Gustavo Ballvé on January 13th, 2015

Back in March 2014 we published our 4Q13 management report containing a special section discussing Proxy Advisory Firms. It was motivated by further research following a June 2013 post on called “Proxy Advisory firms: use with caution”. In the original post I highlighted “the dangers of “outsourcing research” – be it in Corporate Governance, people, financials, business models, competition, whatever – and the temptation of trying to systematize/quantify an investigation that is, by nature, subjective and case by case.” In the excerpt inside I addressed this part in detail but also mentioned “the fundamental choices we should make in terms of capital allocation (be it financial or human).” We can choose how we do our research, and we should choose wisely. For us the choice is clear.

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Gustavo Ballvé on December 30th, 2014

This LEX piece on sell-side research reflects several old, recurring and ever more vital themes I try to address at conflict of interests, incentive systems, the power of brands, halo effects and whatnots – and ultimately how hard it is to actually KNOW something when it is so hard to filter out the noise. All this is more evidence that trustworthy, independent analysis is growing in value by the second.

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Gustavo Ballvé on August 29th, 2013

It’s been a while since my last post and the explanation is simple: earnings season, a perfect occasion to test hypotheses and reconnect with contacts in the industries we cover – but also a perfect storm of incoming noise regarding companies we own (or would like to, at the right price). In any aspect, a huge but immensely rewarding time drain (I should say “investment”)! Farnam St. blog has just interviewed Michael Mauboussin and it’s a good read, especially because Shane Parrish asks about how Mauboussin developed into his current role and it’s an interesting story.

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Gustavo Ballvé on July 19th, 2013

I’ve thought about not writing to comment the latest bullish posts on “Brazil” by the otherwise interesting blog Reformed Broker. In one post, he argues that if he had a gun to his head to pick one market to be invested in for the next 10 years, with no option to get out before these 10 years are over, he would pick Brazil. In another post he shares “analysis” that shows how buying “Brazil” after 20% drops has had great “performance” in ages past. For the sake of foreigners seeking to know more about this, here are a few comments.

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Gustavo Ballvé on July 4th, 2013

Joseph Calhoun of Alhambra Capital in the US reminds us of the basics of Value Investing, in a quick post with some funny moments. Worth the read if only for the laugh. The follow-up regards Zynga, profiled here on Dec. 31st 2009. After that initial post I’ve come back to discuss the company before and after its IPO. I’ve also done the same with Groupon after a larger, initial post. Zynga has just followed the path of Groupon and the founder CEO has left the post after a collapse in share prices.

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Gustavo Ballvé on June 20th, 2013

These are very exciting times in Brazil – forget the protests and the soccer action, I’m talking about the current decline in Brazilian equity prices – somewhat selective, yes, but it is starting to generate interesting opportunities. In times like these we are always reminded of the power of Cash, that benevolent King, and this post about Seth Klarman’s 2010 letter has great tidbits on the subject. But I’d like to highlight a longer post called Don’t Panic.

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Gustavo Ballvé on June 7th, 2013

I’ve just read a Stanford paper on the decision-making process of Proxy Advisory firms such as ISS and Glass Lewis. I will write more in-depth about this in the future, but in summary this paper highlights the dangers of “outsourcing research” – be it in Corporate Governance, people, financials, business models, competition, whatever – and the temptation of trying to systematize/quantify an investigation that is, by nature, subjective and case by case. The paper itself falls into to some of these traps.

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Gustavo Ballvé on May 22nd, 2013

Two recent blog posts (and a funny chart) about the subject of portfolio management and cycles make for good, quick reading and a timeless warning: emotions and portfolio management don’t mix, and that’s easier said than done.

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Gustavo Ballvé on May 6th, 2013

An anonymous survey of 365 U.S. sell-side analysts confirmed many insights about that industry’s practices that should trouble the long-term, value-oriented investor (at least the ones who didn’t yet already know this). That said, it is wrong to generalize and say that all sell-side research is flawed and I explain why in the post. Ultimately, any knowledge that has not been directly earned by you, no matter the source, can’t be taken at face value.

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Gustavo Ballvé on May 3rd, 2013

As the date of the 2013 Berkshire Hathaway annual meeting approaches, here are four news pieces and interesting generalities about Berkshire – including the purchase of the 20% of Iscar the company didn’t own, articles on Doug Bass, the bear who will get to ask tough, unscripted questions at the meeting and more.

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