Thursday, September 12, 2019

Discount to Value Invest New York Conference 2019

Value Invest New York
December 3rd 2019
The Times Center 

$700 discount using code: marketfolly-sept19
Expires September 30th

The conference speaker line-up includes Joel Greenblatt, Alex Roepers, Tom Russo, Michael Mauboussin, C.T. Fitzpatrick, Richard Chilton, David Samra and many others - see the full speaker line-up below or on the Value Invest New York website.

As a partner offer, the organizers have offered MarketFolly readers a $700 discount on a ticket to attend if booked before September 30th.  (There's also a full refund if you cancel by November 1st.)

Speakers at the conference will provide valuable insights into the methods and approaches that have made them successful, comment on the investment climate and other specific investment ideas - the top performing investment ideas presented at the 2018 conference are below:

*calculated with prices correct as of September 9th 2019

You can also see the long-term performance of the stocks presented at the London Value Investor Conference since 2012 on the London Value Investor Conference website.

If you have any questions about Value Invest New York please direct them to the organizers at

Wednesday, September 11, 2019

Baupost Group Increases Translate Bio Stake

Seth Klarman's investment firm Baupost Group has filed a 13G with the SEC regarding its position in Translate Bio (TBIO).  Per the filing, Baupost now owns 24.06% of the company with over 12.27 million shares as of August 31st.  This is up from the 8.84 million shares they disclosed as of the end of June.

Per Yahoo Finance, Translate Bio is "a clinical-stage messenger RNA (mRNA) therapeutics company, develops medicines to treat diseases caused by protein or gene dysfunction. The company is developing MRT5005, which is in Phase I/II clinical trial for the treatment of cystic fibrosis; and MRT5201 to treat ornithine transcarbamylase deficiency. It has a collaboration and license agreement with Sanofi Pasteur Inc. to develop mRNA vaccines for up to five infectious disease pathogens. The company was formerly known as RaNA Therapeutics, Inc. and changed its name to Translate Bio, Inc. in June 2017. Translate Bio, Inc. was founded in 2011 and is headquartered in Lexington, Massachusetts."

Paulson & Co Files 13D on Callon Petroleum, Opposes Carizzo Oil Acquisition

John Paulson's hedge fund firm Paulson & Co has filed a 13D with the SEC regarding shares of Callon Petroleum (CPE).  Per the filing, Paulson now owns 9.5% of the company with over 21.59 million shares.  This is a brand new position for the hedge fund as they did not report any shares on their most recent 13F filing which discloses portfolios as of June 30th.

Paulson has gone activist and sent the board of directors a letter highlighting they oppose the acquisition of Carizzo Oil & Gas.  Paulson outlines a few reasons for their position: 1) Callon stock is down 36% since acquisition's announcement, 2) Co is offering an unwarranted premium to Carrizo, 3) Callon shareholders would be diluted, 4) Callon would no longer be a premium pure-play company, 5) Callon could be worth over 60%+ in a takeover, 6) Permian basin pure-plays remain attractive acquisition targets.  They go on to list other reasons as well.

Paulson & Co's Letter to Callon Petroleum

Embedded below is Paulson & Co's letter in its entirety.

You can also access it here.

Tiger Global Still Buying Sunrun Shares

Chase Coleman's hedge fund firm Tiger Global has filed yet another Form 4 with the SEC indicating their activity in Sunrun (RUN) shares.  As we've detailed previously, Tiger Global has been out buying RUN shares and they've continued to do so into September.

The latest filing indicates they were out buying 654,011 shares in total across September 4th through 6th with the bulk at weighted average prices of $15.247 and $15.501.

After these recent buys, Tiger Global now owns over 25.2 million shares of Sunrun.

Farallon Capital Shows DermTech Stake

Andrew Spokes' hedge fund firm Farallon Capital has filed a 13G with the SEC regarding shares of DermTech (DMTK).  Per the filing, Farallon now owns 9.8% of DermTech as of August 29th with exposure to over 1.23 million shares. 

Their stake is comprised of 615,385 shares and they also hold "Series A Preferred Shares (as defined in the Preliminary Note) convertible into an aggregate of 615,385 shares."

DermTech shares have been extremely volatile, plummeting from $21.69 in late August to around $5 by the end of the month.

Per Yahoo Finance, DermTech is "a molecular genomics company, develops and markets novel non-invasive diagnostic tests to diagnosis skin cancer and related conditions in the United States. The company offers Pigmented Lesion Assay (PLA), a gene expression test that helps rule out melanoma and the need for a surgical biopsy of atypical pigmented lesions. It also provides Nevome test, an adjunctive reflex test for the PLA; and adhesive skin sample collection kits, as well as gene expression assays for the Th1, Th2, IFN-gamma, and Th17 inflammatory pathways. The company sells its products to pathology and oncology practitioners. DermTech, Inc. was incorporated in 1995 and is headquartered in La Jolla, California."

Elliott Management Goes Activist on AT&T

Paul Singer's hedge fund firm Elliott Management has gone activist on AT&T (T), sending a letter to the board to outline what they feel is a 'compelling value-creation opportunity.  Elliott now owns $3.2 billion worth of shares and they see 65% upside to recent trading levels.

Elliott writes, "Elliott  made the investment in AT&T – among  its largest ever – because it exhibits a unique combination of historical underperformance,   a  depressed  valuation,  well-positioned  assets and  a clear path forward to generate extraordinary  value  for shareholders and other stakeholders."

Elliott's Letter to AT&T

Embedded below is Elliott's Letter & Presentation on AT&T.  It includes numerous charts and highlights T's valuation as well as struggling business lines:

You can also visit the website they've setup:

Wednesday, September 4, 2019

What We're Reading ~ 9/4/19

Certain to Win: The strategy of John Boyd, applied to business [Chet Richards]

The commoditization of information [Geoff Yamane]

Position sizing: why conviction matters [Intrinsic Investing]

The problem with believing what we're told [WSJ]

How a Canadian firm has taken on Wall Street's private equity titans [Economist]

Research on the financial performance of collectibles [Alpha Architect]

Peloton is a phenomenon: can it last? [NYTimes]

A skeptical look at Peloton churn [Inquisitive Investor]

Peloton bikes are the real deal [The Margins]

How Amazon's shipping empire is challenging UPS & FedEx [WSJ]

Amazon's next-day delivery has brought chaos and carnage to streets [BuzzfeedNews]

The man behind the biggest beauty brands in the world [Coveteur]

Aston Martin tried to replicate Ferrari's IPO success but shares are down 75% [Fortune]

On the importance of broadcasting income to European football clubs [Swiss Ramble]

5 lessons from Microsoft's antitrust woes by people who lived it [NYTimes]

Tiger Global Continues To Buy Sunrun

Chase Coleman's hedge fund firm Tiger Global has filed yet another Form 4 with the SEC regarding their ownership of Sunrun (RUN).  We previously detailed last week how they were out buying RUN shares

Per the latest filing, Tiger Global was out acquiring more shares on August 29th, 30th, as well as September 3rd.  In total, they purchased 627,439 shares at weighted average prices of between $14.705 and $15.365.  After these buys, they now own over 24.55 million shares.

Per Yahoo Finance, Sunrun "engages in the design, development, installation, sale, ownership, and maintenance of residential solar energy systems in the United States. It also sells solar energy systems and products, such as panels and racking, as well as solar leads generated to customers. The company markets and sells its products through direct-to-consumer approach across online, retail, mass media, digital media, canvassing, field marketing, and referral channels, as well as its partner network. Sunrun Inc. was founded in 2007 and is headquartered in San Francisco, California."

