#WeeklyInvestorReader | wk. 49

Note to readers: #WeeklyInvestorReader contains a few of the articles I read during the week. Visit my Twitter @HurriCap for any other articles not included. If any of the articles are behind paywalls it may be possible to read them by searching for the article’s title via Google News.

Why Mohnish Pabrai Likes GM, Fiat, and Southwest Air – Barron’s, December 10, 2016 | Pabrai finally embraces auto and airline stocks. What the stock market doesn’t understand.

This Warren Buffett Quote Describes Twitter Perfectly – Fool, November 30, 2016 | Throwing good management at a bad company doesn’t solve any problems.

Warren Buffett Says Donald Trump Won’t Derail the Economy – Fortune, December 5, 2016 | In an interview with Fortune, Buffett talks about the election, wind energy, and Jeff Bezos.

Just How Much Do the Top Private Equity Earners Make? – The New York Times, December 10, 2016 | There is C.E.O. pay. Then there is private equity C.E.O. pay.

My Favorite Books of 2016 – Bill Gates, December 5, 2016 | Never before have I felt so empowered to learn as I do today. I’ve been reading about a book a week on average since I was a kid. Even when my schedule is out of control, I carve out a lot of time for reading.

One of Disney’s most popular brands has investors really worried – The Washington Post, December 9, 2016 | ESPN was thrust into the spotlight in November when the ratings company Nielsen predicted the sports juggernaut would lose 621,000 cable subscribers that month. Nielsen estimated the sports network would lose another 555,000 subscribers in December. The staggering losses have led to calls by analysts for Disney to spin off or sell the beleaguered network, which has lost 9 million subscribers in three years, according to company filings.

Insiders Send Wrong Signal on Bank Stocks – Wall Street Journal, December 8, 2016 | Rally in bank shares has coincided with insider selling that is on pace to set a record.

Why is Customer Acquisition Cost (CAC) like a Belly Button? – Tren Griffin, December 9, 2016 | CAC is a key element in the unit economics of a business, which can tell the owner whether the business is healthy. Unit economics are determined by understanding the direct revenues and costs associated with a business model expressed on a per unit basis.

The rise of Live Nation and the fear of an emerging music monopoly – ABC, December 5, 2016 | Live Nation, the world’s largest events promoter, and the owner of the world’s largest ticketing company, has bought a controlling stake in two of Australia’s largest music festivals – Splendour and Falls.

Chipotle Plunges After Saying That Customer Service Has Slipped– Bloomberg Markets, December 6, 2016 | Company says it’s ‘nervous’ about chain meeting guidance. Slow service has undermined efforts to win back customers.

JPMorgan CEO says bank may look to pay special dividend – CNBC, December 6, 2016 | The stock of JPMorgan Chase has been climbing so much that “at a certain price,” the company may consider issuing a special dividend to distribute excess capital rather than buying back additional stock, chief executive Jamie Dimon said on Tuesday.

American psyche: Michael Lewis on the triumph of irrational thinking – Financial Times, December 9, 2016 | The writer talks about how ‘the marketplace for politicians did something as weird as the marketplace for securities’

Better Stewardship Creates Opportunity for AIG – Morningstar, December 5, 2016 | American International Group’s (AIG) problems during the financial crisis primarily related to its financial products division, and all of the issues that led to its blowup have been reduced to a point of immateriality, in our view. But the years since have shown that AIG would have destroyed substantial shareholder value even if it had never written a single credit default swap, that noncore businesses needed to be shed, and that the operational issues in the core operations need to be remedied.

What a Dividend Payout Ratio Can (and Can’t) Tell You – Morningstar, December 6, 2016 | Question: In a recent article exploring the valuations of stocks in the Morningstar Dividend Yield Focus Index, a few readers wondered whether Pfizer’s (PFE) seemingly very high payout ratio signals danger for the company’s dividend. Answer: The payout ratio is a very useful metric for evaluating a dividend-paying stock. The calculation is simple enough: It’s the proportion of a company’s earnings paid out as dividends. A lower payout ratio can sometimes indicate that the dividend is “healthy”; in other words, there is a margin of safety that would allow a company to miss its earnings target and still be able to pay out its dividend, and there may also be room for management to increase the dividend over time. A payout ratio over 100 may indicate that the dividend is in jeopardy, because no company can continue pay out more than it earns indefinitely.

