Intrinsic Value and Margin of Safety (First Eagle Funds - Abhay Deshpande)

"Looking at the subject of long term investing, people are a little upset that buy and hold hasn't worked for the last ten years. If you bought in 1999, your annualized return is at approximately minus 2% for ten years. But the buy and hold approach over the long term is wholly dependent on the price that you pay for something. If you bought Cisco at 100 times earnings in 1999, over the long term, you will lose money. If you bought 3M at eight times earnings, with a 4% dividend yield over ten years, there's a high degree of likelihood that you'll make money over the long term. But it all depends on what you pay. Buy and hold is not dead."

Longleaf Partners Annual Letter to Shareholders 2009

"A macro oriented investor could have logically decided on January 1, 2009 (or in March when stocks were meaningfully lower) that with the horrible global economy, the teetering banking systems across multiple countries, and the extremely weak stock markets, it was a good time to sit on the sidelines until some economic clarity emerged. By contrast, an intrinsic value investor who focused on the free cash flow that certain well-run, competitively advantaged companies generated – even in a severe recession – would have purchased those cash flow streams at incredibly low multiples, i.e. high cash flow yields. Those who chose the macro route and parked in cash missed what was the best purchase point for equities in our lifetime and earned virtually nothing on their liquidity."

"The collective quality and strength of the businesses we own is unprecedented. Our management partners have delivered their companies through the worst of times and positioned them as stronger competitors. P/V’s are near or below the long-term average from which we have compounded successfully. Not only are the Funds quantitatively attractive, but the “V’s”, or appraisals are extremely conservative and probably understated. The returns of 2009 reflected excessively cheap prices moving to more normal discounts. None of the last twelve months’ return was generated by value growth. Going forward our businesses are capable of double-digit value growth given the anemic operating results in 2009 as their base. Any cyclical economic recovery will amplify this growth. The foundation for the next five years is in place to not only protect our partners’ capital, but earn better-than-adequate returns."

Bill Ackman (CNBC --- Video Interview)

Bill Ackman talks about some of his portfolio activity and his take on the economy.




“We own businesses that are extremely economically resilient…they’ll be affected by the economy and won’t do as well if the economy doesn’t do well…but if you pay the right price you can still be a very successful investor even if the economy is not as strong as people expect…so we’re not macro investors at all, but I’m more bullish than most on the economy.”

David Winters (WealthTrack -- Video Interview)

"...you know the other thing is that because of this crash that we've been through, you can buy quality. And what we've tried to do is not go for the short-term trade, you know, Buffett's called it the cigar butt. that you pick up the smoked cigar butt off the street but rather let's get something fabulous that we can own for years and will be a compound money machine."

"...we live here and we earn, generally, our money in dollars, and the thing to do is to hedge your bets, and that's the idea of really what the original hedge fund was. It doesn't mean you can always make money but like Nestle, you're making money in streams of income around the world and that's what Schindler is doing. That's what Richemont is doing, that's what Jardine, more or less, is doing. And that's what we think makes a lot of sense for individuals to do today, and to also realize that you've got to be a buyer when people are panicked and you have got to think long-term, and unfortunately, that is not what people are encouraged to do, and that's how you get rich. The richest people in the world, that's what they do."

Bruce Berkowitz -- Top 5 Holdings (Video)

“There may be frost here and there, but the markets are thawing out and we have some wonderful companies in the portfolio that remain quite cheap in relationship to the cash that they generate for their owners.”


*The author has a position in The Fairholme Fund (FAIRX). This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.

Mark Boyar -- "Deja Vu All Over Again"

"The markets also look similar to ’stagflation’ markets during his start-up. The indices went nowhere until 1982, but below the surface there were great stock buys. It was a stock-picker’s market, and he thinks we are in for more of the same. Like in 1975, Boyar looks at the uncertainty and confusion in today’s markets, and sees opportunity." (Mark Boyar)


"The past few years have been a different story for us. At  the end of 1975 our insurance subsidiaries held common equities  with a market value exactly equal to cost of $39.3 million. At  the end of 1978 this position had been increased to equities (including a convertible preferred) with a cost of $129.1 million  and a market value of $216.5 million. During the intervening  three years we also had realized pre-tax gains from common  equities of approximately $24.7 million. Therefore, our overall  unrealized and realized pre-tax gains in equities for the three  year period came to approximately $112 million. During this same  interval the Dow-Jones Industrial Average declined from 852 to 805. It was a marvelous period for the value-oriented equity buyer." (Warren Buffet, 1978 Annual Letter)

Charlie Munger Musings (Video Interview)

Charlie Munger Musings