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Far Horizon

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  • Investors Are Falling For Indonesia Again [View article]
    Thanks for the great article. I agree with you on several points. Having been in the riots in Jakarta myself I have been negative on the ability of any Indonesian politician to break away from the past of Corruption and nepotism. I was in Jakarta three times last year alone, and the impact of Jokowi is really different.
    I published an article last week in response to his candidacy being formalised, which draws a more positive conclusion than you. China exposure is there, but the rate of domestic consumption in Indonesia is a game changer for me in the long run. I agree that at its current pe, Indonesia is priced for growth, but also feel certain that with the positive demographics, and fast growing regional centres, we will see that growth materialise.
    Mar 24 05:01 AM | Likes Like |Link to Comment
  • Great Dividend Growth Stocks From United Kingdom [View article]
    I agree with the comments that perhaps the UK itself has seen its best growth days, but also the authors observation around the overall quality of the management and governance of some UK firms. I like the pricing of quality LSE firms compared to NYSE listings. For quality management, good governance, growth, and dividends at a good price, check out LSE stocks with EM exposures - I especially like HSBC and PRU, and am long both.
    Just an aside on Admiral - its capital model is hugely dependent on reinsurance - vulnerable to external market influences.
    Jan 20 11:59 PM | Likes Like |Link to Comment
  • Markel: Baby Berkshire Is On Sale [View article]
    What I miss in this analysis and commentary is an evaluation of what Markel are doing on the insurance side of their business. Valuation based on " float " upside needs to be tempered with a downside analysis of the insurance liabilities. I attempted to explain the key drivers in this article http://seekingalpha.co...

    Here you can see that a sub 100% combined ratio in itself doesn't guarantee future. "Free float". I would like to see more insights ino how Markel are meaning their core underwriting activities.
    Nov 5 08:08 AM | Likes Like |Link to Comment
  • Malaysia: Is Recent Economic Growth Worth The Cost? [View article]
    Being a little bearish on Malaysia until it resolves the political issues, I haven't spent much time looking at individual stocks. I would start by looking at the sectors in which Malaysia has a competitive edge, and then well managed players who are doing well with a low reliance on subsidies and govt contracts. Personally I would avoid financials and consumer discretionary stocks and look to the higher tech export oriented manufacturing sector.
    Jun 6 09:27 PM | Likes Like |Link to Comment
  • Japanese Prime Minister Shinzo Abe has unveiled the "third arrow" of his grand plan to pull his country's economy out of deflation. Th arrow itself comprises three "pillars:" improving productivity in the private sector, labor reform, and developing new markets. As expected, the government will allow Japan's massive public pension funds to buy more stocks, with the program also including the creation of special economic zones, free-trade agreements, privatization, and power-market reform. The hope is to raise average income by 3%, above the two-year inflation target of 2%. [View news story]
    Does this have the words 'irony' and 'mirror'?
    Jun 5 09:27 AM | Likes Like |Link to Comment
  • Japanese Prime Minister Shinzo Abe has unveiled the "third arrow" of his grand plan to pull his country's economy out of deflation. Th arrow itself comprises three "pillars:" improving productivity in the private sector, labor reform, and developing new markets. As expected, the government will allow Japan's massive public pension funds to buy more stocks, with the program also including the creation of special economic zones, free-trade agreements, privatization, and power-market reform. The hope is to raise average income by 3%, above the two-year inflation target of 2%. [View news story]
    Xenophobia? Can you define that for me please?
    Jun 5 08:12 AM | Likes Like |Link to Comment
  • Japan GDP Q1: +3.5% (annualized) vs. 2.7% expected. [View news story]
    Very quick impact on GDP if this is Abenomics inspired. It will be interesting to see if the Q2 figures continue to support this trend. Tsunami reconstruction is just picking up steam and this might also distort the underlying growth.
