ValueArb

50 years ago our southern border was completely undefended. Every year millions of mexican workers would migrate up to work on our farms, leaving their wives and families behind. Once harvesting was over, every year they'd head back to their villages in Mexico for half the year and live far better than their neighbors who didn't do migrant work. It was called circular migration and it worked great for the US and Mexico. Then we started to fence and guard the border, making it much harder for them to count on getting back in if they went home. So they started bringing their wives and their kids and staying permanently in the US. The result is called unintended consequences.

Viet­nam’s Vin­Fast Auto be­came the lat­est elec­tric-car startup to cap­ti­vate Wall Street with a stock rally Tues­day that pushed its mar­ket value ahead of in­dus­try stal­warts Gen­eral Mo­tors and Ford Mo­tor. Shares of Vin­Fast have since re­treated, down about 20% mid­day Wednes­day, a day af­ter the com­pany be­gan trad­ing on the Nas­daq. That came af­ter a sur­pris­ing surge on the first day of its list­ing, in which shares more than tripled, giv­ing the com­pany a mar­ket value of roughly $86 bil­lion, Re­fini­tiv data shows. https://www.wsj.com/articles/ev-startup-vinfasts-stock-rally-pushes-value-higher-than-gm-ford-c9dac0e6

Buffett historically does not want to have more than 10 positions in his portfolio. So my entirely unscientific guesstimate method is to assume anything over 10% is 100% Warren, and anything below has a likelihood of being Warren based on portfolio percentage divided by 10%. So a 1% position is 90% Ted or Todd, and a 5% position is fifty-fifty. Because the portfolio is so huge now ($350B?) my theory might not even make sense. OXY is clearly a Buffett position and he started it at well under $10B or 3%. There are almost no stocks big enough for him to put 10% into without going over 10% ownership now that he's just had to change his approach.

Most of our military aid to Ukraine is obsolete equipment we never planned to use pulled from long term storage depots. The idea they are actually worth the billions we’ve claimed is suspect. Even if they are the $50B or so we’ve doled out so far is roughly 0.5% of total federal spending since the war started. There is no either or scenario here.

He was an FX trader before he became an investor, and used technicals heavily in FX trading. He mentioned using technical indicators as an investor extremely early in his education process, but AFAIK hasn’t mentioned them at all since. What he has said is he’s a deep value investor. Since technicals and value work at cross purposes I would bet he abandoned technicals over 20 years ago.

I don't know how accurate this is. His current short position is a small hedge from 2 months ago that might be closed now. Same in March 2020, he wasn't specific about how big his bet was other than it had done well. In January when he tweeted "SELL" there was zero context. He could have been telling a friend to give up his superbowl tickets. Burry makes predictions for fun on twitter, his record is no worse or better than any other macro prognosticator. His real job is stock picking and he's been superlative at it. It was reading a Burry 13F and discovering he had bought a bunch of GME at $3 that got DeepF***ingValue on Reddit to investigate it and make his own huge bet at $5.

He's always been pretty active. I'd have to dig up his investor letters to verify but my impression is that in the Scion Capital days his average holding period was under a year. Unlike Buffett, he doesn't seem to be managing much more money now than then, I suspect its entirely Friends and Family money that got carved out of the previous fund.

They are probably around $30M, not that big at all. Just some hedge that he might not even own anymore.

Did you mean Herb W.D. Smoker?

Looks like Burry’s latest short positions are being misreported at notational value. My guess is. He actually has about 10% of that at risk in premiums

If only he had been president and had both houses were controlled by his party, then we could have done something about the debt Armageddon.

Here is the 10-Q; this stuff is described in Note 8. Some of what is going on here is that Riot has a long-term power supply agreement in which TXU Energy Retail Co. has to supply it with electricity at fixed prices through 2030, and Riot has the option to sell the power back to TXU, at market rates, for credit against its future electric bills, when the spot price exceeds the contract price. But part of it is demand response, where ERCOT pays Riot cash for using less than its typical electrical load during periods of peak demand. As with carbon credits, there are measurement problems; I have never mined a single Bitcoin, yet ERCOT has never sent me a penny for my forbearance. Still, how great is modern finance? Twenty years ago, if you had told people that one day they could get paid for not mining Bitcoin, they would have said “what?” But now it is possible. Modern finance created the problem (Bitcoin mining) and the solution (paying people not to mine Bitcoin); the overall result is that nothing happens and yet people get paid. Just a miracle of financial engineering. Also: Riot is getting paid for not using electricity, but if you are an enterprising Bitcoin miner surely you should look into getting paid for not using carbon when you are not mining Bitcoin. Riot is not there yet, but it is possible to imagine a warming world in which energy prices go up and Bitcoin prices go down and Bitcoin miners can get paid more for not mining Bitcoin than for mining Bitcoin. Giant fortunes will be made by people who got in early to the business of not mining Bitcoin. The future is so good, man.

