What We're Reading ~ 9/4/19

Certain to Win: The strategy of John Boyd, applied to business [Chet Richards]

The commoditization of information [Geoff Yamane]

Position sizing: why conviction matters [Intrinsic Investing]

The problem with believing what we're told [WSJ]

How a Canadian firm has taken on Wall Street's private equity titans [Economist]

Research on the financial performance of collectibles [Alpha Architect]

Peloton is a phenomenon: can it last? [NYTimes]

A skeptical look at Peloton churn [Inquisitive Investor]

Peloton bikes are the real deal [The Margins]

How Amazon's shipping empire is challenging UPS & FedEx [WSJ]

Amazon's next-day delivery has brought chaos and carnage to streets [BuzzfeedNews]

The man behind the biggest beauty brands in the world [Coveteur]

Aston Martin tried to replicate Ferrari's IPO success but shares are down 75% [Fortune]

On the importance of broadcasting income to European football clubs [Swiss Ramble]

5 lessons from Microsoft's antitrust woes by people who lived it [NYTimes]

Tiger Global Continues To Buy Sunrun

Chase Coleman's hedge fund firm Tiger Global has filed yet another Form 4 with the SEC regarding their ownership of Sunrun (RUN).  We previously detailed last week how they were out buying RUN shares. 

Per the latest filing, Tiger Global was out acquiring more shares on August 29th, 30th, as well as September 3rd.  In total, they purchased 627,439 shares at weighted average prices of between $14.705 and $15.365.  After these buys, they now own over 24.55 million shares.

Per Yahoo Finance, Sunrun "engages in the design, development, installation, sale, ownership, and maintenance of residential solar energy systems in the United States. It also sells solar energy systems and products, such as panels and racking, as well as solar leads generated to customers. The company markets and sells its products through direct-to-consumer approach across online, retail, mass media, digital media, canvassing, field marketing, and referral channels, as well as its partner network. Sunrun Inc. was founded in 2007 and is headquartered in San Francisco, California."

TCI Fund Boosts Canadian Pacific Railway Stake

Sir Chris Hohn's TCI Fund management has filed an amended 13G with the SEC regarding its position in Canadian Pacific Railway (CP).  Per the filing, TCI Fund now owns 7.62% of the company with over 10.56 million shares as of August 23rd. 

This is up from the previous 10.15 million shares they owned at the end of June.  TCI has bought CP shares for seven consecutive quarters and their stake is now worth almost $2.5 billion.  They originally initiated the position in the first quarter of 2018.

It should also be noted that Hohn's firm also owns stakes in other railroads, such as Canadian National (CNI ~ $1.75 billion worth) and Union Pacific (UNP ~ $800 million worth), but their stake in CP is the most sizable.

Per Yahoo Finance, Canadian Pacific Railway "owns and operates a transcontinental freight railway in Canada and the United States. The company transports bulk commodities, including grain, coal, potash, fertilizers, and sulphur; and merchandise freight, such as energy, chemicals and plastics, metals, minerals and consumer, automotive, and forest products. It also transports intermodal traffic comprising retail goods in overseas containers. The company offers rail and intermodal transportation services through a network of approximately 12,500 miles serving business centers in Quebec and British Columbia, Canada; and the United States Northeast and Midwest regions. Canadian Pacific Railway Limited was founded in 1881 and is headquartered in Calgary, Canada."

Lone Pine Capital Adds To Dominos Pizza Stake

Steve Mandel's hedge fund firm Lone Pine Capital has filed a 13G with the SEC regarding its stake in Dominos Pizza (DPZ).  Per the filing, Lone Pine now owns 5% of Dominos Pizza with over 2.07 million shares as of August 20th. 

This is up from the 1.24 million shares Lone Pine disclosed at the end of June when they established a new stake in the company.  DPZ shares have fallen from a high of $285 at the end of Q2 to recent lows around $226.

As a reminder, Steve Mandel stepped down from day-to-day management of the portfolio and handed those duties off to managers Dave Craver, Mala Gaonkar, and Kelly Granat (though others are also now listed on the SEC filings).

