investmd

Thanks for insights kab60,thepupil & SharperDingaan. thepupil: agree 85basis points seems like for an ETF like fund - happy to pay good fees for good returns - 1-2% annual fees regardless of returns doesn't sit well given how challenging it is to beat the market by >2% SharperDingaan - interesting play you suggest. However, my understanding has been that the worst thing for the UK about Brexit has been the uncertainty. Now that there is a clearer picture that it is going to happen, could the Pound not strengthen?

Looking for advice on investing in GBP. I'm based in Canada and tend to invest in a) equities like BRK, FFH, BAM & b) managers with zero fee partnership structures - Pabrai Funds, Aquamarine, ROMC & Austin Value Capital. My wife has some money in the UK and she wants me to invest it, but she wants investment to stay in British Pounds. Looking for insights from this group of value investors as to what I can purchase in GBP that could compound at 8-15% over several years - equities that I could buy on the FTSE or bright managers in the UK with value add. Could stay consistent with my current theme or diversify. Thanks!

ValuePadawan, once you've seen a securities lawyer, please do update this post - would like to know outcome of discussion. Thanks

Following up on results 6 months after this post on top 4 FFH positions: Eurobank - UP 17% Blackberry - DOWN 44% Seaspan - UP 10% ICICI Lombard - UP 16% (& recent FFH exit) FFH share price over last 6 months - DOWN 11% All of us are likely keen to see result of if/how FFH uses large cash position from recent ICICI Lombard sale to drive value for FFH.

A dozen years ago bought into the FFH thesis of science of pricing insurance properly that generates float that can then be invested by astute people - the Warren Buffett of Canada philosophy. Have just kept accumulating shares. Looked to generally "buy the dips" , but add yearly, have bought as low as C$300's and as high as C$700's over about 12 years. Always waiting for the stock to outperform. As a result of adding to the position for a dozen years, I have a large position (approx 7% of assets) in FFH with average purchase price of C$498 (today's price=$585). Overall, I haven't lost money, but have deployed a significant portion of assets for a long period of time that has compounded at a rate that is below my expectations (8-12%/year over long periods of time) even after taking in the annual dividend of USD10/share. Does this patient value investor stay the course given the amount of time and resources deployed and hope against hope that Watsa does something to appreciate stock value?? Feeling particularly down after the always ethical, investor friendly, strong EQ personality of Watsa has taken a hit with recent news of court behaviour. This is superimposed by now getting tired of him always talking about 15% compound growth and not delivering. Went through similar thought process with Chou Funds before finally making decision to part ways. Am hurting/struggling with sell side discipline of stay the course (stock is undervalued, there will be an inciting event, Eurobank investment will appreciate, investment process will be improved, Indian investments will pay off, there will be significant stock buy back at these prices...) vs. is the nugget now better deployed elsewhere? Had big hopes for this position.... Would love to hear from some of the FFH bulls who have been passionate on this site. Thanks for your thoughts,

Couple of definitions I like: To know if something involves skill, see if one can purposely lose at it? ie - coin toss - one can't purposely lose; chess --> one can lose. It is a gradient in that there are things that involve v. little skill and others that involve more. If you can't purposely lose, then it doesn't involve skill. Luck = when opportunity meets preparedness - my favourite definition in the English language. There is often opportunity, some can't recognize it, others can't act on it. Those who can recognize and act are considered by others to be "lucky".

+1 for Toronto & Montreal as highlights for a visit. Toronto is a vibrant cosmopolitan city with great coffee shops, restaurants, theatre. Montreal is different than anywhere in N. America - it is full of joie de vivre, totally happening, bustling; equally if not more vibrant restaurant scene, great walking city - worth checking out.

Liberty, Chesko, I'm a fan of Peter Attia but even as a medic I do find his podcasts to be very technical for non medical audience. Am (pleasantly) surprised to see his podcasts being favourites in an investment thread. Are you in the medical field? The Jason Fung episode totally changes our way of thinking of diabetes - I like the idea of time restricted feeding but we need some caution as the science is not there - yet. However, the risk of TRF in healthy adults is uber low. I started about a month or two ago and I'm liking it. Maybe we need to start a thread on Time Restricted Feeding?

I too am excited to see what life will look like 50 years from now. Looking at what life was like in N. America in the 60s/70s - coming out from the Civil Right Act to use of technology in our lives to connectiveness across the world to drastic reductions in world poverty, advances in women's rights, movements towards racial equality - I'm keen to learn how we live in the coming decades. In order for some of us to make it another 50 years, might need advances in longevity research - a very interesting, emerging area of research. Be well!

