What We're Reading ~ 6/22/17

Payments industry overview: Analysis of Visa, Mastercard, American Express [Value Seeker]

Brexit in reverse? [George Soros]

If you can't explain something in simple terms, you don't understand it [Kottke]

On the popular 'FANG' stocks [AQR]

How to survive the retail crisis: a master class from T.J. Maxx [WSJ]

Starbucks' Howard Schultz has something left to prove [Fortune]

Blockchain 101 [CFA Institute]

How a 36-year old Wall Street prodigy saved Burger King [Business Insider]

Why grocery retail is the 'holy grail' [Bloomberg]

A look at subprime auto debt [NYTimes]

Profile of Citron's Andrew Left [NYTimes]

Mary Meeker's 2017 internet trends report [KPCB]

Essilor's CEO on an eyewear megamerger with Luxottica [FT]

Why is Trump causing chaos in Washington but not in the stock market? [Five Thirty Eight]

What We're Reading ~ 4/19/17

The Attention Merchants: The Epic Scramble To Get Inside Our Heads [Tim Wu]

Why we think we're better investors than we are [NYTimes]

Inside the hotel industry's plan to combat Airbnb [NYTimes]

Two law professors mimic activist hedge fund: a corporate raiding adventure [The Atlantic]

Vanguard is growing faster than everybody else combined [NYTimes]

Q&A with Blackrock's (BLK) Larry Fink [Bloomberg]

Why Facebook (FB) keeps beating every rival: it's the network of course [NYTimes]

A look at the first decade of augmented reality [Ben Evans]

Barry Ritholtz's rules of valuations [The Big Picture]

The making of a brand [Collaborative Fund]

Is American retail at a historic tipping point? [NYTimes]

E-commerce is a bear [Andy Dunn]

American Express, challenged by Chase, is losing the 'snob' war [NYTimes]

The potential of graphene to revolutionize the airline industry [Richard Branson]

A day in the life of a food vendor [NYTimes]

What We're Reading ~ 3/16/2016

Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism [Jeff Gramm]

Two powerful mental models: network effects and critical mass [Andreessen Horowitz]

How to be wrong as an investor [A Wealth of Common Sense]

A look at the concept of moats in investing [Intrinsic Investing]

The great race: e-commerce in India [The Economist]

A look inside Google's DeepMind [The Verge]

Amazon's Echo brims with groundbreaking promise [NYTimes]

In-depth analysis of Moody's (MCO) [Value Seeker]

A look at Visa & Mastercard [JanaV]

American Express, Synchrony Financial & the changing credit card landscape [PunchCard]

Amex: cheap blue chip or value trap? [Value & Opportunity]

How credit cards tax America [Priceonomics]

After TV: Video's future will be bigger, more diverse & precarious than its past [Redef]

John Malone 'cable cowboy' faces test in rounding up the right mix of assets [Variety]

The television has a business model problem and it's killing good TV [Redef]

The craft beer bubble [VinePair]

The rise and final hours of Chesapeake's Aubrey McClendon [Bloomberg]

What We're Reading ~ 10/22/15

10 poor investment theses [Irrelevant Investor]

The case against short selling [Long Short Trader]

The five "why's" in problem solving [Wallbuilder]

The danger of 1-year performance numbers [A Wealth of Common Sense]

Latest post from the Valeant (VRX) bear camp [Bronte Capital]

How bad will it get for American Express? [Bloomberg]

China is not collapsing [Project Syndicate]

Kingmakers of China's internet: Baidu, Alibaba and Tencent [WSJ]

A look at wireless tower stocks [Barrons]

Tribune Media shares at a 50% discount [Barrons]

Fossil Group (FOSL): a value stock with temporary problems? [Value & Opportunity]

Netflix is creating a cordless nightmare for traditional media [Institutional Investor]

Light beer gets in touch with serious side [WSJ]

Auto parts retailers' immunity to Amazon drives stock surge [Bloomberg]

Why investors don't fund dating [Andrew Chen]

Robots and us [MIT]

What We're Reading ~ Analytical Links 3/19/14

Meb Faber's new book: Global Value [Amazon]

Why we're awful at assessing risk [Morgan Housel]

Short sellers' new favorite platform: Twitter [Buzzfeed]

The most important economic chart [House of Debt]

America's weird enduring love affair with cars and houses [Atlantic]

Addressing growing student debt [Econbrowser]

One little watched indicator for rising rates is flashing red [Investment News]

Saving, lending and tapering combine in perfect storm [Scott Grannis]

Hertz is in the driver's seat [Barrons]

American Express to spin off business travel unit [Bloomberg]

On CBS' IPO of its Americas Outdoor unit [Hollywood Reporter]

Assessing risk in China's shadow banking system [Triple Crisis]

What if all of Africa was as digital as Kenya? [Financial Access]

Russian richest face margin calls with billions at stake [Bloomberg]

Uh, warning sign? 3 reasons to tap home equity to buy stocks [MSN Money]

An interview with Bill Gates [Rolling Stone]

Interview with Apple's Jonathan Ive [Time]

Warren Buffett & Berkshire Hathaway's Latest Portfolio: 13F Filing (Q1 2010)

(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund filings.)

