Thursday, December 14, 2017

Holiday Gift Ideas For Investors 2017

Each year we highlight some gifts for investors and financial professionals.  Besides the typical money and booze, here's some other ideas for clients, partners, employees or even yourself.

Recommended Books

Margin of Safety - A physical copy of Seth Klarman's book is sure to impress.  They're rare since the book hasn't been in print for years

Principles - The new book from Bridgewater's Ray Dalio

Black Edge: Inside Information, Dirty Money and the Quest to Bring Down the Most Wanted Man on Wall Street: Financial thriller about Steve Cohen / SAC Capital

Against the Gods: A book about understanding risk and probability by Peter Bernstein

Algorithms To Live By: The Computer Science of Human Decisions - Book by Brian Christian and Tom Griffiths

The Industries of the Future - Book by Alec Ross on artificial intelligence, robotics, cybersecurity, commercialization of genomics and much more

Tribe of Mentors - Tim Ferriss' collection of advice from hundreds of experts in their fields

Kindle Unlimited - Get unlimited ebooks and audiobooks at Amazon


33% discount on Hedge Fund Wisdom - Save on our newsletter that summarizes 13F filings

50% off The Wall Street Journal - Sale ends soon so take advantage

The Economist - Always a good option


Bose QuietComfort Wireless Headphones - Great for flights or in the office.  Listen to earnings calls, audio books, or the latest Katy Perry album, whatever floats your boat

Amazon Kindle Paperwhite - On sale.  Great for reading SEC filings and books on the go, even in bright sunlight

Amazon Echo - Also on sale.  New version of the famous Alexa assistant


Billions (Season 2) - The first major television show about a hedge fund manager, starring Paul Giamatti and Damian Lewis.  Catch up before Season 3 starts or get someone else hooked on the series


Patagonia Fleece Vest - To fully blend in with hedge fund bros

Wagyu Beef - Or really any type of high quality meat from Snake River Farms

Hedge Funds For Dummies - Give it to someone underperforming this year

Happy Holidays!

Stan Druckenmiller Interview: Likes Amazon & Tencent, Short Retail

CNBC's Kelly Evans recently interviewed legendary investor Stan Druckenmiller, who previously worked with George Soros and then started his own firm Duquesne (which he now runs as a family office).

Regarding interest rates, he says he wants to see normalization, not so much just rates rising, as he noted there's a difference between the two.  The former, he says, is about re-establishing a hurdle rate for investment.

"Bitcoin, art, wine, equities, credit... you name it.  Everything is one way up.  And there's huge distortions taking place and it's all in the name of this 2% inflation target. And when you get a misallocation of resources, it really hinders growth over the longer term."

He notes there's companies out there borrowing tons of money that shouldn't be and gave Steinhoff as an example (which he mentioned he had been short).

He doesn't own any bitcoin as he says he trades only what he knows.  "It's worth what people are willing to pay for it."

This year, Druckenmiller says he's done well in stocks but he's really mistraded macro.  "I'm not up double digits.  I'm having, relative to the opportunity set, a terrible year."  He's had a bad time in currency trading apparently but his excellent equities returns have bailed him out, so to speak.

Turning to equities for 2018, he doesn't buy the narrative that this is all about earnings.  He says it's all about central bank radicalism.

But for specific stocks, he really likes the stocks he owns long-term.  There's a lot of disruption going on in tech.  He's also been short retail throughout the year and he expects that theme to continue.

On the long side: "I love Amazon (AMZN).  This company, which everyone keeps quoting the multiple... is selling for less than 3x sales.  They're dramatically underearning.  You have to look at the long-term earnings power of the company.  I think (CEO Jeff) Bezos is incredible."

In China, Druckenmiller really likes Tencent (700.HK) as they're in payments, videos, cloud, gaming, and a huge platform (WeChat).  Like AMZN, they're also underearning and trading at 40x with a 40% growth rate, he says you're getting it at 1x growth rate.

Regarding Tesla (TSLA), he said he doesn't like to short great products (he gave himself one for his birthday a while back).  He questions the long-term financial model of the company, though.

On Apple (AAPL), he doesn't find it as exciting as AMZN, Facebook (FB), or Alphabet (GOOG).  He thinks AAPL might be overearning and doesn't own it but isn't short either.  He likes Workday (WDAY) as it fits into the new economy.

He doesn't think tax reform will impact the stock market as it's already priced in and anyways he feels the market is driven by central bank policy anyways.

Embedded below is the video of CNBC's full interview with Stan Druckenmiller:


You can also read the full transcript of the interview here.

Wednesday, December 13, 2017

What We're Reading ~ 12/13/17

10 questions with Berkshire Hathaway's Todd Combs [FSU Alumni]

Profile of RenTec's Jim Simons, the numbers king [New Yorker]

The 12 signs a cheap stock is a 'value trap' [Bloomberg]

How AI will invade every corner of Wall Street [Bloomberg]

More moats, more profits [Morningstar]

The resulting fallacy is ruining your decisions [Nautilus]

A pitch on Pershing Square Holdings [WertArt Capital]

A look at Europe's Amadeus IT Group SA [Bloomberg]

Synchrony Financial: a spinoff better than its parent? [Value and Opportunity]

Profile of Snapchat's founder Evan Spiegel [The Guardian]

The force behind Bitcoin's meteoric rise: millions of Asian investors [WSJ]

The battle in AI [Economist]

You will no longer lease a car, you will subscribe to it [Slate]

European business school rankings 2017 [FT]

On 'sneakerhead' culture, Nike, and sneakers as an investment [TED]