Interesting. Thanks for following up on this Partner24. Wisdom of the crowd was wrong in 2009. If the same poll was conducted today, probably everyone would say either <10% or 11-15%. Wonder if we would all the wrong again....hopefully.

Do you have a time frame for expected re-rating to 1.5x book? 3-5 years? Have been thinking of similar returns for past decade. Hasn't played out yet.

Thanks for sharing this insight. It's a strange buy for Chou as in my opinion he usually seeks deeply undervalued/distressed stocks with a 2-10x potential. FFH doesn't fit that bucket. Maybe in the Chou RRSP, he is restricted to buying Canadian equities. I don't think he bought FFH in his flagship Chou Associates fund?

I take that back. Am getting deeper into the Matthew Walker podcast with Peter Attia - it is very good. Until now there has been a lot of hearsay and generalization about sleep benefit. Now, Mat Walker is sharing that there is science and it is very interesting.

https://fs.blog/naval-ravikant/ - foundational values https://fs.blog/adam-robinson-pt1/ - why value investing doesn't work https://fs.blog/atul-gawande/ - medicine and making a difference https://fs.blog/barbara-coloroso/ - on parenting I read the Mat Walker book - found it OK and started listening to the podcast with Peter Attia but it hasn't grabbed me yet. However, Peter Attia is brilliant. My favourite Peter Attia podcasts so far are: https://peterattiamd.com/zubindamania/ - this is the podcast that got me listening to Peter Attia; 2 brilliant Stanford MDs who are burnt out with current health care https://peterattiamd.com/nirbarzilai/ - trying to understand the science of aging https://peterattiamd.com/samharris/ - Sam Harris is the essence of having a conversation https://peterattiamd.com/jakekushner/ - metabolism of diabetes and understanding glucose uptake appears to be linked with longevity research

This link is not active. Could you pls repost. thanks

I've seen this paragraph more than once in Chou's reports: "A lot of investors are not aware that short-term results can have a huge bearing on the five- and 10-year annualized compounded returns. For example, let’s take Fund A and Fund B. Fund A has consistently returned 7% per year for 10 years and therefore its compound rate of return over the 10-year period is 7%. Fund B, on the other hand, returns 8% for the first nine years but suffers a loss of 20% in the 10th year. Its compound rate of return for the 10-year period drops significantly to 4.8%. The impact is more pronounced for the five-year returns, a similar decline of 20% in the fifth year would have decreased the five-year compound return from 8% to merely 1.7% for Fund B versus 7% for Fund A." Does this not trouble you in its honesty? We all understand that one won't nail a constant 7% annual return. To get 7% a year, one will have 20% declines - fair enough - but they have to be balanced with years where the return is well over 7%. He seems to be justifying that returns over 5 or 10 year periods are not significant. When one is managing money professionally for others, 10 year returns are significant. One has to live with their losses and gains as averaged out over enough time.

+1 Given that Chou is well aware of expense costs and how challenging it is to beat the market, I'm surprised that he has not changed his model of fee structure. Maybe inertia hard to overcome as it's been in place for decades.

Petec, Thank you very much for sharing this analysis. Over past 5 years, insurance business operating results appear solid but there has been essentially little change in market value of FFH. Going forward, hopefully Eurobank, Seaspan and Blackberry can drive equity investments results upwards and reflect in a substantial increase in market value. My expected outcome for investing is that FFH market value should increase AT LEAST 50% over MOST 5 year periods without including dividend payouts. Doesn't seem like hope for significant stock buybacks will come to fruition. However, with good combo of insurance business and equity results, FFH should be in a position to deliver.

Thank you for sharing link to 2018 Giverny letter. Annual outperformance of index by >4%/yr is amazing. Rochon is one of only a very few managers that has done that consistently over 5/10/15 year periods. Whilst there are some historical comparisons for consistent outperformance, who are the comparisons to Rochon's results that are actively managing money today? I looked at Giverny a year ago and they were not accepting new money from Canadian investors outside Quebec & Ontario I think. Had to do with them applying for some regulatory approval.

Prem Watsa is an eternal optimist & infectious about it. Anticipated returns of 15%/year - can hope that works out. What do folks think of approx $1.5B/yr in buybacks? About 8% of market cap.

As you say earnings have increased dramatically over 2 decades yet market price of equity has not marched at the same pace. Is there a structural reason to believe that the next 2 decades will be any different? My own "guess" is that at some point BRK will use the mega surplus cash to buy back stock and this will be a driver for the market price. Waiting for an opportunity to deploy the cash motherload has been a reasonable strategy. However, it can't go on for decades - hopefully.

