Saluki
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1 minute ago, ValueArb said:
I just skimmed Complete Solaria's 10K, and wow, TJ has his work cut out for him. I understand they've reduced costs significantly this year, but it's a mess.
Yes, I looked at briefly and put it in the too hard pile. It would be more investable at a higher price if they can get themselves sorted, but they laid off most of their employees, and Carlyle has their nuts in a vice. The other investor agreed to convert their debt to equity, but it's contingent on Carlyle doing the same. I don't think it's gamesmanship, I think the bond covenants prevent them from issuing new shares or debt without Carlyle's approval. So they can't buy more panels for their backlog without cash, but C won't let them borrow more or issue shares. And it looks like it's in C's interest to let it go under so they can "harvest the organs". Maybe the warrants $0.03 might be interesting.
I thought about starting a post on it, but it's such a small cap and it's got so much hair on it, that it's not worth it. If C converts the debt into equity it will give them some room to maneuver, but TJ said he's not putting more money in and he's not interested in working for Carlyle for free. He can't stand them. He's a billionaire and could literally buy this whole company with his spare change, but he's not going to do it with Carlyle putting their two cents in.
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Dennis Hong, who runs a concentrated book, sold down some Coupang, which is up 20% the past month.
https://www.dataroma.com/m/holdings.php?m=SP
He also bought a big new position in FOUR, which appears to be a payments processor, like Square.
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The quarterly filings are starting to come in and should all be here by tomorrow. https://www.dataroma.com/m/home.php
Does anyone see any interesting buys/sells from people?
I'll start, it looks like Chuck Akre trimmed some of his American Tower, which he is known for. In an interview I heard him say that a analyst told him that X was the next American Tower and he cut him off and said "son, American Tower is the next American Tower!".
He also bought some UBER, along with Tom Russo and Tom Gayner, this quarter.
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This came on my radar because I own shares in Enphase, and TJ Rodgers, who runs it, is also involved in some other things, like a struggling small cap solar installation company.
REPEAT - Complete Solaria Names T.J. Rodgers CEO (yahoo.com)
I don't think I've ever seen such an interesting press release. Here's a sample:
T.J. Rodgers closed, “Messrs. Kapp and Rubenstein, I built and ran a real, operating semiconductor company for an industry-record 34 years. I don’t need or want your help. I want your knee off of my neck, so I can breathe. If you don’t free us by converting your debt to equity, as I have, I will resign shortly thereafter and allow investors to observe and cringe at Carlyle’s organ-harvesting methods in action.”
Rodgers added an epilogue, “While I was spending Sunday night writing this press release, I received an email from Carlyle at 10:06 EDT from Sanket Patel, another Carlyle employee I’ve never heard of. Patel warned me that my recent threatened press release (i.e. the above) might “necessitate legal action by Carlyle.” Make my day. I would relish telling my Carlyle stories in detail – under oath – to a jury of my peers in a public trial.”
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I think Peter Lynch was right when he said that "if you can 8 + 8 and come up with a number close to 16, then you know enough math to be a good investor." He thought the stomach was a more important organ than the brain when it comes to investing. I learned a lot from books like "Fearless Golf" which is written by a sports psychologist who works with the traders at Point 72. It turns out that extreme performance has the same attributes in every endeavor. The author of Fearless Golf said that Steve Cohen has more in common with Tiger Woods or the best heart surgeon in the world than he has with traders who are in the top 10% of his own profession.
This short book was written by someone who a Gold and Silver medal in competitive shooting at two Olympics in the 1970s and it's one of the first books to talk about the mental preparation, which is applicable to other endeavors like investing. His book has diagrams of 3 overlapping circle (the conscious mind, the subconscious mind and the self image) which have to be balanced in order to produce performance. Competence affects confidence, so practice and having the skillset to move with 100% conviction is key to great performance. You can't just psych yourself up for something because your subconscious and self image don't have the required memory of successful repetitions to pull it off.
