Saluki

I trimmed a few share of HHH which I still think are undervalued but I'm losing patience with it. I had sold out of it completely before the pandemic and jumped back in when they did a capital raise. I have added from $43 - $100, but I'm less than thrilled at some managements bid ideas (a minor league baseball team, a celebrity chef chain restaurant, a seaport museum etc). It's been four years of my current holding and the only reason I don't sell it completely is that spinning off the seaport and entertainment assets into a different company actually sounds like a great idea and might move the needle.

If you read this book, and "The Grid", by Bakke you will know more than 99% of the population about how electricity is made, sold and transmitted. This book gives you just enough info on the capacity bidding to understand how it works and what's wrong with it, but without getting too far into the weeds. It explains the problem with intermittent renewable power like wind and solar. They need standby backup, which is almost always coal, gas or nuclear, and the more renewables you add to the system, the more backup systems that you need. Paradoxically, these backup systems tend to be more polluting. A modern gas fired turbine generator produces a lot of heat and that heat can be turned into steam, which can generate more turbine power and electricity. It's 50% more efficient if you use the excess heat for steam power. But if if you only use it for backup, and turn it on and off to make up for spikes and drops in wind power, then it's not continuously burning and you can't make steam with it. The result is that it's 50% more polluting. And with conventional power sources the grid needs about 1.3x peak power generation but with renewables, they need about 1.7x. She also makes a good case for nuclear (it doesn't produce emissions) for backup power. The Germans did away with some of their new nuclear power and pushed hard for renewables, but the importation of Russian gas was disrupted by the war in Ukraine so they had to use backup coal power. The French still have nuclear and the Germans air is 6x more polluted despite their green power. The only EU country with worse air quality than Germany now is Poland. In New England homes have priority when it comes to gas, so they won't freeze to death. But if your gas is going to people's homes, it's not going to power plants, so they need alternate sources of power. Batteries don't work at scale, and it's kind of foolish to assume they will be the answer. It assumes a bunch of breakthroughs, but hope shouldn't be part of your emergency plan. The bidding system is also fascinating. A lot of wind energy gets bid into the system at $0 because they get government subsidies that are much more than they get from selling power, but they get it for power produced, so they are incentivized to sell all of it. This means that a lot of backup power can't compete and goes away, which makes the grid more reliant on intermittent power sources, which makes it more fragile. Learned a lot that I didn't know from this book. I would recommend it if you are interested in power/utilities or green energy.

For my law review I thought about writing about why, in a supposedly efficient market for stocks, CEO salaries vary so much from country to country. If the US pays CEOs much more than CEOs in Europe, and most executives in international companies speak English, why don't they come here? Or why aren't they paid more there. The two plausible answers I came up with are that corporate governance here which allows things like poison pills, keep you from removing bad managers and that's why they can pay themselves so much with impunity. The other option is that insider trading laws (and monitoring for such activity) is so lax in Europe that you can make up for that difference with your side hustle. The law about insider trading https://www.investopedia.com/terms/r/rule10b5.asp changes so what I learned when I was a securities/ M&A lawyer is probably not the law now. However, if you are not an insider, the standards are different, and how you come about the information is important. If your brother in law works at the accounting department of Google and told you what their quarterly numbers are, that's bad. But if you ferret out information on your own that other people don't have, but could have if they went to the effort, that's okay. For example, hedge funds used to pay satellite companies for photos of the parking lots at retailers so they can count the number of cars in the lot. If you know the average sales amount per customer and you count the cars, you can get a good estimate of earnings. It's not public information, but if someone went to the same trouble, they can get it, so it's not "insider trading". So when @Gregmal talks to locals or goes to planning meetings to find out what's getting permits for which businesses and along what part of 30A, that's okay. It's not on any website, but it's information that you COULD get if you wanted to put the same effort in. If he had access to the same information because he worked at the company, then he couldn't trade on it until it became publicly known.

