txlaw

Fantastic talk by Bill Clinton:

Only worried if I see that GM and the auto manufacturers do not adapt. First, ROW growth will continue regardless of self driving cars -- someone has to manufacture the cars and distribute them. And cars do wear out so there will be a replacement run rate even if self driving cars become ubiquitous. Second, there is an opportunity to actually get into this market if you're a big auto manufacturer. You can transform into a large scale fleet management company that happens to be vertically integrated. GM -- like every other big auto manufacturer -- has been working on self driving cars for a long time. Third, you will start to see all sorts of services being offered by these guys. GM, for example, is going to start offering OnStar LTE for a subscription fee. Who knows what other offerings they're working on? I know they have a technology center in Austin where they appear to be hiring in anticipation of all sorts of interesting service offerings. Ultimately, if GM were just mildly undervalued, I would be worried, but at this price, I'm not worried at all.

I should say that the range I get is actually between 7.25% and 9%, depending on what the assumptions are for dividend increases.

I actually get a cost of leverage that is pretty high because of the dividend one is foregoing. Somewhere around 9% if you analogize to a non-recourse loan with paid upfront interest. However, the downside risk is so low from this price and the spread between what you should make on the security versus the cost of the loan is so high that it is worth it for me to start putting money back into the warrants.

Not a ringing endorsement some in this board would say (not me as you know). I actually think Mary Barra is behind the ball. She better start doing a better job. Thanks for those links Plan! It does sound like she is behind the ball on this big time, and selling cars is not like getting people to deposit money in a bank. She needs to be good on the PR front whereas Moynihan didn't need to be good at PR to turn BAC around, he needed to get them out of their legal issues. I don't know if I'd be buying a car from a company with endless recalls. Give her some time. Let's see how she proceeds after all of the recalls have been vomited out. We're judging her too quickly. Fair enough. Isn't she the product of the culture we are talking about changing? She's certainly a GM lifer, but that doesn't mean she has absorbed and represents the old culture that needs to be changed. Instead, I think she is in the perfect position -- as a lifer -- to really understand how to make the changes necessary. There is no way that Ed Whitacre, who was not an auto industry exec at all, would have approved of Barra if he thought she was simply a product of the old GM culture.

Not a ringing endorsement some in this board would say (not me as you know). I actually think Mary Barra is behind the ball. She better start doing a better job. Thanks for those links Plan! It does sound like she is behind the ball on this big time, and selling cars is not like getting people to deposit money in a bank. She needs to be good on the PR front whereas Moynihan didn't need to be good at PR to turn BAC around, he needed to get them out of their legal issues. I don't know if I'd be buying a car from a company with endless recalls. Give her some time. Let's see how she proceeds after all of the recalls have been vomited out. We're judging her too quickly.

Not a ringing endorsement some in this board would say (not me as you know). I actually think Mary Barra is behind the ball. She better start doing a better job. She reminds me a lot of Moynihan exactly because of the PR issues. Ultimately, though, it's about having someone who can chip away at the bad culture and just get the battleship on the right track, which is exactly what Moynihan has been doing (balance sheet mistakes notwithstanding). Neither Moynihan nor Barra are superstars, but they're both "company men" who have the right idea of what the company should become. It is weird -- it's like Marchionne: Barra as Dimon: Moynihan.

The interesting thing to me is that there has a been a leitmotif in the US markets that appears for the very best large/mega cap investments available. And this recurring theme is that the best time to invest in these companies that don't necessarily have the best practices (and, frankly, are messes) is when the shit hits the fan and they are forced to change. Because that's when they start cutting away at the not so nice stuff and revealing the great franchises underneath. So I actually reduced my GM stake substantially after the run up last year (and the talking up of the company by Kyle Bass et al) because I felt that Fiat was a much better run company and because I wasn't so sure about how GM might fare in case we hit some economic air pockets. I also generally avoid companies that pretty much have hit peak market share in the markets that generate most of their profits. But now I'm very, very interested again because I think GM will be forced to change in a very good way. And I think that Barra probably is the right person to make sure that this change occurs. She's like the Moynihan of GM -- at least, that's the hope.

That is hilarious. Nice to see a shout out re: the warrants. I bought into the warrants again (switched to common a while back) last week and plan on adding after reducing some other positions. Parsad, you should ask him what he thinks of the ELR. It's a beautiful car, and I wonder if it's as fun to drive as it looks. Maybe someday I will buy a Alfa 4C and put FCANYSE as my license plate.

This is actually a decent explanation of the net neutrality debate with respect to last mile providers and edge providers. There are definitely some inaccuracies and strong opinions that I don't necessarily agree with it. But, nevertheless, it's a good video.

Now this is something I've been waiting for. I've been following the Indian elections, and I do think this will be a transformational event for India. Would love to invest in India alongside FFH.

--Charles Munger, 2014-05-05, on CNBC's "Squawk Box" Gio +1

http://money.cnn.com/2014/05/04/investing/charlie-munger-berkshire/ A couple of videos from the interview:

Also, May/June 2014 issue of Foreign Affairs is called Big Fracking Deal. Worth reading.

