#WeeklyInvestorReader | wk. 23

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. 

The Real Story Behind Elon Musk’s $2.6 Billion Acquisition Of SolarCity And What It Means For Tesla’s Future–Not To Mention The Planet’s – Fast Company, June 7, 2017 | The Tesla CEO’s merger with his cousins’ sustainable-energy company, SolarCity, is totally logical–and hugely risky. With eyes now on the private sector for environmental leadership, can Musk pull off another miracle?

The Bounty Hunter of Wall Street – The New York Times, June 8, 2017 | Andrew Left sniffs out corporate fraud — and gets rich doing it.

Retail Carnage (Part 1) – Perception vs Reality – Chad Brand, May 19, 2017 As a value investor, it should not be surprising that I have been spending a lot of time on the retail and restaurant sector over the last year or so. The space has been pummeled by Wall Street in recent quarters, as the thesis gains steam that we have essentially reached “game over” for traditional businesses.

Retail Carnage (Part 3) – Sorry Wall Street, Balance Sheets Do Matter – Chad Brand, May 29, 2017 | Can you name a retailer than has gone out of business without having any debt on their balance sheet? The common characteristic of the recent retailing bankruptcy announcements is highly leveraged balance sheets.

Buffett Sells IBM, Jumps On Apple Bandwagon – Blessing Or Curse? – Chad Brand, May 11, 2017 | Warren Buffett’s decision to invest a large sum in Apple (AAPL) in recent quarters was so surprising because he once regarded tech companies to be outside his so-called “circle of competence.”

Zalando Busts the Myth of Cheap Online Retail – Business of Fashion, May 9, 2017 | Zalando is the latest online retailer to spell out just how much it is spending in an attempt to stay one step ahead. The danger is that profit growth doesn’t keep pace with sales expansion.

The Bernie Madoff Fraud: Five Lessons for Investors from ‘The Wizard of Lies’ – Advisor Perspectives, June 5, 2017 | Here are the top five red flags – and lessons – that more seasoned investors should have seen and that average investors should learn from the Bernie Madoff scandal.

There’s no good way to kill a bad idea – Quartz, May 1, 2017 | Millions of people refuse to recognize man-made climate change. Americans spend billions on homeopathy. Around 12 million people believe that lizards are secretly ruling the world. The world is filled with bad, baseless, factually inaccurate ideas that refuse to die.

Inversion: The Crucial Thinking Skill Nobody Ever Taught You – James Clear | This way of thinking, in which you consider the opposite of what you want, is known as inversion. When I first learned of it, I didn’t realize how powerful it could be. As I have studied it more, I have begun to realize that inversion is a rare and crucial skill that nearly all great thinkers use to their advantage.

Q&A With Steve Schwarzman: “There Are No Brave Old People in Finance” – Bloomberg Markets, June 6, 2017 | Steve Schwarzman seems strangely content—up to a point. A decade ago, the Blackstone co-founder, chairman, and chief executive officer was astride Wall Street as the private equity poster boy, armed with record-setting deals, a momentarily blockbuster initial public offering, and a birthday party that people are still talking about.

Testing Mattresses with Warren Buffett – Gates Notes, June 6, 2017 | When the weather turns warm, some people head to the beach. Some like a picnic in the park. Personally, there is one place I visit every spring no matter what: Omaha, Nebraska, the site of Berkshire Hathaway’s annual shareholders weekend with the company’s CEO and chairman (and my friend) Warren Buffett.

Revisiting Buffett’s 1999 Warning: Interest Rates, Orgies, and Value – SMEAD Capital Management, May 30, 2017 | We thought it would be very helpful to review Warren Buffett’s argument in 1999, the last time there was very high expectations attached to technology stocks and to the overall level of common stock prices.

Balancing Professional Values and Business Values – John C. Bogle, 2017 | As we move deeper into the 21st century, nearly every aspect of our society is confronted with extraordinary change. The very survival of some traditional fields of commerce is threatened, including print media, retailing, and intracity travel.

2017 Berkshire Hathaway Shareholders Meeting (Full Transcript) – Slow Appreciation, June 1, 2017 | Thank you and good morning! That’s Charlie, I’m Warren. You can tell us apart because he can hear and I can see, that’s why we work together so well. We each have our specialty.

The Power Of The Model And The Rich Valuation – Part I: Why I believe in Amazon’s model – Grahamites, June 5, 2017 | In retail, almost 100% of the time the answer to the first question is a quick Amazon (NASDAQ:AMZN). But in a recent meeting I was surprised when a member of the management team I visited said that if he were to short a company for the next 10 years in retail, it would be Amazon. Why? He said there was too much Bezos hype built in the stock.

Focus on Fundamentals – LPL Research, May 22, 2017 | What are we telling our investors? Focus on fundamentals.

Warren Buffett just confirmed the death of retail as we know it – Business Insider, May 8, 2017 | Warren Buffett says that in 10 years, the retail industry will look nothing like it does now.

Hot Stocks Can Make You Rich. But They Probably Won’t. – The New York Times, May 12, 2017 | Individual stocks can be hazardous to your financial health. You may not want to hear that right now, with the stock market regularly hitting new highs..

