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]

What We're Reading ~ 11/8/17

Lou Simpson explains his portfolio strategy [Kellogg Insight]

Carl Icahn's making a $5 billion bet on the future of cars [Bloomberg]

A closer look at Ray Dalio's 1937 scenario for current markets [A Wealth of Common Sense]

Bill Miller has 30% of his assets in bitcoin?! [WSJ]

Analysis of Equinix and Interxion: network effects in a box [Scuttleblurb]

The psychology of designer handbags [Business of Fashion]

The biggest stock collapse in history has no end in sight [Bloomberg]

JD.com shares a better deal than Alibaba's [Barrons]

Asia has more billionaires than the US for the first time [Daily Mail]

Caesars returns to building its gaming empire [Barrons]

A look at Snap Inc [Seeking Alpha]

The war to sell you a mattress is an internet nightmare [Fast Company]

Universities take a hard look whether MBA programs are worth it [WSJ]

On trying to boost your productivity [Thrive Global]

What We're Reading ~ 9/27/17

Your tolerance for investment risk is probably not what you think [WSJ]

Is value investing dead? Depends on how you measure it [WSJ]

What do the best investors do that the rest don't? [Behavioral Value]

We're going to need more Lithium [Bloomberg]

Mastering three strategies of organic growth [McKinsey]

DaVita: Warren and Charlie's excellent insurance gambit [SIRF]

Old interview with Chuck Akre - never sell the gems [Value Research]

The history of Sears predicts nearly everything Amazon is doing [The Atlantic]

Don't believe the headlines, traditional retailers are thriving online [VentureBeat]

How Kirkland Signature became one of Costco's biggest successes [WSJ]

Altaba's endgame could reward investors nicely [Barrons]

Netflix's Sarandos aims to build the next great Hollywood studio [Bloomberg]

Our entire credit bureau system is broken [The Verge]

Snapchat's influencers are fleeing to Instagram for money [Bloomberg]

How successful people make decisions differently [Fast Company]

What We're Reading ~ 7/26/17

The most important moat [Base Hit Investing]

Technical Analysis of Financial Markets [John Murphy]

Ferrari (RACE) sells veblen goods, not cars [Intrinsic Investing]

Buy time, they're not making any more of it [Abnormal Returns]

On reinvestment moats and Zooplus [Connor Leonard]

On perceived versus real risk tolerance [Aleph Blog]

On why it's so hard to be a contrarian investor [Medium]

A Hermes Birkin bag generates higher return than stocks? [BagHunter]

Snapchat (SNAP) isn't a social network, it's a toy [Vanity Fair]

Can anyone bury Bloomberg? [Institutional Investor]

Pat Dorsey Interview With Young Investors Society

Pat Dorsey was recently interviewed by Young Investors Society.  He's the founder of Dorsey Asset Management and prior to that worked as the Director of Equity Research for Morningstar. 

He's also the author of two books:  The Little Book That Builds Wealth and then The Five Rules for Successful Stock Investing.  Here's some takeaways from his talk:


- His book talks about moats and competitive advantage.  He wished he put more in his book about the business that is building the moat, versus one that already has one.  A younger biz with a longer runaway and each dollar of incremental cashflow is being invested at an increment ROIC.

- If you've got long-term time horizon, smaller pool of capital, and investors ok with volatility, your returns are probably gonna be superior. 

- For companies, the ability to reinvest is where you really maximize things

- On short selling:  Highlighted the not-so-great risk/reward of only being able to make 100% on your position but the potential to lose an infinite amount (if the short just keeps going up and up).  "Shorting is tough because time is not on your side."

- Short selling is very hard and the few good short sellers he's met never ever ever short because of valuation.  They short because a business is fraudulent or fundamentally flawed.  For shorting candidates, look for businesses that both raises equity and pays a dividend.

- On Snapchat (SNAP): Thinks it could be a smoking hole in the ground after a while.  Mentioned to look at the company's growth rate once Facebook (FB) rolled out its 'stories' copycat feature on its Instagram platform.  Said SNAP needs to find a monetization model over time.

- Said investing in DryShips (DRYS) is kind of like playing poker with Kim Jung Il.

- Make sure it's a business you can understand, don't ignore management.

