Archive for October, 2008
UPDATE – Liquidation value Banking Index: 110.11 Capital 55.05
Liquidation value Top of the Shorts Index: 139.17 Capital 34.79
Inception Capital to be employed in the new Index: 89.84
At today close we’ll sell all our holdings in the Banking and Top of the Shorts Indexes, and they will not be anymore part of the Total Invested Capital. In this incredible time, which will be remembered as the time when the markets ceased to work, I think the best thing is to take profit where we have.
The revenues of these sales, 15% (base) of the Total Invested Capital (the actual reading will be known after the close) will be deployed entirely buying businesses that the current craziness in the market has discounted in a way to create the most compelling value in the sector; never they have been so cheap, never they have yielded so much, and their operations are as essential as always. They will form a new Index, whose composition you’ll know later or tomorrow. I anticipate it will have just 5-6 holdings and almost no turnover for the next few years.
I’m sure this move will add stability to the Total Invested Capital, and in time it will provide steady returns. It will also make simpler our structure, and some banks or shorts can still find their way in the portfolio, through the Currency or the Insurance Indexes.
For the rest, I hope you have a lot of patience. It will be a long way to the recovery. When you meet the worst financial catastrophe ever seen, there’s no shelter that can save you, no matter how good you did it.