PlanMaestro

More like the new Cavallo.

Once Upon a Car you get to know the characters well, but don't expect any analysis or critical thinking. The classic is "The Machine that Changed the World" focused on the power of Lean Manufacturing, but is from the early 90s. The global auto manufactures have caught up with Toyota since that time. I imagine that "Overhaul" is a must read but I have not had the time to get to it. There is a lot of info on the industry available in the internet.

Some tweets from last week with some initial ideas on that issue: * Entertaining the thought that the Big 3 automakers are starting to enjoy a similar positive change as the railroads. * Both great industries in their beginnings, but then plagued by overcapacity and competitors w/advantages … advantages that are shrinking lately. * Railroads vs trucking benefiting from regulation, interstate highway system, and low oil prices. * Big 3 vs foreign auto manufactures w/o high wages and legacy costs, consequence of a long history of union frictions. * And both railroads and autos innovation had been stale, leaving an opening for competitors, but experiencing a renaissance lately. * So both industries that for decades no one in his right mind would think about investing in … until they changed. * One of the first VP posts I used GM as the example of the unrepentant alcoholic: the type of company that stands up only to fall again … * But now … it looks different. A big issue is that the labor arbitrage spread has been shrinking, http://economix.blogs.nytimes.com/2012/12/07/when-cheap-foreign-labor-gets-less-cheap/ Also the Big 3 have moved out of Detroit. The transplants and Mexican plants are as productive as the Japanese, and GM is competing head to head in markets like China. Lean Manufacturing and Global Sourcing are not sources of competitive advantage anymore. Some are ahead, like Ford, but all are moving in the same direction. It is not clear to me at least that imports have a big advantage anymore when all are sourcing from similar places. You can see it with the Big 3 competing successfully once again in sub-compact and compact cars, markets that many thought they had abandoned for good. And Fiat knows how to design cars, especially small cars. They just did not have the cost base and distribution to compete in the US. http://farm9.staticflickr.com/8487/8262555755_9eb8cfc462.jpg

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/fiat/msg93449/#msg93449 http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/auto-manufacturers/msg84526/#msg84526 Sportsgamma, DCG and others have been over it. Maybe 17thStreetCapital may also add. I will just say that if Italy leaves the Euro, it would be a boom for Italian manufacturing and there is lot of spare capacity.

Let's throw some darts in the dark: Fiat. * Marchionne is one of the best CEOs I've seen. * priced at just 0.05x sales. * Good balance sheet. * Chrysler is killing it in the US and provides a margin of safety in case Italy goes bust. * Fiat is earnings positive despite horrible utilization in Italy, and if it ever rebounds … * convoluted way of claiming Ferrari and Maserati (don't tell Bigliari). Now, 40x in 10 years… probably not. Double digit x, I would say yes.

Yes.

http://www.ft.com/intl/cms/s/2/fcc5bdda-3f36-11e2-a095-00144feabdc0.html#axzz2ETS8jRw4?src=longreads

Sales of French cars fell 28pc in November from a year earlier, with Citroen down 26pc and state-owned Renault down 33pc. Foreign brands fell just 7.9pc. French economy buckles as car sales collapse http://www.telegraph.co.uk/finance/financialcrisis/9720053/French-economy-buckles-as-car-sales-collapse.html

Is Spying on Corporate Jets Insider Trading? http://www.cnbc.com/id/100272132 Has anyone used this? Bud Fox is so 80s.

Nice for current shareholders but also time to start being more watchful on their accounting practices. Current practices worked very well in 2008. Insurers Add Reserve Power http://online.wsj.com/article/SB10001424127887323401904578155191984992264.html State regulators Sunday approved new rules for how U.S. life insurers set reserves for future claims, a decision that may ultimately free up billions of dollars for acquisitions, stock buybacks, dividend increases and other uses designed to boost the industry's flagging returns. Under the new rules, insurers would move to a "principles-based" system for determining the size of reserves. The current rules rely heavily on formulas the industry has long maintained are far too conservative.

Another good one is the "Big Store". Donald Katz interviewed Sears executives during their failed early 80s turnaround. Good background especially when the author completely ate management stories of future success finishing the book before the failure was evident. You get to meet people like Philip Purcell, future CEO of Morgan Stanley, in his early management consultant days. Also gives a perspective of how the old business model reacted to the category killer boom (moving into financial services among other things). http://www.amazon.com/Big-Store-Donald-R-Katz/dp/0670805122/ref=la_B001HMN5KM_1_1?ie=UTF8&qid=1354482650&sr=1-1 And now that we are into Sears turnarounds that didn't succeed, Arthur Martinez wrote a book of his early 90s turnaround also calling success too early ("The softer side of Sears"). http://www.amazon.com/Hard-Road-Softer-Side-Transformation/dp/0812929608/ref=pd_sim_sbs_b_2

The problem is that most books on retailers go the narrative / biographic route. The best of those is of course San Walton's "Made in America". I really like "Power Retail" if you want something more quantitative with an emphasis in big boxes. http://www.amazon.com/Power-Retail-Strategies-Chapters-Retailers/dp/0075609967

Taleb Mishandles Fragility http://falkenblog.blogspot.mx/2012/11/taleb-mishandles-fragility.html

