Whitney Tilson’s email to investors discussing that his book, The Art of Playing Defense, is an Amazon bestseller; U.S. bank stocks shine; he sold his airline stocks too early; air travel is back, including all the things you hated; the airline safety revolution; carpocalypse; tips for homebuyers.
Q1 2021 hedge fund letters, conferences and more
The Art of Playing Defense
1) Deep gratitude to those of you who bought my new book, The Art of Playing Defense: How to Get Ahead By Not Falling Behind, when it launched yesterday!
It hit No. 1 in the Amazon Kindle store in two categories, Family Health and Physical Impairments, and No. 2 in Financial Risk Management. Thank you!
The Art of Playing Defense e-book, which you can buy here, will remain available for only $0.99 until Tuesday.
U.S. Bank Stocks Shine
2) As I've written about many times in my daily e-mails, I've been bullish on bank stocks for more than a year.
This is reflected in two of the biggest winners in our Empire Stock Investor newsletter: investment bank Goldman Sachs (GS) is up 61% versus 28% for the S&P 500 Index since we recommended it in December 2019, and Wells Fargo (WFC) is up 91% versus 18% for the S&P 500 since last September. (You can become an Empire Stock Investor subscriber for only $49 for the first year by clicking here.)
Additionally, I bought a basket of six other bank stocks – Bank of America (BAC), Morgan Stanley (MS), Citigroup (C), JPMorgan Chase (JPM), U.S. Bancorp (USB), and Bank of New York Mellon (BK) – in my personal account on March 17 last year, within a week of the market bottom... And these are up an average of 95% versus 64% for the S&P 500. I continue to hold them for reasons that this Wall Street Journal article outlines: U.S. Bank Stocks Shine as Investors Bet on an Economic Recovery. Excerpt:
Everyone is clamoring for a piece of U.S. banks.
Investors, eager to get exposure to an economic recovery, are pouring into bank stocks like never before, putting the stocks on track for what could be their best year on record compared with the S&P 500. Bank of America and JPMorgan Chase recently issued gigantic bonds that rank as the two largest single bank deals in history, turbocharging a big year for financial debt issuance.
Selling Airline Stocks Too Early
3) Alas, while I've been smart enough to hold onto my bank stocks and ride them to big gains, I sold the seven airline stocks I bought at the same time – American Airlines (AAL), Delta Air Lines (DAL), JetBlue Airways (JBLU), United Airlines (UAL), Alaska Air (ALK), Allegiant Travel (ALGT), and Southwest Airlines (LUV) – far too early, as they're up another 35% on average since my last sale. (I sold the first half of these stocks in June and the rest in November.)
It's a good lesson on letting your winners run – though, in the case of a terrible industry like airlines, I don't beat myself up too much because I've never forgotten what Jonathan Ornstein, the CEO of Mesa Airlines, told me nearly two decades ago: "You can't own airline stocks – you can only rent them."
While I'm not buying back airline stocks right now, based on what I saw this weekend, I wouldn't be selling them either. Our flights on American from LaGuardia to Charlotte and back were packed... And when I bought a round-trip ticket yesterday to Las Vegas from June 4 to June 6 for a friend's birthday party, the cheapest non-stop round trip was $438 – and we have to fly out of Newark (flights from JFK were more than $600)!
Yes indeed, Americans are back to traveling with a vengeance – one of the many indicators of the mother of all economic booms that I think is underway.
Here's a WSJ article about it: Air Travel Is Back, Including All the Things You Hated. Excerpt:
Air travel is coming back. So are things people hated about it.
Passenger volumes at U.S. airports hit pandemic records over the weekend, with more than 1.7 million people passing through airport security Friday and again on Sunday.
Frequent fliers like Tim Slabaugh aren't thrilled. "We had this window in COVID where business travel was just wonderful," said the medical-supply company representative, who kept up his travel pace throughout the pandemic.
Air Travel Is Back
4) Speaking of flying, this in-depth WSJ article examines an extraordinary accomplishment: The Airline Safety Revolution. Excerpt:
No commercial airline in the U.S. has had a fatal crash since 2009. Here's the story of the industry insiders who came together to build new systems and to allay the worst fears of air travelers.
Eight ways to get a better deal on car rentals
5) The same factors causing airfares to rebound are also causing shortages and skyrocketing prices for car rentals – the so-called "Carpocalypse." Here's an article with tips on How to Save on Car Rentals:
If the car rental prices you're seeing are a big old nope, here's eight possible ways to save (and in case you had any doubts, we don't get any compensation for these recommendations; these are my personal recs!):
- Costco Travel
- Autoslash
- Turo
- Rent from dealerships
- Uber/Lyft
- Home improvement stores
- Moving trucks
- Car share services
Tips For Homebuyers
6) Speaking of hot industries, the housing market is on fire. If you're looking to buy, here are two smart articles about it:
From the WSJ: Buying a Home? Don't Lose Your Head in a Crazy Market. Excerpt:
In this overheated market, striking a balance between a competitive offer and what you can afford requires a cool head. Here are some questions to consider if you are thinking of going beyond your original budget to buy a home.
- How much house can you afford?
- What if I qualify for a higher loan amount?
- Are you ready for lifestyle changes?
- What is it going to cost you to wait to buy a home?
- Why are you buying a home right now?
From the New York Times: How to Navigate a Hot Housing Market. Excerpt:
The home-buying market this spring is not for the faint of heart.
The main challenge is that the supply of homes for sale in most parts of the country continues to fall far short of demand. That is pushing up prices to heart-stopping levels in many markets. A lack of construction over the past decade, plus pent-up demand from pandemic shutdowns, has unleashed a national seller's market. The median price for a single-family home rose about 18 percent in March to almost $335,000, a record high, according to the National Association of Realtors.
Best regards,
Whitney