Per Yahoo Finance, Dominos Pizza "through its subsidiaries, operates as a pizza delivery company in the United States and internationally. It operates in three segments: U.S. Stores, International Franchise, and Supply Chain. The company offers pizzas under the Domino's brand name through company-owned and franchised stores. As of August 20, 2019, it operated through approximately 16,300 stores in 85 markets. The company was founded in 1960 and is headquartered in Ann Arbor, Michigan."

Dr. Michael Burry Buys More Tailored Brands, Sends Letter to Board

Dr. Michael Burry of Scion Asset Management has been busy lately.  We previously detailed how he re-built a stake in Gamestop (GME) and sent a letter to the board.  Well, he has now also just filed a 13D on shares of Tailored Brands (TLRD), which he's owned and previously also sent letters to the board.

The new filing indicates Burry has boosted his TLRD position, buying throughout August at prices of around $4.7145 and $4.8282.  In total, Scion Asset now owns 5.1% of the company with 2.6 million shares.  This is up from his previous stake of 1.85 million shares at the end of June.


Dr. Michael Burry Sends New Letter to Tailored Brands Board

Burry also sent a new letter to the board dated August 30th where he addresses rumors that Sycamore Partners had approached the company about an acquisition at around $10 per share.  Burry writes, "We do not know if any of this is true.  However, we believe you must know that $10 per share is not fair value and will not be acceptable to shareholders."

Later Burry goes on to write, "With some urgency, we stand by our letters of August 2nd and 19th. Given the quarter-century lows in the common stock and the severe undervaluation this entails, we believe the best use of funds from the corporate apparel segment sale, in good part or in full, is for a share repurchase.While management is considering asset sales, we would encourage exploring the market for Tailored’s Canadian operations. The Board and management ought to focus resources on its core 1300+ store U.S. operations. Proceeds from a sale of these remaining international operations may also be best used to accelerate debt repayment and stock buybacks."

He's previously sent two other letters to the board which you can read here and here.

Per Yahoo Finance, Tailored Brands "operates as a specialty apparel retailer the United States and Canada. It operates through two segments, Retail and Corporate Apparel. The Retail segment offers suits, suit separates, sport coats, slacks, formalwear, business casual, denim, sportswear, outerwear, dress shirts, shoes, and accessories for men. It also provides women's career and casual apparel, sportswear, and accessories; children's apparel; and alteration services. As of February 2, 2019, this segment operated 1,464 stores under the Men's Wearhouse, Men's Wearhouse and Tux, Jos. A. Bank, Moores, Joseph Abboud, and K&G brands. The Corporate Apparel segment provides corporate apparel uniforms and work wear to workforces under the Dimensions, Alexandra, Yaffy, and Twin Hill brands through various channels, including managed corporate accounts and catalogs, as well as through dimensions.co.uk, alexandra.co.uk, and twinhill.com Internet sites. This segment serves companies and organizations in the airline, retail grocery, retail, banking, quick service restaurant, car rental, distribution, travel and leisure, postal, security, healthcare, and public sectors. The company was formerly known as The Men's Wearhouse, Inc. and changed its name to Tailored Brands, Inc. in February 2016. Tailored Brands, Inc. was founded in 1973 and is based in Houston, Texas."

JANA Partners Buys Bloomin' Brands, FIles 13D

Barry Rosenstein's hedge fund firm JANA Partners has filed a 13D on shares of Bloomin' Brands (BLMN).  Per the filing, JANA now owns 9% of the company with over 7.81 million shares.  This is a brand new stake for the firm.

JANA was buying throughout August at with the bulk of their recent purchases coming at prices of around $16.08 and $16.21. 

The 13D contains the standard boilerplate:

"The Reporting Person acquired the Shares because it believes the Shares are undervalued and represent an attractive investment opportunity. The Reporting Person intends to have discussions with the Issuer’s board of directors and management regarding a sale of the Issuer, divestitures, capital allocation, operations and board composition. The Reporting Person expects to have discussions with the Issuer’s management and board of directors, shareholders and other interested parties relating to such matters."

