Saluki

Added a little TV, OXY and SWBI today. Put in a limit order for FF India, but it didn't get filled

Sold some GOOGL. It's still my second biggest position. I tapped into my HELOC and added another 10% when it dipped to the low high 80s/low90s a couple of months ago. No particular reason for the sale other than it was too big a position in my portfolio already and 10% or so in a couple of months in this environment is nice work if you can get it.

Some guy who tracks private planes is reporting that 20 private planes have flown to Omaha recently from different regional banking centers and DC. It could be too that uncle Warren is working on some kind of deal with multiple banks to give his imprimatur to boost confidence in them in exchange for some preferred shares as he did with BAC and Goldman.

Sunday Markel Brunch in Omaha: https://ir.markel.com/events-and-presentations/events/event-details/2023/Markel-2023-Omaha-Brunch/default.aspx I'll post other things as I find them to keep track of them all in one place.

Sold the last of my ATCO shares (got the dividend, and less than 1 percent difference between todays price and the buyout price) and sprinkled it around to some of my favorites: TV, VTS, OXY, BRK, FFH, and FF India. (I also added some BABA, but plan on selling the same amount of much higher cost basis shares in 30 days to try to offset some capital gains).

Right before the close I added some OXY (still below the Oracle of Omaha's price), and some FFH. I was on the fence about adding more FFH, but if I was right to be upset about getting squeezed out of ATCO, then when they have 20+ new ships in a couple of years, purchased at 30% cheaper prices than their competitors, it should help Prem and me out

It seems that the order book for VLCCs and Product tankers is very low. The shipyards are booked up with orders for containerships (covid reopening and supply chain disruptions?) and LNG ships (ESG fad?). According to this, 2026 is the soonest you could get more. https://www.freightwaves.com/news/crude-shipping-revs-up-supertanker-rates-top-100000-a-day I try to keep on eye on the macro stuff because although replacement orders in tankers and product tankers is low, in the back of my mind I'm always concerned that a recession could hurt demand and bring pain to this industry even if the fleet doesn't grow. But with the wars and sanctions and shutdowns, trade routes are shifting and these assets seem to be a way to go long chaos in the world. And when governments take aim at oil companies with windfall profits taxes, they don't seem to mention ships or refineries, so maybe there is less political risk involved. I have a medium size position in STNG for the past few years, but I haven't really looked at VLCCs. Are there any names you like in that space?

Yes, sometimes the bid/ask spread is a couple of cents and balanced b/w buyers and sellers, and on days like yesterday (on no company specific news) it was wide enough to drive a truck through with 5x more asks than bids. Even OXY was trading yesterday for 5% less than the greatest living investor was buying it for last week. Fear is a helluva drug!

Bought some VTS and Fairfax India VTS (both VTS and OXY dropped yesterday to attractive levels, but the drop was much bigger in VTS) Fairfax India (it's still trading below the self-tender offer and it's still improving. I was tempted with FFH at these prices, but I have a lot of FFH already and this seems like a better bargain, FFIndia 70% of what they believe is NAV vs FFH 1.1x book )

History doesn't repeat, but it rhymes. This is a great book I read years ago about the Penn Central Bank Collapse. Penn Central was a small Oklahoma bank that was making loans in the Oil industry during the boom times. Big banks like Continental Illinois (which was the 2nd largest bank collapse in US history up until last week), was buying up a lot of these loans. When things went south, Continental was hit bad by these loans and then when the 1987 crash happened they were wiped out (A broker that they had purchased was badly run and the losses were the final blow). The collateral on a lot of these loans were near worthless. Casings and pipes for drilling rigs can be sold for scrap, but a drill bit for an oil rig is kind of expensive and there are no uses for it besides oil. https://www.amazon.com/Funny-Money-Mark-Singer/dp/0618197273/ref=sr_1_3?crid=1DJMI6PPCX4ZD&keywords=penn+central+bank+failure&qid=1678675770&sprefix=penn+central+bank+failure%2Caps%2C236&sr=8-3 A bank that specializes in one industry (even an extremely profitable one like the tech industry) is a risky proposition on the best days. When you match that with paying depositers short term and investing long term, like during the Savings and Loan crisis, you are doubling down on risk. Most people never heard of Penn Central but the collateral damage it did took out a giant bank. I hope the SIVB damage is contained with the Government involvement and bailout, but it very easily could have damaged many companies who were customers and would be unable to make payroll because the bank took stupid risks to get a few extra basis points of profit.

Even during the great financial crisis, when firms were going under, I don't recall their customers stock positions being affected. SIPC only goes $500k (vs $250k for FDIC). But I've heard Buffett say that he's not concerned about their stock positions if their broker goes under (is this because they are not held in street name, or because it's not really a risk?). I see that SIVB depositors are getting bailed out, and I was surprised to see that Roku had half a billion dollars in cash there. But why wouldn't the treasurer or CFO of a public company keep most of the money in short term treasuries instead of a bank account? Aside from what you need to make payroll, keeping more money in your bank account than you need to pay bills seems like a unnecessary risk to take. If Roku had an account with, say, Charles Schwab and kept that money in 3 month treasuries, instead of a bank account would this be an issue for them if the Bank/Broker wasn't bailed out by the Government?

TV, VTS and OXY on the dip (when you can add to a position at a few hundred basis points lower than Buffett was buying last week, it's a good day. Some FFXDF and I have a resting bid on JOE with an 7 handle that hasn't been hit but it got close today.

I have a work conflict that prevents me from owning most banks, which is sad since everything is on sale. Added some TV, OXY and VTS on the dip. If JOE drops another dollar today, I'll buy some.

