Whitney Tilson’s email to investors discussing the pot bubble; he met Alex Honnold; Shane Parrish; secrets in earnings reports; Jim Pattison; Deal-Master Debbane.
1) I heading to the airport to fly to Orlando for the ICR Conference tomorrow and Tuesday. They’re hosting an “inaugural dedicated cannabis track” with a panel on “Cannabis Investing: Capitalizing on a New Global Asset Class”. Oh please – sure sign of a bubble!
2) You know how you never forget the first time you meet one of your heroes? I for sure remember the handful of times I’ve met Buffett and Munger, for example. Well, I had one of those experiences yesterday when I – totally unexpectedly – had the chance to meet and briefly chat with the world’s most famous rock climber, Alex Honnold. You can read about it on my Facebook post here and here’s a picture of us:
This Tiger Cub Giant Is Betting On Banks And Tech Stocks In The Recovery
The first two months of the third quarter were the best months for D1 Capital Partners' public portfolio since inception, that's according to a copy of the firm's August update, which ValueWalk has been able to review. Q2 2020 hedge fund letters, conferences and more According to the update, D1's public portfolio returned 20.1% gross Read More
3) In my last email, I had a link to an excellent interview by Shane Parrish of the Farnam Street blog on How Not To Be Stupid. Following up on that, here’s a podcast interview that my friend Dan Ferris, who publishes the Extreme Value newsletter at Stansberry Research, did with Shane: click here to listen to it (it starts at 20:00; the first part is a follow-up to Dan’s discussion with Mark Spiegel on Tesla the previous week).
Three economists — Lauren Cohen and Christopher Malloy of the Harvard Business School, and Quoc Nguyen of DePaul University — downloaded every quarterly and annual corporate report of every publicly traded American company from 1995 to 2014.
They then sifted through thousands of reports, using a text analysis program. “We filtered out the reports that made a lot of wording changes over the previous year’s version,” Mr. Cohen said in an interview. “It turned out that when there are a lot of changes, there’s a good chance that something important is going on, and most of the time, it’s negative.”
5) I’d never heard of this guy until I read this article (though I’m told he’s a legend in Canada) – what a story! ‘Canada’s Warren Buffett’ Drives His Own Pickup Truck. Excerpt:
The road trip offers a rare glimpse of the intensely private Pattison, Canada’s third-richest man, who created his iconic business group in seeming defiance of modern empire-building. He eschews emails, carries a cell phone but barely checks it, and can count on one hand the number of times his group has used an investment bank in recent memory.
Pattison is often dubbed Canada’s Warren Buffett—a trope that underscores how relatively unknown he remains outside Canada despite a conglomerate that operates in 85 countries across a dizzying array of industries: supermarkets, lumber, fisheries, disposable packaging for KFC, billboards across Canada and ownership of the No. 1 copyrighted best-seller of all time, the “Guinness World Records.” Believe it or not, he even owns the Ripley Entertainment Inc. empire.
6) What an amazing story – and some good investing lessons! Deal-Master Debbane: Meet The Secretive Lebanese Immigrant Behind Oprah’s Weight Watchers Windfall. Excerpt:
The partnership between Debbane and Wittouck may be private equity’s greatest untold story. But rather than show the strength of the private equity model, the story exposes some of the biggest flaws of one of the richest corners on Wall Street. Debbane, 63, runs a leveraged buyout operation that bucks the traditional model, which has long existed to raise massive amounts from pensions and other institutions, charge high fees, and finance partnerships with relatively short life spans, as dealmakers churn in and out of companies. Invus’ holding periods are extremely long term, and its fees are fraction of what typical PE investors pay.
Says Debbane, sitting in Invus’ boardroom a few blocks east of New York’s Central Park: “We are not interested in playing the private equity game and recycling businesses.”
A friend commented:
This guy must have the best track record in PE, yet he is rarely mentioned because he doesn’t take outside capital. My takeaway from this is that the typical 7-year fund construct in PE is an incentive for capital recycling and capturing low hanging fruit with cost cutting (which is usually anti-growth). Just a lot of financial engineering. The only way to do true growth PE consistently is to have permanent or very long-term capital. Only someone pursuing a long-term strategy like they are is ever going to add to the economy consistently, versus just enrich themselves, and to a lesser extent, their investors.