Ok, don't just run towards smoke, but run twice as fast if smoke is coming from something promising delayed gratification. When you can't get paid for years a lot of people stop their research right there, leaving some juicy juicy deals for those who research deeply and persistently.

https://www.bloomberg.com/news/articles/2023-08-09/dave-portnoy-paid-1-to-get-barstool-back-from-penn-entertainment

Written by someone who doesn't eat a lot of telephone cable. More seriously, having a rule of running towards smoke will have you end up in a lot of fires. I can't speak to the Cigna case, but in the case of the Salad Oil Scandal Buffett could run into the smoke confidently knowing that the losses were contained in a subsidiary and the cost of shutting the subsidiary down was dwarfed by the value of the credit card business. So yes, run into smoke only whenever you can have a very high confidence there isn't a fire (or that its already out).

I have a friend who was betting on BBBY, all I could do is review the balance sheet and give him my take. Don't even want to ask if he got out or not.

Yes “last week’s gains”: Yellow closed at $3.90 last Tuesday, its highest price since February, despite having shut down and being in plans for bankruptcy. Now that it is in bankruptcy — with a plan to liquidate and return nothing to shareholders — the stock is off a bit; it traded around $2.40 at noon today, still much higher than it was trading in early July, before it shut down operations. I don’t know, man. Here’s the Wall Street Journal on the return of meme stocks: Terrific. The way it works now is that if US companies go bankrupt their stocks go up. The stock of a small-cap trucking company is just a boring stock, but the stock of a bankrupt company is an absurd lottery ticket, and that is just more fun. Yellow went from being a boring stock that had lost value to being a silly stock that has gone up, and that’s how modern finance works I guess. Though actually the Yellow story is stranger than that. The Journal also notes: Here is MFN’s filing from last Tuesday, showing that it owned (as of last Tuesday) 42.5% of Yellow and that it bought almost half of that stake last Monday; its total cost was about $22.9 million, or a little more than a dollar a share. I have no idea what to tell you, except I guess that at today’s price MFN is sitting on about a $30 million profit, and more than 200 million shares have traded since last Tuesday. If you are a professional investor, “buy a ton of stock in a public company that has said it plans to file bankruptcy, and then sell the stock at a profit once it actually files for bankruptcy” is not, you know, a rational strategy, but it kind of works now? (Not investing advice!) But buying 42.5% of the company is too much, since it subjects you to short-swing profit rules that basically mean you can’t take your profits for six months. (Not legal advice!) Buying almost half a company a week before it files for bankruptcy as a long-term investment seems like a mistake. From yesterdays Money Stuff column.

If you want to build a list of open mergers for your merger-arb basket, may I suggest a great short-cut. Google "m&A class action", virtually every single merger is "investigated" by law firms looking for a payoff, and some issue newsletters containing their own target lists;)

Looks like the UK will be forced to pull out of the coalition and stop helping Ukraine, because they have given so much aid that they are starving and reduced to eating squirrels. https://www.businessinsider.com/russia-tv-skabayeva-uk-reduced-eating-squirrels-ukraine-military-aid-2023-3

Man, people were really butthurt back then.

Tinder

From WaPo today. I can only see the chart cause I’m a cheapskate but it’s pretty shocking. Ukraine aid is roughly 1/2 of 1% of all US federal spending the last 17 months, and a lot of that is in nearly obsolete equipment. If US voters think that is too much to nearly demilitarize Russia, the future really is dim. Esposa article on US Ukraine spending

I haven’t understood the “we can print money” counter argument to Fitch’s assessment that US debt load is getting too high. How does hyperinflation make debt safer?

Its true that everything I say could be because I'm being paid to hide the truth from the American public. Or that I'm being paid by the aliens, as part of a well funded alien effort to hide their existence. Or that the UAPs are really angels and I'm an emissary from god sent to downplay their visits in order to avoid a panic and outbreak of religious war. The problem with believing my motive is only good skepticism is that its boring, its ruining the fun and killing the party.