
Hektor
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Everything posted by Hektor
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And deal with the unintended consequences of that decision!
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Good one @Xerxes
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Understood. Overtime, what credibility will MW have? Once they go after high profile companies and are exposed as nothing burgers, why would stocks crash on their report?
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That, in my view, is not honorable. MW should have approached FFH for comments before going public with their thesis, in my opinion.
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I read it as Welch at GE
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And, don’t miss God’s Own Country - Kerala https://en.m.wikipedia.org/wiki/Tourism_in_Kerala
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Huy Fong has started to reappear on the shelves, particularly in Asian stores. It’s unclear if their brand is now impaired relative to what it was before. It amazes me that these two managed to kill a partnership that was minting money for decades.
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@Eng12345 After reading your log and the picture, I had to look up Buc-cee’s. It’s very impressive. https://www.usatoday.com/story/graphics/2023/11/22/why-are-buccees-gas-stations-so-popular/71342752007/ And, it’s not a truck stop. Amazing.
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Sriracha, Huy Fong Foods’ iconic fiery-red chili-garlic sauce, had risen to become the stuff of business legend. That spicy, slightly sweet, good-on-everything sauce, in the instantly recognizable bottle with its white rooster emblem and bright green nozzle, was the brainchild of David Tran, who had first devised the recipe and sold the stuff in L.A. in 1980 as a Vietnamese refugee starting a new life for his family. The green-tipped bottles of Huy Fong Food’s Sriracha could be found in one in 10 American kitchens and on the International Space Station. Craig Underwood, a fourth-generation California farmer and owner of Underwood Ranches supplied all Huy Fong’s chilies, and Tran was Underwood Ranches’ only pepper buyer. An epic fallout between that two left millions without their favorite hot sauce. https://fortune.com/2024/01/30/sriracha-shortage-huy-fong-foods-tabasco-underwood-ranches/
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Interesting article from Fortune. Seems like China will do well. Not so sure about non-Chinese companies or investors doing business in China. https://fortune.com/2024/02/02/china-us-geopolitical-tensions-business-economic-rivalry-supply-chains/ A snippet from the article: What is a U.S. company’s best strategy in today’s China? In the near term, the answer depends on its industry and its business relationships. The future looks bright in industries that aren’t technologically sensitive. With China still welcoming many U.S. consumer goods and services, McDonald’s recently announced plans to add thousands more restaurants. “We’re incredibly bullish on the opportunity,” CEO Chris Kempczinski tells Fortune. “There’s no reason China couldn’t be our largest market.” Like other U.S. companies, McDonald’s set up its China operation as a freestanding entity that pays dividends to the parent; McDonald’s owns 48% and state-owned China International Trust Investment Corp. owns 52%. U.S. financial services companies have performed well in China because they achieve efficiencies by being global. Chinese finance companies, in contrast, have a poor record outside China; for example, few Westerners know of ICBC (Industrial and Commercial Bank of China) even though it’s the world’s largest bank by revenue. But last December the CCP published an article stating that the finance sector will be expected to follow Marxist principles. In practice, U.S. firms may now struggle to invest Chinese clients’ funds in U.S.-based assets. Consulting firms face an even dicier future, as the Bain and Mintz raids underscore. Recent laws broadly regulating how companies can possess data or move it across borders are especially restrictive for consulting firms, since their business is gathering, analyzing, and communicating data. Facing the toughest futures are companies making products that China wants to produce on its own. As an executive with decades of China experience notes, “If you are anywhere near a product that has been put under export controls by the U.S. government”—sectors include semiconductors, AI, robotics, biotech, and more—“you know the Chinese government is doing anything it can to support your Chinese replacement.” Other high-priority technologies for China include pharmaceuticals, aerospace, electronics, and renewable energy. Going against Chinese competitors in any of them will be a long, hard slog.
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Yeah, this will be interesting
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A Taylor Swift tour of China might spark its economy https://www.bloomberg.com/news/articles/2024-02-10/taylor-swift-wows-chinese-women-tired-of-xi-s-conservative-era Taylor Swift Wows Chinese Women Tired of Xi’s Conservative Era
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What do you all think about any after effects? e.g. some regulatory body starting a review, diverting FFH time and money.
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Whatever the merit of the recent short thesis, I guess it jolted many investors who knew the company’s business well to examine if there is any holes in their understanding.
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My suggestion is for FFH to license some of @Viking’s writing and put it on their website for unsophisticated investors
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He does say they marked up, but that too is a problem in his view. See "TRSes & Digit — Overview". "We feel it is incontrovertible that Digit is worth far less today than where Fairfax ultimately marked it in 2021, which is why we adjust Fairfax's book value down by $1.1 billion, as of December 2022,for Digit. While the ultimate valuation at which Fairfax marked Digit in 2021 may have been justified at the time (discussed infra), Fairfax, in our view improperly, recognized these gains in a manner inconsistent with valuation changes in Digit by first ignoring a gain that should have been taken before the TRSes were in place, and then spreading a one-time gain out over three quarters.. We believe the inconsistent recognition, rather, was designed to provide more fuel for Fairfax's share price, which as a result of the TRSes, was now feeding directly into Fairfax's net income. Through the TRSes, this fuel had a recursive effect on Fairfax's financials by inflating income as the stock went up, leading to more share price gains and more income."
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+1 That said, Prem built up this firm to where it is today. Also, he beat back a far more vicious attack previously. I trust and the Fairfax team will handle this appropriately.
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The situation sounds to me more like the Fannie/Freddie saga in the US.
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“So US and European hedge funds piled into the debt, envisioning big payouts to juice their returns.” Did they not hedge?