#WeeklyInvestorReader | wk. 26

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. 

Jim Chanos: U.S. Economy is Worse Than You Think – Institute for New Economic Thinking, June 30, 2017 | “The famed short-seller offers a mid-2017 reality check for ‘fake fiscal news,’ economic pipe dreams, and ‘portents of even worse things'”

How a 36-year-old Wall Street prodigy saved Burger King – Business Insider Nordic, June 12, 2017 | “Daniel Schwartz had spent a decade working his way up the corporate ladder on Wall Street when he decided to test his skills in a different trade: cooking burgers and cleaning toilets at a Burger King restaurant in Miami.”

This is Your Nightmare Scenario – The Irrelevant Investor, June 24, 2017 | “What would happen if stocks crash? What would that do to people’s retirement plans? How would that change the way young people think about stocks? And what would it do to our country?”

ENDS, MEANS, AND ANTITRUST – Stratechery, June 28, 2016 | “The European Commission levied a record €2.42 billion ($2.73 billion) fine on Google yesterday for having ‘abused its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service.'”

A Street Fight Among Grocers to Deliver Your Milk, Eggs, Bananas – New York Times, June 22, 2017 | “Delivering food requires military precision: Bananas can’t get cold. Produce can’t get warm. Eggs, of course, must not get broken. And people expect their food to arrive at specific times.”

4 reasons why Buffett’s partner Charlie Munger considers Albert Einstein his hero – CNBC, June 28, 2017 | “To support his claim, Munger dropped a quote from an unexpected hero of his: Albert Einstein. The theme throughout his speech is that of applying different disciplines to one’s business and career decisions. Near the close of his speech, Munger poses the question: ‘How should the best parts of psychology and economics interrelate in an enlightened economist’s mind?'”

Why Retailers Should Fear Amazon Wardrobe – L2, June 21, 2017 | “Once a sector reaches 20% e-commerce penetration, clear winners start to emerge – specifically Amazon, which generates over half of online retail growth. This has already happened in media and electronics, and now it’s happening in apparel, where e-commerce now accounts for 21% of sales in the US.”

From Music to Maps, How Apple’s iPhone Changed Business – FOX Business, June 23, 2017 | “Ten years ago, hailing a cab meant waiving one’s arm at passing traffic, consumers routinely purchased cameras, and a phone was something people made calls on.”

Google Fined Record $2.7 Billion in E.U. Antitrust Ruling – New York Times, June 27, 2017 | “Google suffered a major blow on Tuesday after European antitrust officials fined the search giant a record $2.7 billion for unfairly favoring some of its own services over those of rivals.”

Taking the pulse of ESPN – Sports Business Daily, June 26, 2017 | “Skipper’s message was simple and direct: ESPN needed top sports properties like the NBA, especially in an environment where pay television was shedding subscribers. It would be a strategic mistake to allow competitors to get such a premium sports property. ‘You have to build a deeper moat,’ he often said when discussing competition. In Skipper’s folksy Southern style, that meant keeping ESPN’s enemies at bay. It meant identifying the rights ESPN wanted — the NFL, NBA, MLB, MLS, college sports, tennis — and paying a dollar more than anyone else to get them.”

Buffett’s Bet on Store Capital Shows Not All Retail Real Estate Is Equal – Bloomberg, June 26, 2017 | “Warren Buffett is betting that some types of brick-and-mortar real estate will hold up better than others in the age of Amazon.”

Some of the shine has come off Morningstar – Chicago Business, June 24, 2017 | “Mutual fund ratings powerhouse Morningstar isn’t rating so high with Wall Street lately. A stock analyst who had been covering the Chicago investment research company for a decade dropped coverage this month, citing inconsistent earnings in recent years and a potential profit decline again this year. Shareholders seem to agree: Morningstar shares declined 5 percent for the year through June 22, even as the Standard & Poor’s 500 Index climbed 16.5 percent.”

Stop Reading This Blog. – Oblivious Investor, June 26, 2017 | “Admittedly I don’t mean for the headline to apply to every reader. But I don’t mean for it to be just “clickbait” either. I genuinely mean that some of you would be better off unsubscribing from this blog/newsletter.”

S.E.C. Lets All Firms Keep Parts of I.P.O. Filings Secret – New York Times, June 30, 2017 | “In an attempt to revitalize the public capital markets, the nation’s top regulator of stocks is turning to stealth mode. The Securities and Exchange Commission, in Walter J. Clayton’s first major policy move as chairman, is expanding a program that will allow all private companies to keep some details of their finances and business strategies under wraps early in the process of an initial public offering.”

Amazon Deal Stirs Things Up for Blue Apron – University of Maryland, June 23, 2017 | “For Blue Apron, Amazon’s blockbuster deal to acquire Whole Foods couldn’t have come at a worse time, says Jie Zhang, marketing professor at the University of Maryland’s Robert H. Smith School of Business. The New York-based meal-kit delivery service was just beginning the marketing for its initial public offering, in which it hopes to raise more than $500 million, when Amazon announced the $13.7 billion deal that could upend the food-retail industry.”