No, but I'll add it to the list because he's a good writer and I have a fascination with Patagonia, my ancestral homeland.

I thought I was done with buying OXY, but at $55, I had to pick up a few shares. I'm tempted to overallocate and just sell some higher basis shares in a month for the tax loss harvesting.

Just finished the audiobook and highly recommend. The author also wrote Killers of the Flowers Moon. It's a very short book, 160 pages, but very good writing. It's about a descendant of one of the crew of Shackleton's expedition to Antarctica, who had a lifelong obversion with the voyage. When his career in the British SAS plateaued, he decided to attempt to recreate the historic voyage with two other men, one of whom was also a descendant of one of Shackleton's men. After another trip where he retraced other prior explorers routes, he eventually tried to do it solo and it killed him. The audiobook was a nice way to pass the time while walking the dog in the snow.

Other than the Korea competitor alleging anticompetitive pricing, why do you think it's down over 10% in two days? I see some negative articles about North Korea saber rattling and China, but nothing specific to CPNG that would justify this. I'm still adding in very small bites. I have a medium position and I had planned just to sit on it for another year, but sometimes I see the price drop on a stock and I feel like I'm watching my girlfriend at a shoe sale.

Small adds to CPNG, OXY and BTI. Trimmed a little STNG and HHH to free up the cash.

I relistened to this on audiobook recently and it's fascinating. If it were a movie, no one would watch it because it's unbelievable, which is why people say that truth is stranger than fiction: fiction has to make sense. Highly recommend. "In 1919, Texas rancher J. Frank Norfleet lost everything he had in a stock market swindle—twice. But instead of slinking home in shame, he turned the tables on the confidence men. Armed with a revolver and a suitcase full of disguises, Norfleet set out to capture the five men who had conned him, allowing himself to be ensnared in the con again and again to gather evidence on his enemies. Through the story of Norfleet’s ingenious reverse-swindle, Amy Reading reveals the fascinating mechanics behind the big con—an artful performance targeted to the most vulnerable points of human nature—and invites you into the crooked history of a nation on the hustle, constantly feeding the hunger and the hope of the mark inside." The Mark Inside: A Perfect Swindle, a Cunning Revenge, and a Small History of the Big Con: Reading, Amy: 9780307473592: Amazon.com: Books

'The Big Con': If You Can't Avoid It, Avenge It : NPR I'll post a book recommendation in the book section, but if you don't want to read the book, this is still a fascinating story. He literally tracked down the guys who conned him in Texas by travelling across the country with a suitcase full of disguises and a couple of revolvers.

I've seen some interviews with him and this book is on my list. Thanks. (Coincidentally, last night we were watching The Gilded Age and one of the plot lines deals in the second season deals with one of the wealthiest old money families losing a bunch of money to some con men. And Season one dealt with the Steel/Railroad baron financially ruining someone who crossed him in a short squeeze. I'm sure there are a lot of stories like this where it was trying to be clever instead of just avoiding being dumb that ruined people.)

The odds of an invasion contemplate a binary outcome, but there are other scenarios to consider also. What if they invade some of the 100+ islands but not the main island: https://en.wikipedia.org/wiki/List_of_islands_of_Taiwan Argentina took a gamble that the UK wouldn't fight for the Falklands/Malvinas. They were wrong. But if China started taking some of the smaller islands, especially the ones that aren't inhabited or sparsely populated, would Taiwan fight for it? What if they kept doing it? Russia took a gamble that nothing would happen when they sent troops into Ukraine and annexed Crimea and occupied Donbas. It worked then they tried again and started a war. What if the new Chinese navy decides to blockade Taiwan? The US did this to Cuba during the missile crisis. They could destroy the Taiwanese economy without firing a shot. Most of Africa, Latin America, and even Australia have more economic ties to China now than the US. That wasn't the case 20 years ago. Would they support sanctions/shooting war with China?

