What We're Reading ~ 10/30/19

The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution [Gregory Zuckerman]

How TikTok holds our attention [The New Yorker]

Inside the Nordstrom dynasty [NYTimes]

Is Amazon unstoppable? [The New Yorker]

Schwab kills commissions to feed its flywheel of scale [Intrinsic Investing]

Learning from Costco's Jim Sinegal [MastersInvest]

How Irish butter Kerrygold conquered America's kitchens [Bloomberg]

TheRealReal: the internet's luxury consignment shop [The New Yorker]

On the importance of humility [NYTimes]

With summer over, will hard setlzer's popularity go away? [LATimes]

The strange revival of vinyl records [The Economist]

On filtering the barrage of financial news [CFA Institute]

Sequoia Fund Q4 Letter: Added to Alphabet, Exited Fastenal & Danaher

Ruane, Cunniff & Goldfarb is out with Sequoia Fund's fourth quarter letter.  They returned 20.07% for the year.

At the end of 2017, their top 10 holdings were:

1. Berkshire Hathaway (BRK)
2. Alphabet (GOOG)
3. Mastercard (MA)
4. Constellation Software (CSU)
5. Dentsply Sirona (XRAY)
6. TJX Companies (TJX)
7. Rolls Royce (RR.LN)
8. Charles Schwab (SCHW)
9. CarMax (KMX)
10. Liberty Media

They exited positions in Fastenal (FAST), Danaher (DHR), Emcor, Croda, Tiffany (TIF), and Costco (COST).  They've also trimmed stakes in BRK, MA, O'Reilly (ORLY), Waters, and TJX.

They've added to positions in GOOG, Hiscox, Jacobs, Omnicom, and Wells Fargo.  They've also started new investments in Credit Acceptance (CACC) and Royal Vopak, Priceline (PCLN).

They've been concentrating their portfolio a bit more, and their cash levels have gone down some.

Embedded below is Sequoia Fund's Q4 letter:



You can download a .pdf copy here.

For other recent fund letters, we've also posted Greenlight Capital's Q4 letter.

Glenn Greenberg's Brave Warrior: Long Financials (CNBC Interview)

Glenn Greenberg of Brave Warrior Advisors sat down with CNBC for a rare interview.  Here's some key takeaways:

- He looks to buy stocks that will have around a 10% free cashflow yield 1-2 years from now

- Focused on 2-3 years ahead, less concerned about short-term swings or quarterly volatility. Likes to focus on companies that build wealth.

- Long financial stocks JPMorgan (JPM), Primerica (PRI), and Charles Schwab (SCHW).  "We made a big bet that normal interest rates would not stay at zero.  It was that simple and we didn't know when they would change, but the payoff we felt would be substantial so we have had a lot of financial stocks in our portfolio the last few years."

- On JPM: "They should be earning $8-9 in a couple of years if rates track at the moderate increases that are in the dot plot (of the Federal Reserve)."

- On SCHW: "Amazing franchise" and sees it largely as a bet on interest rates normalizing ... 175 bps now versus 350 bps back in 2007 on client cash positions.

- On Freddie Mac: "Best business model I have ever seen."

- "(Interest) rates could go a lot higher, Inflation could go a lot higher."

- Also owns Airbus (AIR.PA), Express Scripts (ESRX)

- Says Valeant Pharmaceuticals (VRX) was "biggest investment mistake over last 30 years" for him.  But still broke even on it.


If you missed the interview on TV today, it looks like the video replay is behind CNBC's paywall.

