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]

Greenlight Capital Q4 Letter: New Stakes in Brighthouse Financial, Twitter, Time Warner, Ensco

David Einhorn's Greenlight Capital has released its fourth quarter 2017 letter.  They finished the year up 1.6%.

Greenlight Takes New Stakes in Brighthouse Financial, Twitter, Ensco, Time Warner

The hedge fund firm initiated numerous new positions recently.

The hedge fund's new stake in Brighthouse Financial (BHF) is all about valuation.  The company was spun out of MetLife and they feel analysts have been too negative on BHF's prospects.  They feel shares are trading at a 40-50% discount to peers and note management is incentivized if shares appreciate.

Einhorn's firm also jumped back into Time Warner shares (TWX), a previous holding.  They utilized volatility in the name to re-establish a stake as the US government has opposed their sale to AT&T (T).  Greenlight feels the government has a weak anti-trust case but even if they somehow win, shares are still cheap and the company has strategic options.

Greenlight also entered Twitter (TWTR) shares with their thesis being that the user experience has improved yielding growth in new users and time spent on the platform.  They feel the company now has a better pitch to advertisers, yielding revenue growth.  The company has around a 25% margin gap to other social media peers and Greenlight feels they can close the gap.  (Note: David Einhorn is on Twitter, though he doesn't post about the market, usually just poker.)

Embedded below is Greenlight Capital's Q4 2017 letter:



For more from this manager, be sure to also check out David Einhorn's recent investment talk at  Oxford Union.

Bill Miller Thinks We're in a Secular Bull Market, Talks Stocks He Likes

Value investor Bill Miller of LMM Investments appeared on CNBC today and thinks we're in a secular bull market that began in March 2009.

"Bonds are unattractive in my view.  I believe we hit a double bottom in bonds in the summertime... 35 year bull market in bonds is over."

"As long as stocks yield more than bonds, stocks are attractive."

Miller is fully invested and says, "Cash earns zero, why do I want something that earns zero?"

He likes One Main Financial (OMF), bought in the spring, still thinks it's 'crazy cheap.'  Thinks smaller financials are attractive, mentioned MGIC (MTG) and Radian (RDN), mortgage insurers. 

Miller also likes big financials as well: Bank of America (BAC), Citigroup (C), JPMorgan (JPM).  Value investor Rich Pzena also likes financials, as he mentioned in his interview last week.

Bill Miller has owned Amazon (AMZN) since the IPO and still owns it today.  He says that was one of the best decisions he's ever made, and one of the worst has been selling any shares of it.  It's his largest position and says people have misunderstood AMZN's valuation from the beginning.  "Amazon's total addressable market is just so much bigger than any other company on earth."

He also talked about Twitter (TWTR), saying he sold half of his call options when it was in the $20s, and thinks it's a unique asset as a 'network of interests.'  He thinks they need a fulltime CEO and suggested they could perhaps switch to a paid monthly platform.  "We own Twitter because of the optionality."  He think it has a floor of $15-16.

Miller also owns various homebuilders such as Lennar (LEN) and TriPointe (TPH).  Feels builders will grow double-digits for the next few years.

On airlines, Miller still owns them and says Delta (DAL) is trading at a 15% free cash flow yield and will generate $5 billion in free cash and return 75% of that to shareholders.  He likes United (UAL) with more upside as the margins are depressed and they've got new management there.

Miller also commented on former hedge fund hotel Valeant Pharmaceuticals (VRX):  "It's probably the most toxic stock in the overall market.  It's blown a hole in Ackman's portfolio, it cost Bob Goldfarb, one of the best investors in our generation his job.  Our cost is from $20-35, we just bought more last week." 

He says they have 2 issues: the legacy issue of transitioning new leadership and then the debt load.  He thinks it doubles in 3 years as the company has a lot of cashflow and will look to sell non-core assets.

He also talked about Netflix (NFLX), noting it's an incredible company and he's owned it twice before, but thinks it's expensive now.  Also thinks Tesla (TSLA) is expensive and most energy plays are as well, especially the integrated players.

