Monday, January 26, 2015


Book of the day (praised by Dan Carlin in Hardcore History Episode 32, which was also very good): Over the Edge of the World: Magellan's Terrifying Circumnavigation of the Globe

Scott Adams: Reaction to Bad News (LINK)

The man with 26 million students [H/T Mish] (LINK)

Dakshana Recognition Ceremony Dec 2014 - Address by Mohnish Pabrai (video) [H/T ValueWalk] (LINK)

Preview: Mohnish Pabrai Office Tour and Conversation with Guy Spier (video) [H/T ValueWalk] (LINK)

Technology and Finance: Drivers of a Profit Margin Explosion (LINK)
In this piece, I’m going to show that the profit margin expansion seen in the U.S. corporate sector over the last two decades has been driven largely by gains in the financial and technology sectors.  I’m then going to examine arguments for and against the sustainability of this shift.
Barry Ritholtz talks to Bill Gross (Part 2) (LINK)

All of the videos from Davos [H/T ValueWalk] (LINK)

Hussman Weekly Market Comment: Is Q-ECB a Favorable Development? (LINK)
Last week, the ECB announced that it will begin a new program of quantitative easing on March 15 – a delay that allows plenty of time for various rugs to be pulled out, if the experience of recent years is informative. Assuming that the program proceeds as announced, the ECB envisions bond purchases of 60 billion euros per month. Fully 92% of these purchases must be made by the central banks of individual countries in the Eurosystem, with the ECB sharing the risk of losses on only 20% of it (12% being investment-grade institutional debt, and 8% being the sovereign debt of Euro-area countries). This was essentially as expected, but - thus far - without an option for national central banks to treat their share of purchases as discretionary. I still suspect that this shoe will drop in the weeks ahead, but there's actually a much more important factor driving our outlook.
Broyhill Case Study: Time Warner Value Creation (LINK)

The Brooklyn Investor discusses Cowen Group as a potential investment (LINK

I don't know much about the company yet, but Cowen Group was also mentioned by Ariel Investments last year in their 3/31/2014 report: 
Once a year, I consider the question, “If I could own only one stock, what would it be?” This year I wrote about Cowen Group, Inc. & Co. (COWN) in my first-quarter letter. Cowen is traditionally known for being a boutique broker-dealer which has been around for nearly 100 years. Actually, the public company, Cowen Group, Inc. & Co., was bought a few years ago by Ramius LLC, which was a 20-year-old privately owned alternative equity management firm. It was a very successful firm and bought the broker-dealer to have a permanent capital base, expand its operations and capitalize on the synergies between the two firms. What we have seen is a very successful turnaround of the broker-dealer business—it has now been profitable for the last five quarters. Ramius LLC has grown its assets under management from $9.4 billion to $11.6 billion from year end to July 1, 2014. The stock still trades below its tangible asset value despite having two businesses that are operating very solidly now. We think it is a very misunderstood company. If you said “Cowen Group, Inc. & Co.,” most investors would still think of the broker-dealer business, which was in trouble a few years ago, and not even realize that this successful $11+ billion asset management business was the driving force behind the company. Additionally, it has very strong leadership. The CEO is Peter Cohen, who was the CEO of Shearson Lehman Hutton from 1983 to 1990. He and his team, who founded Ramius LLC years ago, have very significant stock in the company, so we feel good about the incentive structure.
And for those micro-cap investors out there that might be interested, we recently released our Boyles Q4 letter and mentioned two recent purchases: Mastermyne Group Limited (ASX:MYE) and Cambria Automobiles plc (AIM:CAMB). As always, this is for information purposes only and not a recommendation to buy or sell a security. We currently own shares in both companies but that may change at any time. Please do your own work before making an investment decision.