Next up in our coverage is the Oracle of Omaha himself, Warren Buffett. From his original Buffett Partnerships to present day Berkshire Hathaway, Warren Buffett has invested his way to the third richest person in the world according to Forbes' billionaire list. He needs no introduction so let's dive right into it. Our recent coverage of Buffett's company includes some notes from Berkshire Hathaway's annual meeting as well as Berkshire's annual letter. And of course to learn to invest like one of the greatest out there, head to Warren Buffett's recommended reading list. The positions listed below were Berkshire Hathaway's long equity, note, and options holdings as of March 31st, 2010 as filed with the SEC. All holdings are common stock unless otherwise denoted:


Brand New Positions
n/a


Increased Positions
Republic Services (RSG): Increased position by 30.6%
Becton, Dickinson & Co (BDX): Increased by 16.3%
Iron Mountain (IRM): Increased by 11.35%


Reduced Positions
Kraft Foods (KFT): Reduced by 22.8%
Gannett (GCI): Reduced by 20.98%
Costco (COST): Reduced by 17.5%
M&T Bank (MTB): Reduced by 17.1%
Johnson & Johnson (JNJ): Reduced by 12%
Procter & Gamble (PG): Reduced by 9.6%
Conoco Phillips (COP): Reduced by 9.37%
Carmax (KMX): Reduced by 3.43%
Moody's (MCO): Reduced by 3% (we detailed these sales back when they occurred)


Positions With No Change
American Express (AXP)
Bank of America (BAC)
Coca Cola (KO)
Comcast (CMCSA)
Comdisco Holdings (CDCO)
Exxon Mobil (XOM)
General Electric (GE)
GlaxoSmithKline (GSK)
Home Depot (HD)
Ingersoll-Rand (IR)
Lowe's (LOW)
Nalco Holding (NLC)
Nestle (NSRGY)
Nike (NKE)
Sanofi Aventis (SNY)
Tiffany & Co (TIF)
Torchmark (TMK)
US Bancorp (USB)
USG (USG)
United Parcel Service (UPS)
WalMart (WMT)
Washington Post (WPO)
Wells Fargo (WFC)
Wesco (WSC)


Positions They Sold Out of Completely
SunTrust Bank (STI)
Travelers (TRV)
UnitedHealth (UNH)
Wellpoint (WLP)


Top 15 Holdings (by percentage of assets reported on the 13F filing)

1. Coca Cola (KO): 21.6%
   
2. Wells Fargo (WFC): 19.56%
   
3. American Express (AXP): 12.28%
4. Procter & Gamble (PG): 9.83%
5. Kraft Foods (KFT): 6.34%
6. Wesco Financial (WSC): 4.32%
7. Walmart (WMT): 4.26%
8. US Bancorp (USB): 3.51%
9. Conoco Phillips (COP): 3.43%
10. Johnson & Johnson (JNJ): 3.06%
11. Moody's (MCO): 1.80%
12. Washington Post (WPO): 1.51%
13. Nike (NKE): 1.10%
14. M&T Bank (MTB): 0.87%
15. Republic Services (RSG): 0.62%
    

It's somewhat rare to see Buffett's Berkshire completely sell out of a position, but this time around he sold multiple holdings in health plays Wellpoint (WLP) and UnitedHealth (UNH). His removal of WLP is intriguing because as you'll see from some of our soon-to-come 13F analyses, many hedge funds still own shares. Buffett also sold partial positions in Procter & Gamble (PG) and Kraft Foods (KFT). Berkshire Hathaway also added to positions in Republic Services (RSG), Becton Dickinson & Co (BDX), as well as Iron Mountain (IRM). RSG was their most sizable increase. Overall, quite a bevy of portfolio activity out of Berkshire Hathaway (at least more than we're used to seeing). As always, to become a great investor like the Oracle of Omaha himself, we point you to as Warren Buffett's recommended reading list. Lastly, those of you wondering about Berkshire Hathaway's future can head to Buffett's thoughts on succession planning.