I agree. When I started watching it I was thinking that there was a 80% chance it was going to be stupid and I wouldn't get through 2 episodes. I'm glad I gave it a chance, it was a pretty good show. Like groundhog day only darker with a better story. Watched Russian Doll - it draws you in - but what the hell happened at the end? Didn't understand how they got out of the death spiral. Thought the ending was a let down.

Parsad, as a conclusion to this thread, could you please summarize a few key points you now know about FFH future that you didn't appreciate before the trip. FFH returns have been flat for past 4 years. During the 10 year bull market FFH has not quite achieved 2x (Price in Feb 2009 was approx C$350 vs. $640 today). Returns not terrible, but expectation of Prem, the insurance business, equity and bond allocation were higher. After this trip are you more convinced than ever that long term FFH investors are in good hands and that the future is likely brighter than the past? Thanks,

Viking, Given all the positive sentiment you have outlined so well, I'm surprised to see the last line where you would sell BRK after a moment up of only 5-7% and then time the next dip to buy on. Since the post on Jan 17th, BRK is up 5%, so are you a seller at today's price - $209 ? Here are my guesses for BRK underperformance YTD: 1.) AAPL and financials big price decline in Q4 and upcoming substantial hit to Berkshire BV when year end results are reported in Feb. Headline will be ugly. 2.) AAPL profit warning (caused immediate decline in BRK) and concern about AAPL results going forward and potential impact on Berkshire BV. 3.) flight to safety reversing: as thepupil mentioned, BRK dramatically outperformed in the Dec panic, and now it is underperforming as investors shift to riskier stocks. The good news: 1.) since the start of the year, financials are on fire and we all know they are twice the size of AAPL in the BRK portfolio. 2.) AAPL, re-priced in the portfolio at $155, is now cheapish. It could go a little lower but the big decline is behind us. At some point in the next year or two Apple will launch a must have phone and when they do sales and profit will hit new records and the company will be valued over a billion $. At $155 this is a great long term hold for BRK. Having said that, i do think 2019 could be a very difficult year for Apple. China may be a big problem, and may persist for a year or two. And the current lineup of iPhone’s looks uninspiring with the result that people will hold on to their current phone a little longer on average (which will impact unit sales and profits. Fortunately, Apple does have a pretty good track record of recognizing mistakes with the iPhone lineup and making the proper course corrections the following year. 3.) at the end of Q3 BRK had $100 billion in cash. BRK bought $25 billion in stocks in Q3. With the decline in stocks in Q4 i would expect more than $25 billion in new stock purchases in Q4. Perhaps big additions to APPL, JPM etc. If so, this will meaningfully increase earnings power of company. 4.) BRK buying back its own stock: I expect more commentary from Buffett about this in this years annual letter. Given the size of APPL and financials, and the investment portfolio in general, we could see large swings in BV from quarter to quarter. Buffett has his own idea of intrinsic value of BRK and it obviously doesnot swing so dramatically quarter to quarter. Perhaps we will see BRK buy back its own stock at 1.4x BV when it feels the stock portfolio is being undervalued by Mr Market (resulting in BV being understated). 5.) as the US banks have communicated, the US consumer and economy continues to perform well. We can expect the Berkshire op co’s to report very strong results. 6.) tax reform: BRK was one of the big winners and the benefits of tax reform will continue into future years. The stock price today is trading close to where it was trading in Nov of 2017 when tax reform was being discussed. Bottom line is it does not look to me like Mr Market Is valuing Berkshire higher even though its future after tax earnings will be much higher as a result of tax reform. 7.) long term bond yields look like they have peaked and may be headed lower. All things being equal this will allow for a higher PE to be attached to stocks (in general). 8.) as volatility returns to the market, Mr Market may start to value ‘stalwart’ (bond like) stocks like BRK a little higher. 9.) insider buying: $20 million purchase by Jain in Dec likely around $192 is encouraging. BRK looks attractively priced at current levels. I buy it in place of holding a bond. When it runs up 5-7% i am happy to sell. Rinse and repeat.

Agree Liberty. The FS podcasts are always so good. They would resonate with audience on this board. The FS podcast with Adam Robinson was particularly relevant to investing and value investing - posted this link on the thread in General Discussion about "why I've left value investing". https://fs.blog/adam-robinson-pt1/ What are some of your favourite Farnam Street podcasts? Mine include ones with Angel Philosopher Naval Ravikant, Adam Robinson, Atul Gawande, Barbara Oakley on Education and Barbara Coloroso on parenting.