It has similarities to the paradox that Fearless Golf discusses. You need to focus only on the task, not the outcome. If you think about anything else, like your getting a good score, then you won't make the shot and your score will be terrible. If you don't think about your score, your score will be great because you are only focusing on the task. Translated to investing, if you think about your P&L or your bonus, or your house payment then you won't be investing with the right mindset. With the right process -- given all my opportunities right now, what is the best use of my available cash-- the results take care of themselves. The thinking is the same in Annie Duke's book.
It's interesting because in investing there is a lot of wisdom about looking at your failures to see where you went wrong. This has a different take and when he's asked about a shot he missed, he only wants to discuss or think about the successes because he doesn't want to think about mistakes, since it's not what he should be focusing on. I'm not entirely convinced that's the best tactic, since you won't know what to work on if you don't look at mistakes. I do vividly remember a seminar I took once with a famous jiu jitsu guy who I'm convinced was insane. To say he was intense was an understatement. He accidentally choked out two people while demonstrating a technique and each time just slapped the person on the back and said "go get a drink of water and come back to the mat." During the question and answer section someone asked if you should drill/practice your good and bad side or just your good side. His face got red and a vein in his head bulged and he yelled "Hey! Don't ever say that! You don't have a good side and a bad side. You have a good side and a GREAT side! Don't ever let weakness creep in or it will rot you from the inside."
Buffett said that when you see those no-brainer opportunities which rain down money, you should run out there with a giant bucket, not a thimble because they are rare. I think that's the confidence that comes from competence and 100% belief in yourself that he's talking about. There is no self doubt because that isn't part of the process, it's just the numbers.
He does socialize with other shooters, who are his competitors, but also his models. Winners have the same mindset and help each other get better, which is why COBF is such an interesting place. It's a short book, less than 200pp and a bit dated since it was written in the 1980s, but still interesting even if people have studied and advanced the field of performance psychology a lot since then.
And if you're interested in some entertainment. Here's proof that I am not exaggerating about the jiu jitsu guy
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It's surprise to anyone except the generals in the military that the current war is always being fought with the prior war's tactics, and the first to adapt to the new reality has an advantage. The Civil War was fought with muskets, but the invention of Colt's multi shot revolvers and better rifling, made small fighting forces and snipers more effective which altered the tactics. World War I initially was fought with Calvary, but trenches and machine guns changed the tactics quickly for all future battles. WWII started with trenches and the Maginot Line, but the Tank had already been invented and "shock and awe" was quickly the new paradigm. The Russians still relied on Tanks, artillery and naval superiority in Ukraine, but inexpensive drones providing real time intelligence, and even improvised sea drones quickly brought the war to a standstill against a much larger force. Maybe the next war will be all cyber attacks, but drones seem to be what is working now.
The above video shows a DARPA prototype by Northrup Grumman that is very interesting. Instead of patrol ships in the Red Sea waiting to find Houthi or Somali Pirates in the middle of an attack, what if it was in sleep mode nearby until activated by a 911 beacon and it could be in the fight in hours instead of days? So my question is, besides the BIG contractors, like Northrup which will benefit, but it will be a small part of a larger operation and won't move the needle, can you think of some smaller companies that will benefit from this?
For example, I own some Taylor Devices because I was impressed with the potential of their structural inertial dampers (giant earthquake shock absorbers for buildings) and the growth they exhibited, I thought it would have more growth because of insurance companies who are refusing to do business in some states from rising losses. The devices can prevent earthquake damage. However, that business shrunk last quarter but was more than made up by their aerospace segment, which producers shock absorbers for Predator drones. I noticed that Kraken Robotics (which is pricey but high growth) makes batteries for undersea subs made by others, but used in the oil and gas industry. Could these be useful in sea drones? Ondas is a company that has FCC frequencies that Railroads can use for reliability communications (like what Anterix uses for Utilities), and they also have an unusual tech that is a flying drone that throws a net on other drones, so you can capture it without destroying it (for intelligence or reuse?). Is this a viable military application? Is anyone else working on drone vs drone tech?