They are building up their navy and building artificial islands so that they can claim their territory extends farther into the ocean. I'm sure that based on their own statements, they plan on taking over Taiwan someday. But that timeline has probably been pushed back a little when they saw what happened to Russia. The sanctions and the poor performance of the Russian military equipment and tactics vs the western equipment and tactics probably made them rethink. China buys about 2/3 of it's foreign military equipment from Russia and they train their troops in the same top down manner vs the bottom up manner that relies more on non-commissioned officers being given an objective and using their judgment on how to achieve it. Taiwan has US weapons and they have western advisors training their military. I'm sure it's possible for China to go in tomorrow and brute force a takeover if they wanted to, but it would be really ugly and it's not a secret that companies like Taiwan Semiconductor may destroy their plants in a takeover to prevent China from taking it. Then you wont' have the technologically advanced economy that you admired, but a rock with a lot of angry residents/insurgents.

Israel-Hamas war live updates: Houthi targets in Yemen struck by US and UK (cnn.com) US/UK strike Houthis in Yemen. They are threatening to retaliate.

I find with the very small stuff it's very hard to get comfortable even after doing your due diligence. The CEO and board are probably people that you aren't familiar with and if it's, say, a $100mm company, you may not even find a lot of articles on them if you search. The answer to that may just be proper position sizing. Another check may be to see how long it's been around. Smith and Wesson is only a $600mm company, but it's been around since the 1800s. Some of these AI, legal marijuana, crypto businesses, drug patents, haven't been around long enough to know if they are looking to run a business or a ponzi scheme. I have a small position in a sub $100mm company, and it was hard to find any information about them, but it's been around since the 1950s, so if they were playing the long con, I think we would've seen it by now.

I'd say it's a business that is a melting ice cube. It's being disrupted by Lyft and Uber. You don't need to rent a car to get around town now (and worry about returning it and refilling the tank and getting it damaged and paying for insurance). Their is also a big outlay of capex/expenses every year because people don't want to rent old cars, so they have to buy them and sell them off after 3 or 4 years and buy more. If you want to see something fascinating, look at the average age of a truck in Uhaul, you will think it's a typo. They rent them for a decade, charge you insurance (which is through a company owned by them), and will charge you for "damage" to the truck, but won't fix it. They just circle the damage and if anyone buts a new ding on the same panel, they get charged again, even though they don't fix it. It's a much better business model, but I don't trust the management.

https://www.reuters.com/world/us-uk-forces-shoot-down-houthi-missile-drone-attack-red-sea-us-military-2024-01-10/ Largest attack yet. 21 drones shot down, but no ships damaged.

I'm just finishing up the audiobook on this and I highly recommend it to see a first hand account of the crypto mania during its peak. Like Michael Lewis, he was in the Bahamas and had extensive interviews SBF and the FTX people. He also spoke to a lot of the bankers, the Tether people, the doubters and the crypto bros. At one point he even got permission from his wife to buy a Bored Ape NFT so that he could get admittance to a party for NFT weirdos. The amount of money and delusion is staggering. Some of the business models appear to be less well thought out than the South Park underpants Gnomes episode where they Step 1 is steal the underpants, Step 2 is "?" and Step 3 is "Profit".

My library allows me access to the online version. For most of my holdings I print out the one pager and write my contemporaneous notes on the back and stick it in a file folder with 10-ks and other articles that I used for my research. It's been really great to prevent "thesis drift" or to pat myself one the back when the stock goes up for reasons that have nothing to do with my thesis. If I'm right for the wrong reason then I just got lucky and I want to keep track of that.

