Uber Part Trois

This is my 3rd post on Uber. You can read part 1 here and part 2 here.

This isn’t much of a post but instead a link to Business Insider. They have a great piece on Uber’s finance with tables and charts. It appears that they pieced together a bunch of leaks from various sources. It’s not complete and there are holes in the data but it pretty much confirm a lot about we thought about Uber’s financial state, which is aggressive growth combined with mega losses.

Anyway here’s the piece:

 Uber’s leaked finances show the company might — just might — be able to turn a profit

Find credit to value investor François Denault.

“Sorry hunny, I’m skipping Subway today for Wendy’s, I want to eat healthy today”

Subway’s Soy + Other Stuff Sandwich

Let’s say you are on the road and you need a quick, healthy, fast meal. If you had to choose between A&W, McDonald’s, Wendy’s,  Tim Hortons, and Subway, you would probably hop for the last one. Subway has always positioned itself as a healthier alternative. So all the time that you went to Subway because you though you were making a healthier choice, well you are in for a slap in the face. It turns out that the chicken in your Subway chicken sandwich might not contain very much chicken meat at all.

Trent University and the CBC’s marketplace conducted a DNA analysis of the poultry in several popular grilled chicken sandwiches and wraps found at those popular fast food joints. The study revealed that in the case of two popular Subway sandwiches, the chicken was found to contain only about half chicken DNA. In testing, Subway’s oven roasted chicken and the chicken strips in its Sweet Onion Chicken Teriyaki sandwich clocked in with just 53.6% and 42.8% chicken, respectively. The results stood up after extra rounds of sampling.

So it looks like chicken, might taste like chicken, but it’s not chicken. So what is it? An unadulterated piece of chicken from the store should come in at 100 per cent chicken DNA. Seasoning, marinating or processing meat would bring that number down, so fast food samples seasoned for taste wouldn’t be expected to hit that 100 per cent target.

Here are the results:

Source: Trent University/CBC

In the tests, most of the meat from Subway’s competitors was shown to contain 85 to 90% chicken DNA.“Subway’s results were such an outlier that the team decided to test them again, biopsying five new oven roasted chicken pieces, and five new orders of chicken strips,” CBC News explained. Surprisingly, A&W and Wendy’s topped the chart. Now I didn’t expected that. McDonald’s and Tim Hortons did well. So if you are limited in your options, you know you are getting at least 85% chicken. McDonald’s has been working very hard at cleaning its reputation in the last few years. I wish they did the study 10 years (I’m sure its out there) to compare the progress they made.

Naturally, Subway disagree with the results. Subway claimed to use only 100% white meat chicken in their chicken products, they did admit to using soy as a stabilizer. They are going to check with their suppliers. I wonder if A&W and Wendy’s are going to ride high with the results with some kind of marketing campaign. Wendy’s is delicious, but its delicious for all the wrong reasons. You committing a sin eating there, but it’s a sin that makes you feel good (well just at first when you are eating). Now the quality of their chicken is superior to Subway!!??? “Sorry hunny, I’m skipping Subway today for Wendy’s, I want to eat healthy today”. I smell class action lawsuit for misleading consumers…

Subway’s chicken also caused a stir in late 2015 following a study by the environmental group Friends of the Earth, which awarded the franchise an F for using antibiotics in their meat. In response, Subway announced that they would be removing poultry raised with antibiotics from its 27,000-plus of its U.S. locations by the end of 2016.


What’s in your chicken sandwich? DNA test shows Subway sandwiches could contain just 50% chicken

The chicken challenge: Testing your fast food (Video)

Company responses: Chicken


One of the Best Trump Political Cartoon

The New Yorker probably has the best political cartoon of Trump I’ve seen in a while. The only reason Trump hasn’t bashed the New Yorker it’s because the articles are too long for him to read.

“It lets you hold the President’s attention for a few extra seconds before he wants to change channels.”

Trump is reputed for watching a lot of TV and a very short attention span. Just think of the people he has attacked on Tweeter seconds after they said something he didn’t like on TV.

