#WeeklyInvestorReader | wk. 4

Note to readers: #WeeklyInvestorReader contains a few of the articles I read during the week. Visit my Twitter @HurriCap for any other articles that may not have been included. 

You can look it up – Seth Godin, January 21, 2017 | Of course, for millions of years, people couldn’t look it up. They couldn’t read and they hadn’t invented writing yet, so there was nothing to look up.

The end of active investing? – Financial Times, January 20, 2017 | Technology and low returns have delivered a killer blow to a once-dominant industry.

Buy. Squeeze. Repeat. – Fortune, January , 2017 | The Brazilian investors who control Kraft Heinz are applying their proven formula to construct a new global food colossus. What will they buy next?

Valuation and investment analysis – Bronte Capital, January 3, 2017 | I just had a chat with someone who wondered why I did not have a valuation for everything in my portfolio – a buy and a sell price. My reaction: such (false) precision was silly and ultimately counter-productive.

When do you average down? – Bronte Capital, January 4, 2017 | A decent stock note is 15 pages on the business, one page on the management, one paragraph or even one sentence on valuation. Valuation might normally be a set of questions along the lines of “what do I need to believe” to get/not get my money back. But I would prefer a simple modification to this process. This is a modification we have not done well at Bronte (at least formally) and we should do better. And that is the question of averaging down.

My Interview with Edward Thorp, from Tim Melvin – Daily Speculations, January 19, 2017 | Edward Thorp is one of the most well known figures on Wall Street. Throughout his venerable career he’s spent time as a mathematics professor, hedge fund manager, blackjack player, and author. “The father of the wearable computer,” recently released his sixth book, “A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market.” Marketfy’s Tim Melvin recently caught up with the Wall Street legend to discuss his career and outlook on investing. Below is their conversation, slightly edited for length and clarity.

Big-Bank Executives Have Sold $100 Million in Shares Since Election – Wall Street Journal, January 24, 2017 | The sales, coming as financial stocks soared, are more than in that same period in any year over the past decade.

Tax Reform Top of Mind for Wide-Moat U.S. Industrial Firms – Morningstar, January 23, 2017 | While management teams enthusiastically highlighted corporate tax reform, capital mobility, and infrastructure spending as potential near-term earnings tailwinds, all stopped short of explicitly incorporating these favorable outcomes into 2017 expectations. We agree that it’s too early to include Trump’s America in the base-case assumptions that fuel our discounted cash flow analyses. However, if President Donald Trump’s target corporate tax rates and modest top-line growth materialize, our bull-case scenarios look realistic.

Does Dow 20,000 Mean Stocks Are Overvalued? – Morningstar, January 25, 2017 | With the Dow crossing the hurdle of 20,000 this morning, many investors are wondering if this is a sign that the bull market is nearing its end or if stocks have become significantly overvalued. In short, Morningstar’s stock analysts see stocks, as a whole, trading at only slightly above their fair value estimate and that there are some values out there, even among Dow components. However, this is not to say that a correction or even a bear market is not in the cards. Current market valuations don’t tell us very much about where stocks are going in the near term; the market can stay overvalued for a long time, could become deeply undervalued or could bounce along at current levels. This unpredictability is one the reasons that trying to time the market around major news events, index milestones. and broad valuations is exceedingly difficult.

Renowned value investor Francis Chou is willing to wait on a bargain – Canadian Business, January 26, 2017 | He’s regarded as one of the savviest value investors in the world. The market is overpriced right now, he says, but it will come down—it always does.

Inside Pandora’s Quest to Take on Spotify, Apple Music & Amazon – Billboard, January 19, 2017 | As the lights of the strip ­glimmer below, Pandora co-founder/CEO Tim Westergren stands before two dozen advertising executives in a 61st floor suite in the Cosmopolitan of Las Vegas. It’s the first day of 2017’s Consumer Electronics Show (CES), and he’s pitching Pandora’s new direction. “In my opinion, the other music subscription products out there are unsatisfying,” he says, referring to the on-demand streaming services the new Pandora Premium will begin competing with later in 2017. “They give you millions of songs, a search box and ‘good f—ing luck.'”

