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]

Third Point's Q1 Letter: Playing Merger Arb & Pro Forma Situations

Dan Loeb's Third Point is out with its first quarter letter.  In it, they talk about how hedge funds have seen a lot of carnage as of late.

Specifically, they see the decimation in merger arbitrage land as an opportunity, writing, "many of these combined businesses should compound in value thanks to the benefit of synergies, modest financial leverage, and strong or improved management teams that have a history of successful capital allocation."

Their letter outlines their thesis on the following plays:

- Dow / DuPont
- ABInBev / SAB Miller / Molson Coors
- Time Warner Cable / Charter Communications
- Chubb / ACE
- Danaher

Embedded below is Third Point's Q1 letter:

Jamie Dinan's Stock PIcks at Capitalize For Kids Sohn Canada Conference

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Jamie Dinan of York Capital who shared a myriad of investment ideas.


Jamie Dinan's Sohn Canada Presentation

Started off with some general comments. US growth is still quite healthy (although not considered by many people), Europe on the other hand is still not. With oil prices coming down, it will give a huge amount of money to the US consumer (essentially a $130B tax break for consumers – this of course assumes money is not relocated to other spending). Believes Europe will be a reactionary market to policies and this will create lots of distressed situations in Europe (and there is still plenty today).

Some merger-arb names which have ~90% probability of closing: Time Warner Cable/Comcast Corporation, Albemarle Corporation /Rockwood Holdings, and DIRECTV/AT&T Inc.

Next, pitched LONG Molson Coors Brewing (TAP), believes an event could happen with the recent news of Anheuser looking for a deal with SAB. Molson has a 42% stake in MillersCoors (The JV between Molson and SAB). This possible transaction will force SAB to divest their 58% interest from MillerCoors (STZ/BUD deal, divestment of Groupo Model JV), Molson seems like the only option. The deal will likely get done with debt and take Molson to 5x Net Debt-EBITDA. Believes Molson can realize great about of synergies (~$300M) from the US JV with their current Canadian operations. 

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.