Tuesday, September 3, 2019

TCI Fund Boosts Canadian Pacific Railway Stake

Sir Chris Hohn's TCI Fund management has filed an amended 13G with the SEC regarding its position in Canadian Pacific Railway (CP).  Per the filing, TCI Fund now owns 7.62% of the company with over 10.56 million shares as of August 23rd. 

This is up from the previous 10.15 million shares they owned at the end of June.  TCI has bought CP shares for seven consecutive quarters and their stake is now worth almost $2.5 billion.  They originally initiated the position in the first quarter of 2018.

It should also be noted that Hohn's firm also owns stakes in other railroads, such as Canadian National (CNI ~ $1.75 billion worth) and Union Pacific (UNP ~ $800 million worth), but their stake in CP is the most sizable.

Per Yahoo Finance, Canadian Pacific Railway "owns and operates a transcontinental freight railway in Canada and the United States. The company transports bulk commodities, including grain, coal, potash, fertilizers, and sulphur; and merchandise freight, such as energy, chemicals and plastics, metals, minerals and consumer, automotive, and forest products. It also transports intermodal traffic comprising retail goods in overseas containers. The company offers rail and intermodal transportation services through a network of approximately 12,500 miles serving business centers in Quebec and British Columbia, Canada; and the United States Northeast and Midwest regions. Canadian Pacific Railway Limited was founded in 1881 and is headquartered in Calgary, Canada."

Friday, August 30, 2019

Lone Pine Capital Adds To Dominos Pizza Stake

Steve Mandel's hedge fund firm Lone Pine Capital has filed a 13G with the SEC regarding its stake in Dominos Pizza (DPZ).  Per the filing, Lone Pine now owns 5% of Dominos Pizza with over 2.07 million shares as of August 20th. 

This is up from the 1.24 million shares Lone Pine disclosed at the end of June when they established a new stake in the company.  DPZ shares have fallen from a high of $285 at the end of Q2 to recent lows around $226.

As a reminder, Steve Mandel stepped down from day-to-day management of the portfolio and handed those duties off to managers Dave Craver, Mala Gaonkar, and Kelly Granat (though others are also now listed on the SEC filings).

Per Yahoo Finance, Dominos Pizza "through its subsidiaries, operates as a pizza delivery company in the United States and internationally. It operates in three segments: U.S. Stores, International Franchise, and Supply Chain. The company offers pizzas under the Domino's brand name through company-owned and franchised stores. As of August 20, 2019, it operated through approximately 16,300 stores in 85 markets. The company was founded in 1960 and is headquartered in Ann Arbor, Michigan."

Dr. Michael Burry Buys More Tailored Brands, Sends Letter to Board

Dr. Michael Burry of Scion Asset Management has been busy lately.  We previously detailed how he re-built a stake in Gamestop (GME) and sent a letter to the board.  Well, he has now also just filed a 13D on shares of Tailored Brands (TLRD), which he's owned and previously also sent letters to the board.

The new filing indicates Burry has boosted his TLRD position, buying throughout August at prices of around $4.7145 and $4.8282.  In total, Scion Asset now owns 5.1% of the company with 2.6 million shares.  This is up from his previous stake of 1.85 million shares at the end of June.

Dr. Michael Burry Sends New Letter to Tailored Brands Board

Burry also sent a new letter to the board dated August 30th where he addresses rumors that Sycamore Partners had approached the company about an acquisition at around $10 per share.  Burry writes, "We do not know if any of this is true.  However, we believe you must know that $10 per share is not fair value and will not be acceptable to shareholders."

Later Burry goes on to write, "With some urgency, we stand by our letters of August 2nd and 19th. Given the quarter-century lows in the common stock and the severe undervaluation this entails, we believe the best use of funds from the corporate apparel segment sale, in good part or in full, is for a share repurchase.While management is considering asset sales, we would encourage exploring the market for Tailored’s Canadian operations. The Board and management ought to focus resources on its core 1300+ store U.S. operations. Proceeds from a sale of these remaining international operations may also be best used to accelerate debt repayment and stock buybacks."

He's previously sent two other letters to the board which you can read here and here.

Per Yahoo Finance, Tailored Brands "operates as a specialty apparel retailer the United States and Canada. It operates through two segments, Retail and Corporate Apparel. The Retail segment offers suits, suit separates, sport coats, slacks, formalwear, business casual, denim, sportswear, outerwear, dress shirts, shoes, and accessories for men. It also provides women's career and casual apparel, sportswear, and accessories; children's apparel; and alteration services. As of February 2, 2019, this segment operated 1,464 stores under the Men's Wearhouse, Men's Wearhouse and Tux, Jos. A. Bank, Moores, Joseph Abboud, and K&G brands. The Corporate Apparel segment provides corporate apparel uniforms and work wear to workforces under the Dimensions, Alexandra, Yaffy, and Twin Hill brands through various channels, including managed corporate accounts and catalogs, as well as through,, and Internet sites. This segment serves companies and organizations in the airline, retail grocery, retail, banking, quick service restaurant, car rental, distribution, travel and leisure, postal, security, healthcare, and public sectors. The company was formerly known as The Men's Wearhouse, Inc. and changed its name to Tailored Brands, Inc. in February 2016. Tailored Brands, Inc. was founded in 1973 and is based in Houston, Texas."

JANA Partners Buys Bloomin' Brands, FIles 13D

Barry Rosenstein's hedge fund firm JANA Partners has filed a 13D on shares of Bloomin' Brands (BLMN).  Per the filing, JANA now owns 9% of the company with over 7.81 million shares.  This is a brand new stake for the firm.

JANA was buying throughout August at with the bulk of their recent purchases coming at prices of around $16.08 and $16.21. 

The 13D contains the standard boilerplate:

"The Reporting Person acquired the Shares because it believes the Shares are undervalued and represent an attractive investment opportunity. The Reporting Person intends to have discussions with the Issuer’s board of directors and management regarding a sale of the Issuer, divestitures, capital allocation, operations and board composition. The Reporting Person expects to have discussions with the Issuer’s management and board of directors, shareholders and other interested parties relating to such matters."

Per Yahoo Finance, Bloomin' Brands, Inc., "through its subsidiaries, owns and operates casual, upscale casual, and fine dining restaurants in the United States and internationally. The company operates through two segments, U.S. and International. Its restaurant portfolio has four concepts, including Outback Steakhouse, a casual steakhouse restaurant; Carrabba's Italian Grill, a casual Italian restaurant; Bonefish Grill, an upscale casual seafood restaurant; and Fleming's Prime Steakhouse & Wine Bar, a contemporary steakhouse. As of December 30, 2018, the company owned and operated 1,068 restaurants and franchised 164 restaurants across 48 states; and owned and operated 125 restaurants and franchised 131 restaurants across 20 countries, Puerto Rico and Guam. Bloomin' Brands, Inc. was incorporated in 2006 and is headquartered in Tampa, Florida."