Per Yahoo Finance, Bloomin' Brands, Inc., "through its subsidiaries, owns and operates casual, upscale casual, and fine dining restaurants in the United States and internationally. The company operates through two segments, U.S. and International. Its restaurant portfolio has four concepts, including Outback Steakhouse, a casual steakhouse restaurant; Carrabba's Italian Grill, a casual Italian restaurant; Bonefish Grill, an upscale casual seafood restaurant; and Fleming's Prime Steakhouse & Wine Bar, a contemporary steakhouse. As of December 30, 2018, the company owned and operated 1,068 restaurants and franchised 164 restaurants across 48 states; and owned and operated 125 restaurants and franchised 131 restaurants across 20 countries, Puerto Rico and Guam. Bloomin' Brands, Inc. was incorporated in 2006 and is headquartered in Tampa, Florida."

Hedge Fund Links ~ 8/30/19

The stock picker versus portfolio manager communications challenge [Harvest]

Good writers make better hedge fund managers [Institutional Investor]

Hedge funds take record short positions against Aston Martin [FT]

Viking Global curbs investor redemptions to aid VC push [FT]

Third Point builds stake in Essilor Luxottica [Reuters]

Quick interview with Michael Burry on Gamestop [Barrons]

Why Mario Cibelli likes GrubHub, Becle & e.l.f. [Barrons]

Notes from a recent trip to China [Cederberg Capital]

Hedge fund Saba Capital spars with BlackRock and Neuberger [WSJ]

A look back: the Bloomberg keyboard [Bloomberg]

Hillhouse Capital's Lei Zhang Talk at Goldman Sachs (Notes & Video)

Lei Zhang of Hillhouse Capital recently had a talk at Goldman Sachs filmed at the Builders + Innovators Summit in Asia.  Zhang runs one of the most prominent funds in Asia after starting with $20 million from Yale University and now growing into a $60 billion firm.


Lei Zhang's Talk at Goldman Sachs 2019

- He says entrepreneurship is about doing something you love, not doing what's trendy or for the money

- Unbelievable change and opportunities created in China over the past 30 years; highlights Chinese people's drive

- Hillhouse was named after the street at Yale Endowment where he previously worked, but in Chinese it also refers to a high vantage point of being able to see everything.  He says Hillhouse is a blend of eastern and western philosophies: being a long-term investor, being thoughtful, entrepreneurship.  Has 45 people on his team.  "We believe you do the right things, you build your reputation, you stand up for what you believe in... and entrepreneurs will find you."

- On what he looks for in people:  persistence, smart, teamwork.  But he emphasizes empathy and the ability to connect with people who are different from you.  Lifetime learning is also essential and not to learn to make more money but a genuine desire to learn.  Also added humility is a great trait.  He likes entrepreneurs who build a culture like a sports team... it's like family but you want to win.

-  "One of the most exciting things of investing in China is you're always embracing change.  And one of the most fascinating changes in the past has been the consumer internet."  First wave was Baidu, Tencent, Alibaba, but the core was connection (people to information, people, and goods).  Now the second wave is coming "Innovation 2.0" it's not just about connection, it's about leveraging AI, SaaS, lots of vision.  Likened it to the industrial internet.

- Belle shoe retailer was being attacked on all sides (especially with e-commerce from JD and Alibaba, etc).   Hillhouse invested and 3 years later it's seen double digit growth.  For instance, they made changes like put a sensor that could tell them that x shoe was getting picked up a ton of times but no one was buying it, so they can make changes faster.  They also brought in a lean manufacturing process (Danaher).  This helped with inventory so they had less to discount which helped maintain the brand.

-  "In investing at a Hillhouse level, we're always joking the best investment is the investment you don't have to think about (an) exit." 

Embedded below is the video of Lei Zhang's talk:




For more on this manager, we've also highlighted Lei Zhang old lecture at Columbia Business School.

Glenview Capital Acquires More Tenet Healthcare

Larry Robbins' hedge fund firm Glenview Capital has filed a Form 4 with the SEC regarding shares of Tenet Healthcare (THC).  Per the filing, Glenview bought 81,368 shares on August 23rd at a weighted average price of $20.6965.  They now own over 19.43 million shares.

In a previous filing, they also were out buying on August 16th, purchasing 26,456 shares at a weighted average price of $19.8153.