Michael Lewis’ Portrait of Two Men Who Changed the World – Bloomberg View, December 5, 2016 | Michael Lewis is the poet laureate of the financial world. Each of his deeply researched, beautifully composed books causes a stir when published. Lewis’ newest book, “The Undoing Project: A Friendship That Changed Our Minds,” is a very different work from earlier Lewis writings.

The seven excuses of highly paid chief executives – Financial Times, December 7, 2016 | I have been writing about executive remuneration for 30 years and have seen the best-paid bosses resist nearly every proposal aimed at slowing the upward movement in their pay. I have counted seven ways highly paid chief executives try to keep their critics away from intervening to limit their earnings.

Is dividend investing dangerous? – Nefound Research, December X, 2016 | In a persistent, low interest rate environment, dividend strategies have rapidly increased in popularity. In theory, investors should be indifferent to dividends.  In practice, they are not. As a strategy, a focus on high dividend yield may simply be a (poor) value strategy in drag. A focus on dividend payers and growers may give investors the ability to tap into the reinvestment premium and create a quality tilt in their portfolio.

Basketball’s Nerd King – Michael Lewis, December 6, 2016 | How Daryl Morey used behavioral economics to revolutionize the art of NBA draft picks. Reprinted from The Undoing Project: A Friendship That Changed Our Minds.

2016 Is on Track to Be Hollywood’s Worst Year for Ticket Sales in a Century – Vanity Fair, June 13, 2016 | Not even Captain America can save this industry in crisis.

Investing 101: A reading list – James Montier, December X, 2016 | One of the questions I am regularly asked is which books do I consider the best investment reads.

The 22 Most Important Finance Books Ever Written – Business Insider, December 3, 2013 | In case you missed them, we’ve compiled a list of 22 classic works. These are the books that show up time and again in lists of books recommended by the pros themselves.

Apple Music Hits 20 Million Subscribers; Execs Want ‘More, Faster — We’re Hungry!’ – Billboard, December 6, 2016 | Apple has released the latest numbers for the music subscription service Apple Music. In the 18 months since the service was launched, the tech giant reveals that it has just crossed the 20 million paid subscribers mark. It last reported 17 million subscribers in September, marking a 15 percent jump in three months.

When the Checkout Lines Go Away – Bloomberg View, December 6, 2016 | The gist of it, in case you don’t feel like watching right now, is that you scan in with an app on your phone as you walk into the store, grab whatever you want — and leave. “Computer vision,” “deep learning algorithms” and “sensor fusion” figure out what you’ve taken and charge you for it.

Starbucks’s $10 Cup of Coffee Is Priced Just Right – Bloomberg Gadfly, December 8, 2016 | It’s not about the $10 cup of coffee. Critics have derided Starbucks Corp.’s push into higher-end coffee bars, which the chain discussed in detail on Thursday, at an all-day confab with Wall Street investors and analysts. Skeptics questioned whether millennials would pony up for pricey drinks such as the $10 Nitro cold-brew coffee, which is infused with nitrogen gas. Others poked fun at descriptions of exotic beans small-batch roasted in Seattle. They are missing the point.

Case Study: Warren Buffett’s Yield-On-Cost For Coca-Cola – Fool, December 8, 2016 | Coca-Cola currently pays $1.40 per-share in annualized dividends, which means Berkshire will receive $560 million in annual dividends. Berkshire is a long-term investor. Buffett first purchased shares of Coca-Cola in 1988. That year, Coca-Cola paid $0.075 per share in dividends. The stock traded for approximately $2.50 per share, after adjusting for stock splits along the way. Based on Buffett’s original purchase price and the current annual dividend payout, Berkshire will receive 56% of its original investment in dividends this year alone. This is called ‘yield on cost’, and it explains the awesome power of dividend growth investing.

