Wednesday, June 14, 2017

Market Folly's Summer Reading List

If you've got a vacation / holiday coming up and need some reading material, here are some recommended books on investing, hedge funds, business, decision making, and life in general.  Some are newer books, others are classics you might have missed and should catch up on.

Have any other suggestions?  Hit the comments below.  Enjoy!

2017 Summer Reading List

  Black Edge: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street by Sheelah Kolhatkar.  If you're looking for a financial thriller centered around the hedge fund world, this is it.

  Competition Demystified: A Radically Simplified Approach to Business Strategy by Bruce Greenwald and Judd Kahn.  Classic text on important concepts. 

  Narrative and Numbers: The Value of Stories in Business by Aswath Damodaran.  New book from the NYU Stern Professor. 

  The Master Switch: The Rise and Fall of Information Empires by Tim Wu.  Relevant read in this day and age. 

  Shoe Dog: A Memoir by the Creator of Nike by Phil Knight.  Recommended by Warren Buffett recently.  

  The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance by Ron Chernow. Biography that's been recommended by many.   

  Option B: Facing Adversity, Building Resilience, and Finding Joy by Sheryl Sandberg and Adam Grant.  New book from the Facebook COO and the Wharton professor.  

  Essentialism: The Disciplined Pursuit of Less by Greg McKeown.  Learn how to stop being busy and start being productive.

Tuesday, June 13, 2017

Senator Investment Group Shows Spirit Realty Capital Stake

Alex Klabin and Doug Silverman's hedge fund firm Senator Investment Group has filed a 13G with the SEC regarding shares of Spirit Realty Capital (SRC). 

Per the filing, Senator now owns a 7.23% ownership stake in SRC with 35 million shares.  This is a newly disclosed equity position and the filing was made due to activity on June 1st, 2017.  In late April, shares traded from $10.44 down to a low of $6.71 in May and now trade around $7.70.

Per the company's website, Spirit Realty Capital is "one of the largest publicly traded triple net-lease real estate investment trusts (REITs) in the United States."

Carl Icahn Enters Forward Purchase Contracts on Herc Holdings, Adds to Freeport McMoRan Stake

Activist investor Carl Icahn has submitted a couple SEC filings recently.

Icahn Enters Forward Purchase Contracts on Herc Holdings

First, Icahn has filed a Form 4 with the SEC regarding shares of Herc Holdings (HRI), a spin-off from Hertz (HTZ).

Per the filing, Icahn has entered into forward purchase contracts on June 8th, 2017.  These contracts have a forward purchase price of $35.00 per share, plus a financing charge.  The contracts have expiration dates of June 7th, 2019.  Multiple contracts were entered via various investment vehicles Icahn controls and in total they represent 23,607 shares.

Per the company's website, Herc Holdings "previously were known as Hertz Equipment Rental Corporation or “HERC.”  We now operate in the U.S. under our new brand, Herc Rentals.  We generated revenue of $1.6 billion in 2016 and offer customers a diversified fleet of equipment valued at $3.6 billion1. We serve customers through 270 company-owned locations, primarily in North America, and have approximately 4,800 employees.  Through the years, we have been widely recognized as a pioneer and leader in the equipment rental industry, setting the standard for service and creating the performance metrics that are now commonplace for rental equipment companies."

Icahn Adds To Freeport McMoRan Stake

Second, Icahn has also filed an amended 13D with the SEC regarding his position in Freeport McMoRan (FCX).  Per the filing, Icahn now owns 6.33% of the company with over 91.58 million shares.

The filing notes that on June 6th, Icahn acquired 351,644 shares in total at $11.41 per share.

Per Google Finance, Freeport McMoRan is "a mining company. The Company operates through geographical assets with proven and probable reserves of copper, gold and molybdenum, and traded copper producer. The Company's segments include refined copper products, copper in concentrate, gold, molybdenum, oil and other. The Company's segments include the Morenci, Cerro Verde, Grasberg copper mines, the Rod & Refining operations and the United States (U.S.) Oil and Gas Operations. The Company has organized its operations into five divisions, which include North America copper mines, South America mining, Indonesia mining and Molybdenum mines. The Company's portfolio of assets includes the Grasberg minerals district in Indonesia, copper and gold deposits, and mining operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America."