Retail Survivor – Eric Cinnamond, May 29, 2017 | Although I do not own DSW at this time, rising retailer pessimism and DSW’s declining stock has increased my interest.

FANGs or Patience = 5 Stars or 1 Star – Eric Cinnamond, June 5, 2017 | Since I didn’t have time to check on the markets last Friday, I turned to financial television for a quick update. I watched three networks and all were discussing the same topic – record high stock prices and the FANG stocks.

Keep It Simple – Seeking Wisdom, June 5, 2017 | I am a big fan of Matt Brice writings. Why is that? He keeps it simple and focuses on key variables that actually matters.

America’s Dying Malls Weigh On Retailers – Footnoted, June 5, 2017 | Last year was a terrible year for brick-and-mortar retailers as layoffs and bankruptcies climbed. But 2017 is shaping up to be even worse, particularly for those located in a mall.

Perrigo Restates to Correct More Than $1 Billion in Errors – Audit Analytics, June 1, 2017 | Restatements are notoriously hard to predict, yet, in some cases the writing is on the wall, or in Perrigo’s case, a late filing. Back in March, we predicted that Perrigo would likely restate its historical financial statements. What we could not predict is that 85 days after the late filing, Perrigo would join the restatements club with a staggering $1 Billion restatement of net income.

Media and the Market – Investment Masters Class, June 2, 2017 | The Investment Masters understand the need to maintain an independent thought process and not get swept up in the emotions of the market at any one point in time.

Payments Industry Overview – Analysis of Visa, MasterCard, American Express – 361 Slides – Value Seeker, May 18, 2017 | There are no specific recommendations in this slide deck. Most of that is due to the current valuations of the companies mentioned, which I find none of which are “cheap”.

The Secret to Investing in Bonds – The Conservative Income Investor, June 3, 2017 | No matter what type of bond investment you are contemplating, the analysis of bond safety will always require two steps.

Competitive advantage – The Economist, August 4, 2008 | “Competitive Advantage” is the title of a book by Michael Porter (see article) which became a bible of business thinkers in the late 1980s.

How Competitive Forces Shape Strategy – Harvard Business Review, March, 1979 | The essence of strategy formulation is coping with competition.

Spotify: How Spotify Turned Free Music into a $10+ Billion Valuation – Growth Hackers | Spotify is a truly remarkable growth story. In just six years the company is valued at more than $10 billion and has more than 50 million users, 12.5 million of which pay for the service. But how did the company get to where it is today and what is its growth engine?

Why Netflix Can Turn a Profit but Spotify Cannot (Yet) – Midia Research, January 19, 2017 | Netflix closed 2016 with 89.1 million subscribers and the temptation to benchmark against Spotify’s equally strong year is too strong to resist. Spotify (which celebrated its decade in June 2016) closed the year with around 43 million subscribers, 48% the size of Netflix. But a closer look at the numbers tells another growth story.

As Herbalife Executives Seem to Disappear, Betting on Zero Goes Viral – Quote the Raven Research, June 3, 2017 | Now, let’s address what appears to be four Senior Management executives possibly leaving the company since this 10-K was filed just months ago.

Oil Price Target: $0 (by 2050) – Absolute Return Partners, June 1, 2017 | Low-cost, high-grade coal, oil and natural gas – the backbone of the Industrial Revolution – will be a distant memory by 2050..

Differentiating Business Performance from Stock Performance – MicroCapClub, June 2, 2017 | Wouldn’t it be great to have the ability to see into the future? This ability would most certainly provide instant success.

Competitive Advantage & Capital Allocation – Dorsey Asset Management, 2017 | Capitalism works: High profits attract competition. But, a small minority of companies enjoy many years of high returns on capital. How? By creating structural competitive advantages, or economic moats.

Marc Andreessen explains how self-driving cars could create a bunch of American jobs – Recode, May 30, 2017 | It’s all about what comes next.

Can Uber Ever Deliver? Part One – Understanding Uber’s Bleak Operating Economics – naked capitalism, November 30, 2017 | This is the first of a series of articles addressing the question of whether Uber’s pursuit of global industry dominance would actually improve the efficiency of the urban car service industry and improve overall economic welfare.

Articles in Swedish

Modekjesaren är lättklädd – Richard Bråse, 6 juni 2017 | H&M har petats från tronen som Sveriges mest värdefulla börsbolag och aktien är tillbaka på samma nivå som för tio år sedan. Frågan alla ställer sig är vad som har gått fel. Frågan som borde ställas är hur modejätten har kunnat komma undan så länge.

Dubbla smällar för H&M – Anders Hägerstrand, 7 juni 2017 | H&M rasade till nytt årslägsta på onsdagen efter att marknadens högst rankade H&M-analytiker, Morgan Stanleys Geoff Ruddell, sänkte riktkursen för klädjätten till 150 kronor. Han lyfter fram ett ledningsbyte i klädkoncernen som ett potentiellt scenario.

Framtiden ser inte ljus ut för modebolagen – Richard Bråse, 7 juni 2017 | Under åren som ledde fram till finanskrisen 2008 var svenska modehandlare börsens älsklingar och miljardaffärerna avlöste varandra. Sektorn har långt kvar till gammal god form och det är svårt att bli läskad av vad Stockholmsbörsen har på modemenyn.

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