Thursday, May 5, 2016

Links

Fantasy Math Is Helping Companies Spin Losses Into Profits [H/T @GnDsville] (LINK)

Notes From Sohn Conference New York 2016 (LINK)

Links to some good collections of investing material from Shai over on the Latticework site (LINK)

Milken Conference Panel with Kyle Bass, Mark Attanasio, Michael Hintze, Mitchell Julis, Sarah Ketterer (video) [H/T ValueWalk] (LINK)

Milken Conference - Meaningful Work and Relationships Through Radical Truth and Transparency: A Conversation with Ray Dalio (video) (LINK)

The full collection of videos from this year's Milken Conference can be found HERE. A detailed program can be found HERE. The subject matter is pretty broad overall (finance, economics, blockchain technology, meditation, future of healthcare, etc.).

Book of the day: Poorly Made in China: An Insider's Account of the China Production Game

Wednesday, May 4, 2016

Links

Berkshire AGM transcribed [H/T Linc] (LINK)

Berkshire's Munger: Ackman Off-Base on 'Sewer' Valeant, But Right on Herbalife (video) (LINK) [Munger: "Sewer was too light a word for the behavior of [Valeant]."]

Buffett, Gates talk tech at Berkshire Hathaway annual meeting (video) (LINK)

Warren Buffett: Rate hikes don't factor into 1% of decisions on buying businesses (video) (LINK)

Warren Buffett: Modern deficits don't matter (video) (LINK)

How Warren Buffett’s Son Would Feed the World [H/T @rationalwalk] (LINK)

Bill Gates: Remembering David MacKay (LINK)
Related link: David MacKay - final interview and tribute (video)  
Related book: Sustainable Energy - Without the Hot Air (Or via free download, HERE.)
Mark Leonard's letter to shareholders [H/T @chriswmayer] (LINK)

Kyle Bass talks betting against China (CNBC video) (LINK)

Jim Chanos betting against China (CNBC video) (LINK)

Notes from a Roundtable With Leon Cooperman, Joel Greenblatt, Richard Pzena (LINK)

Financial Engineering Shows Its Downside (LINK)
Valeant, SunEdison…the S&P 500? 
Financial engineering has built vast financial edifices, but all too often there is little of substance providing support. The latest Wall Street constructs to crumble are familiar names, Valeant Pharmaceuticals International Inc. and SunEdison Inc. Both relied on financial engineering to satisfy shareholders desperate for two items scarce in today’s weak economy: growth, offered by Valeant, and income, supplied by SunEdison’s so-called yieldcos. 
Shareholders who avoided both will be congratulating themselves, or thanking their luck. But they should also be asking themselves a bigger question: Is the entire stock market engaged in unsustainable financial engineering in an effort to satisfy shareholders? Put another way: We know the market is engaged in large-scale financial engineering in the form of a huge ramp-up of leverage. Is it sustainable?
Research Affiliates: Where's the Beef? “Lies, Damned Lies, and Statistics" (LINK)
The inflation rate has a direct bearing on our prosperity. Official government measurements show very low inflation, despite underlying inflation being higher than overall inflation. This raises the question—what is inflation measuring?
The success of Leicester City will be pored over for management lessons [H/T @williamgreen72] (LINK)

Fred Wilson's Coin Center Keynote (LINK)

How Tim Ferriss Became the ‘Oprah of Audio’—Behind the Podcast With 70M-Plus Downloads (LINK)

Edge #467: Is Big Data Taking Us Closer to the Deeper Questions in Artificial Intelligence? - A Conversation With Gary Marcus (LINK)

Three Earth-Size Planets Found Orbiting a Nearby Ultracool Star (LINK)

Tuesday, May 3, 2016

Links

Oaktree Insights - Strategy Primer: Investing in Mezzanine Debt (LINK)

Spring 2016 Issue of Graham & Doddsville (LINK)

Horizon Kinetics' latest in their index series: How Indexation is Creating New Opportunities for Short-Sellers, And Why This Should Alarm Ordinary Buyers of Stock and Bond ETFs (LINK)

Bruce Greenwald's Talk at GuruFocus Value Conference Notes (LINK)

Mutual Fund Observer, May 2016 (LINK)

David Einhorn's Q1 Letter [H/T ValueWalk] (LINK)

The Absolute Return Letter - May 2016 (LINK)

Audio interview with James Grant discussing his piece in Time magazine (~13 minutes) [H/T ValueWalk] (LINK)

Yanis Varoufakis: "And the Weak Suffer What They Must?" | Talks at Google (LINK)

Everything as a Service - by Ben Thompson (LINK)

How Uber conquered London [H/T @iancassel] (LINK)

Coupang: The $5 Billion Startup Filling Amazon's Void In South Korea (LINK)

The Secret Culprit in the Theranos Mess [H/T The Big Picture] (LINK)