Hedge Fund Links ~ 8/30/19

The stock picker versus portfolio manager communications challenge [Harvest]

Good writers make better hedge fund managers [Institutional Investor]

Hedge funds take record short positions against Aston Martin [FT]

Viking Global curbs investor redemptions to aid VC push [FT]

Third Point builds stake in Essilor Luxottica [Reuters]

Quick interview with Michael Burry on Gamestop [Barrons]

Why Mario Cibelli likes GrubHub, Becle & e.l.f. [Barrons]

Notes from a recent trip to China [Cederberg Capital]

Hedge fund Saba Capital spars with BlackRock and Neuberger [WSJ]

A look back: the Bloomberg keyboard [Bloomberg]

Thursday, August 29, 2019

Hillhouse Capital's Lei Zhang Talk at Goldman Sachs (Notes & Video)

Lei Zhang of Hillhouse Capital recently had a talk at Goldman Sachs filmed at the Builders + Innovators Summit in Asia.  Zhang runs one of the most prominent funds in Asia after starting with $20 million from Yale University and now growing into a $60 billion firm.

Lei Zhang's Talk at Goldman Sachs 2019

- He says entrepreneurship is about doing something you love, not doing what's trendy or for the money

- Unbelievable change and opportunities created in China over the past 30 years; highlights Chinese people's drive

- Hillhouse was named after the street at Yale Endowment where he previously worked, but in Chinese it also refers to a high vantage point of being able to see everything.  He says Hillhouse is a blend of eastern and western philosophies: being a long-term investor, being thoughtful, entrepreneurship.  Has 45 people on his team.  "We believe you do the right things, you build your reputation, you stand up for what you believe in... and entrepreneurs will find you."

- On what he looks for in people:  persistence, smart, teamwork.  But he emphasizes empathy and the ability to connect with people who are different from you.  Lifetime learning is also essential and not to learn to make more money but a genuine desire to learn.  Also added humility is a great trait.  He likes entrepreneurs who build a culture like a sports team... it's like family but you want to win.

-  "One of the most exciting things of investing in China is you're always embracing change.  And one of the most fascinating changes in the past has been the consumer internet."  First wave was Baidu, Tencent, Alibaba, but the core was connection (people to information, people, and goods).  Now the second wave is coming "Innovation 2.0" it's not just about connection, it's about leveraging AI, SaaS, lots of vision.  Likened it to the industrial internet.

- Belle shoe retailer was being attacked on all sides (especially with e-commerce from JD and Alibaba, etc).   Hillhouse invested and 3 years later it's seen double digit growth.  For instance, they made changes like put a sensor that could tell them that x shoe was getting picked up a ton of times but no one was buying it, so they can make changes faster.  They also brought in a lean manufacturing process (Danaher).  This helped with inventory so they had less to discount which helped maintain the brand.

-  "In investing at a Hillhouse level, we're always joking the best investment is the investment you don't have to think about (an) exit." 

Embedded below is the video of Lei Zhang's talk:

For more on this manager, we've also highlighted Lei Zhang old lecture at Columbia Business School.

Glenview Capital Acquires More Tenet Healthcare

Larry Robbins' hedge fund firm Glenview Capital has filed a Form 4 with the SEC regarding shares of Tenet Healthcare (THC).  Per the filing, Glenview bought 81,368 shares on August 23rd at a weighted average price of $20.6965.  They now own over 19.43 million shares.

In a previous filing, they also were out buying on August 16th, purchasing 26,456 shares at a weighted average price of $19.8153.

Per Yahoo Finance, Tenet Healthcare is "a diversified healthcare services company. The company operates in three segments: Hospital Operations and Other, Ambulatory Care, and Conifer. Its general hospitals offer acute care services, operating and recovery rooms, radiology and respiratory therapy services, clinical laboratories, and pharmacies. The company also provides intensive and critical care, and coronary care units; physical therapy, orthopedic, oncology, and outpatient services; cardiothoracic surgery, neonatal intensive care, and neurosurgery services; quaternary care in heart, liver, kidney, and bone marrow transplants areas; tertiary and quaternary pediatric, and burn services; and limb-salvaging vascular procedures, acute level 1 trauma services, intravascular stroke care, minimally invasive cardiac valve replacement, imaging technology, and telemedicine access for various medical specialties. In addition, it operates ambulatory surgery and urgent care centers, imaging centers, and surgical hospitals; and offers healthcare business process services in the areas of hospital and physician revenue cycle management, as well as value-based care solutions to healthcare systems, individual hospitals, physician practices, self-insured organizations, health plans, and other entities. As of December 31, 2018, the company operated 68 hospitals, 23 surgical hospitals, and approximately 475 outpatient centers, as well as 255 ambulatory surgery, 36 urgent care, and 23 imaging centers in the United States. Tenet Healthcare Corporation was founded in 1967 and is headquartered in Dallas, Texas."

Dr. Michael Burry Long Gamestop: Sends Letter to Board

Dr. Michael Burry of Scion Asset Management and of The Big Short fame has recently re-surfaced in shares of Gamestop (GME).  He previously owned shares earlier this year but sold out in the second quarter per his latest 13F filing as of June 30th.    However, he has re-established a stake in the company as shares plunged, now owning around 3.05% of the company with approximately 3 million shares.

Burry argues the company should buyback a ton of stock given the limited float.  This has been a popular short among hedge funds which view it as 'Blockbuster 2.0' and recently, as much as 60% of GME's shares have been sold short.

Tae Kim over at Barron's scored a rare interview with Burry on his GME long, which you can check out here.  Burry noted that the new gaming console cycle "is going to extend GameStop's life significantly. The streaming narrative dovetailing with the cycle is creating a perfect storm where things look terrible.  [But] it looks worse than it really is."

Scion's Letter to Gamestop Board

Below is the full text of the letter Dr. Burry sent Gamestop:

"August 16, 2019

Dear Members of the Board,Scion Asset Management, LLC and its affiliates (“Scion”) own approximately 2,750,000 shares, or about 3.05%, of GameStop, Inc. (“GameStop”) common stock.

As mentioned in our previous letter to the board, we have concerns regarding capital management at GameStop. Given recent GameStop common stock prices under $4 per share, we must re-state that GameStop complete the remaining $237,600,000 share repurchase at once and with urgency.

Given the market capitalization of GameStop at $290 million at the close on August 15th, completing the authorization would retire over 80% of GameStop’s outstanding shares. Depending on the timing and quality of execution, such a repurchase would increase earnings per share dramatically - far more than any other possible action on a per share basis.

The numbers are striking and demand action. We estimate that GameStop now has in excess of $480 million of cash, more than enough to complete the share repurchase authorization and still invest in the business and pay down debt.

Through August 15th, a total of 11 trading days, 50,399,534 shares have traded. At this rate, for the month of August and for the third month in a row, the number of shares traded will exceed the total number of shares outstanding. Because of such high volume, we maintain that GameStop could pull off perhaps the most consequential and shareholder-friendly buyback in stock market history with elegance and stealth.

Shareholders staring at all-time lows in GameStop stock see little evidence that GameStop has effectively leveraged its elite position in the gaming universe as the new paradigm came into clear view over the last five years.

The unfortunate reality is that Amazon, not GameStop, bought Twitch in 2014. Instead, in 2014, GameStop started buying wireless store assets. And in 2017, Amazon, not GameStop, bought GameSparks - while less than a year ago GameStop reversed course and sold its wireless store assets. Shareholders are right to worry.

We expect GameStop’s business will perk up a bit during 2020 and 2021 as the new console cycle, with associated software updates and introductions, finally gets underway. But what is happening now in the stock is about more than late cycle doldrums or even the streaming paradigm – shareholders do not have faith in current management, and have not been inspired by new leadership policies.

