Saturday, August 30, 2014

Charlie Munger quote

“Acquire worldly wisdom and adjust your behavior accordingly. If your new behavior gives you a little temporary unpopularity with your peer group...then to hell with them."

Friday, August 29, 2014

Links (and a few quotes)

Tim Melvin interviews Toby Carlisle (LINK)
Related book: Deep Value
Morningstar talks with Francis Chou [H/T ValueWalk] (LINK)

A Q&A with Paul McCulley (LINK)

Burton Malkiel: Are Stock Prices Headed for a Fall? (LINK)
A related book is maybe not the one Mr. EMH is best know for, but rather one that was published in 1980 that I remember reading a couple of years ago, Inflation-beater's Investment Guide: Winning Strategies for the 1980's

"In a sense, there is a cycle of investment results attendant on any investment philosophy or market niche due to the relative popularity or lack of popularity of that approach at a particular time." -Seth Klarman

"A hungry people neither listens to reason, nor is appeased by justice, nor is bent by any entreaty." -Seneca

"Think of yourself as dead. You have lived your life. Now take what's left and live it properly." -Marcus Aurelius

Thursday, August 28, 2014


Buffett's Search for Sure Thing Propels 76-Year Junk Food Quest (LINK)

Aswath Damodaran – Investment Philosophies NYU Classes (LINK)
Related book: The Little Book of Valuation
Kyle Bass: ‘Singer is holding poor countries as hostages’ [H/T ValueWalk] (LINK)

10 Years of Google and the Importance of Long Term Thinking (LINK)

Lessons of the Great Depression for the Eurozone [H/T @TimHarford] (LINK)

And in case anyone was following Zicom Group, which my partner at Boyles, Matt Miller, presented as an investment idea earlier this year (HERE), they released their Preliminary Final Report, HERE.

Wednesday, August 27, 2014


1976 Buffett Letter About Geico (LINK)

Generalizing the Kelly Criterion (LINK)

Illusions and the Art of Paying Attention (LINK)

Andrew Smithers: US economy: the persistent myth of deleveraging (LINK)

Dropbox Slashes Its Price As the Cost of a Gigabyte Nears Zero (LINK) [On a related note, if you haven't signed up for Dropbox and would like to, you can expand your free storage limit for both of us if you use THIS link.]

Change Your Microbiome, Change Yourself (LINK)

Scott Adams: Easiest Diet Plan Ever (LINK)
Related book: How to Fail at Almost Everything and Still Win Big
Parasite of the Day: The Emerald Cockroach Wasp (LINK)


In GADCP, there is no emphasis on estimating future flows. Rather it is recognized that growth in common stock prices can come, and frequently does come, from sources other than corporate operations. Growth can come from judicious acquisitions (Capital Southwest Common); creating unrealized, and unrecorded, appreciation in asset values (Forest City Enterprise Common, Hopewell Holdings Ordinary); creating hidden assets in the form of increases in adjusted book value (Carlyle Group); having companies taken over by others at premium prices (Brookfield Asset Management); and possibly participating in corporate restructurings (Nabors Industries).  
In forecasting future flows of revenues, earnings, or cash flows, no exclusivity in making these forecasts is given to the past earnings record under a GADCP analysis. It is recognized under GADCP that the quality of resources in a business and the quantity of resources in a business tend to be equally important, and for some companies are more important than the past record in making reasonably accurate forecasts of future flows. This is simply giving recognition to ROE and ROA as part of the forecasting process with Equity and Assets being balance sheet items. 
In GADCP, though, there is strong recognition given to the fact that most forecasts, no matter what techniques are used to make them, are going to prove to have been inaccurate. It is just too difficult to properly put into forecasts factors such as competitive forces, technological innovations, inexperienced managements, business cycles, access to capital markets and acts of God. Knowing of the inherent unreliability of its forecasts, we restrict our common stock investments to issues that enjoy very high-quality resources where we can acquire its interests at prices that represent a meaningful discount from the estimated quantity of resources that exist in a business.  
GADCP is inherently long-term conscious. Indeed, securities markets tend to be efficient enough that a GADCP investor is unlikely to find issues at attractive prices unless the near-term outlook is poor to clouded.  
Industry outlooks are as important for GADCP as they are for GARP. However, under GADCP, industry outlooks are based on independent analysis rather than conformity with a general consensus.

Tuesday, August 26, 2014


Larry Cunningham: Berkshire’s Distinctive Shareholders and Corporate Longevity (LINK)
Related book: Berkshire Beyond Buffett
Barry Ritholtz interviews Sheila Bair (LINK)
Related book: Bull by the Horns
The Feynman Lectures on Physics, The Most Popular Physics Book Ever Written, Now Completely Online (LINK)

Property bubble is ‘major risk to China’ [H/T Marginal Revolution] (LINK)
Since 2008 land prices have increased fivefold, triggering corresponding asset price rises, but even as prices soared and supply mushroomed, demand for housing and office space pretty much kept up – until this year.
Until 2011, the market mostly saw supply shortages but today total floor space under construction is enough to satisfy well over four years of demand at a national level.
In some of the worst affected provinces, there is enough supply for more than seven years of demand.
More than 90 per cent of households already own at least one home and, for those urban households that own apartments, nearly 76 per cent of their assets are in real estate, according to Gan Li, director of the Survey and Research Center for China Household Finance.
Mr Gan estimates that China’s existing housing stock is already more than sufficient for every household to own their home but developers are still supplying well over 15m new units a year.