Duncan Clark: "Alibaba: The House That Jack Ma Built" | Talks at Google (LINK)
Related book: Alibaba: The House That Jack Ma Built
Exponential Wisdom Podcast - Episode 21: Inside the Future of Healthcare (LINK)

Latticework of Mental Models: The Two Systems of Thinking (LINK)
Related book: Thinking, Fast and Slow
Evolution’s Next domain, the Symbology - by Nick Gogerty (LINK)
Related book: The Nature of Value: How to Invest in the Adaptive Economy
David MacKay - final interview and tribute (video) (LINK)
Related book: Sustainable Energy - Without the Hot Air
Life As We Know It - By Bill Gates (LINK)
Related book: The Vital Question: Energy, Evolution, and the Origins of Complex Life
If you're interested in blockchain technology, I've seen a couple of mentions of the new book The Business Blockchain: Promise, Practice, and Application of the Next Internet Technology.

Book of the day [Bill Gates and Charlie Munger both mentioned they just read it. Munger said he enjoyed it but was disappointed with the conclusions.]: The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War

TED Talk - Riccardo Sabatini: How to read the genome and build a human being


Link to video

Monday, May 2, 2016

Omaha Links

For those who missed it, here's the link for the Berkshire Hathaway 2016 Annual Shareholders Meeting replay video (LINK) [The Q&A starts around the 42:20 mark.]

16-minute Yahoo! Finance video with Charlie Munger (LINK) [Munger mentioned Eric Hoffer and a key insight from his book The True Believer, around the 10:54 mark.]

Warren Buffett (who then gets joined by Bill Gates and Charlie Munger) on CNBC... Links to videos:
Buffett on streaming Berkshire's meeting (LINK
Buffett on currencies, rates and financials (LINK
Buffett on economic recovery (LINK
Buffett on jobs picture, GDP and oil (LINK
Buffett on American Express and buybacks (LINK
Why voters are mad: Buffett (LINK
Valeant's drug-pricing charge: Buffett (LINK
I drink Coca-Cola and I'm happy: Buffett (LINK
Buffett: Hedge funds in focus (LINK
Jeff Bezos has 'changed the world' in a big way: Buffett (LINK
Wal-Mart under a lot of pressure: Buffett (LINK
Buffett on Brexit (LINK
No surprise Baker Hughes, Halliburton deal fell through: Buffett (LINK
Buffett on slow global growth (LINK
Buffett on Big Blue, Yahoo and trade (LINK
[Gates and Munger join] 
Highlights from Omaha (LINK
Bill Gates: Impact of low rates (LINK
Bill Gates on the next path to normal (LINK
Europe's woes affecting our monetary policy: Buffett (LINK
Munger, Gates on future of AI (LINK
Buffett on driverless cars (LINK
Buffett on Puerto Rico's debt crisis (LINK
Bill Gates on pensions (LINK
'Idiots of each party' in control: Charlie Munger (LINK) [Munger mentioned Eric Hoffer and The True Believer again in this video.] 
Valeant was robbing our hospitals: Charlie Munger (LINK
Bill Gates on encryption battle (LINK
Fixing the tax code (LINK)
Phil Weiss' 2016 Markel Omaha Meeting Notes (LINK)

..................

And since Munger mentioned Eric Hoffer a couple of times, here's the quote from The True Believer that I've posted a couple of times before:
It goes without saying that the fanatic is convinced that the cause he holds on to is monolithic and eternal - a rock of ages. Still, his sense of security is derived from his passionate attachment and not from the excellence of his cause. The fanatic is not really a stickler to principle. He embraces a cause not primarily because of its justness and holiness but because of his desperate need for something to hold on to. Often, indeed, it is his need for passionate attachment which turns every cause he embraces into a holy cause.  
The fanatic cannot be weaned away from his cause by an appeal to his reason or moral sense. He fears compromise and cannot be persuaded to qualify the certitude and righteousness of his holy cause. But he finds no difficulty in swinging suddenly and wildly from one holy cause to another. He cannot be convinced but only converted. His passionate attachment is more vital than the quality of the cause to which he is attached.
For more on Hoffer, see THIS previous post.

Sunday, May 1, 2016

Companies which provide indispensable services to their customers...