Per Yahoo Finance, Tenet Healthcare is "a diversified healthcare services company. The company operates in three segments: Hospital Operations and Other, Ambulatory Care, and Conifer. Its general hospitals offer acute care services, operating and recovery rooms, radiology and respiratory therapy services, clinical laboratories, and pharmacies. The company also provides intensive and critical care, and coronary care units; physical therapy, orthopedic, oncology, and outpatient services; cardiothoracic surgery, neonatal intensive care, and neurosurgery services; quaternary care in heart, liver, kidney, and bone marrow transplants areas; tertiary and quaternary pediatric, and burn services; and limb-salvaging vascular procedures, acute level 1 trauma services, intravascular stroke care, minimally invasive cardiac valve replacement, imaging technology, and telemedicine access for various medical specialties. In addition, it operates ambulatory surgery and urgent care centers, imaging centers, and surgical hospitals; and offers healthcare business process services in the areas of hospital and physician revenue cycle management, as well as value-based care solutions to healthcare systems, individual hospitals, physician practices, self-insured organizations, health plans, and other entities. As of December 31, 2018, the company operated 68 hospitals, 23 surgical hospitals, and approximately 475 outpatient centers, as well as 255 ambulatory surgery, 36 urgent care, and 23 imaging centers in the United States. Tenet Healthcare Corporation was founded in 1967 and is headquartered in Dallas, Texas."

Dr. Michael Burry Long Gamestop: Sends Letter to Board

Dr. Michael Burry of Scion Asset Management and of The Big Short fame has recently re-surfaced in shares of Gamestop (GME).  He previously owned shares earlier this year but sold out in the second quarter per his latest 13F filing as of June 30th.    However, he has re-established a stake in the company as shares plunged, now owning around 3.05% of the company with approximately 3 million shares.

Burry argues the company should buyback a ton of stock given the limited float.  This has been a popular short among hedge funds which view it as 'Blockbuster 2.0' and recently, as much as 60% of GME's shares have been sold short.

Tae Kim over at Barron's scored a rare interview with Burry on his GME long, which you can check out here.  Burry noted that the new gaming console cycle "is going to extend GameStop's life significantly. The streaming narrative dovetailing with the cycle is creating a perfect storm where things look terrible.  [But] it looks worse than it really is."


Scion's Letter to Gamestop Board

Below is the full text of the letter Dr. Burry sent Gamestop:

"August 16, 2019

Dear Members of the Board,Scion Asset Management, LLC and its affiliates (“Scion”) own approximately 2,750,000 shares, or about 3.05%, of GameStop, Inc. (“GameStop”) common stock.

As mentioned in our previous letter to the board, we have concerns regarding capital management at GameStop. Given recent GameStop common stock prices under $4 per share, we must re-state that GameStop complete the remaining $237,600,000 share repurchase at once and with urgency.

Given the market capitalization of GameStop at $290 million at the close on August 15th, completing the authorization would retire over 80% of GameStop’s outstanding shares. Depending on the timing and quality of execution, such a repurchase would increase earnings per share dramatically - far more than any other possible action on a per share basis.

The numbers are striking and demand action. We estimate that GameStop now has in excess of $480 million of cash, more than enough to complete the share repurchase authorization and still invest in the business and pay down debt.

Through August 15th, a total of 11 trading days, 50,399,534 shares have traded. At this rate, for the month of August and for the third month in a row, the number of shares traded will exceed the total number of shares outstanding. Because of such high volume, we maintain that GameStop could pull off perhaps the most consequential and shareholder-friendly buyback in stock market history with elegance and stealth.

Shareholders staring at all-time lows in GameStop stock see little evidence that GameStop has effectively leveraged its elite position in the gaming universe as the new paradigm came into clear view over the last five years.

The unfortunate reality is that Amazon, not GameStop, bought Twitch in 2014. Instead, in 2014, GameStop started buying wireless store assets. And in 2017, Amazon, not GameStop, bought GameSparks - while less than a year ago GameStop reversed course and sold its wireless store assets. Shareholders are right to worry.

We expect GameStop’s business will perk up a bit during 2020 and 2021 as the new console cycle, with associated software updates and introductions, finally gets underway. But what is happening now in the stock is about more than late cycle doldrums or even the streaming paradigm – shareholders do not have faith in current management, and have not been inspired by new leadership policies.

Notably, as of July 31st, 2019, Bloomberg reports short interest in GameStop stock at 57,226,706 shares – this is about 63% of the 90,268,940 outstanding GameStop shares at last report.

