I here below talk about what I’ve done lately. I address it like a mail because it’s based on what I just sent to a fellow investor friend from Germany:
Thanks, I’m doing quite fine. I’m building a house in the woods just out of town. I’m quite entertained and busy doing that. I lately do not feel like dedicating all day to investing. Therefore I seized the chance to invest in building a country house for me and my family. I dedicate some hours to that, at least to supervise the construction. It has been a very valuable experience and I’m enjoying it a lot. It is also a great physical exercise. We have had to shape the natural surroundings in order to adapt the house to the wild topography. I am more and more sure that the final result will be very nice. If you want to come, or know anyone who does, and help build it you’re invited to stay in my house. It’s hard work but it will let you be in one of the most beautiful natural places on earth and we might have fun talking about investing.
Besides that I’ve been reading several books, lots about human action and economy. The most interesting ones about Ludwig Von Mises. I also read some other good books, from David Einhorn and Roger Lowenstein. I even found an interesting one about Buffett’s sister (Giving it all away).
I here send you Buffett’s partnership shareholder letters. It’s another very interesting compilation book I have read lately. You could say that it’s about portfolio tactics. I would indeed classify those letters as giving a big insight into learning tactical portfolio management. You learn a lot about that subject by reading them, just by seeing how Buffett acted back then. But its also teaches much more than that. I’ve learned a lot more with them than with the “modern” ones. You see very clearly how he managed his portfolios in the early days and I find it much instructive for little guys like us. He had quite a fast turnover and talks very personally about his investing philosophy and portfolio management techniques. In those days he seemed to buy and sell a lot. He concentrated more than anything in cheapness and was deeply value oriented. His strategy was to find and buy undervalued companies and sell them when the undervaluation corrected. He also sold fast if he needed money for a better idea. It is interesting to contrast this early strategy with how his portfolio management evolved. In his more mature phase he would concentrate more on great companies, as opposed to undervalued companies. Therefore he would not be too eager to sell just because the undervaluation corrected. He evolved to mainly focus on outstanding businesses. As he grew older it seems that he got more comfortable with the idea that great companies at a fair prices are great investments.
The value to us is that we can learn a lot from what he did back then, it’s more akin to our reality and portfolio size. I also realized that he addressed his partners at a higher intellectual level back then than how he addresses his shareholders now which is one more reason to learn from those letters. Those early letter have been one of the most, or the most, practical investment learning sources that I’ve ever read about. It gives a lot of insight into practical portfolio management tactics.
Thanks for you analysis about Tesco taking into account that Asian competitor DF. It’s a very interesting observation to see how undervalued Tesco ex/Asia would be if you value it’s Asian operations based on its Asian competitors. Then again the apparent cheapness might be inflated if you consider that there are some serious bubbles in some parts of Asia, specifically in retailers. There are indeed probably some serious market inefficiencies world wide.
I have hardly written in the blog because I have more than anything been busy reading. I have not felt the urge to write. This year I have just bought a Spanish train builder (CAF), both for me as well as some family members. I also sold out a small position (XHB). I could write a lot about why I liked that Spanish company but I felt too lazy to do it and invested my time instead in studying it more. My time is split between reading books / building a house / and following my companies, also reading a bit about new ones.
The only company that interests me a bit more now is NOV aka “No Other Vendor”, all the rest I’ve seen does not seem attractive enough. So meanwhile I keep observing, studying and having fun.
Best wishes to you and S.