Cash Cows Of The Dow – Meb Faber, January 14, 2017 | Long time readers know that I have been a shareholder yield advocate on the blog for almost a decade.  (We used to call it net payout yield back then, and we define it as the combination of dividends and net buyacks.) People are slow to change of course, but my hopes are that eventually you all come around to a little common sense.  Sometimes books and white papers are too much, and all that is needed is a simple chart or table that will change people’s minds. Remember the old Dogs of the Dow strategy where you just invest in the 10 highest yielding Dow stocks each year?  This strategy was popularized by O’Higgins, and historically beat the market.  But as you all know, a shareholder yield approach does even better historically.

How Well Does Running Vanguard Pay? – Bloomberg Businessweek, January 19, 2017 | The index fund pioneer is an important shareholder voice on executive pay, but its own compensation practices are kept private.

In German

Mit diesen Problemen kämpft H&M – Stern, December 13, 2016 | H&M hat eine ganze Generation mit günstiger Mode versorgt. Doch das schwedische Modehaus hat Probleme, denn die jungen Kunden kaufen bei der Konkurrenz – oder gleich im Netz. H&M braucht dringend neue Ideen.

H&M fehlt das Konzept für neue Gegner – Wirtschafts Woche, November 16, 2016 | Die Krise bei H&M ist symptomatisch für die Branche: zu viele Filialen, zu wenig Umsatz, kein Konzept gegen neue Angreifer. Eine Änderung der Strategie der einstigen Vorzeigekette ist nicht in Sicht.

In Swedish

“För oss har pengarna inte varit problemet” – Di,24 januari 2017 | Den som investerade 10.000 kronor i investmentbolaget Latour vid starten 1985 har sett kapitalet växa till 8 miljoner kronor. Di har besökt vd Jan Svensson och familjen Douglas börsnoterade överavkastningsfabrik i ett industriområde i södra Göteborg.

Historien om en bank som nästan gick omkull – Aktiefokus, 26 januari 2017 | Denna historia börjar 2002 med en bank. Det skulle egentligen kunna vara vilken bank som helst men det är en verklig nordisk bank som jag har valt för att illustrera några poänger för hur grov lönsamhet snabbt kan vända till att banken behöver räddas genom tillförsel av nytt eget kapital.

H&M- Sveriges största value trap? – Fundamentalanalysbloggen, 25 januari 2017 | Den som köpte H&M på toppen för två år sedan har idag bara 65 % kvar av sina pengar. Detta beror inte på något missförstånd på marknaden pga negativa skriverier, utan på verkligheten. En verklighet som borde ha sänkt aktien än mer vore det inte för att marknaden, inte minst när det gäller en gammal nationalklenod, är sen att agera när det börjar gå dåligt. Det känns också som om ingen riktigt vill skriva ner H&M i Sverige. Man får inte låta sig luras att tro att en fallande aktiekurs tyder på “rea på aktien”. Det beror oftast på att företaget har problem och i H&M:s fall väljer man istället för att lösa problemen att måla över rötan med expansion. Med andra ord mer av det gamla, det jättelika butiksnätet, som idag är ett problem. Lite som att kurera bakfylla med Bloody Mary.

H&M i marknaden – Lundaluppen, 22 januari 2017 | Sedan H&M släppte sina försäljningssiffror för december har dödsrunorna duggat tätt och att H&M är en besvikelse på aktiemarknaden de senaste åren är ett faktum. Jag tänkte titta lite mer på bolagets strategi, dess position i branschen och på klädmarknaden som helhet. Det är en marknad i förändring där den stora förflyttningen just nu går från fysisk butik till onlineförsäljning. Utöver denna mångåriga trend finns den vanliga utmaningen i modebranschen med skiftande moden och ständiga heta nykomlingar. I vissa fall förstärker dessa trender också varandra, men mer om det senare. I detta inlägg vill jag titta på bolaget H&M, inte så mycket på aktien H&M.

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