Data used for this article comes from Alphaclone, our source for sorting through all the hedge fund portfolio movement and backtesting the performance (Market Folly readers can receive a special free 30 day trial). Assets reported on the 13F filing were $50.9 billion this quarter. Remember that these filings are not representative of the investment fund's entire base of AUM. This post is part of our hedge fund portfolio tracking series and we've already detailed the portfolio of Seth Klarman's Baupost Group. Be sure to check back daily for new hedge fund updates.

Warren Buffett's Portfolio: Fourth Quarter 13F Filing

(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund 13F filings.)

Warren Buffett needs no introduction. Seriously. If you don't know who he is, you shouldn't even be reading this.

Through his early Buffett partnerships to the modern days of Berkshire Hathaway (BRK.A), he is regarded as one of the most successful investors ever. While many would argue that Baupost Group's Seth Klarman could give Buffett a run for his money, Buffett has garnered quite a massive following due to his enormous returns over time. Needless to say, investors are always anxious to find out what he has bought or sold, and that's exactly what we're here to do today. To learn to invest like the legend himself, head to Warren Buffett's recommended reading list.

The positions listed below were Berkshire Hathaway's long equity, note, and options holdings as of December 31st, 2009 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Brand New Positions
n/a


Increased Positions
Republic Services (RSG): Increased by 128.7%
Iron Mountain (IRM): Increased by 107.6%
Beckton Dickinson (BDX): Increased by 25%
Walmart (WMT): Increased by 3.2%
Wells Fargo (WFC): Increased by 2.2%


Reduced Positions
Exxon Mobil (XOM): Reduced by 67%
United Health Group (UNH): Reduced by 65.4%
WellPoint (WLP): Reduced by 60.4%
Gannett (GCI): Reduced by 36.1%
ConocoPhillips (COP): Reduced by 34.3%
Ingersoll Rand (IR): Reduced by 27.6%
Johnson & Johnson (JNJ): Reduced by 26.5%
SunTrust Banks (STI): Reduced by 22.1%
Moody's (MCO): Reduced by 18.9% ~ we've detailed all of his sales as they've happened
CarMax (KMX): Reduced by 11.1%
Procter & Gamble (PG): Reduced by 9.2%


Removed Positions (Sold out completely):
Union Pacific (UNP)
Norfolk Southern (NSC)
These were both sold due to conflict with Berkshire's impending acquisition of Burlington Northern.


Top 15 Holdings by percentage of assets reported on 13F filing

1. Coca Cola (KO): 19.7%
2. Wells Fargo (WFC): 14.9%
3. Burlington Northern Santa Fe (BNI): 13.1% ~ this won't show up in future filings
4. American Express (AXP): 10.6%
5. Procter & Gamble (PG): 9.2%
6. Kraft Foods (KFT): 6.5%
7. Walmart (WMT): 3.6%
8. Wesco Financial (WSC): 3.38%
9. ConocoPhillips (COP): 3.32%
10. Johnson & Johnson (JNJ): 3.02%
11. US Bancorp (USB): 2.68%
12. Moody's (MCO): 1.47%
13. Washington Post (WPO): 1.31%
14. Nike (NKE): 0.87%
15. M&T Bank (MTB): 0.78%
    

The name of the game for Warren Buffett was selling shares of other holdings in order to make way for their acquisition of Burlington Northern Santa Fe in its entirety. That massive purchase obviously will not show up in future filings and is Berkshire's largest purchase ever. Obviously when you're purchasing that large of an entity, you're not going to be buying much else. However, Buffett did also double down on his Iron Mountain and Repulic Services positions.

Buffett reduced 'health' holdings by selling over half of his UNH and WLP stakes. Additionally, he sold nearly 70% of his Exxon Mobil position. We've also covered Buffett's sales of MCO shares as they became somewhat frequent occurrences. It remains to be seen if those sales were more-so because Buffett felt the business was threatened or because he was trying to free up capital for his BNI acquisition. Buffett has maintained a large position in Kraft for a while now, but shares have been center stage as Bill Ackman's hedge fund Pershing Square recently acquired a large stake and the company recently sealed a deal to acquire Cadbury.

Keep in mind that there are also some positions that won't show up on the filing because they are non-equity stakes. Buffett acquired many of these during the heart of the crisis in 2008 and as such sealed these deals with ridiculously good terms (for him).