Notably, as of July 31st, 2019, Bloomberg reports short interest in GameStop stock at 57,226,706 shares – this is about 63% of the 90,268,940 outstanding GameStop shares at last report.

We submit that when share prices are at or near all-time lows and more than 60% of the shares are shorted despite cash levels much higher than the current market capitalization, lack of faith in management’s capital allocation is the default conclusion.

All of this creates the opportunity to enter 2020 with a dramatically reduced share count along with multi-fold greater impact per share for every single other achievement of management. Consider as just one example that if the turnaround is successful, and if GameStop were able to shrink its shares outstanding to 30 million through the share repurchase, the $157 million dividend that was just eliminated would pay out around $5.25 per share.

The Board deemed up to $6.00 per share a good price for a buyback less than two months ago, and the price of the stock today is nearly half that amount.

We again advise the Board to represent shareholders well, and to ensure the execution of the remaining repurchase authorization in full.


Dr. Michael J. Burry"

Wednesday, August 28, 2019

What We're Reading ~ 8/28/19

The network effects manual: 13 different types [NFX]

A look at Wells Fargo (WFC) [Sabre Capital]

SmileDirectClub's IPO highlights promises, pitfalls for DTC companies [Modern Retail]

How the recession of 2020 could happen [NYTimes]

Framework for evaluating enterprise software companies [Shomik Ghosh]

How Elon Musk gambled Tesla to save Solar City [Vanity Fair]

Streaming video will soon look like the bad old days of TV [Matthew Ball]

LaCroix won the bubble battle, but it's losing the sparkling water war [Bloomberg]

How Uber got lost [NYTimes]

The making of Amazon Prime [Vox]

China internet report [SCMP]

The real story of the brand Supreme [GQ]

Red flags on the WeWork IPO: WeWTF [Prof Galloway]

WeWork as the AWS of real estate? [Stratechery]

Harry Markopolos' write-up on General Electric [GEFraud]

Tiger Global Buys More Sunrun

Chase Coleman's hedge fund firm Tiger Global has filed a 13D with the SEC regarding its stake in Sunrun (RUN).  Per the filing, Tiger Global now owns 20.4% of the company with over 23.93 million shares.

They were out buying shares through mid-to-late August and in total have purchased over 2.01 million shares with the bulk coming at weighted average prices of $14.98 and $15.07.

Per Yahoo Finance, Sunrun "engages in the design, development, installation, sale, ownership, and maintenance of residential solar energy systems in the United States. It also sells solar energy systems and products, such as panels and racking, as well as solar leads generated to customers. The company markets and sells its products through direct-to-consumer approach across online, retail, mass media, digital media, canvassing, field marketing, and referral channels, as well as its partner network. Sunrun Inc. was founded in 2007 and is headquartered in San Francisco, California."

Tuesday, August 20, 2019

New 13F Summary Newsletter Just Released: Top Hedge Fund Portfolios

The brand new Q2 2019 issue of our quarterly newsletter is now available.  It reveals the latest portfolios of top hedge funds and summarizes their new 13F filings.

Subscribers please login at to download it.

Inside the Brand New Q2 Issue

- Updated consensus buy/sell lists of the most popular hedge fund trades in Q2

- Reveals the latest portfolios of 25 top hedge funds (full list here): New firm added this quarter: Ruane, Cunniff & Goldfarb's Sequoia Fund replaces Lou Simpson's SQ Advisors which no longer discloses a portfolio

- Investment thesis summaries on 2 stocks that hedge funds were buying: Activision Blizzard (ATVI) and CarGurus (CARG). Quickly catch up on the current situation and bull/bear thesis on each stock

33% Discount Ends Soon

Take advantage of the savings while you still can.  After signing up, you'll get immediate access to the new issue & the archive of past issues.

1-year Subscription (4 issues): Normal Price $299.99 Discount Price $199.99 per year

Quarterly Subscription: Normal Price $89.99 Discount Price $59.99 per quarter

Want to pay by check or soft dollar account?  Please email us: info (at) hedgefundwisdom (dot) com

Thursday, May 23, 2019

New Graham & Doddsville Issue: John Hempton, Yen Liow, Bill Stewart

Columbia Business School is out with the Spring 2019 issue of its Graham & Doddsville newsletter.  It features interviews with Bronte Capital's John Hempton, Aravt Global's Yen Liow, and Stewart Asset Management's Bill Stewart.

It also includes student investment pitches such as long Dollarama, long Align Technology, long, and long Dean Foods 6.50% senior unsecured.

Embedded below is the Spring 2019 issue of Graham & Doddsville:

You can download a .pdf link here.

Wednesday, May 22, 2019

What We're Reading ~ 5/22/19

The Culture Cycle: How to Shape the Unseen Force that Transforms Performance [James Heskett]

Xi Jinping calls for new 'Long March' in sign China preparing for protracted trade war [SCMP]

What stocks Baillie Gifford likes now [Barrons]

What can long-term investors learn from traders? [Fundoo Professor]

The greatest investor you've never heard of: an optometrist [Forbes]

A capacity to suffer and setting the right expectations [Scuttlebutt Investor]

The start-ups building dark kitchens for Uber Eats and Deliveroo [FT]

How a cheap, brutally efficient grocery chain is upending American supermarkets [CNN]

Media companies are eyeing cash from sports betting [Axios]

US whiskey stocks have soared; beware the bourbon bubble [Barrons]

Sears's seven decades of self-destruction [Fortune]

Real estate's latest bid: Zillow wants to buy your house [NYTimes]

The world's greatest delivery empire made it cheaper to order in than eat out [Bloomberg]

Profile of e-commerce company Wish [Forbes]

Mr. Market got inside your head; don't let him mess with you [WSJ]

The ultimate productivity hack is saying no [James Clear]

Mapping the world's busiest air routes [Visual Capitalist]

Tuesday, May 21, 2019

Latest Hedge Fund Portfolios Revealed In Our Quarterly Newsletter

The brand new Q1 2019 issue of our quarterly newsletter is now available.  It reveals the latest portfolios of top hedge funds and summarizes their new 13F filings.

Subscribers please login at to download it.

Inside the Brand New Issue

- Updated consensus buy/sell lists of the most popular hedge fund trades

- Reveals the latest portfolios of 25 top hedge funds: Appaloosa, Baupost, Lone Pine, Duquesne, Tiger Global & 20 others (full list here)

- Investment thesis summaries on 2 stocks that have seen hedge fund activity. Quickly catch up on the current situation and bull/bear thesis on each stock

33% Discount Ends Soon

Take advantage of the savings while you still can.  After signing up, you'll get immediate access to the new issue & the archive of past issues.

1-year Subscription (4 issues): Normal Price $299.99 Discount Price $199.99 per year

Quarterly Subscription: Normal Price $89.99 Discount Price $59.99 per quarter

Want to pay by check or soft dollar account?  Please email us: info (at) hedgefundwisdom (dot) com

Friday, May 10, 2019

Broyhill's Best Books of the Year

Broyhill Asset Management is back again with its yearly free Book Club featuring the best books of the year.  Perfect timing with summer vacation right around the corner.  You can check out their list of top recommendations here

We featured their picks last year too and this time around their list spans a myriad of topics apart from just investing.  After all, numerous successful investors have talked about how it's important to read across various subjects. 