For more from prominent investors, check out David Tepper's recent interview, as well as Keith Meister's thesis on YUM China. 

What We're Reading ~ 6/22/16

Ev Williams became a billionaire creating the open web, now he's betting against it [The Atlantic]

The perilous task of forecasting [WSJ]

On Uber's battle for China [FT]

Why LaCroix sparkling water is suddenly everywhere [Vox]

TV advertising's surprising strength and inevitable fall [Stratechery]

Can Netflix survive in the new world it created? [NYTimes]

The business of too much TV [Vulture]

It's 'terrifying' competing with Netflix and Amazon [CNBC]

Spending money to make money, a.k.a. stock based compensation [Chamath Palihapitiya]

All money is made at points of friction [Alex Danco]

An example of an investment checklist [Covenant Lite]

Ideas are not cheap [Daniel Tillett]

Valuation online class [NYU Stern]

Mary Meeker's 2016 internet trends report [Recode]

China Connect: key mobile market trends in China [Slideshare]

The state of digital media 2016 [Slideshare]

A look at the event ticket industry [The Ringer]

The future of agriculture [Economist]

Hot air millionaires: how Drybar became a $100 million business [BuzzFeed]

Simple financial advice for new grads [Morgan Housel]

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]

What We're Reading ~ 6/10/15

Focus on the key variables of an investment [Base Hit Investing]

Bias from overconfidence [Farnam Street]

Robert Shiller: things are overvalued [Zero Hedge]

The most important concepts in behavioral economics [StockTwits]

A pitch on Charter/Time Warner Cable [Value Venture]

A look at Precision Castparts [Jnvestor]

Why did John Malone invest in Lions Gate? [Punch Card]

On the looming rental crisis in the US [SoberLook]

Weak consumer spending: the canary in the bear market coal mine [Mauldin]

How Tesla will change the world [Wait But Why]

The state of Chinese social media in 2015 [AdAge]

Why China is blowing an equity bubble [FT]

Xiaomi, China's new phone giant, takes aim at world [WSJ]

Coal woes are spreading but it still has fans [Economist]

Caesars: a private equity gamble in Vegas gone wrong [Fortune]

On the truly exceptional business [Value Investing World]

Japan's economy grows faster than estimated [Bloomberg]

Apple is the new king of bonds [Bloomberg]

What Twitter can be [lowercase capital]

Protections for late investors can inflate start-up valuations [NYTimes]

David Tepper Says Market Isn't a Bubble: His Thoughts on Valuation, Tapering, Airlines & More

After the Robin Hood Investors Conference last week, Appaloosa Management founder David Tepper sat down with Bloomberg TV to talk about the markets.


On market valuation: He does not think we're in a bubble now as he compared P/E multiples over the last 5 years to the 5-year period running up to the 2000 bubble.  Stocks now have seen little change in multiples, while stocks back then saw huge multiple expansion.

On airlines:  "Our big play versus the market is the airlines.  We're the biggest holder of many of these airlines." We flagged this big bet for readers of our Hedge Fund Wisdom newsletter over a year ago.  See what else Tepper is betting on by subscribing (a brand new issue was just released last week).

On his 2014 investing approach: "We'll probably stay long.  We recently put on a treasury short, to hedge ourselves against the equity markets.  Little bit scared of tapering... higher rates... though rates won't go that high."

On to be worried about: "I would be worried if I was a long/short guy and not long enough, that's what I'd be worried about.  But I'm not worried, because I am long.  But if I'm a L/S guy who can only go 60% long ... the biggest risk for the market is you'll have multiple expansion, higher growth, 10% earnings growth next year, and you'll have another year of 20-30% (performance)."

On J.C. Penney (JCP): "It was a tiny position... a trade and we're done."

On Twitter (TWTR):  They would have held Twitter longer, but they had a price target in the $40's and so when the stock hit that in the first days of trading, he exited.  "It's a discipline."

