Liberty

I have no opinion on bitcoin other than it's very cool math and crypto. The miners validate the bitcoin operation chain, afaik. Their CPUs are necessary to keep the system running. As for the value they received vs what they provide, I don't know, but in that system they're probably closer to the federal reserve than to an average joe working a job.

Of course. It's like Buffett's comment that maybe he should fund EMT chairs at universities, or something of the sort :D

These two. So crazy how so many businesses are managed to hit analyst estimates rather than what is best for the business in the long-term... Our civilization would allocate capital much more effectively if these 'targets' didn't exist.

I'm guessing this is a question about VRX :)

+1 :)

It's not a value blog. It's not a blog at all, in fact. It's a forum! :D

The good old kosher pickle story. It never fails. ;D

Anything recent give you the impression he's not a good capital allocator? Probably a safe bet that years of working closely with Malone has taught him a few things...

Just so we're all on the same page, it should probably be said how the scale works. I'm assuming that 1 is least attractive, and 5 most attractive, but maybe others are looking at it in the oppositve way..?

Clearly the effectiveness and reliability of the computer system matters a great deal in answering that question for any specific situation. But given a computer system with enough quality and reliability, there's very little I wouldn't let it do. I'd go so far as to say I'd let a computer-operated machine perform surgery on me. And I don't see any reason why a computer system can't be more safe and effective than a human driver. That's interesting. I think that most people, knowing that any small mistake while driving can mean life or death, would choose to have their fates placed in their own hands rather than a computer's even if in theory the possibility of life-threatening accidents is lower in the latter case. I agree with you that the efficacy of such technology will play a major factor in driving behaviour. This happens all the time over the course of history. At first, people don't trust a new technologies. Then they see it in action over and over again, they get used to it, and after a while they stop thinking about it and trust it. People who grow up with it don't even question it. It's the transition periods that cause these hesitations. I'm sure it happened with ATMs at first. Do I want to give my money to a machine? What if it swallows it and doesn't credit my account? What if there's a problem, who do I talk to? What if I make a mistake on the buttons and screw everything up? How can I trust what's happening inside of the machine? etc.

Thanks, good read.

I'm very happy for you Gio :)

Then it starts to become a circular argument- these CEOs are good because they are good. I think that you have to be careful with well-written books because some of the ideas may be false. You should try to look at the opposite side of their arguments. Strong ideas are ones where it's hard to argue for the opposite side. I'll leave it at that. I'm on board with the 'halo effect' and I know it's dangerous to look after the fact at how management is described. Something to be very careful about. But I'm also on board with Buffett and Munger and I know that it's possible to identify good businesses and good management. They've done it pretty consistently, and they've said a lot of what they look for. I agree with your approach, I just don't think it's as simple as taking one aspect and grafting it to another random business to see how it does. A lot of these things work together (nobody said it was simple). To me, the book was interesting because it feeds the pattern recognition engine and reinforces a lot of what Buffett has been saying. Good management is long-term oriented, it looks for businesses that throw off a lot of free cash flow that can be re-invested opportunistically for good returns (that can be buybacks if your stock is undervalued and you have a good business, it can be acquisitions if you're in an industry where scale gives big advantages, or a portfolio approach to investments, buying unrelated businesses that have certain characteristics, etc), it requires patience and discipline, independent thinking, the ability to be misunderstood for a long period of time, etc. Nothing that was a secret to anyone before, just some nice case studies.

I don't think his argument is just that buying back shares is the secret, though. The outsider CEOs all had many other tricks in their bags and knew when and how to use them. The best tool for the job depends on the state of the business; what's best to do in your examples would depend on why the net-net is a net-net and what its prospects are. You can't just abstract it all to just "net-net + buybacks = outsider performance?". I think it depends on the business, but of course being both is even better, and I never got the feeling from the book that being a good operator (of having them under the CEO) wasn't important. Only at the very beginning, though, right? That's not Malone's fault at all. In fact, he's the one who was brought in to solve the problem and without him it probably would've gone BK. Indeed, but the real question is, was his strategy best for the long-term, and was he ever in danger of totally blowing up. I don't know the details, so maybe he did come close, or maybe he just had to sell some stuff that he didn't want to sell, but he was still fine (and a few years later, he's definitely fine). You can look at this a bit like volatility. Even a company as safe as Berkshire went down by 50% at least three times. The quoted value of Malone's stuff will go down too, and because of his strategy, he might sometimes be forced to sell some to meet margin calls, but if overall that means he makes 30% a year over the long-term with billions relatively safely, it might be a valid strategy. The BK is not Malone's fault, though, is it? Charter was mismanaged for years and Paul Allen paid way too much to build it up in the early days. Malone's just value investing by picking up an asset with a high replacement value for a low cost and then running it with the best operator in the business.

Well, "good" capital allocation is tautologically good, so all else being equal, it's always good to have. I think the point that shouldn't be forgotten is that everything else that is important about a good business still applies. The moat, the price you pay, the cash generation ability, the reinvestment opportunities, etc. Put a good capital allocator in charge of a terrible business, and you probably won't get good results, though maybe (like Buffett) he'll at least be able to expand energy in switching boats rather than plugging the leaky one... The book did look at successful good capital allocators, so they pretty much all had good businesses to work with. I'm not sure if it's a fault of the book. It certainly would make for an interesting - but different - book to look at what kind of things tripped up good capital allocators and made them unsuccessful. The mistakes of smart, successful investors and businessmen are always great to learn about, IMO. As for the dangers of debt, I think most of the outsiders in the book who used lots of debt did it because they were in businesses that could handle it. That's part of being a good capital allocator, to know how much debt to safely use... Of course, as investors we all have our own risk tolerance which might not match a certain CEO's, and we might be proven right or wrong over time, but that's a different question IMO.

More outsider discussion: http://brooklyninvestor.blogspot.ca/2013/11/what-to-do-in-this-market.html

Hmm, Jeff Bezos' wife reviewing this book, not very positive at all (doesn't mean it's not a good book or that she's not biased, but this data point should be taken into consideration): http://www.amazon.com/review/R2I0T26SV0ELPP/ref=cm_cr_pr_perm?ie=UTF8&ASIN=0316219266&linkCode=&nodeID=&tag=

SolarCity stock up almost 20% today... Up 450% in about a year.

Some more context on how Google, via Motorola, has been suing Apple all over the world before this: http://daringfireball.net/2013/11/rockstar_suit Seems like an all out war from all sides...

No, but I'd also be curious to know if others have been following it. I've put it on my list of things to check out, along with CFX, DHR and TDY. In the outsider vein, I already had VRX and TDG, and the whole Malone complex (LMCA/LINTA/etc). I'll be busy for the next year or two...

+1

http://brooklyninvestor.blogspot.ca/2013/10/a-really-great-book-outsiders.html This was linked elsewhere, but should be here too as reference for people finding this thread.

Thanks! :)

Sad news. Time to spin some Velvet Underground in memoriam.

http://www.thegatesnotes.com/Topics/Development/Great-Books-on-Science-and-Innovation?WT.mc_id=10_25_2013_ScienceBooks_tw&WT.tsrc=Twitter Good list. I've added a few to my pile.