AMZN + WFM = $1T – L2, June 23, 2017 | “Amazon’s acquisition of Whole Foods, should it close, is the white flag (the kind signaling one lap to go, vs. surrender) in Amazon’s march to a trillion. This transaction will be to retail what Facebook’s acquisition of Instagram was to media — the deal everyone wishes they had done. Amazon will reach $1T in value in the next 36 months, at the expense of … everyone.”

Market-beating investor Dan Loeb trumpets ‘rare’ opportunity in Nestle, his biggest bet yet – CNBC, June 26, 2017 | “Third Point owns around 40 million shares of Nestle, according to an investor letter published Sunday. The position totals over $3.5 billion and includes options. The Nestle investment is Third Point’s largest ever, according to the firm.”

Buffett’s Berkshire Hathaway studied this stock for three years before buying in – CNBC, June 26, 2017 | “Store Capital CEO says Berkshire Hathaway followed the company “closely” beginning in 2014 before investing this year. The company announced Berkshire Hathaway invested $377 million in Store Capital, which represents a 9.8 percent stake in the real estate investment trust.”

Amazon’s Grocery Ambitions Spell Trouble for Big Food Brands – FOX Business, June 26, 2017 | “Amazon.com Inc.’s deeper push into the grocery business threatens to further pinch packaged-food companies already coping with slowing sales. An enduring shift by consumers toward fresh and natural options is eating into the business of big food brands, like Kraft Heinz Co., Kellogg Co., and Mondelez International Inc. They also face growing competition from store brands and upstarts.”

In Swedish

Så stora är Uber i Sverige – Dagens Industri, 2 juli, 2017 | “Uber är omskakat, vd-löst och förlusttyngt. Men i Sverige levererar hundratusentals användare kraftig vinst, kan Di Digital avslöja. ‘Vi fortsätter att växa jättesnabbt’, säger Sverigechefen Martin Hedevåg.”

Rapporterna: en viktig detalj HM inte bemästrat – Gottodix, 2 juli, 2017 | “Tar en tur i detaljerna i HM:s rapport. Den som är lite fräck måste faktiskt ställa frågan varför det här ska vara ett globalt bolag. Riktigt bra går det ju faktiskt här hemma med omnejd.”

Richard Bråse: H&M håller drömmen vid liv – Dagens Industri, 29 juni, 2017 | “H&M håller drömmen om marginalvändningen vid liv när modebolaget levererar oväntat stark lönsamhet i andra kvartalet. Men inte ens vd Karl-Johan Persson verkar övertygad om att modebolaget kan leva upp till ambitionen att vända den fallande marginaltrenden i år.”

Karl-Johan Persson: H&M ligger inte efter digitalt – Dagens Industri, 29 juni, 2017 | “H&M:s resultat för det andra kvartalet var bättre än väntat men en svag försäljningstillväxt och höga varulager oroar. ‘Det finns en bild av att H&M ligger efter digitalt. Det stämmer inte, vi har en framgångsrik onlinehandel för samtliga varumärken och vi kommer ha en fin tillväxttakt många år framöver’, säger vd Karl-Johan Persson.”



#WeeklyInvestorReader | wk. 25

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. 

Why Harvard Business School is under fire – The Economist, May 18, 2017 | “A new book, “The Golden Passport” by Duff McDonald, argues that HBS has lost its crown as the top business school in America and also become a breeding ground for toxic behaviour, with conflicts of interests rife within the school, and its alumni responsible for pushing a rapacious form of capitalism that explains many of the ills of the world’s biggest economy.”

All Supermarket Moats are Local – Gannon on Investing, June 24, 2017 | “The market for groceries is local. Kroger’s superstores – about 61,000 square feet vs. 58,000 square feet at a Village run Shop-Rite – target customers in a 2 to 2.5 mile radius. An academic study of Wal-Mart’s impact on grocery stores, found the opening of a new Wal-Mart is only noticeable in the financial results of supermarkets located within 2 miles of the new Wal-Mart. This suggests that the opening of a supermarket even as close as 3 miles from an incumbent’s circle of convenience does not count as local market entry.”

Charlie Munger’s “The Psychology of Human Misjudgment” – Value Investing World, June 24, 2017 | “The abridged and animated video of Munger’s “The Psychology of Human Misjudgment” speech that has been making the rounds led me to go back and re-read the version Munger rewrote in 2005 for inclusion in Poor Charlie’s Almanack. The copy I continuously go back to is from a Word file that I created in order to put the speech on my Kindle, which is a lot easier to carry around than the book. I also added a few additional things that I took from Tren Griffin’s book on Charlie Munger.”

Value Investor Insight, August 31, 2016 – Value Investor Insight, August 16, 2016 | “Of Sound Mind: Eric Cinnamond ‘I love investing, but the only thing I’m very confident about today is that the stocks I follow are overvalued. That will change.'”

