Amazes me how many people misunderstand the value proposition here. Good news is that there is a small proportion of people who do – and they seek me out… Only about 5 people in the world who run money this way. All of them are phenomenal people. Can introduce you some time.
Seen the book. Checklists: Washing hands – reduces infection rates.Aeroplanes. Works in investing too. Seek to find mistakes - & salient facts that existed at the time of the mistake. Seek to avoid
Why great partnerships work. Seek to find great partnerships. Put yourself in the company of the right people. Structure the conversation in the right way.
7. Investment Performance (As of September 2010 net of fees since inception – Sep 1997<br />Historical performance represents Aquamarine Fund, Inc. <br />
10. Performance Expectations<br /><ul><li>85% of mutual funds lag the S&P 500 Index after all fees and expenses. Just 0.5% of Mutual Funds beat the Indices by over 3%. (Source: Bogle)
11. My goal is to beat the three indices over the long haul. Beating all three indices is likely to put us in the top 10% of all US mutual funds and hedge funds.
12. I’m quite confident we willbeat the indices over the long haul. Not sure by how much</li></li></ul><li>Aquamarine Fund Value Proposition<br />Low / No management fees vs. 2/20 @ some funds<br />Spier family is the largest investor – we eat our own cooking<br />No performance fees until fund regains new highs<br />No leverage, No margin loans, No short positions, no complexity<br />
13. I only make money if you make money…<br />
14. Process Adjustments<br />
15. The model I like to sort of simplify the notion of what goes on in a market for common stocks is the pari-mutuel system at the racetrack. If you stop to think about it, a pari-mutuel system is a market. Everybody goes there and bets and the odds change based on what's bet. That's what happens in the stock market.<br /> - Charlie Munger<br />( Commencement Address to USC law school)<br />
19. Moody’s<br />
24. Cresud: Investment considerations at purchase<br /><ul><li>Argentina: Kirschner government introduces heavy levies on agricultural exports.
25. Agricultural and other commodities have plunged.
26. Eduardo Elztain: Controversial figure both in Argentina and in the US. - Aggressive with the company shareholders.
27. Financial crisis: Developed markets hit badly. Developing markets even worse.
28. Share price has plunged: $22 to below $5 in 8 months</li></li></ul><li>Cresud: Investment considerations at purchase<br />Market Cap <br />US$ 250 million<br />$ 50 million in s/t debt. No LT. Debt: <br />EV $300 million<br />IRSA stake.<br />$250 million. <br />(Intrinsic value much higher)<br />Arable Land<br />675 mm hectares arable farm land <br /> - 280 mm hectares producing land<br />Value in Argentina: U$$500 - 5,000 per hectare. Value in the USA – as high as $30,000 per hectare.<br /> $680 million @ $1,000 per hectare<br />
29. Go long what China is short<br /> - John Burbank, Passport Capital<br />
32. CresudS.p.a.<br />
33. Investment Considerations at Purchase<br /><ul><li>Fairfax Financial (PremWatsa) & Wilbur Ross - 20%
34. Approx annual sales: 17-19 mm tonnes (2.6mm met coal)
35. Cash margin per ton $10
36. Moderate production costs cost producer
37. Valuation: 6.5X Cash Margin (US$ 1 billion)
38. Substantial Reserves (1.1 billion tons. 320mm met coal.)</li></li></ul><li>?<br />
41. International Coal<br />Projected Met Sales for 2011 = 3.1-3.5 mmt<br />