While we occasionally highlight a book in our "What We're Reading" posts, this is a large compilation of recommendations from another trusted source.  Broyhill also provides a quick blurb on why a specific book was worth reading or what insights were gleaned from it.

Click here to check out Broyhill's favorite books

Wednesday, May 8, 2019

Warren Buffett, Charlie Munger & Bill Gates Interview

Berkshire Hathaway's annual meeting was this past weekend and was filled with wit and wisdom from investing legends.  In a separate interview, CNBC's Becky Quick sat down and talked with Warren Buffett, Charlie Munger, and Bill Gates.

Here's some takeaways followed by the full 2-hour video below.  The first hour was just Buffett by himself and then Munger joined in, and finally Gates joins at around 1hr 20.

Buffett, Munger & Gates Interview 2019

- Buffett says continued trade war would be bad for the whole world

- On Kraft Heinz (KHC): "The company has my confidence."  If he just owned Heinz, he says he'd be doing better but they paid too much for Kraft.  On overpaying: "Time usually works it out, but capital could have been better deployed."

- On the Occidental Petroleum (OXY) deal he's backing:  They've committed the $10 billion 100% and they don't have control over what OXY does with the money or the terms of the deal, etc.  While the 8% preferred is a sweet deal for him, he noted that, "It's a bet on oil prices over the long-term more than anything else.  It's also a bet on the fact that the Permian Basin is what it's cracked up to be."  He and Munger feel good about doing the financing of the deal and they could have done $20bn instead of the $10bn if needed.

-  He likes when Apple (AAPL) goes down, "Because they're repurchasing shares and when they repurchase shares our interest goes up and we don't lay out a dime; I love it."  He's "wildly" in favor of the company's $75 billion buyback.

- "I will always react well to declining prices."

- He thinks China and the US will be the two big superpowers over the next 100 years and that the two won't always get along and there will be disagreements over various things.

- On Wells Fargo (WFC):  Munger said: "I think it's a fine company; so they made one bad decision about an incentive plan.  I regard it as an honest mistake not as some deep moral failure ... they just had a blind spot."

-  Buffett said: "Charlie beats this into me all the time:  As soon as you find a mistake, do something about it.  And sometimes that's unpleasant.  But I've gotta do it."

-  Bill Gates on China/US: "It's the most important relationship in the world."

-  Gates is also concerned about intellectual cooperation being slowed down between the two countries and things like artificial intelligence

- "Anger drives out reason." ~ Munger

"  I think people should have modest expectations" about stock returns going forward, Gates says.  He thinks valuations have gotten high and he's amazed at that, but he hasn't made many changes to his Foundation's equity portfolio.

-  "I think stocks are ridiculously cheap... if you believe that 30 year bonds at 3% makes sense." ~ Buffett

- Buffett on what he's been reading lately:  Melinda Gates' book The Moment of Lift

Video of Interview

Embedded below is the 2-hour interview with Warren Buffett, Charlie Munger, and Bill Gates:

Tuesday, May 7, 2019

Notes From Sohn New York Investment Conference 2019: Einhorn, Robbins, Sundheim & More

The 2019 Sohn New York Investment Conference concluded and as usual it featured an excellent array of speakers sharing investment ideas all to benefit pediatric cancer research.  Click the links below to go to notes from each talk.

Sohn New York Conference Notes 2019

David Einhorn (Greenlight Capital): Long Aercap, Short GATX

Larry Robbins (Glenview Capital): Buy HMOs and hospitals, short pharma index, short 3M and Chemours

Daniel Sundheim (D1 Capital): Long Netflix & Disney, bearish Canadian pot stocks

Ryan Heslop (Firefly Value Partners): Short Community Health Systems

Gabe Plotkin (Melvin Capital Management): A few ideas

Christopher R. Hansen (Valiant Capital Management): Long Zillow

Jeffrey Gundlach (DoubleLine Capital): Buy interest rate volatility on long bond

Scott Goodwin (Diameter Capital Partners): Short PlastiPak unsecured bonds, long Constellium equity

Bihua Chen (Cormorant Asset Management): Long Reata Pharmaceuticals

Sohn Idea Contest Winner: Short Lamb Weston

Next Wave Sohn New York Notes 2019

Todd Westhus (Olympus Peak Asset Management): WDC long bank debt/short bonds

Matthew J. Smith (Deep Basin Capital): Long Cabot Oil & Gas 

Parvinder Thiara (Athanor Capital): Long Brazilian bonds

David Einhorn Long Aercap, Short GATX: Sohn New York Conference

We're posting up notes from the Sohn New York Investment Conference.  Next up is David Einhorn of Greenlight Capital who presented long Aercap (AER), short GATX (GATX).

David Einhorn's Sohn New York Presentation

•    Companies that lease airplanes have better businesses than companies that lease railcars (long Aercap, short GATX)

o    Airline leases are usually at least 10 years with a 25 year life
o    Railcar leases are 5 years when it’s new or less when it is used. Useful life is around 45 years
o    Airlines in cyclical growth
o    Railroads are more cyclical
o    Airplane utilization much higher than railcar
o    Can move airplanes around easier
o    Credit has cost airline leasing companies 0.1%. Cost railcar leasing companies nothing
o    Railroads becoming more efficient and using less railcars
o    Aercap- airline leasing in growing industry. Average age 6 years. Sells 15 year old planes. Longer leases
o    GATX-Railcar leasing. 14% market share. Cyclical and secular headwinds. Provides maintenance to customers. Average 20 year age. More dependent on releasing rates. Recent leases are shorter term
o    Aercap trades at a 50% discount to GATX even though it’s a better business both on P/E and P/B
o    Aercap is buying back stock. Reduced shares outstanding by 36%. Will continue to buyback stock

Be sure to check out the rest of the Sohn New York conference presentations.

Larry Robbins Long HMOs/Hospitals, Short 3M & Chemours: Sohn New York Conference

We're posting up notes from the Sohn New York Investment Conference.  Next up is Larry Robbins of Glenview Capital who talked about the healthcare industry and shared a myriad of ideas, including long HMOs and hospitals, short pharma index, and short 3M (MMM) and short Chemours (CC).

Larry Robbins's Sohn New York Presentation

Buy HMOs and hospitals. Short pharma index.  Hospitals trading at discount despite superior growth.  Buy Cigna (CI), Humana (HUM), UnitedHealth (UNH), HCA (HCA), Tenet Health (THC), UniversalHealth (UHS). 

•    Medicare For All is dead on arrival. Need President and Congress in order to get Medicare For All. Too high of a hurdle. Only 3 presidential candidates support this and they are not the favorites. Democrats in House and Senate not all on board. Need 60 senate votes to do this because it requires spending money.
•    Multiples are compressed relative to the market in HMO sector and have over 50% upside
•    President can act unilaterally to lower drug costs due to provisions of ACA. Drug revenues at risk
•    Same drug cost 3 times more in the US as in other OECD countries
•    Both sides (Dem and Republican) agree on drug prices
•    People under appreciate coming biosimilars

Short 3M (MMM) on PFAS (chemical that causes cancer that has ended up in drinking water) risk. Lawsuits have gone up 87 fold. Reserves for liabilities have only gone up 8%. They are not reserved. They have at least  $3 to $6 billion liabilities on this.

Short Chemours - is also exposed to these PFAS lawsuits.  Each time DowDuPont (DWDP) loses a lawsuit, he says you should assume this also hits CC.

Be sure to check out the rest of the Sohn New York conference presentations.

