Ice77

For me this is the single biggest challenge to sizing big (30-50% of your liquid portfolio at cost). In any given week or month on its way to price discovery, the price may move 10-20-30% against you for any justified or unjustified reason and that 3 to 15% M2M erosion of liquid networth can feel brutal even if mentally you treat it as just a paper loss. I can tell from experience that it gets easier after the first time you've done it successfully and especially once it moves significantly in the money (for whatever reason our minds can handle house money loss a bit better than dips in original capital..Hence the preponderance of sell half on double regime among many). And I WOULD NEVER size that big on Margin unless you have special funding that can't be withdrawn/terms changed easily. Otherwise it is just crazy talk. There is a second aspect to it that is not well understood even if patently obvious. It is far easier to find a 2x than to find and ride a 6x or a 10x. So investing big in a "sure" 2x is preferable to investing peanuts in a probable 5-10x move. The $ impact is not dissimilar even if ROI on the ideas are different. Finally, black swans by design are not predictable or measurable. Look at TAL the Chinese education company that is generally perceived as a solid company but has fallen more than 90% in this Chinese tech crackdown. One fine day the CCP decides to render a large part of the industry not for profit. So you have no idea of knowing your specific unknown unknown that could render a business worthless overnight or put it in heavy distress. You just can't. The only remedy is to be prepared for the worst case which is a total loss of the capital (even if completely unlikely). If that outcome is not palatable for your individual context then don't size as big.

OSTK - the furniture biz is selling at half of where it should and so we essentially get a portfolio of a couple dozen blockchain investments (w 70% carry for ListCo) basically for free. That sort of crypto exposure is rarely available in the public markets.

I mean prudence sneezes at the mention of leverage but which investor would not want 1.enormous amounts of 2. Limited recourse leverage 3. available for long periods of time? It’s a massive carry trade when coupled with someone who has a significant edge in profitably using the implied negative or low cost of that capital (as Buffett has been doing for 50 odd years). Mohnish may have been unsuccessful at it but atleast he tried and put himself in a position to be able to afford it.

Einhorn’s stubbornness sometimes reminds me of the flexibility of Soros strangely. When Soros would come across an approach to making money that he couldn’t do himself he would carve out a part of his capital and hand that to the specific strategy/manager. He wasn’t stubborn about it. There are many ways to make money and he didn’t have to master them himself or be fixated about only his own as if it was his sworn religion. Maybe that came from his trading mindset (even though in early 70s he started out as a value investor himself). Flexibility and open mindedness is less common than we realize.

I don’t really see a big correction right away. As Jamie Dimon says, we are entering a Goldilocks period of multiple tailwinds for the economy. There is more risk in staying out than staying in here I think. As for interest rates, I don’t see them much higher than where they are. The perennial QE and low interest rates have taken OECD debt to GDP to such a level that higher interest rates are just not an option anymore (so long as the central banks can help it). I’m sure there will be market sneezes along the way but nothing crazy. We are swimming in a sea of massive liquidity and the pro cyclical forces continue to gain ground.

I don't have names for you but have some considerations. First of all...over a horizon that long, the returns on the stock should approximate the core returns of the business with valuation not really a big factor. That should widen the set of names that one would consider. Secondly, business life cycles have shortened materially since the 70s/80s so it ideally has to be a slowly changing industry or if not ..it has to be led by a team/executives who can keep reinventing the firm in each new cycle (e.g. Samsung of the past or the IBM of the past). Thirdly, the extent of fiat debasement that is happening in the world at present (or since the great recession) makes me really wary of anything barely generating mid single digits in core compounding. So it would have to be something able to grow better than that. Ideally, one that keeps pace with this debasement/inflation. Lastly, there has to be an element of antifragility in the business as the world has been in a state of long (relative) peace for over 70 years. Whether it is war or a super pandemic or something else that is an unknown unknown or known unknown, the business has to be able to survive an extended period of dislocation. It better have some strong cushions built in.

The problem is that the spread of viruses is governed by the science of networks more than just the nature of the disease (ref. Nexus by Mark Buchanan) in large complex interconnected systems. If a significant chunk of population do not vaccinate in the name of some conspiracy or pseudo science or real science or freedom or whatever individually justifiable reason, they are rendering the whole network potentially vulnerable to perennial exposure to the virus...provided this group has a significant critical mass/membership. I suspect governments will eventually be forced down the road of mandatory vaccinations in the future. May not be this epidemic but eventually that is coming.

This book was referenced in the interview with Mark Leonard (not by him but by the interviewer) and sounded compelling so I am going to give it a read.

KALA

People don't have a personal experience with high inflation or they would worry more. Most haven't lived through the 1970s stagflation when rates were in teens or the terrible things that happened in 1920s Weimar Germany during hyperinflation. LatAm 90s inflation or Zimbabwe's inflation or that in Venezuela more recently are more stories and memes to most. Even the risk aversion of the Depression got lost along the way by the late 50s. That's why history rhymes because people forget the lessons of the past once generational handover happens.

APTS looks quite interesting, Thanks. 98% are fixed mortgages at a weighted average interest rate of around 4% with less than 3% of them maturing in the next 2 years. Almost full occupancy even during the pandemic. Common equity is a sliver of the EV and the calls on the common then become an option on an option. If only there were some LEAPs, it would be even more fun.

Exited a couple of trading sardines which seemed like eating sardines but were not anymore.

Henry Singleton did a variant of this back in the day with Teledyne. Watered the stock down like crazy by issuing a lot of stock to fund 100+ acquisitions in the conglomerate boom of 60s and then in the ensuing 70s bear market bought back 80% of it when everyone had given up on stocks. The stock did phenomenally well over his lifetime: ~23% CAGR over 35 years IIRC.

