To capitalize on its deep discount to NAV, Exor employed a sophisticated reverse Dutch auction for share buybacks. This allowed the company to repurchase €1 billion in shares at the lowest prices offered by shareholders, maximizing value accretion.

When Carvana's stock fell 90%+, Thrive evaluated it like a private portfolio company undergoing a restructure, focusing on operational improvements instead of the daily stock price. This private-market framework allowed them to see progress where the public market saw failure, giving them the conviction to double their position at a fraction of the cost.

When investing in markets with potential governance hurdles, like regional Japan, the "deep value" principle is key. Purchasing assets at a fraction of book value creates a margin of safety. Even if activism takes longer or yields less, the low entry price can still generate an acceptable return while risking no capital.

Fairfax executed a brilliant capital allocation move by selling a 10% stake in its subsidiary, Odyssey, to pension funds for 1.7 times its book value. They then used the billion-dollar proceeds to buy back their own undervalued parent company stock, which was trading at a discount of 0.9x book value.

The decision to exit was driven by a change in the investment's risk/reward profile. A 25% increase in underlying aircraft values, combined with a stock price rally from 80p to ~150p, removed the initial deep-value margin of safety, prompting an exit even though the ultimate goal of a full company sale wasn't achieved.

When a company's stock trades at a significant discount to tangible assets, the market signals that every new dollar invested is immediately devalued. The correct capital allocation is returning capital to shareholders via buybacks or dividends, not pursuing growth projects that the market refuses to credit.

A tender offer, where a company buys a large block of its stock in a set price range, signals higher conviction than a typical buyback program. It forces management to put a stake in the ground, indicating they believe the shares are significantly undervalued at a specific price.

Contrary to Modern Portfolio Theory, which links higher returns to higher risk (volatility), Buffett's approach demonstrates an inverse relationship at the point of purchase. The greater the discount to a company's intrinsic value, the lower the risk of permanent loss and the higher the potential for returns. Risk and reward are not a trade-off but are both improved by a cheaper price.

Instead of complaining that its stock trades at a steep discount to its net asset value (NAV), Exor's management pragmatically views this as a chance to invest in themselves. They trimmed their highly appreciated Ferrari stake specifically to fund share buybacks at this significant discount.