What We're Reading ~ 9/8/16

In-depth pitch on Liberty Global Latin America (LILA/K) [Find Me Value]

A second look at Amerco (UHAL) [Punch Card Research]

WD-40 (WDFC): a case study of the bubble in 'safe' stocks [Intrinsic Investing]

Analysis of Dell Technologies new VMWare tracking stock [Clark Street Value]

Morris Mark on four stocks he likes [Barrons]

Uber: from zero to seventy billion [Economist]

Google, Uber and the evolution of transportation [Stratechery]

Why electric cars will be here sooner than you think [WSJ]

How Apple's car could crack the automotive industry [Autocar]

Old article on capital allocator Henry Singleton [BrianLangis]

A look at the online travel industry [Phocuswright]

Why walking helps us think [New Yorker]

Inside Dyson's reinvention factory [Forbes]

Will Amazon kill FedEx and UPS? [Bloomberg]

On subscription retail [The Robin Report]

Theranos: how Elizabeth Holmes's house of cards fell [Vanity Fair]

Graham & Doddsville New Issue: Interviews With MSD Capital, Meritage Group & More

The Spring 2016 issue of the Graham & Doddsville newsletter has been released by Columbia Business School.  In it, they have some great interviews with John Phelan of MSD Capital, Alex Magaro of Meritage Group, Adam Wyden of ADW Capital, and short-seller Marc Cohodes.

The issue also features the stock pitches from students from the 9th annual Pershing Square challenge.  Long Alimentation Couche-Tarde (TSE:ATD.B) won first place.  Next, second place went to a long pitch on Charles Schwab (SCHW).  Finalists also included a long pitch on Advance Auto Parts (AAP), a long of Alcoa (AA), and a long of Alliance Data Systems (ADS).

Embedded below is the latest Graham & Doddsville issue:



You can download a .pdf copy here.

What We're Reading ~ 8/26/15

Risk: your best friend and worst enemy [Morgan Housel]

On when to sell a stock [Safal Niveshak]

What investors must know about China [Dash of Insight]

A quick look at Charles Schwab [Brooklyn Investor]

A write up on Cable & Wireless [Dislocated Value]

A pitch on Interactive Brokers [Bear of Burrard Street]

Quick look at impending spin-off Ferrari [Just Value]

Myths and facts about risk parity [FT Alphaville]

A teenager's view on social media [Medium]

Ways to think about cars [Benedict Evans]

Preparing for life after cable [NYTimes]

A look at Google's new CEO Sundar Pichai [The Verge]

American economy blues: everything you need to worry about [Fortune]

Housing, consumer confidence are bright spots in US economy [WSJ]

Credit scores are rising and becoming more visible [NYTimes]

Racing to stay ahead of Uber [Bloomberg]

Smart guys are the most dangerous [Behavioral Macro]

Peter Thiel on what works at work [Washington Post]

Ken Griffin's Citadel to Sell E*Trade Financial (ETFC)

Ken Griffin's hedge fund Citadel Investment Group plans to sell a ton of its shares in E*Trade Financial (ETFC), a company it had aided in the past. As the company's largest shareholder, Citadel is planning to sell over 27 million shares.

Keep in mind that even after Citadel divests its almost 9% equity stake, they still own a sizable chunk of convertible debt. If converted, this would ratchet their stake to almost 30% ownership. But this is not the first time Griffin's firm has sold shares, as Citadel sold ETFC back in late 2009 when shares traded around $1.20 per share. Since then, the shares have undergone a 1:10 reverse split and shares trade around $15.85 today.

The company underwent turbulent times during the financial crisis as it strayed from its stock brokerage roots and into the mortgage market right at the peak. After slowly but surely returning solely to its core business, the company still sits in limbo as shares are only up around 2% over the past year.

Hedge fund legend Leon Cooperman and his Omega Advisors are long E*Trade and see it as a potential takeover target. (To see the rest of Omega Advisors' portfolio, head to our new issue of Hedge Fund Wisdom). This seems to be the common investment thesis on ETFC as many investors argue it could be a prime asset to bigger houses like TD Ameritrade (AMTD) or Charles Schwab (SCHW). This thesis has not played out over the past few years (obviously). Perhaps activity in this regard would be spurred once interest rates start to rise, as this would help improve brokerage profitability.

Per Google Finance, E*Trade Financial is "a financial services company, which provides online brokerage and related products and services to the individual retail investors, under the brand E*TRADE Financial. It also provides investor-focused banking products, sweep deposits and savings products, to retail investors."