Refreshing Climate Talk from Exxxon’s New CEO

The first blog post by ExxonMobil’s new CEO and Chairman Darren Woods is refreshing. Mr. Woods advocates a nationwide carbon tax to discourage use of polluting fuels. Exxon also endorsed the Paris Agreement. Actually, former CEO and now Secretary of State Rex Tillerson wasn’t a climate denier unlike his predecessors. Rex Tillerson said that climate change is real, but downplayed humanity’s responsibility for raising the global thermostat. Tillerson was also favor of a carbon tax. The fact that Mr. Woods is repeating these commitments  is encouraging. He doesn’t want to start his term labelled a climate denier. 

Exxon and other energy companies are facing huge challenges. The Company needs to meet growing demand for energy while managing the risk of climate change. The neutral carbon tax would promote greater energy efficiency and the use of today’s lower-carbon options, avoid further burdening the economy, and also provide incentives for markets to develop additional low-carbon energy solutions for the future. Woods’ view continues the corporate policy implemented during Tillerson’s reign at Exxon.

I occasionally visit the East Coast, the Gaspé peninsula on the Atlantic ocean, where I’m from.  That region is a front row seat to climate change. Scientists’ warnings that the rise of the sea would eventually imperil the coastline is no longer theoretical. In Gaspé they are seeing increasing severity of extreme weather, floods and heavy rain in the summer. Because the Gulf doesn’t freeze as often it used too in the winter,  tidal floods increasingly inundate the roads that are too deep to drive through. Certain roads are disappearing beneath the sea several times a year. These things didn’t happen when I was a kid. Now its a few times a year.

It is a good sign that we are starting to move away from discussions about whether climate change is real, and talking about solutions. Let’s see if these nice words can translate into action.


2016 Baupost Group Annual Letter Part 2

My publication of the 2016 Baupost Group Annual Letter was taken down. I wasn’t supposed to published it, as clearly stated at the bottom of every page in the letter. I felt a little guilty publishing it. At the same time I felt like I was doing the right thing. Let me explain.

In the letter, Seth Klarman, the legendary value investor running Baupost, stated that the letter is addressed to the limited partners only (his investors). However, after reading the letter, which is available all over the Internet, it’s clear that he wrote it for a larger audience. It’s obvious by the content of the letter that he expected non-investors and the media to study and analyze every line. He wanted people to read it. A good portion of the letter is on Trump.  Klarman warn us about a Trump presidency. He knew his thoughts would end up in the New-York Times and Wall-Street Journal. You don’t write that kind of stuff without expecting it to go public. His shareholder letters are not like reading a personal email he sent to somebody. Publishing something like that would clearly be in violation of privacy and other rights.

I also think he didn’t make his letter public on purpose. Seth Klarman obviously understands basic psychology; as soon you can’t have something you create a desire for it. If he didn’t understand that he wouldn’t be the legend he is at investing. Since “you are not supposed” to read his letter, now you want to read it. Just like his book, Margin of Safety, one of the most sought after value investing book, was never reprinted and now sells for over $1,500 a copy (Imagine the price crash if a reprint is ordered). He knew that his letter was going to be leaked.  His letter are up there with Warren Buffett’s annual letters. Imagine if Buffett didn’t make his shareholder letters public, it would become of the most pirated document ever.

Why did I think I was doing the right thing? In his letter he share his thoughts on the current state of the market and investment philosophy. You can learn a lot and will make you a better investor. Again, that’s something Klarman intended to accomplished since he is one of the most successful and influential investor.

As mentioned his letter got taken down on this blog. But somehow, the New-York Times among others, published large section of the letter in numerous posts and it’s legal. I guess they know the legal tricks to get around the “ban”. From what I understand, if I copy and paste sections of the letter, it’s fine, but if I publish the document (the source), it’s wrong. Not sure how that makes it legal. So don’t take my legal advice. Anyway, people who want to read his letter will find it and read it.

Baupost Group has a reputation for being extremely private. I like that and I respect that. But it’s also strategic. Klarman has long kept a low public profile. But when he comes out in the media, it creates an impact. People listen because it’s a rare event.

