OID: Where are you finding bargains today?
   Cundill: Well, our biggest country today is France. And our biggest position is Paribas [PM.PA/Fr].

OID: At your annual meeting, you suggested that Paribas was still dirt cheap.
   Cundill: According to two analysts, the adjusted book is around FF525-550 per share.
   Tim McElvaine: And that's just the sum of the parts -- the securities marked to market. It's not any attempt to value the business by estimating earnings and giving it an appropriate multiple or anything of the sort.

OID: And you think those estimates are reasonable?
   Cundill: We do.

OID: Do you still find it compelling today?
   McElvaine: Well, our average cost is about FF270. However, we have paid as much as FF315 per share. And we actually bought some earlier this week.
   Cundill: In fact, we're buying it right now at FF300.

OID: That sounds like a yes to me.
   Cundill: There's still a very good margin of safety.

OID: I assumed that the opportunity in France came and went with the riots and the elections -- although I gather from your annual meeting comments that it's actually even come down a bit lately.
   Cundill: A little. The French market has been something of a paradox. French industrial shares -- the normal concerns -- have really been quite strong. So we haven't focused on those. The weakness has been in the French banking sector and in the holding companies.

OID: For good reasons or bad?
   Cundill: I think they're unpopular for several reasons: First, Credit Lyonnais got into trouble. Second, the banking industry generally is very competitive. And, third, it's very difficult for virtually any company -- in most of Continental Europe, at least -- to cut costs because of rather draconian labor laws.

OID: Not altogether bad reasons.
   Cundill: Maybe not -- at least today. However, these holding companies are extremely interesting. A lot of French organizations are run through what I call cascading holding companies whereby one owns 51% of another which owns 51% of another, etc.
   And, actually, these holding companies traditionally sold at discounts to net asset value -- with the discounts typically ranging from 20% to 50%. Therefore, people say, "Your upside is limited." But that's fine.

OID: Because you're already rich?
   Cundill: The upside may not be as limited as they think. One of the things that's happening in France -- and, to a certain extent, elsewhere in Europe (although, admittedly, it's a very uneven process) -- is that corporate governance is coming to town.

OID: Exactly what Chris Browne tells us.
   Cundill: And it's coming from a number of fronts. For example, Calpers is making their views known, although I'm not sure how effective they've been thus far. But they're there. And an increasing number of institutional shareholders -- including us -- have been raising their hands and saying that maybe merger terms or some such are out of whack.

OID: Chris Browne says Tweedy is virtually becoming the Michael Price or Alan Kahn of Italy.
   Cundill: We haven't gotten very far yet. It's still a pretty club-like environment in most of those markets. However, the North American practice of listening to shareholder groups is beginning.

OID: So that maybe they'll even begin to factor shareholder interests into the equation?
   Cundill: Exactly.

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