Author Topic: What would you guys buy TODAY? given 100% cash  (Read 17687 times)

giofranchi

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Re: What would you guys buy TODAY? given 100% cash
« Reply #30 on: December 08, 2012, 02:07:37 AM »
No one mentions BRK? I'd also buy BAC, some ECO, LUK/JEFF. Also for some foreign ones Nintendo, Aida Engineering in Tokyo. LRE London. BMW3 in Frankfort, EXOR in Milan.

I am curious about EXOR: could you elaborate a little bit? Is it just a matter of the meaningful discount to NAV it is trading at, or do you also really like what you see?
Thank you,

giofranchi
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ASTA

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Re: What would you guys buy TODAY? given 100% cash
« Reply #31 on: December 08, 2012, 03:27:49 AM »
Hello Gio,
Take a look at Bestinver's hedgefund and you can see that they have over 20% of their portfolio in Exor. And MOI had a interview of them explaining a bit of it.
I might buy it as well if it goes to 15 :D
Cheers,
ASTA

giofranchi

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Re: What would you guys buy TODAY? given 100% cash
« Reply #32 on: December 08, 2012, 03:52:14 AM »
Hello Gio,
Take a look at Bestinver's hedgefund and you can see that they have over 20% of their portfolio in Exor. And MOI had a interview of them explaining a bit of it.
I might buy it as well if it goes to 15 :D
Cheers,
ASTA

Thank you ASTA!
I know that Bestinver has a meaningful position in Exor. I will look for the interview on their website.
It seems you have already done your homework on Exor: can you tell me their track record on a 5, 10, and 15 years basis? I have checked very quickly, and all I could find was the increase in NAV during the past 3 years. Not enough for me! Also because the management team seems relatively new, and therefore unproved (Enrico Vellano became CFO in 2006, Alessandro Nasi became Vice President of Business Development of CNH in 2008, and Mario Bonaccorso joined Exor in 2007). If I cannot project earnings at least 5 years into the future, with some sort of confidence, I almost never invest. Even if the price looks very cheap.

giofranchi
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Packer16

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Re: What would you guys buy TODAY? given 100% cash
« Reply #33 on: December 08, 2012, 04:03:24 AM »
I would put some into core growing "jockey" firms such as FFH, JEF and MIL, some into cheap segments like TV broadcast TVL, NXST and GTN, O&G like SD, LUKOY and UPL, lease finance like AIQ, SSW, ATSG and FLY, financials like BAC.WT, LNC.WT and BPOP and RE like BAM and Wheelock.  This mix provides some diversity with a focus on value.

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frog03

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Re: What would you guys buy TODAY? given 100% cash
« Reply #34 on: December 08, 2012, 04:08:21 AM »
Some comments on Bestinver.

1)  They always compare their performance vs. index without dividends
2)  Once you include dividends, their hedge fund launched five years ago has not beaten the index
3)  The position reports are as of 6/30 on the fact sheet

So, the investment may be fine but a positive view by Bestinver is only a starting point...

giofranchi

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Re: What would you guys buy TODAY? given 100% cash
« Reply #35 on: December 08, 2012, 07:36:02 AM »
Hello ASTA!
Whoever invests and has real skin in the game knows that we are all dealing with uncertainty, because we are all dealing with the future, and nobody knows what the future might have in store for us! Right? So everyone’s view should be regarded and examined with the utmost respect. Arrogance doesn’t belong here! At least that’s my firm belief.
Furthermore, your portfolio makes perfect sense! And, if I should make a guess, I would say that it will perform very well!
Unfortunately, I have got a psychological restraint that doesn’t let me behave like a copycat investor 100%: I call it “the businessman negative bias towards what he doesn’t understand”. :(
I like to partner with Mr. Watsa, but I would never invest in RIM, just because Mr. Watsa did so. I like to partner with Mr. Einhorn, but I would never invest in GM, just because Mr. Einhorn did so. I like to partner with Mr. Malone, but I would never invest in Sirius, just because Mr. Malone did so. Etc.
Why? Because I think I can forecast with a sufficient degree of confidence what the annual return on my firm’s investment in FFH might be for the next 10 years. The same is true for GLRE and LMCA. On the contrary, I have no clue about RIM’s, GM’s, and Sirius’s long term future earnings. They are either beyond me (RIM and Sirius), or I know I have not done my homework (GM). Same thing applies to BAC: I understand and I truly believe that BAC is “statistically” very cheap, but I have not really done any due diligence on BAC, so I am psychologically frozen, and I cannot invest… It surely is a weakness of mine!
Thank you for the link to the interview about Exor.
And I hope you don’t mind me having answered to your message publicly. You should write more frequently on the board! ;)
Best regards,

giofranchi
« Last Edit: December 08, 2012, 07:37:47 AM by giofranchi »
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Hielko

