Tag Archives: TAVF

Videos of Ray Dalio (Global Economics) and Amit Wadhwaney (International Investing) Update on VALUE VAULT

Thanks to www.greenbackd.com/

International Value Investing (TAVF)

[youtube http://www.youtube.com/watch?v=_VBGAeJ3eJM&w=560&h=315]

Read his transcript: Amit Wadhwaney TAVF Interview on International Value Investing

Ray Dalio of Bridgewater Associates on Global Economics

Ray Dalio on International Economics http://www.cfr.org/business-and-foreign-policy/conversation-ray-dalio-video/p28984

Thanks to a reader–Ray Dalio, founder and co-chief investment officer of Bridgewater Associates, L.P., discusses global economics.

This meeting is part of the Corporate Program’s CEO Speaker Series, which provides a forum for leading global CEOs to share their priorities and insights before a high-level audience of CFR members. The series aims to educate the CFR membership on the private sector’s important role in the policy debate by engaging the global business community’s top leadership.


Don’t panic if you are wondering what happened to the Value Vault. I moved the files. I will place the video files into separate folders and books into other folders. This should make for easier access and better organization. Though I go under the knife within two weeks, this will get done.  Thanks for your patience. An email will go out to all Value Vault key holders with updates.

Inflation, Price Controls and Rome; Tweedy Browne, TAVF

My last mention of the Roman Empire, http://wp.me/p1PgpH-vM.

The fall of the Roman Empire ushered in the Dark Ages (Wow! Now THAT is a bear market–an age of fear, despair, fiefdoms, and darkness)  http://en.wikipedia.org/wiki/Dark_Ages_(historiography)

If Only Edward Gibbon Could Have Read Mises

By Daniel J. Sanchez at www.mises.org

Monday, June 4th, 2012

Thanks to Ed Smith for pointing out this passage in the Decline of the Rome Wikipedia article:

Historian Michael Rostovtzeff and economist Ludwig von Mises both argued that unsound economic policies played a key role in the impoverishment and decay of the Roman Empire. According to them, by the 2nd century AD, the Roman Empire had developed a complex market economy in which trade was relatively free. Tariffs were low and laws controlling the prices of foodstuffs and other commodities had little impact because they did not fix the prices significantly below their market levels. After the 3rd century, however, debasement of the currency (i.e., the minting of coins with diminishing content of gold, silver, and bronze) led to inflation. The price control laws then resulted in prices that were significantly below their free-market equilibrium levels. It should, however, be noted that Constantine initiated a successful reform of the currency which was completed before the barbarian invasions of the 4th century, and that thereafter the currency remained sound everywhere that remained within the empire until at least the 11th century – at any rate for gold coins. According to Rostovtzeff and Mises, artificially low prices led to the scarcity of foodstuffs, particularly in cities, whose inhabitants depended on trade to obtain them. Despite laws passed to prevent migration from the cities to the countryside, urban areas gradually became depopulated and many Roman citizens abandoned their specialized trades to practice subsistence agriculture. This, coupled with increasingly oppressive and arbitrary taxation, led to a severe net decrease in trade, technical innovation, and the overall wealth of the Empire.[8]

The passage of Human Action in which Mises discusses the decline and fall of Rome was recently featured as a Mises Daily.

Tweedy Browne Annual Report:



Third Avenue Value Funds 2nd Qtr. Report: http://www.thirdave.com/ta/documents/reports/TAF%202Q%202012%20Shareholder%20Letters.pdf

Marty Whitman Comments on How TAVF Differs from Graham & Dodd

TAVF’s 4th Qtr. Letter to Shareholders

The letters from Marty Whitman of TAVF are worth the effort to read for buyers of non-franchise companies.


This is an interesting read on how Marty Whitman differs from the principles of Graham and Dodd (“G&D”). He says analysts at Third Avenue Value Fund (“TAVF”) think like owners, like private acquirers or like creditors, emphasizing elements of fundamental finance that differentiate TAVF from G&D.  For example, G&D emphasizes the importance of dividends for outside passive minority investors (“OPMI”). In contrast,  TAVF looks instead at the corporation optimizing its uses of cash. In general, corporate cash can be dispensed in three areas:

  1. Expand assets
  2. Reduce liabilities
  3. Distribute to equity owners
  •      Via dividends
  •      Via stock buybacks

There are comparative advantages and disadvantages for dividends and buybacks, which are never discussed by G&D because they only mention the stock buyback alternative as it relates to stock options for management.

There is no discussion by G&D of stock buybacks as a method of enhancing a common stock’s market price over the long run, giving management the flexibility to retain cash in troubled times, and also increasing the percentage ownership interest of each non-selling stockholder.

VALUATION lesson in fundamental finance:

GAAP recognizes three classifications on the right hand side of the balance sheet: liabilities; redeemable preferred stock; and net worth.

In economic fact, there are many liabilities that have an equity component. It is up to the analyst to decide what percentages of certain liabilities are close to equivalent to payables and what percentage are close to equivalent to net worth. Take the liability account, deferred income taxes payable, in a going concern. If the cash saved from deferring income taxes are invested in depreciable assets, the tax may never become payable.

However, the deferred tax payable account can never be worth as much as tax paid retained earnings (part of net worth) because the tax may someday become payable, especially if the company engages in resource conversion activity, such as being acquired in a change of control transaction. So, maybe there is as much as a 90% equity value in the deferred income tax accounts payable. On the other hand, deferred income taxes payable can never be as much of a liability as current accounts payable or interest bearing debt. Maybe, at the maximum, there is a 5% to 10% equity in the deferred tax payable account. GAAP is based on a rigid set of rules; it is no longer principles based. The appraisal of an account, such as deferred income taxes payable, is in the province of the users of financial statements, not the preparers of financial statements.

And another lesson:

Most OPMIs involved with common stock believe in substantively consolidating the company with its common stock owners. They believe they are buying General Electric (“GE”), not GE common stock. In fundamental finance, the company is a stand alone, separate and distinct from its shareholders, its management, its control group and its creditors. Essential for understanding the dynamics of many companies are not only consolidated financial statements but, also, how financial statements are consolidated. In many cases, it is important to know which liabilities of particular parents or subsidiaries are assumed or guaranteed by other companies which are part of a consolidation.

Try to read Marty’s letters and the other managers of Third Avenue Value Fund each quarter, especially if you like asset-based investments.