Daniel Sundheim Long Netflix & Disney, Bearish on Canadian Pot Stocks: Sohn New York Conference

We're posting up notes from the Sohn New York Investment Conference.  Next up is Daniel Sundheim of D1 Capital Partners.  He talked about being bullish on Netflix (NFLX) and Walt Disney (DIS) and was bearish on Canadian pot stocks. 

Daniel Sundheim's Sohn New York Presentation

- Overall cautious saying valuations are a concern and especially so if inflation picks up and Fed expectations are impacted or China trade talks fall, there's not enough cushion.

- Bullish on Walt Disney (DIS) and Netflix (NFLX).  Both will be the leading direct-to-consumer video companies in the future.  Sees the latter breaching $1,000 in the next 4-5 years.

- Bearish on Canadian pot companies: "Growing marijuana is inherently not a good business." Says Canadian weed industry has enormous downside due to huge supply.  Business models are challenged and the valuations are 'absurd.'  Closest thing to a bubble since bitcoin.

- Unlike other hedge funds, has not shorted Tesla because Elon Musk is 'hard to bet against.'

- Advised not to sell out of positions where you have a ton of conviction.  Cited Mastercard which he bought at IPO and sold once it doubled, only for it to jump 10x its IPO price.  "Great businesses don't come around that often ... Time is your friend when you have a great business."  He emphasized compounding capital over years instead of months.

Be sure to check out the rest of the Sohn New York conference presentations.

Ryan Heslop Short Community Health Systems: Sohn New York Conference

We're posting up notes from the Sohn New York Investment Conference.  Next up is Ryan Heslop of Firefly Value Partners who presented a short of Community Health Systems (CYH).

Ryan Heslop's Sohn New York Presentation

•    Short Community Health Systems (CYH): levered rollup of rural hospitals

o    Company will file for bankruptcy and equity will be worthless
o    CYH grew from 8,000 to 30,000 beds through acquisitions since 2000’s. Paid 600k per bed
o    Net debt grew to $16 billion from less than $2 billion since 2005
o    Management compensated on revenue and EBITDA. Ignores debt
o    Admissions have been declining. Patients are choosing to go to urban hospitals. Trend towards outpatients
o    Rising unit costs
o    Declining profitability per bed
o    Slashed capex by 50% per bed over 10 years. Under-investing in new technologies which fuels patient declines
o    CYH charging more and gauging out of network patients and uninsured. Top in the industry in gauging. Desperate for cash
o    Over 4 years has sold 1/3 of hospitals. Paid top dollar buying them at 600k. On sale has received 250k per bed and might be getting worse
o    Debt per bed has increased to over 700k per bed
o    Company doesn’t generate any cash. Including items the company categorizes as one-time costs they are burning a few hundred million a year.

Be sure to check out the rest of the Sohn New York conference presentations.

Christopher Hansen Long Zillow: Sohn New York Conference

We're posting up notes from the Sohn New York Investment Conference.  Next up is Christopher R. Hansen of Valiant Capital Management who presented long Zillow (ZG).

Chris Hansen's Sohn New York Presentation

Long Zillow
•    $7 billion market cap, $6 billion EV
•    70% market share
•    Currently sells leads. Potential to move to taking part of the commission
•    $1.2 billion in revenue. $350 million in EBITDA
•    Huge potential in flipping homes. Has all the data. Has all the traffic of people looking to buy homes. Some people willing to sell for a little less in order to get cash quick and not deal with selling their house
•    Will get into mortgage origination business. 50% to 75% attach rates
•    Will get fees on this flip. Don’t even need to make money on the actual flip. Will turn over inventory 6 times (30 to 90 day holds) a year which will make it a good margin business

Be sure to check out the rest of the Sohn New York conference presentations.

Jeffrey Gundlach: Buy Interest Rate Volatility on the Long Bond (Sohn New York Conference)

We're posting up notes from the Sohn New York Investment Conference.  Next up is Jeffrey Gundlach of DoubleLine Capital who talked about markets.

Jeff Gundlach's Sohn New York Presentation

•    Public debt about to explode and interest costs will explode. Especially once we hit a recession
•    He thinks there is more of a chance of recession
•    Interest rates will see more volatility
•    Fed Chair Powell has completely changed his tune and is moving towards MMT
•    Buy interest rate volatility on the long bond. Thinks volatility could double

Be sure to check out the rest of the Sohn New York conference presentations.

Gabe Plotkin Bullish Las Vegas Sands & Worldpay: Sohn New York Conference

We're posting up notes from the Sohn New York Investment Conference.  Next up is Gabe Plotkin of Melvin Capital Management who talked markets.

Gabe Plotkin's Sohn New York Presentation

- Sees US growth looking stable, says this is a "good environment for stocks."
- Bullish on Las Vegas Sands (LVS) and Worldpay (WPAY)
- Most of his fund's profits have come from shorting and betting against companies.  He's skeptical about mall REITs and Tesla (TSLA).

Be sure to check out the rest of the Sohn New York conference presentations.

Scott Goodwin Short PlastiPak, Long Constellium: Sohn New York Conference

We're posting up notes from the Sohn New York Investment Conference.  Next up is Scott Goodwin of Diameter Capital Partners who presented a short of PlastiPak unsecured bonds and a long of Constellium equity.

Scott Goodwin's Sohn New York Presentation

•    Credit investor - Secular shift in plastic packaging. 50 year bull run in the use of plastic packaging.
•    Many single use plastics being banned. Creating huge problems in oceans and landfills. Not easy to recycle. Thinks use of plastic will decline and will be a secular decline. Cliff is coming
•    Short PlastiPak unsecured bonds. 4% EBIT margins. Peer group has 10% to 12% margins. Bond trades at 95 cents. Heavily levered. Likely to be worth close to zero in bankruptcy
•    Long Constellium equity (aluminum). Much easier to recycle aluminum and higher recycling rates

Be sure to check out the rest of the Sohn New York conference presentations.

Sohn New York Idea Contest Winner: Short Lamb Weston

We're posting up notes from the Sohn New York Investment Conference.  Next up is the Sohn idea contest winner who presented a short of Lamb Weston (LW).

Sohn Idea Contest Winner: Short Lamb Weston

•    Lamb Weston(LW) – (Short idea) Lamb will miss estimates by 30% to 40% in next few years as margins are at peak.

o    Buys potatoes and sells them as french fries to restaurants.
o    Lots of new supply coming online. Was an unexpected boom in demand which sent margins in the business way up but a supply response is coming
o    People don’t realize that their current pricing power is cyclical and not secular. Stock is priced like a consumer staple
o    Would cost $5 billion to recreate Lamb’s assets. Company's EV is well more than double that

Be sure to check out the rest of the Sohn New York conference presentations.

Bihua Chen Long Reata Pharmaceuticals: Sohn New York Conference

We're posting up notes from the Sohn New York Investment Conference.  Next up is Bihua Chen of Cormorant Asset Management who presented a long of Reata Pharmaceuticals (RETA).

Bihua Chen's Sohn New York Presentation

•    Reata pharmaceuticals (RETA) - stock can be a ten bagger if it works. Has an experimental drug targeting kidney disease with good results. Can be a $25 billion company on $5 billion peak sales. Current market cap is $2.3 billion
•    Current data is so good that some people believe the data is fake
•    Some safety concerns on heart safety (now excluding patients with heart disease and slowly moving patients dose up) Since changes there have been no problems. No liver problems or any warning signs. No actual muscle loss. They think the safety profile is good

Be sure to check out the rest of the Sohn New York conference presentations.

