From Whitney Tilson’s latest email to investors.
Also see Whitney Tilson On Tesla ” almost daily I’m tempted to short it”
Whitney Tilson – “We hedgies” Deserve “A Lashing …
From: Whitney Tilson
Sent: Thursday, April 13, 2017 10:54:05 AM (UTC-05:00) Eastern Time (US & Canada)
Subject: 2 events I’m hosting at the BRK mtg; Buffett & Lemann; Why We Think We’re Better Investors Than We Are; Book Pins Corporate Greed on a Lust Bred at HBS; Retail Meltdown of 2017; stock scam; WINS soared 4,500%; Charles Murphy; United
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1) Reminder: On May 6th I will be attending my 19th consecutive Berkshire Hathaway annual meeting in Omaha. If you’re going to be there, I’d like to invite you to two events on Friday evening and Saturday afternoon, both at the Omaha Hilton (I’m not sure which rooms; there will be signs):
- a) My friend Chuck Gillman and I are hosting our annual cocktail party from 8pm-midnight on Friday, May 5th. No agenda, no speeches, no dress code – just come, enjoy the drinks and snacks, and meet other value investors.
- b) Chuck and I are also sponsoring a casual get-together immediately following the annual meeting (~3:30) on Saturday, May 6th – just walk across the street or take the skybridge to the Hilton. It will end around 6pm.
To RSVP for either of these events, please email Ram at [email protected] and include:
- Which event(s) you plan to attend
- Your name as you wish it to appear on your nametag
- Your city as you wish it to appear on your nametag
I look forward to seeing you!
2) I wish I’d seen this (please let me know if you find the video of it posted online):
The billionaire investors Warren Buffett and Jorge Paulo Lemann have teamed up to engineer some of the biggest and boldest mergers and acquisitions in recent years, but they have rarely appeared in public together.
On Saturday night, however, the two appeared on a stage in Cambridge, Mass., to be interviewed by the dean of the Harvard Business School, Nitin Nohria. They were speaking at the Brazil Conference 2017, an annual event that Mr. Lemann formed and is organized by Brazilian students at Harvard and the Massachusetts Institute of Technology.
In their comments, the two investors offered a strong defense of open markets, free trade and the United States as a great place to do business.
3) Gary Belsky, author of one of the first and best (and quick) books I’ve read on behavioral finance/investor irrationality, Why Smart People Make Big Money Mistakes and How to Correct Them: Lessons from the Life-Changing Science of Behavioral Economics, with a smart op ed, Why We Think We’re Better Investors Than We Are:
What differentiates the typical lawyer and average investor, however, is their justification for engaging in their activity. Lawyers are trained to do what they do, while the majority of investors are not. Ask a random player in a law firm’s basketball league whether he or she could compete with LeBron James, and the most common response will be laughter. Yet many of those lawyers would willingly compete with the billionaire investor Warren E. Buffett.
Despite the spectacular growth of index funds — passive investment vehicles that track market averages and minimize transaction costs — millions of amateur investors continue to actively buy and sell securities regularly. This despite overwhelming evidence that even professional investors are no more likely to beat the market than monkeys throwing darts at securities listings.
Money managers, at least, are paid to make investment bets. But why do amateurs believe they can outperform the professionals — or even identify those pros who will outperform? (Performance of individual mutual funds cannot be predicted with any greater degree of accuracy than individual stocks or bonds.) Many biases and cognitive errors contribute to this costly behavior, but a few deserve mention.
4) I just ordered this book and look forward to reading and considering the arguments the author makes. My initial reaction is one of skepticism – perhaps not surprisingly, given that I and many of my closest friends went there and we all had great experiences – but I’ll try to read it with an open mind. Yes, our capitalist system is, in many ways, broken, but to argue that HBS is a major CAUSE of this strikes me as a real stretch…
It is hard to overstate the school’s influence on corporate America.
That’s why a new, exhaustive history of the school is causing a stir before it is even out. The book, “The Golden Passport,” by the veteran business journalist Duff McDonald, is a richly reported indictment of the school as a leading reason that corporate America is disdained by much of the country.
“The Harvard Business School became (and remains) so intoxicated with its own importance that it blithely assumed away one of the most important questions it could ask, which was whether the capitalist system it was uniquely positioned to help improve was designed properly for the long term,” Mr. McDonald writes in the book, to be released in two weeks.
His answer? “With economic inequality at a hundred-year high and meaningful progress on climate change and other social and environmental issues embarrassingly paltry, the answer to that question is obvious. It is not.”
Citing a report from the Aspen Institute, Mr. McDonald explains that “when students enter business school, they believe that the purpose of a corporation is to produce goods and services for the benefit of society.”
“When they graduate,” he continues, “they believe that it is to maximize shareholder value.”
5) An insightful article about the meltdown in the retail sector:
From rural strip-malls to Manhattan’s avenues, it has been a disastrous two years for retail.
There have been nine retail bankruptcies in 2017—as many as all of 2016. J.C. Penney, RadioShack, Macy’s, and Sears have each announced more than 100 store closures. Sports Authority has liquidated, and Payless has filed for bankruptcy. Last week, several apparel companies’ stocks hit new multi-year lows, including Lululemon, Urban Outfitters, and American Eagle, and Ralph Lauren announced that it is closing its flagship Polo store on Fifth Avenue, one of several brands to abandon that iconic thoroughfare.
A deep recession might explain an extinction-level event for large retailers. But GDP has been growing for eight straight years, gas prices are low, unemployment is under 5 percent, and the last 18 months have been quietly excellent years for wage growth, particularly for middle- and lower-income Americans.
So, what the heck is going on? The reality is that overall retail spending continues to grow steadily, if a little meagerly. But several trends—including the rise of e-commerce, the over-supply of malls, and the surprising effects of a restaurant renaissance—have conspired to change the face of American shopping.
Here are three explanations for the recent demise of