Monday, August 25, 2014


Chris Martenson interviews Lacy Hunt [audio] (LINK)

Daphne Koller on EconTalk (LINK)

What The Original Mad Man David Ogilvy Can Teach Investors (LINK)
Related books: Ogilvy on Advertising (which I believe Mohnish Pabrai may also have recommended somewhere); Confessions of an Advertising ManBlood, Brains & BeerDeep Value
Dan Harris's Panic Attack (and Discovery of Meditation) (LINK)
Related book: 10% Happier
Seneca on Wisdom (LINK)

Howard Marks' Crystal Ball Proved Accurate

Link to article: Howard Marks' Crystal Ball Proved Accurate
Ten years ago, veteran investor and writer Howard Marks sent a contrarian -- and prescient -- memo to clients of his firm, Oaktree Capital Management, assessing the state of the hedge fund industry. Last week, Barron's checked in with Marks to get his thoughts on the industry today. 
Though aimed at clients, Marks' missives are widely read on Wall Street and beyond. Marks, 68, earned his stripes as a manager focused on credit, high-yield, and distressed debt, in particular. Marks co-founded Oaktree in 1995 after spending 10 years at TCW. Oaktree oversees $91 billion in assets, specializing in alternative strategies and, again, emphasizing credit. A prolific memo writer, Marks pulled a lot of his thoughts together into a 2011 book titled The Most Important Thing: Uncommon Sense for the Thoughtful Investor
"Hedge Funds: A Case for Caution," dated October 2004, came at a heady time for hedge funds, which were launching at a rapid pace and gathering billions of dollars from investors eager to join the alternative investing trend.

Related book: The Most Important Thing

[H/T ValueWalk]

Joel Greenblatt profiled in Barron's

Link to: Writing a Bigger Book
In 2009, at the behest of investors, their Gotham Asset Management firm put out the welcome mat again, this time with a far more diversified approach. The current strategy is, on the surface, pretty simple. Buy more than 300 high-quality names trading at cheap prices, and short more than 300 stocks on the other end of that spectrum. The stock that ranks first on these attributes gets the largest weighting in the portfolio, while the second-best stock gets the No. 2 weighting, and so on. 
"That's quite a bit different from the six to eight holdings we had once upon a time," says Greenblatt, 56. At the same time the original, highly focused strategy had limited capacity, it also came with extreme volatility. "Rob and I would wake up some days and lose 15% or 20% of our net worth," he adds. "Now it's more like 15 or 20 basis points." (A basis point is 1/100th of a percentage point.)

Related books:

The Little Book That Still Beats the Market

You Can Be a Stock Market Genius

Burger King in Talks to Buy Tim Hortons in Canada Tax Deal

Link to article: Burger King in Talks to Buy Tim Hortons in Canada Tax Deal
Burger King Worldwide Inc.  is in talks to buy Canadian coffee-and-doughnut chain Tim Hortons Inc., a deal that would be structured as a so-called tax inversion and move the hamburger seller's base to Canada. 
The two sides are working on a deal that would create a new company, they said in a statement, confirming a report on the talks by The Wall Street Journal. The takeover would create the third-largest quick-service restaurant provider in the world, they said. 
Inversion deals have been on the rise lately, and are facing stiff opposition in Washington given that they threaten to deplete U.S. government coffers. A move by Burger King to seal one is sure to intensify criticism of them, since it is such a well-known and distinctly American brand. 
In 2010, Brazilian private-equity firm 3G Capital Management bought Burger King and took the chain known for its Whopper burgers private. A few years later, the company structured a complex deal with an investment vehicle co-owned by Mr. Ackman to go public again, while retaining control of the company. 
3G, which has offices in Rio de Janeiro and New York, has become a major player in the U.S. food sector, with a taste for iconic brands. Billionaire co-founder Jorge Paulo Lemann was a big shareholder in brewer InBev and helped engineer its 2008 acquisition of Anheuser-Busch. 3G last year teamed up with Warren Buffett to buy U.S. ketchup maker H.J. Heinz Co. for $23 billion, one of the largest deals of the year. 
A key rationale for the deal is the potential to leverage Burger King's expertise in global development to boost Tim Hortons' international growth, the companies said, adding they plan operate the two as stand-alone brands.

Related book: DREAM BIG: How the Brazilian Trio behind 3G Capital - Jorge Paulo Lemann, Marcel Telles and Beto Sicupira - acquired Anheuser-Busch, Burger King and Heinz