Todd Westhus's WDC Trade: Long Bank Debt/Short Bonds (Sohn New York Conference Presentation)

We're posting up notes from the Sohn New York Investment Conference.  Next up is Todd Westhus of Olympus Peak Asset Management who presented a Western Digital (WDC) trade: long bank debt / short bonds.

Todd Westhus's Sohn New York Presentation

•    Western Digital (WDC) - negative cyclical and secular headwinds. Capital structure arbitrage. Long bank debt/short bonds. 2 points downside with 50 points upside.

o    HDD is losing share over time to SSD where WDC is a smaller player. HDD is in secular decline.
o    SSD has cyclical and competitive issues. WDC is losing market share in SSD
o    SSD inventory bloated and prices falling. Cycle is early and WDC has worst balance sheet in industry
o    HDD industry revenue expecting to decrease 15% over 4 years. Melting ice cube
o    WDC SSD has been growing 2% a year while industry grew 24%.
o    WDC has an inventory issue
o    Margins going to get worse. Gross margins likely to go flat or negative in a recession
o    China will be entering SSD market and will create more supply.
o    $11 billion of debt and EBITDA can go negative in a recession from $4 billion today

Be sure to check out the rest of the Sohn New York conference presentations.

Matthew Smith Long Cabot Oil & Gas: Sohn New York Presentation

We're posting up notes from the Sohn New York Investment Conference.  Next up is Matthew J. Smith of Deep Basin Capital who presented long Cabot Oil & Gas (COG).

Matthew Smith's Sohn New York Presentation

•    Energy focused investment firm
•    Cabot Oil & Gas (COG) - Currently $25 a share. Base case $35/Bull case $45/Downside to low 20’s
o    Acquisition candidate. Management incentivized to sell
o    Acreage in Marcellus shale. Marcellus generates 1/3 of natural gas used in the US
o    COG is in the best place in the country for nat gas
o    Productivity of COG wells 75% better than industry average
o    18 years of inventory in prime acreage
o    Atlantic Sunrise pipeline built to take COG gas into premium markets. Realize higher prices on nat gas. Own 10% of Atlantic Sunrise
o    40% higher margins than peers and growing
o    Over next 8 years will generate market cap in FCF
o    Based on current curve COG worth mid-thirties. On 50 cents higher curve worth bull case
o    Doesn’t like AR RRC because they are levered and are competing with free gas from oil production (associated gas)
o    COG will soon be a tax payer. Through an acquisition the profits can be shielded from taxes
o    COG share of Atlantic Sunrise worth $300 million and likely to sell and repurchase stock
o    Average management age at Cabot is in the sixties so think they will look to exit in a sale

Be sure to check out the rest of the Sohn New York conference presentations.

Parvinder Thiara Long Brazilian Bonds: Sohn New York Conference

We're posting up notes from the Sohn New York Investment Conference.  Next up is Parvinder Thiara of Athanor Capital who presented long Brazilian bonds.

Parvinder Thiara's Sohn New York Presentation

•    Worked at DE Shaw for 8 years before setting up fund; Chemist
•    Uses macro for relative value trades
•    Brazil- Long Brazilian bonds (currency hedged) as too much policy tightening is being priced in.

o    Went through a painful economic cycle and too much policy tightening is being priced in.
o    Real output still 5% below previous peak. Inflationary pressure should remain low as there is slack in the economy. There is currently low inflation. Easing is more likely than tightening being priced in.
o    Balance of payments is good and has money to defend currency. Not vulnerable to current account shocks. This isn’t Turkey or Argentina
o    Bolsonaro wants lower rates and tweets about it like Trump

Be sure to check out the rest of the Sohn New York conference presentations.

Monday, April 29, 2019

24th Annual Sohn Investment Conference New York

The 24th annual Sohn Investment Conference in New York is fast approaching.  Supporting the Sohn Conference Foundation's mission to treat and cure pediatric cancer, this is always a great event and supports a great cause.  In partnership with CNBC, the conference features top investors and industry thought leaders sharing investment ideas and more.

You can learn more about the event and register by clicking here.

2019 Sohn New York Speakers List

·         Bihua Chen, Founder and Portfolio Manager, Cormorant Asset Management, LP
·         Patrick Collison, Chief Executive Officer, Stripe
·         Laura Deming, Managing Director, Longevity Fund
·         David Einhorn, President, Greenlight Capital, Inc.
·         Tim Ferriss, Investor, Best Selling Author, and Top-Ranked Podcaster
·         Spencer Glendon, Concerned empiricist and Founder, Probable Futures
·         Jeffrey Gundlach, Chief Executive Officer, DoubleLine Capital LP
·         Christopher R. Hansen, President and Founding Partner, Valiant Capital Management, L.P.
·         Ryan Heslop, Co-Founder & Portfolio Manager, Firefly Value Partners, LP
·         Sir Michael Moritz, Partner, Sequoia Capital
·         Gabe Plotkin, Chief Investment Officer and Founder, Melvin Capital Management LP
·         Larry Robbins, Founder, Chief Executive Officer, Portfolio Manager, Glenview Capital Management, LLC
·         Daniel Sundheim, Founder and Chief Investment Officer, D1 Capital Partners
·         Josh Waitzkin, Extreme Athlete, Peak Performance Specialist
·         Ariel Warszawski, Co-Founder & Portfolio Manager, Firefly Value Partners, LP
·         Dr. Joon Yun, President, Managing Member, Palo Alto Investors LP

Click here to register for the conference.

Event Details

When: May 6th, 2019

Where:  Lincoln Center in New York City

Next Wave Sohn 2019

In addition to the main event, the conference will again feature the 6th annual Next Wave Sohn segment earlier in the day, which showcases emerging managers presenting their latest investment ideas.  Here's the speaker's list:

·         Angela Aldrich, Managing Partner & Portfolio Manager, Bayberry Capital Partners LP
·         Matthew J. Smith, Chief Executive Officer & Chief Investment Officer, Deep Basin Capital LP
·         Parvinder Thiara, Chief Investment Officer, Athanor Capital, LP
·         Todd Westhus, Founding Partner, Chief Investment Officer, Olympus Peak Asset Management LP
·         Lauren Taylor Wolfe, Managing Partner, Impactive Capital LP

As usual, this figures to be a full day of interesting market ideas and thought provoking discussion, all benefiting pediatric cancer research.  If you're interested in attending, we'd recommend signing up quickly before the rest of the seats disappear. 

