Spekulatius

Markel is vastly overrated for the results they have been generating. WRB is a much better business, imo. I think even BRK is likely to get better returns going forward than MKL despite their size.

Pretty much any company that is a few decades old has ~50 system different IT applications that the company runs on. Most are probably not mission critical, they are just legacy systems that have not been retired, mostly because there is one or two applications somewhere that are not easy to replace. Other applications are the result of acquisitions but that's probably not the case for GEICO since they never acquired other companies as far as I know. FWIW, the company I work still has Lotus Notes running for some use cases... (Edited per @John Hjorth request )

it should be noted that the preferred of all failed bank got wiped out with this latest episode. this is a different outcome than during the GFC where most preferred survived. In my opinion this makes the preferred not that great of a risk reward considering the downside. I would rather invest in common bank stocks the way things are - at least you get the upside. Now, if banks start to raise capital, this may become a different situation.

I think his comment on Oxy and Chevron were interesting, he clearly likes that resources are mostly in the US, but he won’t buy them outright as @gfp noted. He also applied the same logic to TSMC - he likes everything about them but their location, so he sold for that reason alone as he obviously changed his mind a out geopolitical risk I also liked the answer about what commercial real estate is worth - the answer “ whatever I can borrow against without guaranteeing it personally” is quite revealing. What it means is that it is almost entirely depending on lending market, not stuff like replacement cost and maybe not even cash flow in many cases

@Luca Feels like a pet zoo.

@WayWardCloud on LSXMK - the results from SIRI were worse than expected for two quarters in a row.Q1 2023 was much worse. Managment partly explained this - they pulled back marketing in anticipation of product changes , but I am sceptical that those will turn around subscriber number. In addition, I bought a car, so I had the opportunity to test the product for free. I am not impressed and think Upgrades in car entertainment systems ( Apple/ Android CarPlay or whatever the manufacturers come up with) make Sirius just another app amongst many others. Just just my personal opinion but of course even that anectode didn’t help my conviction.

LSXMK at a loss. Consider my thesis broken.

A lot of them will be dead.

TFC does have an outsized security portfolio with substantial unrealized losses. Management seems so so. I like them less than some other superregionals like PNC or USB but what do I know. I do think that TFC has the deposit base so sustain their assets.

Adding some FNF and restarting LHX position here.

I think the net effect of this "confusion" besides the banking itself is that it results in credit tightening for small business (served by mostly smaller banks), commercial and in particular commercial real estate lending. This all may boil down to a 0.25-0.5% tightening on top of the tightening that the Fed anyways. That's why I think the Fed should have stopped tightening because the effect of both the bank quantitative tightening and the risk rate increasing compounds. I think Powell is in a tough spot. The economy is still humming along, labor market super strong and the inflation still not budging all that much - for example both residential RE strong, used car value rising and energy/gas/fuel prices rising for most. FWIW, I don't think there will be much effect on residential lending.

FHN looks like a decent bank. At sub $8, I am a buyer. I don't think there is anything inherently wrong with it. My $USB is getting wrecked here.

FHN deal terminated: https://finance.yahoo.com/news/td-bank-first-horizon-mutually-100000980.html

Relevant interview from Kasparov. He has followed Putin closer than almost anyone. Memorable phrase : Dictators tend to lie about the past, but they always tell you what they are going to do.

Acquiring a bank from the FDIC (with backstops and after doing DD) has always been the better option for the acquirer, that is nothing new. I personally have not seen any recent deal with the FDIC being intermediary that has not worked out well for the acquirer. FRC was a zombie after the deposits left in March, they were just a Walking dead at that point. Any bank without deposit is a zombie.

I do wonder what happens if you give lousy management a lot of capital to play with. Some credit unions got money too - like Workers Federal CU close by (for me) in Littleton MA got $150M . Main branch is 1.5* star rated. it's a crummy organization from what I can tell with generally uncompetitive terms, no they can become a crummy organization twice their current size. They are not operating in a distressed area either, god knows how they got the funding. https://home.treasury.gov/system/files/136/Applicants-Approved-for-ECIP-Investment.pdf

@Dalal.Holdings I don't agree - the regulators are not there to protect shareholders or debt holders, their job is to protect depositors and the integrity of the entire banking system. Anyways, bought back some PNC which I sold a few days ago. I do not think this banking crisis is over, at least not for equity holders of bank stocks. We just moved from an acute to a chronic phase. I also think the Fed would be better of not raising interest rates any more. The steepening of the yield curve inversion is just going to stress banks more by bleeding deposits in higher yielding vehicles. The banking calamities and issues already lead a tightening for the borrowers on top of the Fed tightening. I think the Fed should wait and see before they risk to overdo it here.

Dimon and his CFO looking at other banks to “donate” deposits to:

More like the magnificent seven.

Interesting - the market commentary podcast from Morgan Stanley fellow mentioned that the entire gains in the stock market this year were driven by the 10 largest market cap stocks - Tesla, MSFT, AMZN, GOOG, Apple and META etc. The rest of the market in aggregate has done squat. That's a very narrow stock market.

Casualty list: Si Bank: ~$11B Signature bank: ~$110B SIVB: ~$220B FRC: $230B About $570B in banking assets have taken a new owner and the equity base supporting them has been destroyed. Total size of the US banking system is about ~$22T, so that's ~2.55% so far.

Collectively active can never beat passive, because for someone to outperform, somebody else needs to underperform and then there is the overall drag of active versus passive due to higher fees for active. That said, in less efficient markets, it makes sense to pick your spot with an active manager. if you want to invest in nanocaps, where there are so many crappy and fraudulent companies around, investing alongside somebody like Alluvial capital makes sense versus investing in a small/ nano cap index fund. Same in some foreign markets where the stock market index is dominated by a few often state controlled enterprises. In “efficient” markets, I think it makes less sense unless you can identify a truly outstanding manager and have reason to believe that he can continue to outperform due to having a better process. In some cases, you can get vehicles with outstanding managers that have also very low agency cost. Some family owned vehicles can be like this (Exor comes to my mind) or Berkshire. With those, you have to consider that they have control investors, which can become an issue if there are leadership changes.

@tnp20 Do , if I believe that the magic quadrant assessment is correct, than IBM Is seriously undervalued with a market cap is just $115B vs trillions for competitors in the same quadrant.

I have no interest in Reits/ property stocks in Europe. The demographics are of little concern if you invest in small caps. As for Italy, I recommend looking at all the IPO’s in Italy in the last few years. Italy has a very vibrant IPO market for small caps with decent disclosure. There are many profitable private company coming to market with market caps <200M € for example, but you have to put in the work. The same opportunity set does not exist in the US because it is not economical to IPO companies that small, they get gobbled up in acquisitions or private equity instead. You can check in Alluvial capital letters for some ideas as well.

A lot of people can’t pass the marshmallow test and we don’t teach it on school either. If anything, I suspect a lower percentage of people pass the marshmallow test than decades ago, thanks to more social media envy and perhaps other factors. If you don’t pass the marshmallow test, you are unlikely to become wealthy or even stay wealthy they in case you are well off already. Passing the marshmallow test is probably a better indicator of your chance to become well thy than intelligence, education or even be a hard worker.