It is a prized asset. I was surprised when I heard it was going to be listed this early. VCs don’t usually share the spoils of such assets this early with the public. Even the Russians rocket scientists admire it. But people expect miracles and a fully formed business model when it’s barely the 2nd innings of the private space race. But for the DA timing amid a correction, it would be trading lot higher

I don’t see it that way at all. I see it as one would underwrite insurance for a possible event. Getting paid 5% premium for a 2% probability event if done with regularity is not a bad deal. We are talking of one of the only companies apart from SpaceX to have a successful launch vehicle. It’s a conditional probability event just like betting on a successful entrepreneur’s second startup. The odds of success are different than if he were on his first one. That it requires lots of capital and is very difficult to do can be an evolving moat of sorts. Even Astra which is led by ex CTO of NASA and ex SpaceX engineers has failed to reach orbit. It is not easy so I’m not going to summarily dismiss someone like RocketLabs who has done it and done it many times.

SpaceX is an altogether different beast as its pace of fail fast/innovate/succeed cadence is insane. But I think some value has to be given for a successful launch vehicle and multiple launches and being an early success in this race. It's likely to be a big industry (TAM in trillions) and unlike internet it won't be a winner take all even in launches I think (Look at the governments for example: NASA and ESA were never the cheapest to launch...while the ones who are don't have 100% of the market either). This is literally the proverbial rocket science and not everyone can do it and few have succeeded despite pouring billions into it (look at Blue Origin or Virgin). I'm willing to have a small position to track the story and then scale as things evolve. Put another way, SpaceX is worth $100b according to the last Morgan Stanley valuation exercise ($75b in private markets). If they IPO'd, the value would probably be $200b or more who knows. Here VACQ/Rocket Labs at its current EV is pricing in a 2-4% probability that someday RocketLabs can be as big as SpaceX (the P/FAAMG approach to valuation that was postulated by a blogger recently. Quoting it briefly here, "you can abstract away a lot of complexity by thinking about startup valuations as the probability that they can grow as large as Facebook, Amazon, Apple, Microsoft, or Google. The higher the valuations of the biggest tech companies, the higher the potential valuations of any startup"). It's an approximation & for a small sized bet I don't mind it.

Rocket Labs is listing via a SPAC (VACQ) and I have a small position. It's the closest competitor to SpaceX out there and they are trying to be a fully integrated space company providing launch vehicles, space systems and space applications. The founder is a bit of a maverick (ate his own hat because of a past bet he made). They have a successful launch vehicle for LEO and have launched 97 satellites to date and are now moving to heavier launch vehicles. Lockheed Martin (LMT) is an investor. Elon Musk did take notice when the SPAC DA happened and put out a couple of tweets about them. https://www.rocketlabusa.com/assets/Rocket-Lab-Investor-Presentation.pdf

https://loupventures.com/spac-return-performance-resembles-venture-capital/ Interesting analysis of merged SPACs by Loup ventures. Returns for merged SPACs more closely resemble VC returns than the traditional stock market. For merged SPACs, top 20% SPACs provided 92% of total return as compared to NASDAQ 100 where top 20% stocks provided 51% of total return. Returns seem more concentrated..exhibiting a sort of power law. So if someone has an edge in deciphering the right targets, they would have greater dispersion from the median portfolio.

Gates foundation gets B shares. The A to B conversion is a one way street. So whether they choose to sell in the open market or back to BRK, it wouldn’t make as much difference as B shares are vote light

Think the real activist game may only begin 6-7 years after WEB's demise. He has willed that his shares be given away within 12 years of this death so his voting control will start to weaken midway through that I reckon.

That's not even remotely the case. Bruce went deep in the trenches with his DD. He was over concentrated and stubborn and that has been his undoing but Chamath barely does any DD, has lots of positions and doesn't have anywhere close to the same conviction as Bruce did. He is the polar opposite

Yep. He’s donating 7-8K odd A shares (via conversions to B) but his voting stake will still go up by nearly 4-5pp due to the massive buyback of A shares (80998). So even as he donates this byte size annually, if the buybacks continue at more than 20K annual pace (via A shares), his voting stake will keep rising.

Start an investment ideas thread? Have you seen any more comprehensive write-ups from fund managers? I'm intrigued. I haven’t seen any good writeups yet. It only started trading in Oct 2020 after the SPAC transaction was consummated. So it’s not had a long history in the public markets.

CURI: added around $15 levels. Curiosity stream is the infotainment streaming vehicle of John Hendricks, the founder of Discovery. He owns 40%+ of the stock and has been a buyer in each cap raise. Current T12m revenue runrate is $40m and they should double that in the next year (management aims a 10x in 5 years). The service is priced at ~$20/year (very good value...subscribe if you haven't) and has nearly 10x+ as much documentary content as Netflix (the content library itself is worth $1.3b+ according to management comments vs a current market cap that is half of that). Compared to traditional TV dramas which cost ~$8-10m/hour to make, infotainment content can be made much much cheaper at $200-300K/hour. So like for like, it has more compelling economics than other streamers once it establishes itself as a must have option. Looking ahead they could have 80m+ subs in a few years generating $40/yr+ in ARPU for a $3b+ revenue run-rate and this business could be worth 10-20x of what it is worth now. John Hendricks is very widely connected in the Content/Cable/CTV industry as an OG legend and is thus rapidly getting access to the service everywhere in the world.

Don’t have specific suggestions for you but you won’t prepare them for the coming wars by giving them worn out tools or limiting their context to one that dominated your own thinking and ideas. Give them a choice and let them find their own way.