Paul Singer, Doomsday Investor Notes

Paul Singer
Paul Singer from Elliot Management. Source: Wikipedia and World Economic Forum

Sheelah Kolhatkar from The New-Yorker wrote a long-form piece on Paul Singer and Elliot Managment. Like most pieces from the New-Yorker, it’s long and very detailed. Sheelah wrote a great article on one of the most feared and successful investor. Below are some of the notes:

    • Paul Singer, the head of Elliott Management has developed a uniquely adversarial, and immensely profitable, way of doing business.
    • Singer grew up in the Bronx and in Teaneck, New Jersey, one of three children of a pharmacist father and a homemaker mother. Paul is now 73 years old. Elliot is his middle name.
    • Singer is deeply involved in everything Elliott does.
    • The firm has many kinds of investments, but Singer is best known as an “activist” investor, using his fund’s resources—about $35 billion in AUM—to buy stock in companies in which it detects weaknesses.
    • Elliott then pressures the company to make changes to its business, with the goal of improving the stock price.

Continue reading “Paul Singer, Doomsday Investor Notes”

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Mad Cow Disease and Brexit

Don’t jump to conclusion but…I see a positive correlation.Mad Cow - Brexit

Durable Principles for Real Asset Investing

I got my hand on a copy of the presentation Bruce Flatt from Brookfield Asset Management (BAM) did at Google. Here’s the video of the Google Talk presentation.

Here’s the Talks at Google – Brookfield Presentation – Aug2018 and below are my favorite slides. It’s a good guideline to follow if you want to became a better investor.

I want to start my three favorites slides:

Dubai in 1991 and today:

BAM Dubai 1991
Dubai 1991
BAM Dubai 2018
Dubai 2018

And a visualization of contrarian thinking:

Continue reading “Durable Principles for Real Asset Investing”

The Way to $1 Trillion

Yesterday Apple announced new iPhone models that will be bigger, will be better, faster, stronger, and—of course—more expensive. Over the summer Apple (AAPL) passed the $1 trillion in market cap value milestone. Amazon (AMZN) followed not too long after. Today one share of Apple cost $224, up 32% just in 2018.

If there’s one stock that analysts couldn’t get right, it’s Apple. Not because they are not smart. It’s the opposite, most analysts are very brilliant. The problem is that analysts are stuck playing the short-term quarter to quarter game of guessing how many iPhones Apple will sell. Apple has over 100 analysts following the company. At this moment last year, when the iPhone X was announced, analysts were saying the cost of the iPhone was too high and sales would slow down, and the stock would fall. Following Q2-2018 results, analysts changed their tune when Apple blew  the estimates out of the water. Analysts are now saying that because the iPhone X was selling so well it would eat into future revenues.  Analysts insights are interesting, but if you are a retail investor, I suggest to do your own homework and invest with a long-term horizon. And ignore the short-term noise.

How did we get to $1 trillion? The Ringer made this interesting 7 min long video.

A year and a half ago I wrote this article on Seeking Alpha. Apple was trading at $106 a share. Apple was a 205-bagger from 1990 to March 2016, without calculating dividends. But it wasn’t an easy ride. You needed an 80% loss twice in order to get it and the large majority of the gains came after the iPhone was released in 2007. This is not your classic buy and hold fairy tale. Below are a couple tables and charts that display Apple’s rocky ride to $1 trillion.

The first table summarized Apple’s stock price since the IPO in the early 80s. It wasn’t necessary a good time to buy and Apple was on survival mode for over the next decade. The stock hover around $0.50 to $2 for the large part of its existence.

Apple chart 2

This second chart shows that the multi-bagger gains came after 2007, when the iPhone was released.

Apple chart 1

Below is a 10-year chart of Apple financials. Look at the revenue growth, going from $37 billion to $229 billion at the end of fiscal 2017. And it is still growing….

Apple financials

Bruce J. Flatt “Durable Principles for Real Asset Investing”

Bruce Flatt, the CEO of Brookfield Asset Managmement (BAM), has made a rare appearance at Google for one of their Talks (video below). The most striking thing about the presentation is the lack of people that showed up to listen to one of the world’s most successful investors. In the screenshot below of the presentation, I count 10 people. Let’s say there were 15 people. If they paid any attention, these 15 people are now much better investors. I’m not sure how something like this happens. I can see 10 people showing at a talk in the basement of a church, but this is Google we are talking about, and Google is located in Silicon Valley with all that money and investors. My guess is that nobody knows who Bruce Flatt is.

The lack of people is a testimony to the low profile of Bruce Flatt and Brookfield Asset Management. Unless you are in the investment world, most people have no idea that they own some of the world’s most precious real estate with with $285 billion in assets.

Bruce Flatt Speech Google.JPG
I see 10 people. 

I have written an elaborate article on BAM in the past (read here) and it was also the subject of a podcast I did (listen here). Here is the video:

Behind The Idea Podcast: Disney

Two weeks ago I was on the Behind The Idea podcast with Daniel Shvartsman to share my views on Disney. The Atlantic’s Derek Thompson also contributed at the 50 minute mark.

