56. Capital allocation is just as much about anticipating and influencing the sequence of events as it is about allocating capital. What’s optimal in one scenario isn’t in another. There’s more to it than choosing between dividends and stock buybacks.
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67. Singleton altering perceptions of Teledyne’s profitability to buy back shares on the cheap and Musk performing elaborate
games to issue equity at high prices are two sides of the same coin.
Both are legendary to me for seeing narrative & sequence as capital to allocate.Show this thread -
68.
$L is ALLEGED to have used a similar trick on Boardwalk Pipeline, by deliberately tanking the units to exercise its call on them at lower prices. Capital is not just cash and assets. It is perception, ideas, and time. Alter those and the rational uses of cash also change.Show this thread -
69. Of course, I cannot prove any of this was done intentionally. I’m not suggesting it’s a matter of fact. But from the info I have been able to piece together, and noting Singleton’s genius in using reflexivity to build Teledyne, it’s an idea that makes sense to me.
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Sources for those who care: https://www.valuewalk.com/wp-content/uploads/2014/11/leon-cooperman-value-investing-congress-henry-singleton.pdf … https://www.nytimes.com/1975/06/17/archives/argonauts-malpractice-premiums-in-74-amounted-to-35million-claims.html … https://www.nytimes.com/1975/06/08/archives/for-argonaut-profits-proved-illusory.html … https://www.milbank.org/wp-content/uploads/mq/volume-55/issue-02/55-2-The-Malpractice-Controversy-and-the-Quality-of-Patient-Care.pdf … https://news.bloomberglaw.com/mergers-and-antitrust/loews-must-face-suit-alleging-pipeline-stock-option-gamesmanship …
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70. Ken Fisher shouldn’t be shamed for discussing the use of LSD. Investing is a creative field more than a scientific one, and certain drugs do boost creativity by helping you make unique connections. I wish more investors would talk about how drugs influence their investing.
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71. If you pay up to invest in moats you should be careful not to drown in them. If a company’s moat begins to degrade, you can get a deadly combination of decreased earnings power and multiple compression. All of a sudden the sure thing becomes a sure loser.
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Screwed up my chaining. Thread continues here. https://twitter.com/laforeverhall/status/1207885870843318272?s=21 …https://twitter.com/LAForeverHall/status/1207885870843318272 …
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End of conversation
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