We submit that when share prices are at or near all-time lows and more than 60% of the shares are shorted despite cash levels much higher than the current market capitalization, lack of faith in management’s capital allocation is the default conclusion.

All of this creates the opportunity to enter 2020 with a dramatically reduced share count along with multi-fold greater impact per share for every single other achievement of management. Consider as just one example that if the turnaround is successful, and if GameStop were able to shrink its shares outstanding to 30 million through the share repurchase, the $157 million dividend that was just eliminated would pay out around $5.25 per share.

The Board deemed up to $6.00 per share a good price for a buyback less than two months ago, and the price of the stock today is nearly half that amount.

We again advise the Board to represent shareholders well, and to ensure the execution of the remaining repurchase authorization in full.

Sincerely,

Dr. Michael J. Burry"

What We're Reading ~ 8/28/19

The network effects manual: 13 different types [NFX]

A look at Wells Fargo (WFC) [Sabre Capital]

SmileDirectClub's IPO highlights promises, pitfalls for DTC companies [Modern Retail]

How the recession of 2020 could happen [NYTimes]

Framework for evaluating enterprise software companies [Shomik Ghosh]

How Elon Musk gambled Tesla to save Solar City [Vanity Fair]

Streaming video will soon look like the bad old days of TV [Matthew Ball]

LaCroix won the bubble battle, but it's losing the sparkling water war [Bloomberg]

How Uber got lost [NYTimes]

The making of Amazon Prime [Vox]

China internet report [SCMP]

The real story of the brand Supreme [GQ]

Red flags on the WeWork IPO: WeWTF [Prof Galloway]

WeWork as the AWS of real estate? [Stratechery]

Harry Markopolos' write-up on General Electric [GEFraud]

Tiger Global Buys More Sunrun

Chase Coleman's hedge fund firm Tiger Global has filed a 13D with the SEC regarding its stake in Sunrun (RUN).  Per the filing, Tiger Global now owns 20.4% of the company with over 23.93 million shares.

They were out buying shares through mid-to-late August and in total have purchased over 2.01 million shares with the bulk coming at weighted average prices of $14.98 and $15.07.

Per Yahoo Finance, Sunrun "engages in the design, development, installation, sale, ownership, and maintenance of residential solar energy systems in the United States. It also sells solar energy systems and products, such as panels and racking, as well as solar leads generated to customers. The company markets and sells its products through direct-to-consumer approach across online, retail, mass media, digital media, canvassing, field marketing, and referral channels, as well as its partner network. Sunrun Inc. was founded in 2007 and is headquartered in San Francisco, California."

New 13F Summary Newsletter Just Released: Top Hedge Fund Portfolios

The brand new Q2 2019 issue of our quarterly newsletter is now available.  It reveals the latest portfolios of top hedge funds and summarizes their new 13F filings.

Subscribers please login at www.hedgefundwisdom.com to download it.


Inside the Brand New Q2 Issue


- Updated consensus buy/sell lists of the most popular hedge fund trades in Q2

- Reveals the latest portfolios of 25 top hedge funds (full list here): New firm added this quarter: Ruane, Cunniff & Goldfarb's Sequoia Fund replaces Lou Simpson's SQ Advisors which no longer discloses a portfolio

- Investment thesis summaries on 2 stocks that hedge funds were buying: Activision Blizzard (ATVI) and CarGurus (CARG). Quickly catch up on the current situation and bull/bear thesis on each stock


33% Discount Ends Soon

Take advantage of the savings while you still can.  After signing up, you'll get immediate access to the new issue & the archive of past issues.

1-year Subscription (4 issues): Normal Price $299.99 Discount Price $199.99 per year

Quarterly Subscription: Normal Price $89.99 Discount Price $59.99 per quarter

Want to pay by check or soft dollar account?  Please email us: info (at) hedgefundwisdom (dot) com

New Graham & Doddsville Issue: John Hempton, Yen Liow, Bill Stewart

Columbia Business School is out with the Spring 2019 issue of its Graham & Doddsville newsletter.  It features interviews with Bronte Capital's John Hempton, Aravt Global's Yen Liow, and Stewart Asset Management's Bill Stewart.

It also includes student investment pitches such as long Dollarama, long Align Technology, long Carsales.com, and long Dean Foods 6.50% senior unsecured.

