of times already. I don't think he is unrespectful, perhaps at times a little harsh.

For Li Lu : http://streetcapitalist.com/2010/06/24/li-lus-2010-lecture-at-columbia/ Maybe this gives a first impression. :)

Hi all, As an European I have at least 30-40% of my holdings in foreign currencies such as the USD or GBP. Moves from 1,42 to 1,29 and back to 1,46 for the EUR/USD for example make my returns vary widely over the year. With a long term view in mind, should I bother looking for a hedge for these currency moves or should I just ignore them and hope none of them devaluates majorly for extended periods? My portfolio is still small (being a student..) but I would probably dislike these volatile moves if my portfolio was ten times the size it currently is... Thanks! Tom

You are mixing things up cwericb. This is where brokers and companies go to : http://www.northbridgefinancial.com/ http://www.odysseyre.com/ etc.

Slightly off-topic but anyway. Would be very interesting to hear more about this. What was the main things that you overlooked etc? I have a similar situation to OP, but at the same time very different. Young (22) but have a large pile of savings, though not a great prospect for earnings, aside from cashflow from that money, for the next 4-5 years, while I get the education I pushed forward to be able to make money in a short window. Balancing spending and saving is tricky. I am afraid that I will regret my decisions no matter what I do. But being extremely well-off at the age of 35-40 seems like a goal that I can sacrifice for at the moment. As a 21-year old student I totally agree. In fact, it seems like the reward system in my brain gets excited from savings and not spending money on stupid stuff. My personal greed factor gets satisfied over a longer time period by saving, instead of spending it on consumer goods that give short bursts of satisfaction. My largest costs are actually kind of investments, namely books and a gym membership! ;d A large part of my money is in companies like BRK and FFH just because I realise how much I still have to learn. Although I am making sufficient progress, the road is long and I have plenty of time.

What do you need more? All information is easy to find and clear(er) (than before). Do you want management to spend our money on a flashy corporate website? Let them keep the few thousands of dollars and give it to charity...

I bought BRK last week and will buy more under 75-80$ if possible. I am holding FFH since a couple of months and added recently, over time I will pick up more around BV. You can't really compare BRK and FFH btw... Both are cheap compared to the market.

I agree that many books for beginning value investors don't offer much when compared to the classics of Graham. For me two expections so far are 'Value Investing : From Graham to Buffet and beyond' and 'Common Stocks and Uncommon Profits' which helped me to get more intellectual framework like you call it. Now I am learning much more with (less fun) accounting books or (equally fun) behavorial finance books, no need to read ten books for beginners. If you want to get all the value out of those few very good books, letters, ... just start marking, take notes, ... to get all the pieces together, that is how I am doing it now and it is starting to look like something I can actually work with.

"Some" of it may be misleading? :P

INTC? also a very fair dividend.

I'm going to bump this topic. I would go with INTC and drop AMD, mainly because of size. AMD just has a serious disadvantage when you compare budgets for R&D, marketing, ... What advantage does AMD have over INTC to steal its market share in the future? After a very quick view AMD seems to be more expensive too based on a simple P/E. INTC is at 10x P/E which includes a lot of cash and they can still have some growth. is ARMH a serious threat for them to get market share in the mobile devices sector? Probably, but at current valuations their normal bussiness seems more than enough? MSFT has some size moat (economies of scale) because of user habits. I doubt CSCO, AMD and DELL have the same connection with their consumers? But I do like DELL because M. Dell returned, lots of cash overseas (change for tax problems coming?), low valuations not considering possible growth under Michael Dell, ... Btw we have WDC, HPQ, ... to consider too! Just some very quick points that I wrote down without any thorough research! Any thoughts?

Let me bump this topic instead of making a new one... I'm wondering about how to get started on learning more about accounting given two facts : (1) I'm an European and (2) interested in both EU stocks (IFRS) as US stocks (GAAP). Can I just pick up a book like "How to Read a Financial Report: Wringing Vital Signs Out of the Numbers" as a starting place and ignore the differences between GAAP en IFRS? In what way are they different and how much in-depth knowledge will be required on the subject to understand both GAAP and IFRS enough to sufficiently value stocks with different accounting regulations? Thanks!

Seems like the classic I was looking for. Added to basket! :)

I found some books on 'smart reading' with good reviews on amazon but was wondering if anyone here can recommend books on the subject? Thanks!

Exactly. From FFH 2010 letter :

Nice! Stock gets some love too. About the hedge : http://gregspeicher.com/?p=2262 Their hedging activities are misunderstood, and, to your question, they are not “speculations;” they are enabling them to lock in their investment performance and to protect their liabilities with their assets. Fairfax is a unique company, and they have evolved into one of the leading investment groups in the world, overlying a group of much-improved insurance companies. They have evolved with terrific management in the insurance companies that the holding company oversees. The deflation bet is the possible lightning strike, not the hedge. But I am very happy with their edge at this moment, I feel like buying FFH is some kind a safe haven to store cash for the long run when I can't find obvious opportunities, much like BRK.

It is not "times worse" or "times more shaking" but "times more energy". :) Wiki says 6 is the equivalent of the energy released from big nuclear bomb and 8 is the equivalent for a meteor of 150-200m in diameter hitting earth.

Is that supposed to be a serious comparison? :-X

Alek, I had the same intitial thought when I heard that the tsunami knocked out the backup cooling systems. ( I mean, who builds a reactor on the seashore and doesn't plan for tsunamis). This is no excuse---but it's important to remember that a magnitude 9.0 earthquake releases 1000 times more energy than a 7.0 Or is it 100 times more energy? Crazy hu.. :)

Nope. They hold very high quality US assets with a short average duration. :) What do you think about their exposure to claims from Japan? I saw some numbers (250 million tops for a 2010 Japan earthquake) but can't really make much of it because I believe that would include some major damage in cities etc. Then again, who knows they hit the jackpot on any of there 4 lines of insurance...I feel like the stock reaction is brutal but it was trading at 1,3x BV and now still at +- 1,10x BV excluding the incoming claims...