Yes, for reasons I don't completely understand, the Panama Canal uses fresh water from a nearby lake to operate the system and drought and climate change have depleted the water coming in. https://ctmirror.org/2023/08/27/the-panama-canal-is-running-out-of-water/ I've seen that they are allowing fewer ships through and charging higher rates. One beneficiary (besides shipping companies that benefit from higher charter rates if they have to sail around south america, appears to be the Canadian Pacific Railway. According to the article, they own half the railway that can be used to ship goods overland if you can't use the canal. Haven't looked at Railways, but it seems to be a good business for Berkshire. They were terrible until they consolidated and the regulations changed which allowed the RRs to charge higher rates. BRK timed it perfectly.

After the Houthi attacks in the Red Sea, some of the larger carries like Maersk announced they would sail around Africa and avoid the Suez canal. One of the reports I saw stated that insurance, at the time, on cargo ships had gone from 1% of cargo to 2% for non-israeli ships. Some people saw this as a move by Maersk, which had overbought containerships during the pandemic, to try to artificially raise rates by conjuring up a reason to avoid the Suez. After the US and others announced they were sending patrol ships, thing appeared to go back to normal, but now Maersk says they are avoiding the Suez again after the latest attack and the fact that Iran is sending what they call a destroyer (but is more likely what other people would consider a Frigate or possibly even a Corvette). https://www.cnbc.com/2024/01/02/oil-prices-rise-as-iranian-warship-enters-red-sea-.html What I find interesting is that 1% -> 2% insurance isn't a huge deal, but now that the west and the houthis and now Iran are sending ships to the region, maybe insurance companies can argue that it's a war zone and deny insurance claims altogether. Then that would dry up shipping even faster than the piracy issue. Talk about the law of unintended consequences: you send warships to make ships feel safe, but your warships are responded to by more warships and now the shippers want to avoid it because they will eat the loss if the insurers use your warships as an excuse. Anyway, thought this might deserve it's own post. Moving around Africa to Europe adds from 2 weeks to 21 days depending on the speed of the ship and since about 1/4 of ocean freight goes through this canal, it should have a big effect on shipping rates. Anyone want to chime in?

Added some CPNG and NTDOY

I started this book a few years ago and never got around to finishing it until now. It's a really interesting book because most of us, including me, know nothing about how the system works that brings power to our houses even though we are increasingly reliant on more electricity and the system delivering it is older and not well equipped for the needs of society. Even before climate change started making things worse, the grid wasn't well equipped. In the US about 30% of generation capacity (usually the oldest and least efficient power plants ) were available as stand by power for peak times when needed. Now it's about 10%. And the system was designed for large generators putting out lots of power from a central place. Wind and consumer solar putting energy into the wires at different dispersed points at unpredictable times and in unpredictable amounts is not what the system was designed for. No money for investing in the grid either because the money is made on the generating side. Utilities fight against renewables like solar because they want homeowners to buy power from them, not sell it. If they have to buy power at times they don't need it, then they become the backup power. As people leave the buying system, the remaining customers have to pay more which encourages them to install solar too, creating a death spiral. Ironically we are moving to micro grids for reliability, which is what the power system looked like in the early days of electric. People had small, local generation and the power did not travel far. An interesting book about a topic that there isn't a lot of stuff written about.

Yes, they have the opposite problem, too much cash. That Coke position was dead money for a decade but he held it and now it doesn't make sense to sell it because the basis is so low that it would be a big tax hit, and he would need to buy something else a LOT better to make up for it. Since he's got $150bln that he can't deploy, this would probably just be short term treasuries, which are paying about what the KO dividends are, but don't grow. I think the problem is also that we all have stories of trimming something and looking back later and regretting it. Bill Miller held onto Amazon and he's a billionaire. Lots of people bought it when it crashed to $1 and patted themselves on the back when they sold at $3 and missed the next $1000. When I first tried Greenblatt's spinoff strategy, I bought one that went up about 40% in a few months and sold it. It went nowhere for a couple of years then went 10x over the next couple of years. When Todd (or Ted?) bought that position in Dillards, it was a 10x, but it also went nowhere for a few years. It's hard to figure out which are the flowers and which are the weeds when you are just looking at some small green shoots coming out of the ground.