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Saluki

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  1. it's up about 25% in two months. If it was in retirement portfolio I would probably sell too and buy back in a pullback, but in my taxable account it's all short term gains
  2. Sold some ATCO from my retirement portfolio and picked up some more JOE. If the deal goes through, I'm losing a few nickels, if it doesn't, I can buy it back later at the pre-offer price with no consequences. I'm still holding my much larger position in my taxable account and I plan on voting against the deal. If the deal goes through, hopefully it will be after Jan 1, but if it doesn't go through, I may add more on the dip.
  3. Good point. Too much many ships built during the boom more than a decade ago and very bad rates for a long time after scared away a lot of future investment/capex in this sector. Another year or two of bad rates and more of the weak hands would've been shaken out. But IMO2020 didn't cause a lot of scrapping. Then the pandemic disrupted the sector at first but built up demand sent rates for everything (containers, drybulk, VLCC, product tankers) on a tear. I think it saved a lot of companies that no bank or hedge fund would be interested in. Part of the appeal of a consolidating industry is the presence of a few good capital allocators (Sokol) and access to a lot of cash (Prem).
  4. I too had hoped to own it for a long time. I do own FFH too, so I'm not so broken up about it. With the new builds that they have under contract (locked in pre-inflation at 30% below what other people are buying ships for now), which they have locked in leases for, this looked like it had a really bright future. Sokol and Chen cleaned up the balance sheet, put the revolver finance system in place, kept growing the top line, it looked like the best in show among shipping companies. I do think $11 was too cheap for this. The only reason I haven't added recently is that I have a lot already, and I saw cheaper stuff out there that I like more. I have owned it since 2018 and bought more on the dips. It was nice getting a decent sized dividend while watching the business get better and being able to add along the way because the market didn't agree with me. This kinda reminds me of the Dell going private deal. There, however, Southeastern was a big shareholder who opposed the deal. Because it's a mutual fund, they couldn't hold non-public companies and weren't going to be able to participate the way FFH is with this one, and Southeastern (Mason Hawkins) was pushing for a better deal from Dell or other bidders. There won't be other bidders here because the bidders own almost 70% of the float, and I suspect most people owning it don't have diamond hands and may sell on the news. The buyers will be arbs who are buying because they want to approve the deal. If it is approved, I hope it happens after January 1 so I can put off the taxes.
  5. When reading the "Becoming Trader Joe" book, he mentioned that this book was one of his favorites. It won the Nobel Prize for literature, so I figured that with two recommendations like that, it must be good. I listened to the Audiobook (16 hours on audio, almost 1000 pp on paper). It's a very thorough look at the first 6 months of the First World War (well, the First World War if you don't count the Seven Years War, which we call "The French and Indian War" in US Schools). It's basically a battle of two different tactics. Thorough planning by the Germans following the "Schlieffen Plan" which had taken years to prepare and had troop movements planned down to the hour in some cases versus the improvisation and "Elan!" of the French, aided by not enough Brits, and some eager but not well prepared or equipped Russians. The writing is excellent and some of the quotes are great prose and saltier than anything you can find on twitter. For instance, the inexperienced German Crown Prince was put in charge of one of the German armies. He gave out a LOT of bronze crosses to his men after battles. "The only way to serve in his army and avoid getting one was to commit suicide". It's fascinating to see how many bad decisions there were, and how many chances there were to change the tide of the war with small decisions. For instance, in the first days of the war the Germans captured some territories where there was lots of iron ore, and agriculture. This allowed the war to persist at a standstill for years because they were able to keep up military production and feed the nation, which would've been impossible otherwise since they were surrounded on all sides by land and cut off from the sea by the British navy. And the Schlieffen plan counted on marching through Belgium and not putting up a fight. The Belgians fought back and blew up train tracks and bridges which slowed the advance and ruined the perfect plan. The Germans had to follow the plan, and the Belgians weren't