Why Taleb is wrong about markets and uncertainty http://condoroptions.com/2012/11/26/why-taleb-is-wrong-about-markets-and-uncertainty/ Insurance companies are the very essence of fragility: they collect policy premiums and hope that the world stays exactly as it is. A natural disaster, epidemic, or outbreak of mass hysteria could ruin an insurer. But in the real world, we see insurance companies surviving easily enough after disruptions. The premiums collected in quiet periods are typically more than enough to offset risks, and companies even use recent events to justify charging higher premiums to newly risk-averse customers. Historically, betting on the fragility of insurance companies – especially immediately after a natural disaster – has been a losing strategy. A more literal case of anti-fragility is an investor who buys an option straddle, consisting of a put and a call on the same security with the same strike price and time to expiration. The more volatile the underlying asset is, the more profit accrues to the straddle buyer, and because the position consists of both puts and calls, the investor is indifferent to the direction of price movement. A breath-taking rally is just as advantageous as a market crash.* The risk to a straddle buyer is that the options will be worthless at expiration: if the underlying asset is priced at the strike price of the straddle at expiry, all of the premium paid for those options will be lost. In spite of their epistemically virtuous behavior (as Taleb would have it), option buyers tend to lose more than they win: not just more often, but more money, too. VCs are long gamma, too, and have on average delivered sub-par returns in spite of the anti-fragility of the companies they fund. Somehow, short-gamma insurance companies survive. This is the fact that should make sympathetic readers of Taleb pause: we have had at least two major global crises in recent years – the financial crisis in 2007-08 and the European banking crisis in 2011 – and yet the payoff to option buyers from those events has not even covered the carrying costs of the strategy in the last several years, much less the costs incurred from buying anti-fragility (option gamma) during the prior decade. It’s not just that options are not underpriced in light of “black swan” risks: they’re dramatically overpriced. RR: Taleb has appropriated Minsky's idea in a non-empiric non-rigorous way to propose the opposite that Minsky proposed. Go to the source instead, read Minsky.

I think this is something few have recognized in the recent Buffett and Berkowitz picks. We focus on companies that are regulated entities, because when you have a regulated entitity, when they get a dislocation there's a lot of publicly available information and there are a lot of professionals that you can engage to analyze, and there's a lot of transparency if you can really get the right people to analyze how much damage there is. Is it going to put the company out of business? Is it something the company can recover from? Is it something that spending a certain amount of money, such as to pay taxes, fees and other things, and restitution can fix?

Very interesting comments. Out of curiosity, why the US does not have a value added tax? http://worthwhile.typepad.com/worthwhile_canadian_initi/2009/08/economic-policy-advice-for-the-ndp-part-iii-the-gst.html

Excellent data. He also has a book. Videos Introduction (BigThink): Data Intensive (1:30 and lots of charts) : Book How Many People Can the Earth Support? http://www.amazon.com/gp/product/0393314952/ref=ox_sc_act_title_3?ie=UTF8&smid=ATVPDKIKX0DER Articles Ten Myths of Population (excellent). http://lab.rockefeller.edu/cohenje/PDFs/235CohenTenMythsPpnDiscover1996.pdf Population problems: Recent developments and their impact. http://lab.rockefeller.edu/cohenje/PDFs/288PpnProblemsRecentDevelopments&ImpactAsiaPacificRev2000.pdf Population and Climate Change. http://lab.rockefeller.edu/cohenje/PDFs/366CohenPopulationClimateChangeProcAmPhilSoc2010.pdf Population and the Environment. http://lab.rockefeller.edu/cohenje/PDFs/287CohenKeynoteironmt20001.pdf World Population in 2050. http://lab.rockefeller.edu/cohenje/PDFs/301CohenSeismicShifts2001.pdf Meat (excellent). http://lab.rockefeller.edu/cohenje/PDFs/372CohenMeatFirstMalthusLecturePRBIFPRI2011.pdf Human Population Growth and Tradeoffs in Land Use. http://lab.rockefeller.edu/cohenje/PDFs/277CohenHumanPpnGrowthEcologicalStewardship1999.pdf All his papers. http://lab.rockefeller.edu/cohenje/cohen

He is the man! (and it looks like I am just a clone) http://variantperceptions.wordpress.com/2012/03/07/munger-on-the-perfect-turnaround/

LoL! General Growth… a friend was in love with it. Bill Ackman was ranting and raving about it, buying equity for pennies. I just couldn't see it … but their bonds!

Complex business makes Olam vulnerable. http://www.ft.com/intl/cms/s/0/baaae8bc-33ba-11e2-9ae7-00144feabdc0.html#axzz2DRDxjlXJ

The report. Enron analogy. No surprise there. http://d.muddywatersresearch.com/wp-content/uploads/2012/11/MW_OLAM_11272012.pdf

@SamAntar NYTimes: New Breed of SAC Capital Hire Is at Center of Insider Trading Case http://nyti.ms/Sk5fYi @SamAntar Memo to Mathew Martoma: Don't get fooled by your high paid lawyers. They will defend you to your last dollar. Give up Steve Cohen. @SamAntar Memo to Mathew Martoma: Your lawyers are selling you hope. They won't spend time in prison for your lack of cooperation with the Feds. @SamAntar Memo to Mathew Martoma: No amount of money is worth ten plus years in federal prison. Ask any inmate.

Five economic trends to be thankful for http://www.calculatedriskblog.com/2012/11/irwin-five-economic-trends-to-be.html

It's becoming more difficult by the day to find long lasting competitive advantages. If even Coke has to be on their feet what's left for the rest. Sweet Little Lies http://www.motherjones.com/print/197151 What moats are under threat and where are the moats of the future?

http://bloom.bg/QuOpre