7. Henry Singleton built and dissembled Teledyne so profitably by using the dark arts. Soros gets credit for reflexivity but Singleton understood it intuitively AND knew how to manage narrative to bend it to his own will. Look at how trouble at Argonaut influenced his buybacks.
-
-
17. Company narrative metagame management is one of the primary roles of a good CEO and most do a poor job of it. Managing your narrative is a big aspect of capital allocation and can create or destroy fortunes for your shareholders.
Show this thread -
18. This is why Elon Musk may be one of the greatest CEOs of all time, ESPECIALLY if you think Tesla is worthless. Narrative management + capital allocation alters intrinsic value.
Show this thread -
19. Some of the most basic setups are basically just capital structure arbitrage. Have doubled my money on
$MAR from the company replacing higher cost equity with lower cost debt. Doesn’t always work out but when it does it’s like putting biz performance on steroids.Show this thread -
20. Dispassionate analysis will always have its place but emotion can add a ton of value to an investor’s skill set. Putting yourself in the customer’s shoes can help you share empathy with them, which can tell you a lot about WHY they use the products and services they do.
Show this thread -
21. Distressed situations are fascinating because they’re just as much about game theory as they are about legal protections and rights. The Vulture Investors by Hilary Rosenberg is a fun book on the subject, for those of us (mostly) locked out of this game.
Show this thread -
22. Markel’s culture is overrated. The company’s predecessor was literally formed to take advantage of regulatory capture its founder created. Here’s
$MKL co-CEO Richie Whitt talking about the scheme. “It was pretty brilliant.” I’ll say. https://www.carriermanagement.com/news/2016/09/19/158932.htm …pic.twitter.com/dtj2JxoEXs
Show this thread -
24. Economic moats are cool but aren’t the only thing. Commoditized businesses can be great investments despite low AVERAGE returns if the range of possible outcomes is wide enough.
Show this thread -
25. For example, industries with relatively low short term price elasticity of supply occasionally experience jackpot economics when the service they’re supplying is mission critical. See: shipping.
Show this thread -
26. In highly reflexive businesses, short sellers are kind of like economic terrorists by reducing the range of possible intrinsic value outcomes.
Show this thread -
27. The pink sheets are one of the last Wild West markets in, well, the West. The SEC’s new proposed rule may make trading many of the stocks there much more difficult in the next few months. Looking forward to major dislocations, if so. Do the homework now to be ready.
Show this thread -
28. Businesses that don’t have economic moats yet but are developing them can be better investments than businesses that already do.
Show this thread -
29. Social hierarchies come natural to humans, so entities that sell perceived access to higher tiers of those hierarchies will always be in demand. Social signaling never dies and neither will lux goods and services.
Show this thread -
30. The economy is creating more wealthy people and more poor people. The middle gets eaten by the economic meat grinder. The same is true for businesses. Midline is usually the worst place to be. High end and low end are key to the American Carnage portfolio.
Show this thread -
31. You can run your own John Malone home game. Dividend stocks are for tax deferred accounts and geezers who want an extra $20 per month in income to supplement their SSI. Compounders are for taxable, just gotta hold them til you die so your heirs get a cost basis step-up.
Show this thread -
32. LTV/CAC analysis can really screw you up if you don’t consider cohorts and scale of spend. Often, your earliest adopters are your biggest fans. If you don’t have an internal growth engine, there’s a good chance you’ll run into diseconomies of scale in customer acquisition.
Show this thread -
33. Real estate leases serve as a hedge against Wholesale Transfer Pricing. Advertising may be the new rent, but the rent is month-to-month so if you don’t expect to get squeezed it’s your own fault.
Show this thread -
34. Insurance tends to be an awful business, but a fun way to check the trend in reserving adequacy is converting calendar year loss development triangles into accident year ones. Insurance has goofy accounting so sometimes you can gain insight from the granularity.
Show this thread -
35. Insurance float is one of the worst kinds of float because what you can do with it is heavily regulated. If someone is starting an insurer for float, run away. There’s a good chance they’re either living decades in the past, planning a scheme, or lacking in creativity.
Show this thread -
36. Anti-prestige businesses are often not appreciated on the market. There’s often value in companies that cater to non-coastal regions and rural communities.
Show this thread -
37. Having a list of businesses that should do well in alternate economic environments can be useful to help you move quickly if things change.
$FMBL will make a killing if interest rates rise, for example, because of its huge base of non-interest bearing deposits.Show this thread -
38. Get on the mailing lists of the major investment newsletter publishers. Sometimes they’ll pitch a small cap stock for months at a time in their advertising, if the return on ad spend is high enough. Between a small float and a million Boomers, interesting things can happen.
Show this thread -
39. Alternatively, just check out Stock Gumshoe and avoid the spam. There’s a guy there who analyzes the advertisements and outs the stocks they’re pitching. Sometimes the momentum from a repeated pitch alone is enough to be worth a small wager. http://www.stockgumshoe.com
Show this thread -
40. Who knows how long it will last with the new proposed SEC rule, but there is an opportunity to create catalysts with Pink Sheet stocks that don’t post their financials publicly. Using shareholder rights laws to get and share them, you can sometimes help market efficiency.
Show this thread -
41. Structural subordination sounds like a BDSM theme but unfortunately it’s just a credit term mostly relevant in distress scenarios. Well, I guess it’s not that different.
Show this thread -
Show this thread
-
43. Stock ownership doesn’t necessarily represent partial business ownership in any realistic sense. He who has the gold makes the rules.
Show this thread -
44. Not every company is even trying to become more competitive over time. Many exist only to provide sinecures to their agent operators. There’s money to be made in companies that bother to care.
Show this thread -
45. Massive presentations about a new position are massive not because that much information is relevant, but because it looks more convincing and shows people you “did your homework” Using research as marketing. Very smart.
Show this thread -
46. The best players in bad industries are worth investigating. If economics are so poor most companies can’t make money, you MAY not have to deal with new players boosting industry capacity. Top dog’s scale can let it wring out profits surrounded by a moat of broken glass.
Show this thread - 5 more replies
New conversation -
Loading seems to be taking a while.
Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.