cooperating. But if they hadn't invaded Belgium, it would've remained neutral, and the UK wouldn't have gotten involved. Fighting the UK led to attacking merchant ships which eventually got the US involved. Why not just stay clear of Belgium? The Schlieffen plan took years to prepare, so without the Belgium part, you would need a new plan. You can't just improvise in a war, right? Also, as is clear from the Ukraine/Russia situation where drones and anti-tank handheld weapons are tipping the scales, the generals are always planning to fight the previous war. Calvary and Bayonet assaults were used by both sides early in the war and they both learned how useless that is against a dug in opponent with a few machine guns. (Not mentioned in this book, but when the British first used Tanks towards the end of the war, the man who had been pushing for them for years, asked for 50 of them so that they could run then in a formation, over the barbed wire and trenches and wipe out the whole enemy line. He was told by the general that it was a stupid idea. The General thought the way that you use a tank is punch a hole in the barbed wire lines, then send in your Cavalry to cut the enemy down with lances and sabres. )
  6. When asked for book recommendations at the AGM or in talks, I've heard Charlie Munger mention "Guns, Germs and Steel" a few times and it was a good book, so when I saw that he had written another one, I thought it would be worth checking out. It's been in my very long queue for a while and when I saw that it was available as an audiobook I downloaded it and chipped away at it while walking the dogs, and gave the physical copy to a friend who also likes these kind of non-fiction books. I think, as Charlie says, you can learn a lot by inverting. Looking at failures is a great way to avoid it. "What I learned Losing a Million Dollars" and "The Big Short", "the Smartest Guys in the Room" and "Barbarians at the Gate" are great ways to look at the other side of the coin. Most business books tout the successes (Apple, Amazon) but less than 10% look at the dark side of the moon: failure.
  7. Not nearly as well known as Guns, Germs and Steel, but it was excellent read. It's been in my queue for a while and finally cracked it open. Definitely worth a read. He goes over different societies that have collapsed (Easter Island, Greenland) and ones that have survived. Some are still around, but are making the same ecological mistakes as those that collapsed (we're looking at you Australia). Some collapsed from environmental degradation, others from climate change or overpopulation and sometimes from a combination. Definitely something that we should think about as the earth is being warmed and there seems to be little effort to do something until we are in total crisis mode (which seems to be a pattern in collapsed societies).
  8. I haven't sold anything, but just added some more META, GOOGL, JOE, BRK-B, and ATCO with money that was accumulating in my checking account. Nothing major, just normal periodic purchases. The world doesn't seem to make sense. I was hoovering up BRK-B, which always makes fantastic deals in a downturn, at below $200 when covid hit. Is it really only worth 25% more now, after the overhang of potential business interruption insurance etc is gone and they have a ton of cash on the balance sheet ready to deploy? ATCO has locked in long term leases and new ship build contracts that will be delivered at 30% below current new build prices and it's only 50% above march 2020 prices (when the docks shut down and everything ground to a halt and no one knew if some of these container ship companies would go under)? JOE is not selling off acres to pay it's operating costs anymore, it's firing on all cylinders. Bruce Berkowitz bought this more than then years ago in the high 20s when most of the acreage was trees for paper mills. He thought it was cheap in the high 20s then, but people don't think it's worth high 30s now? GOOGL, which has voting rights, sells for a little less than GOOG, which doesn't (efficient market?). It has the number 1 (google) and 2 (youtube) search engines. Trades at slightly above what the average SP500 has historically trades at. And the money losing moon shots are about to start paying off. Self driving cars always seemed like more hype than reality, but a competitor is now doing driverless taxis in San Francisco, Google's Waymo has been doing driverless cars in Phoenix for a couple of years now. And although no one's going to catch Amazon in cloud anytime soon, Alphabet (and Mircrosoft) are going cloud at incredible rates compared to any other business you can think of. I get that people don't like to see the numbers in their brokerage account go down, but if you know what you own, and the thesis hasn't changed, and the price is cheaper, and you have a steady paycheck coming in so that you don't need to sell anytime soon. Why aren't they buying?
