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.
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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
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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.
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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.
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26. In highly reflexive businesses, short sellers are kind of like economic terrorists by reducing the range of possible intrinsic value outcomes.
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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.
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28. Businesses that don’t have economic moats yet but are developing them can be better investments than businesses that already do.
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Replying to @LAForeverHall
Because they were forced to develop operational excellence?
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Replying to @Altimor @LAForeverHall
I'm no Liz, but one theory is that if they're growing the moat, they're actually paying attention. Moats that are undefended are more easily breached.
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this and also because of who might capture the value.
If you buy a biz that goes from no moat to impenetrable moat the multiple, all else equal, is likely to go much higher.
If you buy a biz that has a moat that then degrades, its multiple may contract over time.
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In the first scenario you’re capturing that value. In the latter scenario the guy who sold it to you extracted the value.
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