On Citigroup (C):  "Citi still has some pretty good upside, we think it can make 7 bucks a share."

On his performance this year:  "I think gross we're in the 40's (%)."

On tapering:  He does think it's time to start tapering. He also said: "There can be a short-term negative reaction.  But if you're tapering, it's because there's stronger underlying US growth.  And if there's growth, there's going to be higher P/E multiples and the market should be higher.  If the market goes down, that's great, it'll be one more opportunity that people will be come and buy."

On what a lower Japanese Yen means: "It means higher P/E multiples in Japanese companies, straight out.  That's the way it works, because they're such exporters. So when you have a weaker yen, you have higher earnings."


Embedded below is the video of Tepper's Bloomberg TV appearance:



For more on the Appaloosa manager, head to Tepper's other recent interview where he said he thinks the market could see an 18-20x multiple.

What We're Reading ~ Analytical Links 11/6/13

Individual investor bullishness hits 6 year high [PragCap]

What to do in this market [Brooklyn Investor]

On a consistent and repeatable investment process [Research Puzzle]

Portfolios With Purpose: Stock picking for a cause [WSJ]

The 20 smartest things Jeff Bezos has ever said [Fool]

The bull case on Valeant Pharmaceuticals [Barrons]

Quick glance at Du Pont [Modern Graham]

A look at QEP Resources and Rick's Cabaret [HF Intelligence]

Springleaf Holdings and the re-emergence of subprime consumer lending [CFA]

Take-Two: A compelling value with 2 asymmetric options [First Adopter]

Disney and Dish wrangle not over broadcast fees, but the future of TV [NYTimes]

Can companies maintain their extraordinarily high margins? [WSJ]

Whitney Tilson's observations from his trip to China [Seeking Alpha]

On China's pollution problem [NYTimes]

Ajit Jain feeds Buffett's hunger [Insider Quarterly]

Why Twitter's IPO is a bigger deal than Facebook's [WSJ]

For new MBA's, tech more appealing than Wall Street [WSJ]

What We're Reading ~ Analytical Links 10/23/13

Margin debt hits new high [WSJ]

A dozen things learned from Bill Ruane about investing [25iq]

Look to helicopter Ben for clues to Yellen's Fed [FT]

The biggest emerging market in the world: the US [FT]

Do investment consultants pick future winners? [CBS News]

Sales are colossal, shares are soaring. All Amazon is missing is a profit [NYTimes]

Painful prescription: looking at Express Scripts [CNN Money]

In 5 years, Microsoft will be the most valuable company [BusinessInsider] 

Not already invested in Twitter? Might want to stay on the sidelines [AnObjectiveView]

Why Warren Buffett passed on the Washington Post [Fortune]

Interview with now-Nobel laureate Robert Shiller [WashingtonPost]

Emerging market investors sour on Mexico stocks [WSJ]

On hot chocolate demand and cocoa prices rising [FT]

Death of the American mall and rebirth of public space [The International]

Investing as a hobby [AbnormalReturns]

Buying shares in star athletes [NYTimes]

What We're Reading ~ Analytical Links 10/16/13

Being a long-term investor in a short-term world [The Big Picture]

Living in a low return world [Abnormal Returns]

The most important variable governing market prices [Minyanville]

Sears (SHLD) rally belies big worries about the retailer's prospects [Barrons]

In-depth look at Amazon's (AMZN) Jeff Bezos [BusinessWeek]

Pay TV: the future is not written [FT]

Takeaways from Liberty Media's (LMCA) analyst day [StreetInsider]

US cable companies home in on security [Reuters]

Scott Adams' secret to success [WSJ]

Iron Mountain (IRM) drops as Barclays says REIT conversion unlikely [Barrons]

How the Winklevoss twins found Bitcoin [Bloomberg]

Thoughts on Twitter's IPO & a good trade/bad investment [Aswath Damodaran]

Profile of Twitter & Square's Jack Dorsey [NewYorker]