So my question is do you know of any smaller cap companies that supply parts, equipment, or software for bigger defense contractors doing things like air or sea drones, or cybersecurity? Palantir is an obvious name in intelligence and the big players like Amazon and MSFT are fighting over cloud contracts, but there has to be other smaller suppliers that are feeding into those use cases. Olin makes ammunition for the army, but it's over $6bln so they won't see much benefit even if there are twice as many wars. So something in the $1Bln or less market cap would be interesting. Any ideas?
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Someone mentioned this book on the China post and I'm listening to the audiobook. About 20 years ago when I first started investing, I did what Peter Lynch said not to do and invested in something that I didn't know much about, a company called Photronics that made photomasks, which are like jigs for lasers that are used to make computer chips. I didn't lose much but I gained an understanding that tech businesses in general and computer chips in particular are terrible for investors who aren't in the business. When Buffett invested a bunch in Taiwan Semiconductor, I reacted the same way that I do when someone mentions Micron or Skyworks. I listen politely and ignore it.
However, this is a really understandable book and it starts at the very beginning: vacuum tubes to transistors, to integrated circuits, to computer chips and you will meet all the players along the way and find out how they got distributed onto the chessboard in the four corners of the earth. Even if you are not interested in these companies as an investment, they are important to know about because of their place in the world economy and politically. Computer chips are the oil that really runs the world economy.
And weirdly enough one of the early backers of Micron was Simplot, the potato king. When memory chips became nothing more than commodity, then whether it's a potato chip or a computer chip, you can make money on it by doing commodity type business with it.
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Started trimming the STNG shares I bought a year ago (up 50-60%). I wanted to wait for the better capital gains treatment after the one year anniversary. I want to sit on most of the older shares because I hate paying taxes
But with cyclical companies, it always feels like the Ogre's feast fairytale where you can eat as much as you want at the buffet, and you can leave anytime, but if you stay too long, at some point they close the doors and kill all the guests.
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I trimmed something and sprinkled the proceeds for small buys in some of my smaller holdings: ATEX, FRPH and ENPH.
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CPNG, NTDOY and MSCI.
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MSCI, NTDOY and a small resting bid on TAYD that I forgot about got filled.
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It's a silly show but by better half and I are watching "Girls 5 Eva" and it's funny and light.
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New interview with Todd Combs posted yesterday. I haven't listened to it yet but I figured I would mention it so people can listen to it during the break in the Berkshire meeting today.
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MELI, CPRT, FFH, JOE, GOOG, SPGI, BRK, FICO.
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Picked up a few shares of ENPH.
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Right before the tech bubble burst in 2000, I was in a corporate finance class when someone brought up the topic of tech stocks, and how they are certainly not a bubble, but rather follow a different method of value that is unlike anything that came before it. As the tech boom in stock prices for company with no profits had continued for several years, the student thought the professor should agree that he (and the old methods of valuation) were wrong. At which point he gave the classic response that "the four most dangerous words in the English language are 'this time is different'".
Contrary to the opinion of CryptoBros that I talk to, I do understand how crytpo works. I took a couple of courses in it, and I "get" the technology. But I also have always felt that 99% of the use cases are nonsense and that the price action is driven by FOMO. When everyone was talking about NFTs and how important they were going to be to everything, and were buying up JPEGs for more than a house costs, I knew it would end badly.
Bored Apes are now selling for a ten cents on the dollar, and that's probably too much for them:
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Took a couple big bites of MSCI yesterday and today and I'm at a 1% position.
Added a little NTDOY.
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Season 5 of Fargo is great. It's reimagining of the original Fargo Movie, where the characters have different personalities. Sort of like the alternate universes in The Man in the High Castle.
Fargo Seasons 1 and 2 were great. Season 3 was passable, and Season 4 was so bad that I couldn't finish it, but they are back on track with the new one.