Embedded below is the Spring 2019 issue of Graham & Doddsville:



You can download a .pdf link here.

What We're Reading ~ 5/22/19

The Culture Cycle: How to Shape the Unseen Force that Transforms Performance [James Heskett]

Xi Jinping calls for new 'Long March' in sign China preparing for protracted trade war [SCMP]

What stocks Baillie Gifford likes now [Barrons]

What can long-term investors learn from traders? [Fundoo Professor]

The greatest investor you've never heard of: an optometrist [Forbes]

A capacity to suffer and setting the right expectations [Scuttlebutt Investor]

The start-ups building dark kitchens for Uber Eats and Deliveroo [FT]

How a cheap, brutally efficient grocery chain is upending American supermarkets [CNN]

Media companies are eyeing cash from sports betting [Axios]

US whiskey stocks have soared; beware the bourbon bubble [Barrons]

Sears's seven decades of self-destruction [Fortune]

Real estate's latest bid: Zillow wants to buy your house [NYTimes]

The world's greatest delivery empire made it cheaper to order in than eat out [Bloomberg]

Profile of e-commerce company Wish [Forbes]

Mr. Market got inside your head; don't let him mess with you [WSJ]

The ultimate productivity hack is saying no [James Clear]

Mapping the world's busiest air routes [Visual Capitalist]

Latest Hedge Fund Portfolios Revealed In Our Quarterly Newsletter

The brand new Q1 2019 issue of our quarterly newsletter is now available.  It reveals the latest portfolios of top hedge funds and summarizes their new 13F filings.

Subscribers please login at www.hedgefundwisdom.com to download it.


Inside the Brand New Issue


- Updated consensus buy/sell lists of the most popular hedge fund trades

- Reveals the latest portfolios of 25 top hedge funds: Appaloosa, Baupost, Lone Pine, Duquesne, Tiger Global & 20 others (full list here)

- Investment thesis summaries on 2 stocks that have seen hedge fund activity. Quickly catch up on the current situation and bull/bear thesis on each stock


33% Discount Ends Soon

Take advantage of the savings while you still can.  After signing up, you'll get immediate access to the new issue & the archive of past issues.

1-year Subscription (4 issues): Normal Price $299.99 Discount Price $199.99 per year

Quarterly Subscription: Normal Price $89.99 Discount Price $59.99 per quarter

Want to pay by check or soft dollar account?  Please email us: info (at) hedgefundwisdom (dot) com

Broyhill's Best Books of the Year

Broyhill Asset Management is back again with its yearly free Book Club featuring the best books of the year.  Perfect timing with summer vacation right around the corner.  You can check out their list of top recommendations here. 

We featured their picks last year too and this time around their list spans a myriad of topics apart from just investing.  After all, numerous successful investors have talked about how it's important to read across various subjects. 

While we occasionally highlight a book in our "What We're Reading" posts, this is a large compilation of recommendations from another trusted source.  Broyhill also provides a quick blurb on why a specific book was worth reading or what insights were gleaned from it.

Click here to check out Broyhill's favorite books

Warren Buffett, Charlie Munger & Bill Gates Interview

Berkshire Hathaway's annual meeting was this past weekend and was filled with wit and wisdom from investing legends.  In a separate interview, CNBC's Becky Quick sat down and talked with Warren Buffett, Charlie Munger, and Bill Gates.

Here's some takeaways followed by the full 2-hour video below.  The first hour was just Buffett by himself and then Munger joined in, and finally Gates joins at around 1hr 20.


Buffett, Munger & Gates Interview 2019

- Buffett says continued trade war would be bad for the whole world

- On Kraft Heinz (KHC): "The company has my confidence."  If he just owned Heinz, he says he'd be doing better but they paid too much for Kraft.  On overpaying: "Time usually works it out, but capital could have been better deployed."

- On the Occidental Petroleum (OXY) deal he's backing:  They've committed the $10 billion 100% and they don't have control over what OXY does with the money or the terms of the deal, etc.  While the 8% preferred is a sweet deal for him, he noted that, "It's a bet on oil prices over the long-term more than anything else.  It's also a bet on the fact that the Permian Basin is what it's cracked up to be."  He and Munger feel good about doing the financing of the deal and they could have done $20bn instead of the $10bn if needed.