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Re: What would you guys buy TODAY? given 100% cash
« Reply #36 on: December 08, 2012, 07:51:25 AM »
If you give me 100% cash I would probably replicate my current portfolio mostly, but to throw some names on this board that I really like, and aren't mentioned so far:

- TLI.L (Traded life interests. Almost no market correlation, yet offering a 10%~20% IRR)
- ASFI (~Market cap in cash. Strong positive cash flow and buying back a lot of shares)
- DSWL (Chinese manufacturer. Also market cap in cash, long history of paying dividends and profitable)

Packer16

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Re: What would you guys buy TODAY? given 100% cash
« Reply #37 on: December 08, 2012, 10:25:47 AM »
I would be very careful with life settlement investments.  They are just about impossible to evaluate from the "outside" and there have been a few blow-ups and historical returns have been less than 8% with alot of unknowable risks (like extension of life expectancy due to better technology, changes in mortality tables that occurred a few years ago).  They are very sensitive to life expectancy as you are paying policy premiums while the insured is alive.  In addition, in few states some of these policies have been ruled void as the insured has no beneficial interest.  The IRRs are based upon a mark to model value that can and has changed very quickly over time.

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Hielko

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Re: What would you guys buy TODAY? given 100% cash
« Reply #38 on: December 08, 2012, 11:21:48 AM »
I know. Think that's probably why the opportunity is there in the first place. The case for TLI:

- No debt (rights offering completed last month): collections > premium payments past 4 years
- Average age insured: 89 years (LE ~4.7 years, and most LE's have been reassessed recently)
- Higher age => LE more certain (LE's for people aged 89 are actually not really improving)
- You can easily add 1 or 2 years to the average LE (that's HUGE at that age) and still get excellent returns
- Successful history of collecting (and selling) policies
- Fund is liquidating: no risk of management doing something stupid with your money
- No correlation between the cash flows from policy maturities and the market is a huge plus

txitxo

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Re: What would you guys buy TODAY? given 100% cash
« Reply #39 on: December 08, 2012, 12:53:37 PM »
Some comments on Bestinver.

1)  They always compare their performance vs. index without dividends
2)  Once you include dividends, their hedge fund launched five years ago has not beaten the index
3)  The position reports are as of 6/30 on the fact sheet

So, the investment may be fine but a positive view by Bestinver is only a starting point...

 Bestinver has a long term track record which is almost unmatched in Europe, they are classical, hard-core value investors, but I would certainly not invest in their hedge fund. They have a perverse incentive structure, they get paid 50% of their overperformance over Bestinfond (which is their flagship fund). That means that since BHF has much fewer positions than Bestinfond they can make money purely out of the higher volatility or by making Bestinfond underperform. The hedge fund has a high-water mark, but only for 3 years. There is not reason whatsoever to assume that these guys will not do their best to perform as well as possible with both funds, but following Charlie Munger,  I never bet against the power of incentives. In fact I am pulling my money out of Bestinfond and putting it into Bestinver International (which is only a palliative because both funds have a significant overlap). I am keeping a eye on them and I may pull out my money in the future if I see anything I don't like.

  García Paramés, who is the manager responsible for the overperformance of the first 15 years, had an near-death experience in 2006, barely surviving a plane crash, and right afterwards he instituted the new system, with two additional managers and a hedge fund. He may have decided it was time to smell the roses and it is still not clear whether the new, expanded team can match the historical results.

 Regarding the thread theme, my recommendations would be:

- FFH (as a safe store of value in NA)
- Any good value fund or basket of cheap stocks concentrated on the Eurozone.

   Run like hell from Australia and Canada (the expensive crap indicator goes crazy for them), keep out of the US and UK (same danger levels as in 2000 and 2007). The Eurozone is safe, and the best world market should be Japan, but when stocks go up there the yen will sink (or viceversa) so tread with care.

  If I am right in my "predictions", there will be a big crash in the NA stock market in the next 1-2 years, perhaps getting us close to the secular lows that we haven't seen yet. If I am wrong, and the sky doesn't fall after all, FFH bought at close to BV is a very nice long term investment, same as  Eurozone stocks at the current levels.