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https://www.youtube.com/watch?v=x3CSmiw-1z4
Several great speakers at this event in Norway, like Howard Marks. But I particularly liked this talk by Michael Maboussin. His book "More Than You Know" is a really great book to help you think about process and connecting the dots.
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It's the anchoring fallacy. When it goes down, you feel like lost even if you are still up from where you bought it. It's why Peter Lynch (and now Buffett) like to remind you that "the stock doesn't know you own it" so it won't go back to even or the high water mark just so you can sell out.
I think it's mistake to also follow the strategy of "if I wouldn't buy it at this price, I should sell it." Because it tends to cause too much activity in your portfolio, which is correlated with negative returns. And also because there is a "range of reasonableness" with pricing and if you bought when it was flashing green, then held it when it's fairly priced, you shouldn't do anything unless it flashes green again to buy more or goes to red and sell. I suffer from this because as a cheapskate it looks priced to sell before it is done going up. But I'm working on it.
Between anchoring and reviewing your portfolio everyday with fresh eyes, the truth lies somewhere in the middle. I think I've mentioned before, but I usually print out a 1 pager from ValueLine and take notes on the back about why I like this and what I think will happen. It keeps me from "thesis drift" or patting myself on the back when the stock goes up, but not for the reason that I thought. (for example STNG did really well this past year, but it was because the attacks on the Red Sea caused ships to take the long way, and rates spiked for vessels. My original thesis was the old fleet and low order book, which should help STNG which had the youngest fleet. So I'm up, but part of it was luck. Whereas SWBI did well for the reasons that I thought it would. So I'll happy take both wins, but I need to be honest about it, because I won't improve if I judge myself by "resulting" instead of the process.)
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NTDOY.
Very small adds to ATEX, BTI and FFXDF.
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I picked up some ENPH and one of my resting limit orders for NTDOY got filled today
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13 minutes ago, steph said:
....and 15 times earnings. FFh could double and still be cheaper than WRB.
Yes, a couple of months ago a friend asked me about FFH because someone they knew was interested in it. This was right before the Muddy short attack. I mentioned that if you look at it like most insurance companies (or banks), it's above book, which is not great, but still cheaper than BRK or MKL by that metric. If you account for future growth which is probable based on history, and profits locked in due to rolling the fixed income portfolio, it's trading at a great price (based on P/E) for anything it looks like a great bet.
I haven't sold any shares, but didn't have the courage to double down during the few days that the price dropped, because it's already a big position for me. I have been adding to FF India though. It's still at an inexplicable discount to book and they are making some shrewd moves buying back shares and selling things when they are fully priced, like the National Stock Exchange in India. And I appreciate that when the performance fee was due to FFH, that Prem didn't dilute us and take his fee in shares instead of cash. You wouldn't see that at Brookfield.
Some of the holdings look interesting and kind of mirror each other, like buying ATCO in FFH and the Tanker company whose name I can't remember in FF India.
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@Jaygo almost done with The Wager, thanks for the recommendation. Besides the great writing, I enjoyed the history. The Wager mutiny happened when they were on their way to attack Valdivia, my ancestral homeland. At the time it was the southernmost outpost of the Spanish empire. No one lived below that, which is why the British were interested in it and how they ended up owning the Falkland's.
One of my ancestors had arrived from Spain a few years before to be in charge of one of the forts that guard the mouth of the river that leads to Valdivia. So if the Wager and the others had succeeded they would've literally crossed swords with him. At the time, it was basically a penal colony. The forts had been destroyed by an Indian uprising, helped by the Dutch supplying weapons, and was being rebuilt by convicts who were offered freedom in exchange for a set amount of military service (the same way Russia emptied it's prisoners into Ukraine). So he was the commander or warden, depending on how you look at it.
13F Filings May 2024
in General Discussion
Posted
Looks like Chubb is the mystery company that Buffett has been buying.
https://www.dataroma.com/m/holdings.php?m=BRK