What business models have float? – S&C Messina Capital Management, December 7, 2016 | Most people know Warren Buffett as a stock picker but few understand his deep affinity for businesses that have float. Below, we will look at some businesses that have access to float.

Bell Industries: Warren Buffett’s Fountain of Youth – Latticework, November 25, 2016 | If you started with $1 million today, how would you invest it?

The Man Who Saved Floundering Geico – Wall Street Journal, March 11, 2013 | In 1976, Jack Byrne rescued Geico as it teetered on the edge of bankruptcy, kicking off a career as one of the most storied turnaround artists in insurance.

Geico Chief May Be Heir to an Legend – New York Times, April 29, 1997 | Yet as Berkshire investors prepare to gather in Omaha next week for the company’s annual meeting, the question remains: Louis Who? The answer is that the man who apparently will take over investing for one of history’s remarkable investment vehicles is as private and low key as Mr. Buffett is iconic. But more important for Berkshire shareholders, Mr. Simpson is just as iconoclastic.

Becoming Wareen Buffett, candid documentary chronicling the life of the billionaire investor, debuts Jan. 30 on HBO – HBO PR, December 7, 2016 | With unprecedented access to his day-to-day personal life, BECOMING WARREN BUFFETT tells the improbable story of how an ambitious, numbers-obsessed boy from Nebraska became one of the richest, most-respected men in the world. The definitive documentary on Buffett, this candid portrait sheds new light on a man who has helped shape the way Americans view capitalism and, more recently, philanthropy. Told primarily in Buffett’s own words, the film features never-before-released home videos, family photographs, archival footage and interviews with family and friends.

Google Makes So Much Money, It Never Had to Worry About Financial Discipline—Until Now – Bloomberg Businessweek, December 8, 2016 | Alphabet’s CFO Ruth Porat wants to bring focus to Mountain View. Can the moonshot factory adapt?

Mutual Fund Giant Vanguard Flexes Its Muscles – Fortune, December 8, 2016 | The index-investing pioneer now has $3.8 trillion in assets. How will it use the clout that comes with all that money?

With LinkedIn, Microsoft Looks to Avoid Past Acquisition Busts – The New York Times, December 8, 2016 | Microsoft announced on Thursday that it had completed its $26.2 billion acquisition of LinkedIn, the social network for professionals. There are ample reasons to be skeptical that the deal, the biggest by far in Microsoft’s history, will pay off.

From the archives: Daniel Kahneman – Jason Zweig, November 25, 2014 | I first met Danny Kahneman at a conference on behavioral finance at Harvard University in 1996. I wasn’t struck by his ideas; I was stricken with them. They took me over like an infection; for months, I could think of little else, and for years I pursued more of their implications in the financial world than I could possibly count.

Inside Cotsco: The Magic in the Warehouse – Fortune, December 15, 2016 | Costco became a phenomenon by doing things its own way. But with Amazon ever more powerful, millennial shoppers burgeoning, and a new generation of leaders awaiting its turn, can the company preserve its edge?

The Maxim For Every Successful Person; ‘Always Stay A Student’ – Ryan Holiday, June 21, 2016 | It is not enough only to be a student at the beginning. It is a position that one has to assume for life. Learn from everyone and everything. From the people you beat, and the people who beat you, from the people you dislike, even from your supposed enemies. At every step and every juncture in life, there is the opportunity to learn — and even if the lesson is purely remedial, we must not let ego block us from hearing it again.

The Used-Car Pile Up – Bloomberg Gadfly, December 7, 2016 | 2017 is shaping up to be an excellent year to purchase a used car. That’s great news for consumers — but a big worry for auto manufacturers, rental companies and auto finance groups.

Brace yourself: the most disruptive phase of globalization is just beginning – Quartz, December 7, 2016 | To properly understand globalization, you need to start 200,000 years ago.

