RVP

I've looked at this and passed, but mainly because I thought recent years earnings were abnormally high. Numbers over the past few years were remarkable, but reversion to the mean (which should be around 1/4 of current) is common in this industry, and tends to happen very quickly. That dynamic might be even more pronounced here, given the customer concentration. Their business track record since going public already reveals how wild the swings can be.

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https://www.nytimes.com/2022/09/14/climate/patagonia-climate-philanthropy-chouinard.html Truly remarkable

Didn’t realize that Buffett’s infamous first investment in Cities Services went on to become part of Occidental. Great catch by the journalists, and full circle indeed.

Probably not. Speculation will always be around, during the best and worst of times. The propensity to gamble may even increase during tough times, as folks seek “quick and easy” ways to get out of their hardship.

I agree the industry is rife with folks justifying their underperformance (or performance), and I understand the bitter after-taste it can leave. But I also understand the pressure to do so is intense, especially when you have a public persona and outside expectations. Yes sometimes letters may come off as arrogant and self-righteous, but everyone has their own circumstances and communicates differently. No point dwelling on it or criticizing others. It’s too easy to point fingers when we’re not the ones in the pit. Just throw it away and read something else if it turns you off/ you find no value.

+1

Agree with this framework of thinking in regards to managing risk, but disagree with the notion that it's quite simple. "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so." - Mark Twain

Assuming appropriate skill and understanding, I think as much as possible (even 100%) if you can gain full control and the company's capital allocation destiny is in your hands. Otherwise, 10% - 30% tends to be the sweet spot for me. And I try to frame the idea through the lens of a recessionary/ depressionary environment, not vs. whatever the opportunity set may look like today.

This needs to be re-labeled "Sponsored Content: The Paradigm Shift, brought to you by [insert marketing co here]".

Agreed. Money's been way too loose for too long, and moral hazard's only getting larger by the day. And just like in 1999, Pokémon cards are back in vogue: https://www.polygon.com/2021/2/9/22274841/mcdonalds-pokemon-cards-anniversary-25-scalpers-ebay-prices-resell-happy-meal

Doesn't the delta hedge thing cut both ways? Like if sentiment turns for whatever reason and the stock becomes less bullish or even bearish, wouldn't the market maker sell the stock to avoid being overhedged? These days it feels like there are Cheshire cats all over the place seducing folks to imagine...

In a world of abundant capital and VCs willing to tolerate years and years of losses, I think having everything under one roof is not only a big advantage, but increasingly a necessity. Yes spinning off divisions can allow you to be more focused & efficient, but in an upside down world where growth is all that matters and near/mid-term profitability is an after-thought, you need a very big bank account to endure/adapt to the uneconomic competition and disruption. A lot of Berkshire's non-monopolistic/ non-regulated subsidiaries may be mortally wounded going it alone.

I would argue that on balance, Pershing Square has benefited from being promotional (plus being large shareholders). And whether their picks were right or wrong, the market has been rather quick to agree/ disagree. I would also argue that PS's holdings for the past two years skewed towards compounder-type businesses (that were never really "value" on an absolute basis even when taking into consideration their asset-light nature), and for the most part already had considerable marketing heft within the enterprise. And because they benefited largely from the large-cap/ compounder trend, there really was no need to go out to the media touting XYZ position. Were the inverse true, I would wager they would not be sitting quietly.

Agree that lower interest rates benefit cash flows further out in the future. But long-term prospects are just that, "prospects". Isn't the notion that companies (outside more obvious cases like Amazon) are able to convince investors of their long term prospects a form a good marketing? And if a value company is not in secular decline, shouldn't they be able to do similar? Is the investment community focused primarily on said value company's near term robust cash flows (instead of future), because value investors/ management put it front and center, and is that a marketing problem?