More than anything I have been focusing my energy on building a house. Since I am doing most of it alone, including the bricks, it goes slow. I could hire help, specially here being quite cheap, but the enjoyment would be lost if I did it. That is a probable reason why I have been writing little. Another reason is because lately I prefer reading than writing.
I have also dedicated time to do some other things like follow some of the companies I have. I sold out recently a small investment in Ryan Airlines. Ryanair is an exceptionally well managed company but in a business that the more I learn about the more I get convinced that it’s bad. I am also not too fond on having small investments. I sold out while the profit was decent. I have finished increasing substantial positions on a Spanish train company called CAF. That’s the only investment I’ve done this year if I remember well. There are also a couple of new companies I have been reading about that seem quite interesting. One of them is National Oilwell Varco and the other is a Sweedish company called Sandvik. Sandvik is a supplier of machine tools, services, and construction materials for the mining and several other industries. It is widely diversified internationally in most of the markets I am interested about. It seems to be very well run, conservative, shareholder friendly and with a very sustainable future. National Oilwell Varco is a supplier for the Oil and Gas industry. It has acquired several companies and integrated them quite profitably. It’s market is also quite diversified, although not as much as Sandvik. It is focused on new non traditional drilling activities, which I think have a good future. It’s debt load is also quite reasonable. Both companies seem to be trading at reasonable prices, but of course if they get cheaper I would be even happier about investing in them.
I read some books. A very interesting classic book was “The Crowd – A Study of the Popular”, from Gustave Le Bon. It is a serious study on the behaviour of crowds. The book was referenced by Roger Lowenstein’s “Buffett The Making of an American Capitalist” and has also been more deeply referenced by Ludwig Van Mises. The book makes me further think that the more people that get involved in investing decisions the worse the results are. Not only does a crowd decision lead to mediocre results, I even tend to think more and more that the intelligence of a crowd is often quite worse than the average intelligence of its members and tends to the lowest of them. This helps me understand why sometimes very bright people acting together act worse than each of them separately. It also helps me understand why Warren Buffett, in its early partnership letters, said that the investment results obtained by groups of more than one member are often bad. Note that if you read French I recommend you reading the original, even though the English version seems well written.
Another interesting book, quite recent, was Ronald Chan’s “The Value Investors”. It’s not nearly as deep as the previous one. It’s interest lies in being kind of an interview to several successful investors. The ones that interested me quite much, besides Walter Schloss, who I already knew, were Francisco Parames, from Spain, sometimes referred as the Spanish Warren Buffett and Teng Ngiek Lian from Singapore. It was interesting to note that several of the investors read enormously, specially the centenary Irving Kahn, which by the way gave a very interesting interview. Kahn highlighted that, even though the classical value opportunities have changed, now there are as many opportunities in the investing world as before. There are much more securities and countries where to invest, and the amount of available information is much bigger. Another interesting point that impressed me quite much is that both Jean-Marie Eveillard, a french investor interviewed, and Francisco Parames were followers of the Austrian school of economics. I have noticed that several of the investors I admire follow that school, or think very similar to it, specially Charles Munger and Phil Carret. Carret was also a friend of Buffett and one of it’s relatively early investors. He is actually the one who introduced me to Von Mises and his thoughts.
Speaking of Von Mises, another great book I read was Ludwig Von Mises’ “Theory and History An Interpretation of Social and Economic Evolution”. An incredible underrated book, philosophical, practical and centered on human action. It shows how human acts and ideas shape history and economical evolution. A must read for any serious investor who wants to increase his analytical thinking.
A very interesting book about financial analysis I am currently reading is Martin S. Fridson’s “Financial Statement Analysis: A Practitioner’s Guide”. The book was referenced by one of the investors interviewed by Ronald Chan. It was a surprise to learn about it. It has nicely shaped and cemented some of my views about the nature of financial reporting and what can be extracted from it. It shows why it pays well to be quite skeptic and focus on human motivations when reading financial information.
I had unfortunately never found a woman investor whom I admired until I stumbled upon Hetty Green. I knew about Hetty Green since I was eight, but forgot completely about her for many years. The first time I read about her was in the Guinness Book of World records. Her record was being the greediest person ever. It is interesting to note that she was a Hathaway investor, even before it was merged with Berkshire or that Buffett entered into the scene. She was infamously remembered as the Witch of Wall Street. Besides her terrible reputation she is currently widely unknown and after reading about her I have shaped a completely different opinion than the rest. She seems to me an outstanding investor, better and sounder than many other much more famous. She survived the great depression with almost no scars and multiplied her fortune through a lifetime of very conservative investments. Holding cash and not leveraging was one of her characteristics, as well as never panicking when others did, buying cheap and selling dear. For those interested about her I recommend her biography written by Charles Slack.