Here’s the write-up:

https://seekingalpha.com/article/4198481-rest-disneys-story-brian-langis-derek-thompson-podcast

And this is the podcast itself –

https://soundcloud.com/behind_the_idea/behind-the-idea-29-the-rest-of-the-disney-story-wderek-thompson-and-brian-langis

This comes about the article on Disney I wrote back in May that got quite a reaction. The article has some thoughts and insights on the future of Disney and ESPN. Disney is a leader in content and that it has to figure out distribution in the modern internet era. It was a short article that I wrote fairly quickly. The podcast gave me an opportunity to expand on my analysis of Disney. There’s also some discussion on value investing and other stocks.

I hope you enjoy the podcast!

Topics covered:

Brian Langis interview – 2:00 minute mark to 49:00 minute mark

  • 2:00 – Reviewing Brian’s thesis and a new hope for Disney
  • 7:45 – What are you watching for in the transition to streaming? When does the tipping point come?
  • 16:00 – How big a deal is Fox (FOX) (FOXA), how much to worry about $20B extra? The running cost of content and the offense/defense game.
  • 20:00 – Looking at Netflix (NFLX) across the aisle from Disney
  • 24:45 – Getting to the numbers for Disney. What is the story there?
  • 28:30 – How do we avoid getting attached to Disney shares when we enjoy Disney products?
  • 35:30 – Talking value investing in an expensive market, and a cheesy answer. Getting to Alimentation Couche Tard (OTCPK:ANCUF) and Dollarama (OTC:DLMAF) as examples.
  • 41:00 – What has changed in the past five years for your investing?
  • 45:30 – The Iger risk for Disney.

Derek Thompson Interview – 50:00 minute mark to 1:30 minute mark.

  • 50:00 – Setting the scene on Disney, one of the most interesting companies in the world
  • 54:30 – Why does Disney have a good chance of pulling off the transition to streaming?
  • 56:30 – Why relinquish ESPN to decline? What barriers are there?
  • 1:01:30 – What do the economics look like once Disney makes it to streaming land?
  • 1:08 – Are we at the tipping point where video is too easy to make, thus drowning out Disney’s advantage?
  • 1:16 – How important is Fox?
  • 1:19 – Vertical integration – is this business different? Why not work together with Netflix?
  • 1:27 – Let’s get into the fintwit discussion

 

Mittleman Brothers, Open Letter to the Board of Directors of Aimia Inc.

Below is a repost of the Mittleman Brothers letter to the BOD of Aimia (AIM). I have some shares of Aimia, better known for their Aeroplan loyalty program, that I bought at a very distress level. I’m a valuation guy and the value the market attributed to Aimia didn’t add up. I’m not saying this is a company that you need to buy and hold forever. It’s also not a company that I’m really fond of. This is a situation where there’s a large disconnect between price and value. That’s it.

Mittleman Brothers, the largest investor in Aimia, has publicly been outspoken on the situation at Aimia. I reposted the following letter because it provided clear detailed valuation of Aimia and it’s different parts. A consortium composed of Air Canada and a couple banks made an offer to buy Aeroplan. The offer is clearly way below the conservative estimated value of Aeroplan and was wisely rejected. This story is not over. Remains to be seen how it plays out. Original link.


NEW YORK, Aug. 6, 2018 /CNW/ —

Board of Directors
Aimia Inc.
525 Avenue Viger West, Suite 1000
Montreal, QC H2Z 0B2
Canada

Re: Recent offers for Aeroplan and PLM

Dear Sirs and Madam:

As the Chief Investment Officer for Mittleman Brothers, LLC, which is Aimia Inc.’s largest shareholder with a 17.6% stake, I feel compelled to share my opinion of the offer for Aeroplan announced on July 25th (revised and expired Aug. 2nd), and the offer for PLM announced on July 26th (wisely rejected by you on same day). The views expressed here are mine alone, but I’ve had unsolicited calls from many shareholders since July 25th, with estimated ownership of 20% of Aimia’s stock, who related opinions on these matters that largely concur with my own views.
Continue reading “Mittleman Brothers, Open Letter to the Board of Directors of Aimia Inc.”

Tesla: Bulls Vs. Bears

My article on Tesla was published on Seeking Alpha two weeks ago and since I was away on  vacation I didn’t have time to publish it on the blog. This article can be seen as a companion to the podcast I did, The Intelligent Investing Podcast with Eric Schleien.

We talked about the most hated or loved stock in America: Tesla. Elon Musk and Tesla are a very polarizing topic. The most hardcore short-sellers believe that Tesla is a fraud, Elon Musk is a conman, and the stock is worth less than zero. Fanboys believe in Elon Musk’s mission of transitioning the world to sustainable energy and will have become one of the most valuable and successful companies in the world. Both camps are deeply entrenched in their position and it’s very interesting to see them go at it. I also published a companion to the podcast on Seeking Alpha; Tesla: Bulls vs. Bears.

