#WeeklyInvestorReader | wk. 20

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. 

Bruce Greenwald: Channeling Graham and Dodd: Everyone thinks the market is expensive – Barrons, May 13, 2017 Everyone thinks the market is expensive. It isn’t, says Greenwald.

Why Amazon is Eating the World – Tech Crunch, May 14, 2017 | Amazon’s lead will only grow over the coming decade, and I don’t think there is much that any other retailer can do to stop it. The reason isn’t the bullet-point moats that are talked about in headlines, and it isn’t the culture of innovation or Bezos’s vision as CEO (though I do think Amazon’s culture is incredible and Bezos is the most impressive CEO out there). It’s the fact that each piece of Amazon is being built with a service-oriented architecture, and Amazon is using that architecture to successively turn every single piece of the company into a separate platform — and thus opening each piece to outside competition.

The Mac is Turning Into Apple’s Achilles Heel – Above Avalon, April 12, 2017 | Apple’s decision to change course and develop a new Mac Pro has received near-universal praise from the company’s pro community. While developing a new Mac Pro is the right decision for Apple to make given the current situation, it has become clear that the Mac is a major vulnerability in Apple’s broader product strategy. The product that helped save Apple from bankruptcy 20 years ago is now turning into a barrier that is preventing Apple from focusing on what comes next.

Full Transcript: Billionaire Investor Warren Buffett Speaks with CNBC’s Becky Quick on “Squawk Box” – CNBC, May 9, 2017 Following is the full unofficial transcript of a CNBC interview with Berkshire Hathaway Chairman & CEO Warren Buffett on CNBC’s “Squawk Box” (M-F, 6AM-9AM ET) today, Monday, May 8th. Video from the interview is available on CNBC.com.

Sorry, we’re closed: The decline of established American retailing threatens jobs – The Economist, May 13, 2017 | A love affair with shopping has gone online

Retail Ripe For And Resistant To Disruption – Greenwood Investors, May 14, 2017 | A favorite cocktail party question we had a few years ago was, “which business do you think will get amazoned next?” At the time it seemed slightly novel. Now, it seems like the norm. In fact, your GreenWood Researchers recently overheard two grandmothers from Long Island saying there was no need to be entrepreneurial anymore, “because Amazon is just going to destroy your business.” In some respects, this is equivalent to the taxi driver investing in tech stocks in the late 1990s, but in other respects, it’s a sign that retail disruption has gained critical mass.

EBITDA and Gross Profits: Learn to Move Up the Income Statement – Focused Compounding, May 10, 2017 I think both EBITDA and EPS are “bullshit earnings” when they are the only numbers reported to shareholders. Of course, EPS and EBITDA are literally never the only numbers reported to shareholders. There is an entire income statement full of figures shown to investors each year. Profit figures further down the income statement are always more complete – and therefore less “bullshit” – than profit figures further up the income statement.

Is EBITDA as Bad as Buffett Says? – Morningstar, May 18, 2017 | In Berkshire Hathaway’s annual report to shareholders, Warren Buffett expressed disdain for financial reporting practices that deliberately inflate earnings figures in an attempt to “make the numbers.”

Berkshire Hathaway: A Safe, High-Quality, Growing Company With 30% Upside Over the Next Year – Kase Capital, May 4, 2017 | Berkshire Has Everything I Look for in a Stock: It’s Safe, Cheap and Growing at a Healthy Rate

A Few Notes About the Spotify Stock Market Listing – Felix Salmon, May 14, 2017 Everybody’s writing about this idea that Spotify might go public not through a traditional IPO, but rather through a direct listing. Direct listings are rare beasts, and so in order to understand them, reporters phone up bankers who work in equity capital markets. But the problem is that bankers who work in equity capital markets hate direct listings, because they mean they get much lower fees. And so they start spreading misinformation. So let’s go through some of the assertions.

Amazon’s epic 20-year run as a public company, explained in five charts – Recode, May 15, 2017 Soaring revenue and cash flow, plus intentionally tiny profits

5 Media Stocks Worth Tuning In For – Morningstar, May 16, 2017 |What’s ailing these companies? Though many issues are company-specific, there are also general concerns contributing to media stocks’ malaise. Subscription revenue is one. In addition, advertising revenue continues to be an issue among many media players.

How the iPhone triumphed in business – Financial Times, May 17, 2017 Apple’s ubiquitous smartphone outdid rivals but can it hold out for another decade?

An ‘asset class du jour’ is emerging out of the retail apocalypse – Business Insider, May 17, 2017 | Industrial real estate is emerging as a winner out of the crisis in brick-and-mortar retail

Spotify revenues rise but losses widen – BBC, May 24, 2017 | Spotify saw revenues reach €1.95bn ($2.2bn; £1.5bn) over the past year, but the Swedish music streaming platform has still not made a profit.

Stock Buybacks: What corporations are not telling you Arne Alsin, Founder, Worm Capital – Worm Capital, May 8, 2017 Trillions of dollars of shareholder wealth have been spent on nonproductive buybacks since rules were liberalized in 1982—and much of it has bHen wasted. Just since 2010, over $3 trillion of shareholder cash has been withdrawn from corporate accounts and sent to the stock market for buybacks, generating zero tangible benefit for shareholders. We will establish in this report that stock buybacks are wildly excessive, and that investors are being harmed. Among those harmed include index fund investors, pensions, retirees, and unsophisticated investors. Among those that benefit from buybacks include corporate insiders—primarily executives and boards of directors.

An Industry in Disruption, AUTOS. Notes from a Capital Junkie. Tit-for-Tat Analysis – CSInvesting, May 19, 2017 An electric vehicle has drastically fewer moving parts than an internal combustion vehicle and is, by design, far more modular, meaning that barriers to new entrants are significantly lower.

Cognitive Bias Survival Guide Manage the Mind to Make Better Decisions – GeekWrapped, 2017 | You know the feeling: Every day you get flooded with new ideas and information. You barely have enough time to process it all. Sure, you’re a smart and rational person that puts a lot of thought into the decisions you make. But the brain still takes decision-making shortcuts all the time. It especially happens when you need to act quickly, there is too much information, or limited memory. Here’s the deal: Research suggests that there are a number of intellectual stumbling blocks which can get you entangled in wrong judgment without you even noticing. They are called Cognitive Biases. The result is errors and irrational decisions that can hold you back. To help all of us escape this mental quicksand we’ve put together this real-world Cognitive Bias Survival Guide. It’s designed to reduce wrong conclusions and bad choices, plus protect you from charlatans trying to exploit ignorance. Think of it as anti-virus software for the brain!

In Swedish

Magnus Dagel: Tre aktier som sticker ut på börsen – Di, 17 maj 2017 | Från börsens alla balansräkningar har vi plockat ut tre som är intressanta på olika sätt. En vars nettokassa gradvis har sjunkit, en som har stärkt balansräkningen rejält det senaste året och en där kapitalet går runt i ett kretslopp.

Magnus Dagel: Allt ljus på balansräkningen – Di, 16 maj 2017 | Har du undrat över vilka bolag som har börsens starkaste balansräkningar, vilka som är högst skuldsatta och vilka som har mest goodwill? Di har lämnat vinsterna ett tag och i stället gått igenom börsbolagens balansräkningar på längden och tvären.

“Därför tvingas Izettle samarbeta med Swish” – Di, 18 maj 2017 | Izettle var länge förknippat med sin lilla dosa för kortbetalningar. Avtalet med Swish visar att man klippt navelsträngen – och byter kortavgifter mot ambitionen att växa som ett bolag för digitala kassaregister, skriver Di Digitals Jonas Leijonhufvud.

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