One of the more interesting revelations in Alice Schroeder’s biography of Warren Buffett, Snowball, is that the Oracle used coattail-riding as a strategy early in his career. For a notably independent thinker, this is surprising. Yet the book also reveals how often Buffett relied on friends and colleagues to collect information on his many investments. In a sense, Buffett had been coattail-riding since the very beginning, learning the craft from Ben Graham at Columbia University and studying his mentor’s every idea, the most successful outcome of which was GEICO.

In Schroeder’s chapter “Spaghetti Western,” Buffett is riding the coattails of Gurdon W. Wattles, who ran a closed-end investment company called Century Investors. Buffett explains:

“He did this chain thing where he would be buying stock in a company at a discount, which would be buying stock in another company at a discount, which would be buying stock in another company at a discount.

[…]

For ten or fifteen years I followed him. He was very Graham-like. Very Graham-like. Nobody paid any attention to him except me. He was sort of my model as to what I hoped to do for a while. It was so understandable and so obvious and such a sure way of making money. Although it didn’t make you huge money necessarily, you knew you were going to make money.

You don’t have to think of everything, you know. It was Isaac Newton who said I’ve seen a little more of the world than others because I stand on the shoulders of giants. There’s nothing wrong with standing on other people’s shoulders.”

Buffett eventually surpassed Wattles in making Russian doll-type investments, all of which ended under the umbrella of Berkshire Hathaway.

Nearly five thousand miles away across the Atlantic, the enigmatic Belgian billionaire Albert Frère has been doing something similar.

Born in the small Belgian town of Fontaine-l’Evêque on February 4, 1926, Frère came into a family of nail and chain merchants. At the age of four his father died of pneumonia, leaving his mother, Madeleine – then 44 years old and devoid of one eye – to take over the family business.

From these humble beginnings, Frère has built a fortune worth over three billion Euros by quietly buying and selling stakes in European companies. His background and the corporate history of his holdings are extremely colorful, and have been chronicled well in a recent Bloomberg profile and a New York Times article. If you read French, you can also try his biography.

At the sprightly age of 83 today, Frère still heads or controls at least three publicly traded investment vehicles: Groupe Bruxelles Lambert (GBL), Pargesa Holding S. A. and Compagnie Nationale à Portefeuille S. A. (CNP). All three have holdings in common, with CNP having the most diverse set of assets. GBL and Pargesa, however, tend to trade at wider discounts to NAV and have very easily ascertainable values, given that their holdings are a handful of publicly traded European stocks.

There is probably no easy explanation for why the web interlocking these and other companies is so complicated, much the same way Wattles’s Century Investors or Buffett’s Blue Chip Stamps came to be after years of deal making. But if you were yearning to find a modern example of the complex holding structure reminiscent of the diagram in Snowball’s pages 412-413, just take a look at page 2 of this PDF on GBL’s website.

Pargesa is particularly easy to understand, however. It holds stakes in six public European companies and publishes NAVs weekly on its website (there are really seven holdings but the seventh, Iberdrola, is so small as to be immaterial). Pargesa’s shares trade on the Swiss Stock Exchange and are quoted in Swiss Francs. If you would like more details on the six main holdings, which range from oil and gas exploration and production to a worldwide leader in the spirits business, you may want to look at GBL’s latest annual report.

On Pargesa’s website you’ll find that the shares sell at a 20% discount to NAV. But knowing this is probably not enough. A disciplined investor will want to know what multiple of free cash flow he’s paying for the underlying businesses.

Here’s a recent diagram of Pargesa’s shareholdings:

Notice how the economic interest Pargesa holds in each company is multiplied by 50% in each case, because of its ownership of half of GBL (with the exception of Imerys).

Using conservative estimates of free cash flow for each of the six holdings, I arrived at a consolidated estimate – in Swiss Francs – of about CHF 8.6 per Pargesa share. Given that they currently trade for about CHF 70.75, the shares are available for just about 8.2x free cash flow. If you believe that a 10% discount rate is an appropriate indifference level between today’s and tomorrow’s cash flows, a multiple of 8.2x implies a perpetual decline of 2.2%. Given the quality of the businesses Frère has invested in, this is unlikely.

Keep in mind the risks: many of the holdings are companies that currently have a lot of debt. Lafarge and Pernod Ricard – both particularly debt-laden – have just issued rights offerings. This is when a company offers its shareholders the right to increase their stake in the business, usually at a discount to the current market price of the shares. This issuance of stock dilutes a shareholder’s ownership by increasing the number of shares outstanding, unless that shareholder participates fully in the rights offering. GBL, being a large shareholder of both Lafarge and Pernod Ricard, bought all the shares to which it had rights, thereby maintaining its economic interest intact.

Like every great investor, Frère has also made mistakes. But this is a good opportunity to ride the coattails of a savvy operator and pay nothing for the privilege.

Marcelo P. Lima is a securities analyst. He may be reached at MPL4@cornell.edu