Farallon Capital Shows Savara Stake

Andrew Spokes' hedge fund firm Farallon Capital has filed a 13G with the SEC regarding shares of Savara (SVRA).  Per the filing, Farallon now owns 9.5% of the company with over 2.22 million shares.

This is a newly disclosed equity stake and the filing was made due to activity on June 2nd.  It's worth noting that Savara recently closed on a merger with Mast Therapeutics in April of this year.  In conjunction with the merger, Master effected a 1 for 70 reverse stock split. 

Also, Savara this month completed an underwritten public offering of over 9 million shares of common stock at $4.75 per share.

Per Google Finance, Savara is "formerly Mast Therapeutics, Inc., is a clinical-stage pharmaceutical company. The Company is focused on the development and commercialization of novel therapies for the treatment of patients with rare respiratory diseases. Its pipeline includes AeroVanc, Molgradex and AIR001. AeroVanc is an inhaled formulation of vancomycin, which the Company is developing for the treatment of persistent methicillin-resistant Staphylococcus aureus, lung infection in cystic fibrosis patients. Molgradex is an inhaled formulation of recombinant human granulocyte-macrophage colony-stimulating factor. It is developing Molgradex for the treatment of autoimmune pulmonary alveolar proteinosis, a rare lung disease. AIR001 is a sodium nitrite solution for inhalation via nebulization. AIR001 is in Phase II clinical development for the treatment of heart failure with preserved ejection fraction, also known as diastolic heart failure or heart failure with preserved systolic function."

Monday, June 12, 2017

Jim Chanos Interview on Bloomberg

Jim Chanos, founder of hedge fund Kynikos Associates recently sat down with Bloomberg to share his thoughts on markets.

He talks about the macro landscape, how the recent political shift has changed things, and other topics.

Chanos is worried about China because it's a debt driven model.  He thinks they've added trillions to the system.

Turning to US healthcare, Chanos says it's a system designed to be gamed:  "It's a hybrid of socialized and free market healthcare."

He thinks the kidney dialysis business is "headed for difficulties."  DaVita (DVA) seems to be one play that Chanos is short.

Telsa (TSLA) is another company Chanos has been short.  He would cover the short if the company actually began to make money.  They were also short Solar City before it got folded into Tesla.  The company burns a lot of cash (he thinks up to as much as $1 billion a quarter).  The upcoming Model 3 is the big test.

Embedded below is the video of Jim Chanos' Bloomberg interview:

For more recent interviews with prominent investors, be sure to also check out Paul Singer's chat with David Rubenstein.

Paul Singer Chats With David Rubenstein

Paul Singer of hedge fund Elliott Management sat down with Carlye Group co-founder David Rubenstein to chat at Bloomberg Invest New York.

They talk about how Singer founded Elliott, investing, and more.

Elliott manages $34 billion now and started in 1977 with $1.3 million.  Singer was a practicing lawyer at the time but started with friends and family money as he found investing much more enjoyable.

Convertible bond hedging was the first strategy Elliott used for around ten years. (Elliott, by the way, is Singer's middle name).  Over 40 years, Elliott has compounded at 13.5% net.

Embedded below is the video of Singer's chat with Rubenstein:

For more profiles of prominent investors, check out Howard Marks' recent interview with Bruce Karsh.

Howard Marks Interviews Bruce Karsh at Wharton School

University of Pennsylvania's Wharton School has started a Howard Marks investor series where the founder of Oaktree Capital interviews outstanding investors and this time around he's interviewed Bruce Karsh, his co-founder at Oaktree.

They talk about the founding of Oaktree, distressed investing, and a myriad of other topics. 

Embedded below is the video of Howard Marks' interview with Bruce Karsh:

For more from Marks, check out his most recent memo: Lines in the Sand.