What Investors Really Want

We want high returns from our investments, but we want much more. We want to nurture hope for riches and banish fear of poverty. We want to be number 1 and beat the market. We want to feel pride when our investments bring gains and avoid regret that comes with losses. We want the status and esteem of hedge funds, the warm glow and virtue of socially responsible funds, and the patriotism of investing in our own country. We want good advice from financial advisors, magazines, and the Internet. We want financial markets to be fair but search for an edge that would let us win, sometimes fair and at other times not. We want to leave a legacy for our children when we are gone. And we want to leave nothing for the tax man. The sum of our wants and behaviors make financial markets go up or down as we herd together or go our separate ways, sometimes inflating bubbles and other times popping them.

Source: What Investors Really Want by Meir Statman and Ben Carlson from awealthofcommonsense.com

Baupost Group 2016 Annual Letter

**February 24, 2017 Update Here.

Here’s a copy of Seth Klarman’s 2016 annual letter. As always, very insightful, a must read if you want to become a better investor. The letter also provides his take on Trump.

Baupost 2016 Annual Letter


Seth Klarman Baupost Group Letters 1995-2001


Some content on this page was disabled on February 13, 2017 as a result of a DMCA takedown notice from The Baupost Group, L.L.C.. You can learn more about the DMCA here:


Warren Buffett & Bill Gates: Looking Forward

While on the topic of Warren Buffett (see previous post), Buffett and his pal Bill Gates were interviewed by Charlie Rose back in January. They discuss current affairs, the recent US Elections and issues facing the world and what they’re doing to tackle them. One key takeaway from the interview was that Buffett said, “We’ve bought $12 billion net of common stocks since the election. (Ted and Todd) have probably bought some too.”  This is coming from a guy that campaigned for Hillary Clinton. He really believes that the economy will do better even with Trump in power.

Below is the video of Charlie Rose’s interview with Warren Buffett:

Becoming Warren Buffett

This is the HBO documentary on Warren Buffett’s life. You don’t need to be a fan of Buffett or investmenting in general to enjoy this. There’s a lot you can learn from this documentary. Below are copies of the documentary on Youtube. I don’t know how long it will be there since it’s most likely an illegal feed. Below the video I have attached some notes from the doc provided by Market Folly.

Link #1:

Link #2:

Market Folly notes:

– He was always fascinated by numbers and it talks about how at an early age he discovered the power of compound interest. He concluded, “It’s a pretty simple concept, but over time it accomplishes extraordinary things.”

– He goes to McDonald’s everyday for breakfast on the way to work and has three options based on how much change his wife has given him for the day. Yup, one of the biggest owners of American Express (AXP) pays for breakfast in cash.

– He framed newspapers from various financial crises and hung them on the wall as a reminder that “anything can happen in this world.”

– As a young student, all his teachers owned AT&T at the time and he shorted the stock and showed the teachers proof to kind of spite them.

– Buffett learned two rules of investing from Benjamin Graham: Rule 1: Never lose money. Rule 2: Never forget rule number one.

– Doesn’t hang his diploma from undergrad or graduate school, but instead the certificate from the Dale Carnegie course of public speaking, which he says changed his life since he was so scared of it.

– Charlie Munger said Buffett made a lot of money early on buying thinly traded securities that were incredibly cheap statistically (“cigar butt” investing).

– Started his first partnership with $105,100 – $100 from himself and the rest from investors.

– Buffett says, “The trick in investing is to just sit there and watch pitch after pitch go by and wait for the one in your sweet spot. There’s a temptation for people to act far too frequently in stocks simply because they’re so liquid. Over the years, you develop a lot of filters. I do know what I call my circle of competence. I stay within that circle. Defining what your game is, where you’re going to have an edge is enormously important.”

– He later adds, “If you’re emotional about investment you’re not going to do well.”

– Charlie Munger had a big impact on him by shifting him to look at wonderful companies at fair prices rather than fair companies at wonderful companies.

– Buffett said he spends 5-6 hours a day reading. He likes to just sit and think. When asked to describe what one word describes his success, he said ‘focus.’

– “The biggest thing in making money is time. You don’t have to be critically smart, you just have to be patient.”

– “Look for the job you’d take if you didn’t need a job.”