From Capital Returns (the excerpt below was from a Marathon letter in February 2015):
Companies which provide indispensable services to their customers often prove to be excellent investments 
The typical growth stock starts out with high returns, rising turnover, and glorious prospects, only to stumble in later years. The trouble is that profitable and growing businesses tend to attract lots of competition, especially when they operate in exciting areas, such as technology. Investors who buy growth at high starting valuations generally end up disappointed. There is, however, a certain class of company which we have found is well worth paying a premium for. Our preferred growth stocks undertake apparently unglamorous activities that are essential to their customers – so essential, in fact, that customers pay little attention to what they’re being charged. 
When Marathon encounters such companies, the common refrain of managers is that their products (or services) constitute only a small part of the customers’ total cost and yet are of vital importance to them. It may be that a particular component is “mission critical” for an industrial process or a company’s workflow. For instance, customers may face a very high cost if they have to shut down a production line when a crucial component fails. Hence, reliability weighs more highly than price. The product may also be essential by virtue of its quality, safety or performance attributes. 
Having a high perceived value for customers often combines with some other advantages, which limits competition, ensuring high and sustained returns. These may be economies of scale in manufacturing and distribution, regulatory barriers and high switching costs. Companies talk about “value based,” or “technical” selling, which often involves having highly qualified sales staff “embedded” in the R&D departments of their customers. Sometimes this means that the component is mandated for use over the lifecycle of a product, as is commonplace in the automotive and aerospace industries. 
...While the high profitability of the companies under discussion may be below the radar of their customers, it has not escaped the attention of investors. In the past, when we encountered such wonderful businesses we were prone to assume that high valuations meant they were fairly priced, or even overpriced, in the stock market. A few years later, however, when we reengage with the same firms, we often find that their share prices have shot up. When we first met with Spirax-Sarco in 2005, for instance, it was valued at 17.5 times earnings and the shares were trading around £8. We demurred. Five years later, at our next meeting, the stock was trading above £18. Again, we concluded that it was fully valued. Since then, the share price has almost doubled again. The lesson seems to be that a full price is often justified for high quality, “under-the-radar” businesses.

Friday, April 29, 2016

Links

Warren Buffett one-on-one (video) (LINK)

Elon Musk Supports His Business Empire With Unusual Financial Moves (LINK)

Exponent Podcast: EPISODE 077 — PHYSICAL GOODS (LINK)

The Bill Simmons Podcast — Ep. 95: Billionaire Investor Chris Sacca (LINK)

Edge #466: A Characteristic Difference - A Conversation Between Joshua Knobe and Daniel Kahneman (LINK)

Seneca: on tranquillity of mind (LINK)

Charlie Munger quotes on not predicting the direction of the current...

"We try and predict what individual investments will swim well in relation to the tide. And then we tend to accept the effects of the tide as those effects fall." -Charlie Munger (Wesco 2001 Annual Meeting, via Charlie Munger: The Complete Investor)

"We're emphasizing the knowable by predicting how certain people and companies will swim against the current. We're not predicting the fluctuation in the current." -Charlie Munger

Wednesday, April 27, 2016

Links

Innovation Ecosystem Podcast: IE011 Larry Cunningham – Of Berkshire, Moats and Culture (LINK)
Related books:  
The Buffett Essays Symposium: A 20th Anniversary Annotated Transcript
Berkshire Beyond Buffett
Could You Work at a Place Where Everyone Gets to See Everything and People Always Tell You What They Really Think? Ray Dalio Believes You Should (LINK)

The road to confetti - by James Grant (LINK)

Bill Miller Nabs Valeant Shares, Spying Opportunity Where Others See Chaos - by Jason Zweig (LINK)

Chobani CEO Announces Plans to Give All of His Employees a Stake in the Company (LINK)

Antitrust and Aggregation - by Ben Thompson (LINK)

Inside “Emojigeddon”: The Fight Over The Future Of The Unicode Consortium [H/T @benthompson] (LINK)

James Altucher Podcast: Ep. 164 – Steve Case: The Third Wave is coming (LINK)
Related book: The Third Wave: An Entrepreneur's Vision of the Future
FT Alphachat Podcat discusses what happened when Argentina defaulted on $80bn of its bonds in 2001 [And touches on the most recent issues as well.] (LINK)
Related book: And the Money Kept Rolling In (and Out) Wall Street, the IMF, and the Bankrupting of Argentina
A Leak Wounded This Company. Fighting the Feds Finished It Off (LINK)

Origin Stories Podcast - Episode 08: Being Human with Robert Sapolsky (audio) (LINK)
Related previous post:  Robert Sapolsky interview with Nautilus
Related books: 
A Primate's Memoir: A Neuroscientist's Unconventional Life Among the Baboons 
Why Zebras Don't Get Ulcers
Chimpanzee fig selection sheds light on primate motor skills evolution (LINK)

The young chimpanzees that play with dolls (video) (LINK)

John Wooden: Values, Victory and Peace of Mind (video) [H/T David] (LINK)

Tuesday, April 26, 2016

Kate Welling talks with Chris Bloomstran

Given all of the feedback I've gotten about the Semper Augustus 2015 Annual Letter, many of you are going to really enjoy the conversation between Kate Welling and Chris Bloomstran linked to below. And given that the Semper Augustus letter was written before Mr. Buffett's annual letter, this interview (which took place after the Buffett letter) is a great compliment to the previous missive; especially with the Berkshire Hathaway Annual Meeting coming up this weekend. 

Kate's interviews are always great, and I agree with Chris when he says: "Kate Welling’s interviews are terrific and have been the best on Wall Street since her days at Barron’s. They are absolutely worth a subscription. Visit www.WellingonWallst.com for information."