-  He likes when Apple (AAPL) goes down, "Because they're repurchasing shares and when they repurchase shares our interest goes up and we don't lay out a dime; I love it."  He's "wildly" in favor of the company's $75 billion buyback.

- "I will always react well to declining prices."

- He thinks China and the US will be the two big superpowers over the next 100 years and that the two won't always get along and there will be disagreements over various things.

- On Wells Fargo (WFC):  Munger said: "I think it's a fine company; so they made one bad decision about an incentive plan.  I regard it as an honest mistake not as some deep moral failure ... they just had a blind spot."

-  Buffett said: "Charlie beats this into me all the time:  As soon as you find a mistake, do something about it.  And sometimes that's unpleasant.  But I've gotta do it."

-  Bill Gates on China/US: "It's the most important relationship in the world."

-  Gates is also concerned about intellectual cooperation being slowed down between the two countries and things like artificial intelligence

- "Anger drives out reason." ~ Munger

"  I think people should have modest expectations" about stock returns going forward, Gates says.  He thinks valuations have gotten high and he's amazed at that, but he hasn't made many changes to his Foundation's equity portfolio.

-  "I think stocks are ridiculously cheap... if you believe that 30 year bonds at 3% makes sense." ~ Buffett

- Buffett on what he's been reading lately:  Melinda Gates' book The Moment of Lift


Video of Interview

Embedded below is the 2-hour interview with Warren Buffett, Charlie Munger, and Bill Gates:

Notes From Sohn New York Investment Conference 2019: Einhorn, Robbins, Sundheim & More

The 2019 Sohn New York Investment Conference concluded and as usual it featured an excellent array of speakers sharing investment ideas all to benefit pediatric cancer research.  Click the links below to go to notes from each talk.


Sohn New York Conference Notes 2019

David Einhorn (Greenlight Capital): Long Aercap, Short GATX

Larry Robbins (Glenview Capital): Buy HMOs and hospitals, short pharma index, short 3M and Chemours

Daniel Sundheim (D1 Capital): Long Netflix & Disney, bearish Canadian pot stocks

Ryan Heslop (Firefly Value Partners): Short Community Health Systems

Gabe Plotkin (Melvin Capital Management): A few ideas

Christopher R. Hansen (Valiant Capital Management): Long Zillow

Jeffrey Gundlach (DoubleLine Capital): Buy interest rate volatility on long bond

Scott Goodwin (Diameter Capital Partners): Short PlastiPak unsecured bonds, long Constellium equity

Bihua Chen (Cormorant Asset Management): Long Reata Pharmaceuticals

Sohn Idea Contest Winner: Short Lamb Weston



Next Wave Sohn New York Notes 2019


Todd Westhus (Olympus Peak Asset Management): WDC long bank debt/short bonds

Matthew J. Smith (Deep Basin Capital): Long Cabot Oil & Gas 

Parvinder Thiara (Athanor Capital): Long Brazilian bonds

David Einhorn Long Aercap, Short GATX: Sohn New York Conference

We're posting up notes from the Sohn New York Investment Conference.  Next up is David Einhorn of Greenlight Capital who presented long Aercap (AER), short GATX (GATX).


David Einhorn's Sohn New York Presentation

•    Companies that lease airplanes have better businesses than companies that lease railcars (long Aercap, short GATX)

o    Airline leases are usually at least 10 years with a 25 year life
o    Railcar leases are 5 years when it’s new or less when it is used. Useful life is around 45 years
o    Airlines in cyclical growth
o    Railroads are more cyclical
o    Airplane utilization much higher than railcar
o    Can move airplanes around easier
o    Credit has cost airline leasing companies 0.1%. Cost railcar leasing companies nothing
o    Railroads becoming more efficient and using less railcars
o    Aercap- airline leasing in growing industry. Average age 6 years. Sells 15 year old planes. Longer leases
o    GATX-Railcar leasing. 14% market share. Cyclical and secular headwinds. Provides maintenance to customers. Average 20 year age. More dependent on releasing rates. Recent leases are shorter term
o    Aercap trades at a 50% discount to GATX even though it’s a better business both on P/E and P/B
o    Aercap is buying back stock. Reduced shares outstanding by 36%. Will continue to buyback stock


Be sure to check out the rest of the Sohn New York conference presentations.