- On Facebook (FB), which Dorsey owns: seems almost too obvious; has huge topline but still growing at over 50%.  Global advertising market is huge (opportunity).  Advertising grows a little bit more than global GDP but digital ads have grown even faster.  Advertisers follow attention.  2 companies get 80% of incremental ad spend: FB and Alphabet (GOOGL).  But if you had to take the stock and lock it up and not touch it for 10 years, you probably can't do that with FB because the landscape changes too much.  FB is hyper-aware of the risk of declining user engagement.  The current valuation does not assume dominance 10 years from now.  Close to 17-18x EBIT now, growing over 50%.

- "We worry about all our positions.  If you ever have a position you're not worried about, you're probably in trouble."

- Single biggest lesson is to avoid endowment bias.  Just because he owns it doesn't mean he should trust management more.  "My biggest mistakes have definitely come when I've not kept the bar as high as it should be with management quality or business quality."

- You can never have too high of a hurdle rate for businesses you evaluate.  You don't need to own 100 stocks, you're not running a Fidelity mutual fund.  Maybe 10 in your personal account, or 30 if you're running a fund

- Sticky note on his computer: "No FOMO"  or No Fear Of Missing Out.

- Ask yourself: Does it fit your personality?  Does it fit what you're trying to do as an investor?

The publisher disabled the ability to embed the video but you can view it here at the Young Investors Society YouTube channel.

We also recently posted up Mark Cuban's interview with Young Investors Society as well.

David Tepper: Market Multiple Kind of Full, Short Bonds, Long European Equities

David Tepper, founder of hedge fund Appaloosa Management, was interviewed on CNBC this morning.  Here's the highlights. 

Regarding the markets in general, Tepper said "Listen, I don't think the market is cheap by any stretch of a multiple, you can't say that.  On the other hand, with that backdrop of growth around the world, with the potential we'll do other things here, with the sugar that's still being put on by the ECB, BOJ and let's face it, the Fed is way low ...  You can't be short in that kind of setup.  I'm not suggesting the market is really cheap, but listen, it's hard to go short when you still have the 'drugs' being given.  The punch bowl is still full."  He went on to add, "On a multiple basis it's kind of full... I don't think the market's cheap." 

Regarding bonds, Tepper continues to be bearish and is short them: "If we're short US bonds, we're betting on a stronger economy here.  That's the bet.  Listen... bonds are really hard to own, the yields are really low."

Tepper also noted he bought Snap Inc (SNAP) shares in the IPO but sold on the spike higher.  "I'm not jumpin' through the hoop to buy it at $21.80.  But if it trades back down to the original offer price, I'd love to buy the stock there.  I'm a believer in the company, it's a valuation question to me.  Up near $30 it's too high for right now ... My youngest daughter loves the thing.  Anybody between 12 and 25 loves it, it's kind of anti-Facebook in that generation."

On Apple (AAPL): Trimmed the position due to concerns over China policy, but that shoe never dropped.  "I wouldn't be adding at $139."

He also likes Europe:  "I am long European equities, I could lose my behind.  There's upside people aren't recognizing.  It's a probability game to me.  (Valuations) are much much lower (than the US). 

On the Federal Reserve, he thinks they will raise interest rates more quickly.

Appaloosa now manages around $17 billion.  You can see the rest of their portfolio in the new issue of Hedge Fund Wisdom.

Embedded below are videos from David Tepper's interview with CNBC:

Video on the market:


Video on shorting bonds:


Video on the Federal Reserve:


Video on Snap Inc (SNAP):


Video on Europe & ECB:


Video on Apple (AAPL):


Video on regulation / tax cuts:

What We're Reading ~ 2/22/17

Why we dig in with a long held belief instead of changing our minds [Reformed Broker]

Decision making amid uncertainty: improving your process [CFA Institute]

Inside the Snapchat roadshow [Business Insider]

On Quicken loans, the new mortgage machine [NYTimes]

China's artificial intelligence (A.I.) boom [The Atlantic]

Podcast with Ed Thorp [Meb Faber]

Prem Watsa drops long-held bearish stance on markets [BNN]

On Buffett's new stake in Monsanto (MON) [Bloomberg]

Warren Buffett's honor versus 3G [Lawrence Cunningham]

A look at Expedia (EXPE) [Value and Opportunity]

On owning a stock for five full years [Gannon on Investing]

Mark Cuban's two biggest stock holdings [Benzinga]

Apple: the greatest cash machine in history? [Aswath Damodaran]

Billions the TV show versus real life [The Ringer]

McLaren struck gold making supercars for regular drivers this year [Bloomberg]