Wednesday, March 20, 2019

What We're Reading ~ 3/20/19

T. Rowe Price: The Man, The Company & The Investment Philosophy [Cornelius Bond]

How to take the outside view [McKinsey]

Pitch on short Tesla [Dropbox]

What is Amazon [Zack Kanter]

Allen Zhang on the key product principles of WeChat [WeChat]

KKR is too cheap [Yet Another Value Blog]

Buying is easy, selling is hard [Bloomberg]

In 12 minutes, everything went wrong: LionAir crash [NYTimes]

The SaaS busines model & metrics [Matrix Partners]

How an app for gamers went mainstream [The Atlantic]

The risk of low growth stocks: Prestige Brands [Intrinsic Investing]

Franchise value: video game IP vs movie IP [Medium]

The 20 craziest investment facts ever [Irrelevant Investor]

Netflix is the most intoxicating portal [NYTimes]

Farmbelt bankruptcies are soaring [WSJ]

ESPN's ex-President wants to build the Netflix of sports [Bloomberg]

Inside HBO's plan to win the streaming wars [Vanity Fair]

Interview with Twitter CEO Jack Dorsey [Rolling Stone]

Wednesday, March 13, 2019

What We're Reading ~ 3/13/19

The Misbehavior of Markets: A Fractal View of Financial Turbulence [Benoit Mandelbrot]

Transcript of interview with Federal Reserve Chairman Jay Powell [60 Minutes]

Status as a service [Eugene Wei]

The four fundamental skills of all investing [Collaborative Fund]

The perils of investing idol worship: The Kraft Heinz lessons [Aswath Damodaran]

A pitch on Nintendo [HardcoreValue]

A pitch on Molson Coors [Elevation Capital]

A look at the timeshares businesses [Yet Another Value Blog]

A look at HSBC [UK Value Investor]

How internet marketplaces unlock economic wealth [Bill Gurley]

DoorDash tops GrubHub & UberEats in food delivery [Fortune]

Google quietly releases hotel booking with potentially huge implications [Skift]

Pricing algorithms can learn to collude with each other to raise prices [MIT Tech Review]

Not caring: a unique and powerful skill [Collaborative Fund]

On Manchester United: the paradox of profits without trophies [FT]

Investors get burned after betting on electric car metals [WSJ]

Wednesday, February 27, 2019

Last Chance: 33% Discount Ends Tomorrow

The 33% discount on our quarterly newsletter expires tomorrow.  A brand new issue was just released and reveals the latest portfolios of 25 top hedge funds. 

Find out what stocks they had on their watchlists and finally bought during the market sell-off.  It also includes investment thesis summaries on 3 stocks that value managers have been accumulating.  To see a sample of the newsletter, check out a full past issue here.

33% Discount Expires Tomorrow

The discount expires on February 28th.  After signing up, you'll get immediate access to the new issue & the archive of past issues.

1-year Subscription (4 issues): Normal Price $299.99 Discount Price $199.99 per year

Quarterly Subscription: Normal Price $89.99 Discount Price $59.99 per quarter

Want to pay by check or soft dollar account?  Please email us: info (at) hedgefundwisdom (dot) com

Tuesday, February 26, 2019

Warren Buffett Interview: Summary, Video & Transcript

Yesterday on CNBC Warren Buffett sat down for a 2-hour interview with Becky Quick and shared his thoughts on a number of financial topics.  Here's a summary and select quotes, with videos and transcript below.

Warren Buffett Interview Summary

- On the economic signals he sees from all his businesses:  "The rate of improvement has tapered but certainly hasn't flattened ... Home construction has been disappointing, but our retail figures in January were not strong, but January is a peculiar month.  Right now things look fine."  He also noted he sees some signs of inflation in raw material costs.

- On the Federal Reserve & interest rates: "I don't second guess (Jay Powell) at all.  He's a terrific choice."  He said what the Fed does doesn't affect what Berkshire does.

- He's amazed that ten years after the crisis that rates are where they are worldwide (especially negative rates) with the world doing 'really well' now.  "The real question for investors: are these rates the new normal?"

-  On Apple (AAPL): "The lower it goes, the better I like it obviously ...  If it were cheaper, we'd be buying it.  We aren't buying it here"  This quote is interesting considering that AAPL was recently down as much as 30+% in the fourth quarter, but Berkshire was a net seller of shares as one of the portfolio managers (not Buffett) was selling.  His average cost basis is around $141 per share.

- Likes financials as "very good investments at sensible prices.  They're cheaper than other businesses that are also good businesses by some margin."  Says Moynihan at Bank of America (BAC) was underestimated and has done excellent.  Says JPMorgan Chase (JPM) is a very well managed bank.

-  Wanted to be buying stocks in Q4 as they were cheaper, but it sounds like Berkshire was keeping cash on hand for a potential acquisition that didn't materialize.  He said they haven't been buying equities yet in 2019 as the market as 'basically gone straight up.'

- Notes that portfolio managers Ted Weschler and Todd Combs since joining Berkshire: "Overall, they are a tiny bit behind the S&P, each, by almost the same margin."  The now manage around $13 billion each.  Buffett says they've also done better than he has over that time period.

-  On the trade war: The tariffs have had some impact on some of his businesses.  "It pushes prices up, there's no question about that."  It hasn't had a big impact at 10% but 25% you'll have to make changes (pricing, sourcing, etc).

- On KraftHeinz (KHC): Brands in general aren't what they used to be, and in many cases consumer packaged goods companies are being threatened by a ton of new brands, increasingly strong private label, and more.  "The ability to price has been changed, and that's huge."  On his investments he noted: "We didn't overpay for Heinz ... but we overpaid for Kraft."  Says the co still has real debt to be reduced.

- Sold Oracle (ORCL) quickly after concluding he didn't understand the business well enough.  His past dalliance with IBM also entered his mind.  "I don't think I understand exactly where the cloud is going."

- "You do not want to have a political view in investing."

- If Bloomberg announced he were running for President, he would be for him.  If Howard Schulz runs as an independent, he thinks he'd take votes away from Democrats, so it'd be a mistake for him to run.  Generally, third party candidates are going to hurt one side.

Warren Buffett Interview Video

Embedded below is the video of the full interview

Warren Buffett Interview Full Transcript

You can also read a full transcript here.

For more from Berkshire, be sure to also read Warren Buffett's annual letter 2018.

Monday, February 25, 2019

Warren Buffett's 2018 Annual Letter: Berkshire Hathaway

Warren Buffett has released his 2018 annual letter in Berkshire Hathaway's annual report.  In it, he notes they bought $43 billion of marketable equities last year and sold $19 billion.  Berkshire now has a cash-equivalents hoard of $112 billion and another $20 billion in fixed income.

Here's some select quotes from the letter with the full text below:

On share buybacks:  "All of our major holdings enjoy excellent economics, and most use a portion of their retained earnings to repurchase their shares. We very much like that: If Charlie and I think an investee’s stock is underpriced, we rejoice when management employs some of its earnings to increase Berkshire’s ownership percentage."

On Berkshire buying back its own shares:  "it is likely that – over time – Berkshire will be a significant repurchaser of its shares, transactions that will take place at prices above book value but below our estimate of intrinsic value. The math of such purchases is simple: Each transaction makes per-share intrinsic value go up, while per-share book value goes down. That combination causes the book-value scorecard to become increasingly out of touch with economic reality."

On holding cash:  "Berkshire will forever remain a financial fortress. In managing, I will make expensive mistakes of commission and will also miss many opportunities, some of which should have been obvious to me. At times, our stock will tumble as investors flee from equities. But I will never risk getting caught short of cash."

On finding private acquisitions: "Prices are sky-high for businesses possessing decent long-term prospects.That disappointing reality means that 2019 will likely see us again expanding our holdings of marketable equities.  My expectation of more stock purchases is not a market call. Charlie and I have no idea as to how stocks will behave next week or next year."

Embedded below is Warren Buffett's annual letter:

You can download a .pdf copy here.

For more from the Oracle of Omaha, be sure to check out Warren Buffett's recommended reading list.

We've also posted up other recent investor letters:

- Excerpts from Baupost Group's letter

- Third Point's Q4 letter 

- Sequoia Fund's letter