I’m not biased, am I? – Journal of Accountancy, February 1, 2015 | Avoid 5 common judgment biases that can affect accounting and auditing decisions.

How Jack Bogle’s Long-Game Investment Strategy Beat Wall Street Every Time – NYMag, November 7, 2016 |People believed Earth was flat long after Pythagoras and Aristotle made the case for a spherical planet. How else to explain why a ship would disappear hull-to-topmast as it reached the horizon? Still, the flat-earthers, a little like today’s climate-change deniers, lingered until explorers including Columbus poured so much water on that fallacy that it dissolved.

Coca-Cola’s CEO Transition Not a Surprise, and Highlights the Firm’s Deep Bench; Shares Undervalued – Morningstar, December 9, 2016 | We’re not making any changes to our $44.50 fair value estimate for wide-moat Coca-Cola following the company’s announcement that CEO Muhtar Kent will step down in May 2017, making way for COO James Quincey to take the top spot. We remain comfortable with our long-term forecasts for rebounding top-line growth–driven largely by rising international per capita consumption rates, as well as further penetration of noncarbonated beverages – and improved profitability.

Speaking Truth to Power: An Interview With Peter Buffett – Psychology Today, December 3, 2016 | The philanthropist musician talks about the antidote to greed.

The next chapter for Starbucks? Getting fancier. – The Washington Post, December 7, 2016 | For years now, Starbucks has been dipping a toe into more luxe offerings.

McDonald’s Wants to Be the New Starbucks – Fortune, December 5, 2016 | The fast food company is investing in $12,000 espresso machines McDonald’s is challenging Starbucks and Dunkin’ Donuts in the coffee business as part of an effort to attract more customers.

8 reasons why Google’s Pixel is better than the iPhone – Business Insider, December 4, 2016 | Damn, the Pixel is good.

Cloud computing titans battle for AI supremacy – Financial Times, December 5, 2016 | Amazon boosts artificial intelligence focus as it challenges Microsoft and Google

Google, democracy and the truth about internet search – The Guardian, December 4, 2016 | Tech-savvy rightwingers have been able to ‘game’ the algorithms of internet giants and create a new reality where Hitler is a good guy, Jews are evil and… Donald Trump becomes president

Articles in Swedish

Fingerprint cementerar bilden av opålitlighet – Dagens Industri, 8 december, 2016 | Fingerprint Cards kapitalmarknadsdag hamnar i skuggan av bolagets blodiga vinstvarning för fjärde kvartalet. Det sätter stora frågetecken för trovärdigheten i bolagets prognos för 2017.

“Fingerprint är nästan riskfri” – Privata Affärer, 29 februari, 2016 | Förra veckan bjöd på en extrem hyllning av Fingerprint från Handelsbanken Fonder som bedömde aktien som mer eller mindre riskfri. “Här kan man sova gott om natten, menar fondförvaltaren Oscar Karlsson.

Peter van Berlekom: ”Sålt Hexagon och Assa” – Affärsvärlden, 6 december, 2016 | Peter van Berlekom förvaltar Alfred Bergs Sverige Plus: ”Det som står högst på min önskelista är att H&M håller en kapitalmarknadsdag”.

Kommentar: Nya frågetecken kring Fingerprint – Privata Affärer, 8 december, 2016 | Kapitalmarknadsdagen för Fingerprint blev ingen klang- och jubelföreställning. Framtiden för biometri är spännande, men bolaget underpresterar när det gäller informationsgivningen till marknaden. Och styrelsen har gjort bort sig igen.

Kommentar: Förtroendet faller för Fingerprint – Privata Affärer, 8 december, 2016 | Analytiker som haft säljrekommendationer på Fingerprint har haft rätt. Bolaget har försökt att framstå som förtroendeingivande, men dagens vinstvarning innebär att blankarna nu kan fira en tidig julafton.

Jens Engwall blir kvar som vd – Realtid, 9 december, 2016 | Jens Engwall avgår inte som vd som planerat före utgången av 2017. Som en konsekvens av detta lämnar vice vd Joacim Sjöberg Hemfosa.

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