Whitmey Tilson’s latest email to colleagues entitled – Leon Cooperman’s Omega Hedge Fund; Jorge Paulo Lemann Says Era Of Disruption In Consumer Brands Caught 3G Capital By Surprise; Tesla’s Driver Fatality Rate is more than Triple…; China, Russia, etc. are fudging their GDP data; fiscal responsibility
A great investor, great philanthropist, and great guy, Lee Cooperman, is retiring from managing outside money – and going out at the top. Well deserved! Leon Cooperman's Omega Hedge Fund Converts to Family Office, https://www.bloomberg.com/news/articles/2018-07-23/cooperman-s-omega-investment-firm-converting-to-family-office. Excerpt:
Charlie Munger: Invert And Use “Disconfirming Evidence”
Charlie Munger is considered to be one of the best investors and thinkers alive today. His thoughts and statements on investment research, investment psychology, and general rational behavior are often incredibly insightful. Anyone can learn something from this billionaire investor and philosopher. Q2 2020 hedge fund letters, conferences and more If you’re looking for value Read More
Renowned hedge-fund manager Leon Cooperman on Monday told clients that he would be returning capital and turning his firm into a family office, a dramatic shift for one of the country’s best-known stock pickers.
Mr. Cooperman said his New York hedge fund, Omega Advisors Inc., which was founded in 1991, will now manage only his personal wealth. Mr. Cooperman, who regularly appears on financial television, said the decision was driven “solely by how I want to spend my remaining years.”
In an interview, Mr. Cooperman, 75 years old, said his decision wasn’t based on performance. “I’m closing because of my age and because I want to reduce my stress level,” he said.
One of Omega’s funds, Omega Overseas Partners Ltd., has posted 12.6% annualized net returns for certain clients since January 1992, according to a fund document reviewed by The Wall Street Journal. That was better than the 9.6% rise in the S&P 500 during the same period. This year, that same fund has gained 4.5% after fees through Friday, lower than a 5.9% gain for the S&P 500, including dividends.
2) Speaking of great guys, Jorge Paulo is one of the best. You don’t hear honesty like this very often: Jorge Paulo Lemann Says Era Of Disruption In Consumer Brands Caught 3G Capital By Surprise, https://www.forbes.com/sites/antoinegara/2018/04/30/jorge-paulo-lemann-says-era-of-disruption-in-consumer-brands-caught-3g-capital-by-surprise/#f32c40e1f9b9. Excerpt:
Often when dealmakers and corporate chieftains offer their insights at major conferences, all one hears is jargon and slogans. That was not the case when billionaire Jorge Paulo Lemann, co-founder of 3G Capital, joined Wells Fargo’s Tim Sloan, Accenture’s Julie Sweet and Principal Global Investors CEO Jim McCaughan at the 2018 Milken Institute Global Conference to confront “an age of disruption.”
Take it from Lemann, among the most powerful and private investors on the planet, who heads 3G Capital and is a board member of its principal large-capitalization consumer investments like brewer Anheuser-Busch InBev , foods giant Kraft Heinz, and burger and doughnut seller Restaurant Brands. “I’m a terrified dinosaur,” he said of the craft brand-driven changes in tastes and in Amazon-driven consumer spending habits that are reshaping the world’s largest consumer companies, including 3G holdings.
“I’ve been living in this cozy world of old brands and big volumes," said Lemann. “We bought brands that we thought could last forever,” and borrowed cheap money to do so, he added: “You could just focus on being very efficient... All of a sudden we are being disrupted.”
3) An outstanding piece of original analysis by my friends at a midwestern hedge fund. Gee, what a shocker that they caught Musk in a big, fat lie. He’s an incredible engineer, entrepreneur and visionary – but, other than Con Man Don, our Malignant Toddler in Chief, I’m not aware of anyone who is so often disconnected from the truth. Tesla’s Driver Fatality Rate is more than Triple that of Luxury Cars (and likely even higher), https://medium.com/@MidwesternHedgi/teslas-driver-fatality-rate-is-more-than-triple-that-of-luxury-cars-and-likely-even-higher-433670ddde17. Excerpt:
Tesla’s mortality rate (41 deaths per million vehicle years) is so much higher than the average luxury car (13 deaths per million vehicle years) that when comparing the two, the difference is hugely statistically significant. The difference is 28 additional deaths per million vehicle years, with a confidence interval of 11 to 63, and a p-value of 0.0001.
Remember that, unless California Tesla driver deaths magically went to zero in 2016 as Tesla increased production, and unless there were zero unreported deaths in the rest of the world, the true value for Tesla’s fatality rate is likely even higher. Regardless, Musk’s assertions that Tesla is the “safest vehicle” on the road or “four times better than average” are ridiculous untruths. Tesla’s driver fatality rate was massively higher than luxury peers, and at least 37% higher than the average 2011–2014 car. Musk’s “safest vehicle” on the road claim is as phony as his 2016 solar neighborhood.
Here's Conan O’Brien with a funny riff on the Tesla TBD, due out in 2024 – LOL! www.facebook.com/teamcoco/videos/1842523202473220 (1 min)
4) Speaking of liars, it’s no surprise that China, Russia and other authoritarian states are fudging their GDP numbers. What a cool and creative piece of analysis! Satellite data strongly suggests that China, Russia and other authoritarian countries are fudging their GDP reports, https://www.washingtonpost.com/news/wonk/wp/2018/05/15/satellite-data-strongly-suggests-that-china-russia-and-other-authoritarian-countries-are-fudging-their-gdp-reports. Excerpt:
China, Russia and other authoritarian countries inflate their official GDP figures by anywhere from 15 to 30 percent in a given year, according to a new analysis of a quarter-century of satellite data.
The working paper, by Luis R. Martinez of the University of Chicago, also found that authoritarian regimes are especially likely to artificially boost their gross domestic product numbers in the years before elections, and that the differences in GDP reporting between authoritarian and non-authoritarian countries can't be explained by structural factors, such as urbanization, composition of the economy or access to electricity.
Martinez's findings are derived from a novel data source: satellite imagery that tracks changes in the level of nighttime lighting within and between countries over time.
5) One of the things to keep an eye on that could really upset markets is ballooning deficits – which are really ballooning, due, ironically enough, to Republicans being in charge, as this article notes: The Democrats Are the Party of Fiscal Responsibility, www.nytimes.com/2018/04/15/opinion/democrats-fiscal-responsibility.html. Ah, facts are such troublesome things – they can absolutely ruin a good narrative on Fox “News”! Excerpt:
Over the last few decades, Democrats have repeatedly reduced the deficit. They have raised taxes. They have cut military spending and corporate welfare. Some of them have even tried to hold down the cost of cherished social programs. Obamacare, for example, included enough cost controls and tax increases that it’s cut the deficit on net.
…Since 1977, the three presidential administrations that have overseen the deficit increases are the three Republican ones. President Trump’s tax cut is virtually assured to make him the fourth of four. And the three administrations that have overseen deficit reductions are the three Democratic ones, including a small decline under Barack Obama. If you want to know whether a post-1976 president increased or reduced the deficit, the only thing you need to know is his party.