Whitney Tilson’s email to investors discussing his webinar video, Ackman on Starbucks (SBUX), Einhorn on Tesla (TSLA), MLMs, General Electric (GE), and hedge funds.
1) Our webinar on Thursday, The Best of Value and Growth: Make Money Investing, went well and we took questions for an extra half hour, so it went for 2½ hours. In it, I explained why I no longer consider myself a value investor – at least not in the classic sense – but I’m certainly not a pay-any-price-for-growth investor. Rather, I now consider myself a “make money investor.” I still care about valuation, but am much more focused on business quality and growth rather than only owning stocks that look cheap based on traditional metrics. For most of my career, I had this backwards and it cost me and my investors dearly.
Tollymore Investment Partners 2Q20 Letter: ESG ≠ sustainable investing
Tollymore Investment Partners letter to investors for the second quarter ended June 30, 2020. Q2 2020 hedge fund letters, conferences and more Dear partners, Tollymore generated returns of +19% in the first six months of 2020, net of all fees and expenses. Investment results since inception are shown below: Tollymore's Raison Detre Tollymore is a Read More
I’ve been developing my thinking on this topic over the past few years and finally wrote it down and delivered it in a 124-slide presentation I gave on Oct. 3 at the annual Stansberry Research Conference in Las Vegas. In it, I critiqued both value and growth investing and showed, using 30 company case studies, how I seek to take the best of both to maximize long-term gains as well as minimize the risk of permanent loss of capital. I concluded by sharing my analysis of my three favorite stocks right now, Alphabet, Facebook and Howard Hughes, and then Glenn and I took questions.
The slides and video are now available for only $95 – just click here.
2) Here is the 43-slide presentation Bill Ackman gave on Starbucks at the Grant’s Conference on Tuesday.
3) Here is Greenlight’s Q3 letter, which has in-depth thoughts on Tesla.
4) I’m really enjoying this podcast, The Dream, that does an excellent job of exposing the scummy, scammy world of multi-level marketers. 4 of the 12 episodes are now available on every podcast app. Here’s an article about it in Vanity Fair: This Podcast Can’t Legally Tell You Amway Is a Pyramid Scheme. Excerpt:
Marie and her producer had, like many people, noticed her Facebook feed filling up with friends from high school selling leggings, or makeup, or handbags, asking their friends to buy them and sign up as salesmen themselves. They’re all participating in multi-level marketing (MLM) schemes, which anyone involved will tell you are not a pyramid scheme, because pyramid schemes are illegal.
“That doesn’t mean it’s not one,” Marie, a veteran of This American Life, said in a recent phone call. “That means it hasn’t been prosecuted.”
There’s a lot of red tape in reporting on MLMs, and as Marie says in the debut episode, “The subjects of our investigation are highly litigious.” But after months of reporting and signing up for one MLM, which sells makeup, Marie remains passionate in her belief that virtually all MLMs—including Amway, source of the DeVos family fortune—are . . . well, let’s not call them scams, exactly. “I don’t want to say that everyone involved is a scammer or a con man or whatever, but I would say that the business model is unsustainable in the regular marketplace,” Marie said. “Legitimate companies don’t work this way for a reason.”
And the victims of MLMs—that is, the people who pay high buy-in fees but never recoup their investment—are usually women.
5) This is a very insightful WSJ article about the new CEO of GE: Can Larry Culp Fix GE? Excerpt:
The arrival of Mr. Culp didn’t just install the first outsider in GE’s 126-year history—it also ushered in a new management philosophy that has guided his every move since he became CEO of Danaher Corp. at age 37. The strategy has developed a cult-like following, largely because Danaher used it to buy a string of companies, boost profits and richly reward shareholders.
Danaher, based in Washington, D.C., and established in 1984, is a much smaller company than GE. It owns disparate units that make everything from dental instruments to centrifuges to water-purification systems. It had about $4 billion in annual revenue when Mr. Culp took over as CEO on 2001 and $20 billion when he retired about 14 years later. GE had $121 billion in revenue last year and employs nearly five times as many people as Danaher.
Still, an investor who put $10,000 into Danaher 20 years ago would have more than $200,000 today. Over that same period, $10,000 invested in GE would be worth about $8,700.
The Danaher playbook, modeled after similar systems used at Toyota Motor Corp. , is defined by a maniacal commitment to efficiency and constant assessment of business units against eight performance metrics. Those include financial targets like core revenue growth as well as measures of customer satisfaction (on-time delivery) and employee morale (retention rates).
This reminds me of when Lou Gerstner took over IBM in 1993 (here’s an article about his 10-year tenure: How Lou Gerstner Got IBM To Dance).
6) Tough times in the hedge fund world. Here’s a cover story about it in the WSJ this week: Hedge Funds Retreat as Markets Advance and here’s an opinion piece in Bloomberg: Hedge Fund Stars Crying Uncle Gives Industry Hope.
7) The market is only down 6% but many investors are down a lot more so to capture (mock?) their pain, someone has created a hilarious Hitler meme. Excerpt:
We should lever up and buy momo
Buy some biotech, chinese tech, and oil
Maybe even some f**king crypto
NOVOGRATZ HAS A F**KING JET
WHERE'S MY F**KING JET
THE FED IS RIGGING THE MARKET
AND TRUMP IS RUINING THE ECONOMY
Maybe value investing is coming back
Maybe we should buy uranium stocks
Something with a catalyst, a story
Our performance fee is almost gone
WE REDUCED THE MANAGEMENT FEE TO 1%
I might have to sell my 4th house
8) A friend has up to five desks available for $500/month each in a beautiful office in the heart of Soho:
We are a friendly collaborative group of entrepreneurs, VCs and financiers in the tech sector who are looking to fill five empty desks in our sun-drenched Soho office loft. Gorgeous views of east Soho and Brooklyn through seven huge windows from the top floor. Very high ceilings and bright office. Telephone booth. Included: lightning fast internet, full kitchen with yummy free snacks, hot and cold filtered water, cleaning services, printing, storage space and conference table. Doorman building. Optional VOIP phone. Fantastic restaurants and bars within a few steps. Two major subway lines a half block away. Citibike dock on block. 24/7/365 Access. 24 hour doorman. Please contact Liz at [email protected] and she can send you pictures and video.