The Natural Gas Economy Panel: -Ralph Eads III , Vice Chairman, Jefferies LLC -Stephen Green, Vice President, Policy, Government and Public Affairs, Chevron Corporation -John Hickenlooper, Governor, State of Colorado -Fred Krupp, President, Environmental Defense Fund

Milken Institute: The Natural Gas Economy http://www.milkeninstitute.org/events/gcprogram.taf?function=detail&EvID=4840&eventid=GC14 Good stuff. Here's the panel: -Ralph Eads III , Vice Chairman, Jefferies LLC -Stephen Green, Vice President, Policy, Government and Public Affairs, Chevron Corporation -John Hickenlooper, Governor, State of Colorado -Fred Krupp, President, Environmental Defense Fund

Thanks! That was an excellent panel. ValueAct may be my favorite "activist investors" right now.

I am on record expressing my awe of John Malone (Liberty Media) and Brian Roberts (Comcast). I have even owned both CMCSA and LMCA in the past. As someone who practiced (edit: made it past tense) technology and telecom law at a very big law firm in DC, and who saw how lawmaking/regulation goes down in that city, I have to say that there is very little that I disagree with in Professor Crawford's presentation. The MSOs and telcos have huge influence in DC, and they run circles around the regulators, as they are always much further ahead in thought and vision than the old school people (who don't get paid very well) in regulatory agencies. The FCC is highly politicized and is terrible at fulfilling its antitrust function. It's also a revolving door. Regulatory capture is real, though not necessarily in the insidious conspiracy theory way that a lot of libertarians and anarcho-capitalists like to spew. Indeed, it is the lack of forceful regulation -- necessary because this industry tends to natural monopoly -- that is the terrible result of this regulatory capture. If I were given antitrust czar power tomorrow, where I could consolidate all antitrust-related functions that are spread across the federal government into that position, I would be running things way differently in DC. I would never have allowed Comcast/NBCU. I would do everything in my power to stop John Malone from making his genius end runs around antitrust laws. I would put in onerous regulations that would be far more consumer friendly, and much less protective of existing industries. I might even go back to a situation where the Internet infrastructure providers are limited to a specified rate of return on investment, similar to the railroads.

This book is supposed to be on the required reading list for anyone in the economics profession -- or really anyone interested in macroeconomics. Here's the Economist's review: http://www.economist.com/news/finance-and-economics/21592635-revisiting-old-argument-about-impact-capitalism-all-men-are-created

Thanks for posting this. Got too much to read/watch this weekend.

LOL! Awesome. Today I'm buying Indian food at the best Indian buffet in Houston. Thanks, Lance I'm guessing India's? There is a restraunt called Himalaya in hillcroft thats much better imo Have not been to Himalaya, will check it out. I'm partial to http://www.thebombaybrasserie.com/ Bombay is decent, but Himalaya is real authentic high quality indian and Pakistani food. Everything there is pretty fresh, but it's a really hole in the wall type of place. Haha, it's hilarious to see references to Hillcroft on CoBF. One thing about Austin that sucks -- terrible Indian and Asian food compared to Houston.

Even President Obama loves Jiro Dreams of Sushi: http://www.npr.org/blogs/thesalt/2014/04/23/306227740/obama-gets-a-taste-of-jiros-dream-sushi-in-name-of-diplomacy

The banks get better interest rate spreads when rates are somewhat higher than they are now. Instead of borrowing at 1% and lending at 3%, they can borrow at 2% and loan at 4.3%. The 0.3% over a trillion dollars becomes significant. At a certain point rates go too high and people stop borrowing as much. Dimon is talking about hitting a sweet spot where soreads and volumes are both good. Historically banks didn't do as well in rising rate environments but most of the bigger banks now hedge off possible interest rate risk. It also has to do with the speed of a rise. That good? Yeah, that's how I would explain it. At the zero bound, NIMs are highly compressed. In fact, I believe we are still at historically low NIMs in the US -- see http://research.stlouisfed.org/fred2/series/USNIM. When rates go up, NIMs should go up. Also, higher (but not too high) interest rates tend to mean a better economy and, therefore, higher volume of biz. That is, higher interest rates are a sign of a better economy, and since we were (are?) in a global balance sheet recession, where the private sector was actually deleveraging, we will have quite a bit of demand for debt financing going forward, not just in the US but across the world. Debt- (as opposed to equity-) financed growth isn't going away and only increases proportionately with global GDP growth. Mortgage banking has slowed in the US for good reason -- everyone who could refinance or take out low interest rates did so as soon as they could to take advantage of the historically low interest rates. And now we will see mortgage banking normalize, I suppose. Anyone disagree with this simple assessment?

Me too.

See the following article: http://arstechnica.com/security/2014/04/critical-crypto-bug-in-openssl-opens-two-thirds-of-the-web-to-eavesdropping/ The short of it is that if you used Yahoo or any other vulnerable site in the past, it's possible that your password (and other confidential data) has been stolen. I actually had my Yahoo email contact list stolen, and the culprits have been sending spoof emails from that address to people on my contact list. Could be time to update passwords and actually start using 2-factor authentication.