  9. Norman Ralph Augustine said "Bulls do not win bullfights; people do. People do not win people fights; lawyers do." I would add that "countries don't win country fights, no one does."
  10. I just finished this on audiobook and I really enjoyed it. Retail is a tough business and I really like shopping at Trader Joe's so I was really interested to hear the whole story. Unfortunately shortly after he wrote this book, he passed away. He had a much different approach to his stores than Sam Walton (high volume location vs small rural areas with no competition) but I am impressed with how both of them were always experimenting with new ideas and not afraid to discard one when it didn't work. Too often we get the myth of the stubborn entrepreneur who stuck to his guns about his crazy idea no matter how bad things got and made it work. They never tell you about those other people who stuck to their ideas right up to the steps of the bankruptcy court. He also did it by paying his employees well, listening to their feedback and being generous with employee ownership. A great read!
  11. I used to own Suncor, and it's like Pabrai says that you don't really understand a company until after you own it. They have billions in invested in equipment so that they can process the tar sand onsite, and that's a pretty good moat. It's not like a fracking play where someone can just buy the plot next to you and start pumping. But the capex required just to keep it going is incredible. That oily sand going through those metal pipes is basically sand paper and they have to keep replacing everything that the sand goes through whether the oil price is high or low. Good luck, but not for me. I noticed that all the potash producers are down today. Intrepid (which I've jumped into and out of) was down 16%. It's crazy. When they were making $20 million a year on the water rights and just breaking even on the Potash, this was in the $40s. (it dropped below $10 at march 2020 during the Covid rout). When the war in Ukraine brokeout, it got up to $120. Now potash has gone from $220 a ton to $750 and Intrepid is on track to make $120 million this year and the share price is....in the $40s. These cyclical commodity plays are ruled by fear and greed and you gotta have an iron stomach to sail in these waters. Why are they all down? Who knows? I saw an article about a potential new entrant in Michigan that wants to start mining. So what? The big guys are ramping up production too. Trade embargoes took 30% of the Russian/Ukraine supply offline, so that should already be priced in.
  12. This book was recently mentioned on the Value After Hours Podcast. I haven't ordered the book yet because I'm traveling, but i did find a few talks that the author gave about the book. I'm placing one here to remind me to order the book and also because the discussion of the group mind is relevant to the COBF forum. Larger,more interconnected societies develop technology much faster than smaller isolated communities. The constant iteration and refinement of ideas is compounded more quickly with more brains working on it. Sort of like the threads we have here.
  13. Just finished the audiobook on this. It is long, but very good. Highly recommend. As stated earlier, his previous book deals with Jeff's early life and the beginnings/ middle of Amazon. This has the later stuff (Amazon Cloud, Whole Foods, Advertising, Prime Video, Blue Origin, The WaPo and the Affair with Lauren Sanchez).
  14. Ironically, the Russian military's equipment doesn't appear to be as modern and upgraded as Putin believed. I say ironically, because when he was in the KGB in St Petersburg, he was accused of syphoning off funds that were allocated to modernizing military equipment and using it to enlarge his bank account. It's not inconceivable that his successors did the same thing figuring that no one would ever find out, because the only way people would know if these tanks were being maintained is if you tried to use them in an actual war. It reminds me of the old commercial where the dad finds the drug paraphernalia and asks where he learned to do drugs. "From you! I learned it from watching you!"
  15. We have a barbell TV technique in my household. We watch great TV shows (Better Call Saul) and dumpster fire shows (Married at First Sight) and nothing in the middle. We just finished Super Pumped and it was entertaining and a good rage watch. Due to current events, I would recommend the Putin Interviews by Oliver Stone. I think Stone doesn't push back enough and he is too ready to accept things at face value, but it's a good look into Putin's thinking. If you watch it, you might not be surprised that he actually went full dictator and invaded. He is pretty adamant that the soviet union shouldn't have disbanded and that Ukraine belongs to Russia.
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