The podcast was recorded three weeks ago. When Tesla is the subject matter, a lot can happen in two weeks. Tesla, the drama filled company that gets TMZ style coverage, is one of the main reasons why I stay away from the stock. Even though the shorts have a very compelling investment thesis, the market seems to think otherwise. Tesla currently trades at $375 a share. When the article and podcast was published Tesla traded at $300. Seemingly out of the blue, Elon Musk proclaimed that he might pull his money-losing Tesla off the market for $420 a share! He also claimed that he has funding secured.  This story is not over.

Here’s the SA Article. The full article is available on Seeking Alpha.


Tesla: Bulls Vs. Bears

By Brian Langis

Summary

  • Elon Musk and Tesla are a very polarizing topic. Tesla may be the most hated or loved stock in America.
  • Tesla comes with a lot of noise and buzz. Facts, figures, and claims are exaggerated, spun, and manipulated to one’s interest or to simply distract from the real issue.
  • I have front row seats to a good heavyweight fight between Tesla bulls and bears.
  • It’s not the first time Tesla faces an existential crisis.

I had the pleasure to be back on The Intelligent Investing Podcast with Eric Schleien to have an in-depth conversation on Tesla (TSLA). If you are even reading this, you are fully aware that Tesla has turned into a full blown soap opera. The podcast and this following article try to make sense of the Tesla drama.

Since Tesla is a very polarizing topic, let’s start off with the disclosures regarding Tesla:

I’m not a shareholder and never was. I’m not a short-seller and never was. I don’t have an agenda. I don’t have a horse between the short-sellers and the bulls. I’m not a “hater” or a “fanboy”. I don’t have a secret source inside Tesla’s factories. I didn’t pay anybody for information. I don’t own a Tesla. I find the debate between the Tesla bulls and bears very interesting.

Bloomberg Headline ( Link)

I long hesitated writing an article on Tesla. I wrote short one back in January 2014. Tesla is one of the most popular (or unpopular) stocks on Seeking Alpha and the media. There are a couple of pieces published every day and it wasn’t clear at first how I could add value to the debate. It’s has all the ingredients for a juicy story. The combination of a very colorful CEO on a mission to save the world, a flashy company that is disrupting the auto and energy industry, and with billions of dollars at play makes this stock very emotionally divisive. Musk and Tesla comes with a lot of noise and buzz. Facts, figures, and claims are exaggerated, spun, and manipulated to one’s interest or to simply distract from the real issue. And I think this is where the opportunity is. With so much being said, it’s hard to see the forest for the trees. We need to take a step back and get a little perspective. I will write about the good and the bad. While the goal of this article is to provide clarity, I’m aware that this article won’t change people’s mind since folks with money on the line are deeply entrenched in their position. I haven’t seen a bull turned bear on Tesla or vice versa.

I have front row seats to a good heavyweight fight between Tesla bulls and bears. These two opponents have very opposite points of view. In one corner, we have the bulls, aka the fanboys. The fanboys are “believers”. They believe in Musk and that Tesla will achieved its mission of transitioning the world to sustainable energy and will have become one of the most valuable and successful companies in the world. The legacy car companies like GM and Toyota are dinosaurs that won’t be able to compete with Tesla because of its EV head start and superior technology. Musk has also talked about turning humans into an interplanetary species. He makes you dream. In the other corner, we have the bears, aka the “haters”. The extreme version of the bear thesis is that Musk is a straight up fraud and Tesla is going to bankrupt. The milder version of the bear thesis is that Tesla is overvalued and a correction is due.

I try hard to look at Tesla from a rational and objective point of view and this is a difficult task. I also suffer from my own biases. From the outset I’m a fan of Elon Musk but skeptical about investing with him. I’m a fan for what Elon has accomplished and tries to accomplish. I’m a skeptic because I’m not into fairy tale stories and I understand basic high school math. But whether you like Elon or not, his journey from his youth to present day is very interesting and inspiring. Ashlee Vance’s biography of Elon Musk is an excellent book that covers his journey. Of course Musk is a flawed individual. He has personal foibles and challenges as everyone else.

Let’s try to cut to through the clutter and noise.

Continue reading “Tesla: Bulls Vs. Bears”

Is Tesla a Fraud?

Print
The Intelligent Investing Podcast – Copyright 2017 Eric Schleien

I had the pleasure to be back on The Intelligent Investing Podcast with Eric Schleien. This is a big one. We are talking about Tesla and the problems that company is facing. We examined its valuation, its history, the bull case, and the short case.

Enjoy!

Is Tesla a Fraud?

Seth Klarman Investment Wisdom

Below are the updated links to Seth Klarman’s investment wisdom. You can find the full archive at the Investment Resources.

You can also buy one of the most famous book ever on investing, Margin of Safety by Seth Klarman, for $7.58 on the Kindle. Hard copies are going for $500 to $1000 each. Of course you don’t get the joy of holding a hard copy of this rare book in your hands, but you get access to its treasured wisdom.

Seth Klarman (Baupost Group)