Added a little OXY, TV and SWBI. Just listened to the SWBI conference call after the close, it probably won't be this cheap tomorrow

Craig McCaw is involved now with a company called Clearwire. The founders of Nextel are now involved with a company called Anterix which owns 900mhz broadband and licenses it to utility companies for private LTE networks. My client, took control of Citizens Utilities (water, gas, electric) and sold off all the utilities and bought rural ILECs and renamed it Citizens Telecommunications. Because of the Universal Service Fee that you are (still) paying on your cellular service, it's almost impossible to lose money on rural fixed line phone service. He made a bunch of money on that and bought a gas/pipeline company (Southern Union) when the energy industry was in the dumpster. He later sold that for a bunch of money when energy was on an upswing. I think the last thing that he bought while I was still at the law firm, which he still owned at his death was a lot of Spanish Language radio stations in the US (Mega Radio). Which is part of the reason why I like Grupo Televisa so much (they own half of Univision, which includes a lot of Spanish language TV and Radio stations in the US).

Added a little VTS and OXY. When I think of worst case scenario 1970s stagflation, I think owning real assets, including oil is the best of the worst scenarios. Taxing windfall profits from energy producers isn't incentivizing anyone to look for new capacity so the existing capacity should be worth more.

If you hadn't heard of ChatGPT (or seriously considered that Google, Meta, Baba etc have all been developing AI for years and just haven't shown their hand yet), it looks like a no brainers. About 10% cash and selling at a multiple that is slightly above the historical SP500 multiple, with incredible growth and margins. If you step back and squint your eyes, it looks great. If you read the DOJ's antitrust complaint (yes, I'm a nerd) it doesn't look like a legal document. It looks like a pitch deck from a sell side analyst about why you should own GOOG. It's my second biggest position (I've owned it since 2016) and I wouldn't buy more because LiLu owns it, but it's comforting to know that smart people think it's a good buy at these prices.

added a little SWBI. It dropped 6% yesterday, I assume it was on a false rumor that was trending on twitter that that they endorsed the Proud Boys (They showed a photo with a tacticool shirt from Perception Brands ("PB") which the outrage mob assumed Proud Boys merch). added a little VSTO (still a small position but the ammo part that I'm interested in will be the remainco, and the whole thing doesn't look too bad now that they fired the acquisition happy CEO).

I'm not opining on the South Korean economy, but I've never heard of this Jeonse thing. My question is if you have 70% of the purchase price of the property, why wouldn't you just buy the property? If you don't have it and you have to borrow it, again why not just buy the property? If you have to pay interest on the borrowed money to live "rent free" for two years, then it isn't rent free. You are essentially borrowing money from a solvent lender and lending it to an unsecured borrower with you as the guarantor to the lender. Fascinating concept though.

Added some VTS on the dip. A little more TV and CPNG. (still selling a slug of my ATCO every few days and redeploying).

If i recall, BNSF was purchased through the National Indemnity Insurance subsidiary instead of directly through the BRK parent. One commentator (I forget who) speculated that he did it that way to make it harder for any successor to try to break up. It was a better idea than relying on corporate culture. Since the railroad can produce steady income like a utility, by placing it in an insurance sub, the state insurance regulator may make it harder for you to spin it off without replacing it with some equally large assets on the balance sheet. Since BRK is so decentralized, it would be tempting to break it apart, since the subs are essentially already independent businesses. I think the hand picked successors and the family members on the board to who were chosen to perpetuate the culture rather than for their business acumen, are another line of defense against that breakup strategy.

There are a few whales still in private hands but I doubt that Warren is interested. Mars Candy (and dog food and Banfield Veterniary hospital chain). The founder, Forest Mars died a few years ago. The sons who run it seem competent, but that business gene seems to die out after a while (as in See's Candy) so it may be for sale one day. Each of those seems like moaty businesses. Cargill. Buffett hates commodity business, but he doesn't seem to mind oligopolies that provide stuff to other companies (Precision castparts, Lubrizol, Paint, Bricks, machining tools). Koch: Nope. PC Richard and Son. 66 store white goods/electronics retailer in the Northeast. When I worked there in my 20s they had the second highest percentage of customers with a store card (after Sears), which is a great measure of customer loyalty. They also have a large wholesale division that sells appliances to property developers and mom & pop electronics stores. (He's had terrible luck with retail, except for Nebraska Furniture Mart) State Farm is right in their wheelhouse, but it's a mutual insurance company, so I don't think they would agree to be sold. But imagine what he could do with all that float (maybe not much, since cash has been coming in faster than Buffett can send it back out, which is a good problem to have). ALDI is privately held. IKEA is private and seems like the kind of differentiated business that he would like. But...retail. Probably a lot more abroad, but those are the biggest ones that I can think of operating in the US.

A little more CPNG and TV. I also bought a tiny amount of Vista Outdoor. I know they talked about splitting into two companies, so I just wanted a token amount to remind me to check in on that periodically.

If they did that, I would quit my job and just sell $69 puts until I'm so rich that I can buy my own penis shaped rocket ship like Elon and Bezos. A lot of majors have their own trading desks. Shell has Coral Energy trading for instance. Those guys lose money sometimes, and they are the ones drilling it and selling it, and they are talking to people everyday in that business. If they can't predict the price of oil reliably, what edge does some GS14 employee in Washington, who comes into work at 9am and leaves at 5pm have? The SPR is supposed to be for emergencies, not for smoothing out inflation. They made a mistake selling. And they probably will compound that by buying it back wrong.

Nice one! I'm sitting on some VTS that I like. Besides the nice dividend, in their first post-spin conference call they announced a $60mm stock buyback (that's almost 12% of the market cap).