To hear some of Buffett's recent thoughts, we posted up his recent television interview. For analysis of Berkshire Hathaway (BRK.A / BRK.B), we noted that hedge fund T2 Partners deemed shares undervalued in their in-depth presentation. And lastly, make sure you check out Warren Buffett's recommended readings.

We'll be tracking 40+ prominent funds in our fourth quarter 2009 hedge fund portfolio tracking series. We've already covered Seth Klarman's Baupost Group, Mohnish Pabrai's Investment Fund, Carl Icahn's hedge fund Icahn Partners, David Einhorn's Greenlight Capital, Stephen Mandel's Lone Pine Capital, John Griffin's Blue Ridge Capital, and David Tepper's Appaloosa Management. Check back daily for our new updates.

Credit Card Squeeze

I wanted to post up an excerpt from a piece in Fortune a while back which discussed the next Credit Crunch. In it, Geoff Colvin hints at what could be a difficult time for credit card companies. Some of this information sets up a broad backstory as to why one might short the likes of Capital One (COF), American Express (AXP), Discover Financial (DFS), or even banks like Citigroup (C) who have large credit card businesses.

Here's an excerpt from the article,

"Last year, just as the subprime crisis happened, credit card debt took off. The home-equity ATM had been shut down, so people turned to the last source of easy money they had left, the most expensive debt on the menu, credit card borrowing.

Since credit card debt has been growing much faster than the economy - more than 8% in last year's third and fourth quarters and over 7% in May (the most recent month reported)- people are apparently using it as a substitute for income. Thus, for the past year or so we have still maintained the standard-of-living illusion.

But a big crunch is coming - and here's why. Credit card debt, like mortgage debt, gets bundled, securitized, and sold off by banks. Citigroup (C), one of America's largest credit card lenders, just reported that it lost $176 million in the second quarter through securitizing such debt. That happens when the buyers of those securities observe rising delinquency rates and rising interest rates, and decide the debt is worth less than Citi thought. More generally, the amount of credit card debt that is securitized nationwide has plunged by more than half in the past five months because it's getting riskier. That means credit card issuers will be charging customers higher interest rates, and since the banks can't offload as much of the debt as before, they'll have less money to lend to cardholders.

The squeeze has already started, which is why Congress is in the process of passing the Credit Cardholders' Bill of Rights, which would prevent issuers from changing rates and terms without warning, among many other provisions. But bottom line, the credit card money window is going to start closing - and soon.

So now what? It's hard to see where consumers can turn next. Home prices seem highly unlikely to start rising again soon. Stocks? You never know, but the Great Bull Market looks like a once-in-a-lifetime event. Homes and stocks are households' biggest asset classes by far. There isn't much else to borrow against.

It may be that the standard-of-living bubble finally has to deflate. Sustainable increases in living standards have to be earned, not borrowed, and that means performing ever higher value work that can't be outsourced. We haven't been meeting that challenge very well; doing so will probably require much more and better education for millions of Americans, which takes time and money."

I agree with the overall theme of this article and truly believe that the strapped consumer is going to be facing larger headwinds than anyone anticipates (which I partly touched on here). Credit card debt is piling up for the average American, and many are having a very hard time paying it off. This simple concept was illustrated in a nice graph I posted earlier, showing how delinquencies are rising. Capital One (COF) is the perfect example of a company being impacted by this. It has been piling up each quarter and their most recent earnings/conference call gave us a further glimpse, as noted by Forbes' Melinda Peer, who writes

"Credit card and banking company Capital One (COF) said its net charge-off rate, or measure of soured loans, for its U.S. card business jumped to 6.34% in September, from 5.96% in August. Internationally, charge-offs rose to a rate of 5.87%, from 5.31%, in the same period.

Delinquencies, considered signs of troubled accounts, were also on the rise in the U.S. and abroad during September. Domestically the McLean, Va.-based company's 30-day delinquency rate inched up to 4.20%, from 4.07%, in August, and internationally the rate inched up to 5.24%, from 5.15%."

Calculated Risk also took the liberty of transcribing key comments from the conference call, which you can read here. Basically, the company is taking positive steps to reduce credit lines and try to limit their risk. But, they still won't be able to completely protect themselves from the impending tsunami.

Additionally, this WSJ article seems to imply that credit card companies and banks are going to face historic headwinds in the credit card arena. Overall, I truly believe this is going to be an over-arching theme that stems from the current crisis as things continue to bleed over to main street. The ultimate question becomes, how much of this is already priced into banking and credit card equities, if at all?


Full disclosure: At the time of publication, MarketFolly was short COF
Source: Fortune