    May 16 06:29 AM | Likes Like |Link to Comment
  • Berkshire Hathaway Intrinsic Value Pie Chart [View article]
    Interesting analysis Eric - and I do support your overall conclusions. I do think that it is dangerous to assume that 'float' is overstated, as the P&C insurance business is highly cyclical, and the current cycle is downward, a slope compounded by low yields. BH as I explored in a recent article, http://seekingalpha.co...
    - are taking a much more aggressive market position, and this could reduce the accounting inefficiency of insurance liabilities running off better than reserved.
    It is easy to look at float as an asset, but all it is is the underwriters best estimate of the cost of future claims.
    May 13 08:33 AM | Likes Like |Link to Comment
  • Reinsurance Update: Interim 2013 Q1 Earnings Comparisons [View article]
    Very interesting Steve. I wonder how clean a perspective on profitability combined ratio is for a hedged portfolio - which I assume is how alphacat operates. For example, does Validus provide a wrap for the reinstatement of the upfront cat contract, or run other basis risk that increases the volatility of the retained exposure - ultimately requiring a lower combined ratio to generate the same economic outcome?
    Apr 30 05:15 AM | Likes Like |Link to Comment
  • Indonesia: Share The Wealth [View article]
    Thanks Dwi - yes the p/e multiple is 15, not 15%, as a multiple I agree the correct format is 15. If I was being pedantic, I would point out that a ratio has to have two components, so the p/e ratio is 15:1. The earnings to price ratio could be a percentage (6.6%) being the reciprocal of 15:1, or the p/e ratio could be 1500% - luckily I don't feel pedantic today as I did make a typo....... Salamat Pagi !
    Apr 11 07:04 PM | Likes Like |Link to Comment
  • Berkshire Hathaway's Insurance Businesses - Float Or Sink? [View article]
    Thanks for the feedback. To reiterate, I am long BH because I do see the value in the model, and of the management. The stimulus for the article was that I observe a significant shift in underwriting strategy for BH that has emerged over recent months. This shift has coincided with the reduction in bond yields, which are now, in US generating negative real returns, as Buffett himself has observed.
    BH seem to be shortening their underwriting risk duration, which means writing more catastrophe business (such as the deals in Asia) and writing broader portfolios (less focused on rigid risk selection, such as the Aon and Marsh deals.) These latter deals are more like selecting a sector and buying an Etf than trying to pick the best individual stocks in the sector.
    My assertion is that this shift in strategy is driven by the need to generate liquidity to replace the lost bond returns.
    I accept that BH are not solely invested in T bills (see the split mentioned in my article) but use the 10 year Treasuries to highlight the yield reduction - expecting similar basis point drops from a higher base in other bond classes. The net impact on investment yields should be consistent.
    I do agree that the BH team has had a consistent 30 year track record, but over this time the yield environment has not moved so sharply against them.
    This seems to be one explanation for the observable shift in underwriting strategy. I do not think that they are doing anything ill considered, but do think that there is a short term shift up risk, and that the impact of this will be likely to lower their market combined ratio outperformance.
    Mar 23 11:30 PM | Likes Like |Link to Comment
  • The Insurance Insight By Warren Buffett [View article]
    Paolo, Mr. B has indeed put his finger on a tricky issue, but one that impacts companies in the sector very differently depending on their business mix. This is explored in some detail in this article http://seekingalpha.co.... I plan to publish some analysis on the BRK.B insurance businesses in the next few days.
    Mar 9 11:49 PM | Likes Like |Link to Comment
  • Thailand: Taking A Stake In A Changing Economy [View article]
    Earnings are out, and I will include an update in a follow up article to this.
    Mar 2 11:39 PM | Likes Like |Link to Comment
  • Thailand: Taking A Stake In A Changing Economy [View article]
    I think next will look at Indonesia, or Malaysia, but Philippines will follow. For now there are so many questions on this article I will follow up on Thailand.
    Mar 2 11:39 PM | Likes Like |Link to Comment
  • Thailand: Taking A Stake In A Changing Economy [View article]
    Thanks for the suggestion - I am writing a follow up and will include TTF.
    Mar 2 11:33 PM | Likes Like |Link to Comment
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