Amazon’s Nike deal took a billion dollar bite out of competing retailers – Recode, June 22, 2017 | “Amazon is in the business of everything and is one of the biggest companies in the world. When it makes moves, retailers feel it.”

Slides From Our June Markets Webinar (Is This As Good As It Gets?) – Pension Partners, June 23, 2017

Firefox Is As Fast As Chrome Now, And No One Cares – The AWL, June 20, 2017 | “Speaking of the web browser you already have, most likely, you are using Google Chrome. Eeeevvverrryone knows you’re using Google Chrome, especially Mozilla, the creators of Firefox, who have published their own report with humbling statistics about how everyone uses Chrome.”

Checklists for Evaluating Quality of Earnings – Arizona State University

Berkshire Hathaway Invests in Embattled Lender Home Capital – Bloomberg Markets, June 22, 2017 | “Buffett’s firm to buy shares, supply C$2 billion credit line. Alternative lender attempts comeback after regulatory woes.”

How to Survive the Retail Crisis: A Master Class from T.J. Maxx – Wall Street Journal, June 20, 2017 | “Traditional retailers are in crisis, damaged by rapidly shifting consumer tastes, technological change and cut-throat price competition. And then there’s TJX Cos., which is defying gravity with the simple idea that under the right circumstances people still like to shop in stores.”

Can Uber ever make money? – Financial Times, June 23, 2017 | “Ride-hailing company’s new CEO will have to stem billions of dollars in losses”

Everything You Need To Know About Wall Street Economists – @Goldfinger, June 22, 2017 | “The following chart was too good not to publish. What would we do without Wall Street economists?”

If you can’t explain something in simple terms, you don’t understand it – Kottke, June 17, 2017 | “Feynman was a truly great teacher. He prided himself on being able to devise ways to explain even the most profound ideas to beginning students. Once, I said to him, ‘Dick, explain to me, so that I can understand it, why spin one-half particles obey Fermi-Dirac statistics.’ Sizing up his audience perfectly, Feynman said, ‘I’ll prepare a freshman lecture on it.’ But he came back a few days later to say, ‘I couldn’t do it. I couldn’t reduce it to the freshman level. That means we don’t really understand it.'”

Why Amazon Added Whole Foods to Its Cart – Morningstar, June 21, 2017 | “Nevertheless, we do see several reasons why this acquisition is more than just a push into the grocery category, and why it can enhance Amazon’s wide moat.”

Home Bias Blues: Investors Really Should Get Out More – Morningstar, June 21, 2017 | “‘Home bias” is the term used to describe investors’ tendency to tilt their portfolios in favor of domestic stocks (bonds, too, but I’m going to focus on stocks). Here, I’ll discuss how home bias is measured, the factors that underpin this phenomenon, and why it’s probably a good idea to expand your horizons a bit–especially given current valuations.”

Kroger: The World Might be Ending, but not Before a Dividend Increase and a $1 Billion Share Buyback – Sure Dividend, June 23, 2017 | “If you were to base your investment decisions solely on the news headlines, you might be convinced that Kroger (KR) is going out of business. In fact, Kroger stock lost one-third of its value… in two trading days.”

THE NAKED FUND MANAGER: Platforms are taking over the world – Proactive Investors, April 17, 2017 | “The internet has fundamentally changed the playing field for businesses around the world. It has led to the removal of geological and informational constraints that many companies historically relied upon to carve out their economic moats and turn a profit.”

Scuttlebutt: The Qualitative Way to Test for a Moat – Geoff Gannon, May 30, 2017 | “A stock being on a magic formula list is not any proof of it having a moat. We know it had high returns on capital in the past. We now need to test if it will have high returns in the future”

Costco didn’t get all that cheap – The Reformed Broker, June 20, 2017 | “Amazon’s purchase of Whole Foods put a highly discussed dent in all the retail grocery stocks, of which Costco is perhaps the most highly regarded. It’s probably an overreaction, but time will tell. In the meanwhile, the stock really hasn’t gotten all that cheap on this recent slide.”

Amazon’s Real Target Isn’t Whole Foods. It’s Everything You Buy. – Bloomberg View, June 20, 2017 | “The really tempting margins are in consumer products. Look out, Procter & Gamble and Colgate-Palmolive.”

Amazon’s New Customer – Stratechery, June 19, 2017 | “If you don’t understand a company’s goals, how can you know what the strategies and tactics will be?”

Finding High-Quality Companies Today – Contrarian Edge, June 8, 2017 | “We are having a hard time finding high-quality companies at attractive valuations.”

Rise of hard discounters to hit market share of large US supermarkets – Consultancy.uk, June 19, 2017 | “The rapid expansion of discount grocery stores is set to affect the market share of traditional retailers, with price sensitive shoppers from a range of consumer segments keen on low prices, while products stocked at the respective hard discounters tend to be perceived as of sufficient quality.”

Conglomerates Didn’t Die. They Look Like Amazon. – New York Times, June 19, 2017 | “The conglomerate was supposed to be dead, a relic of a bygone era of corporate America. Investors, we have been repeatedly told, want smaller, nimbler, more focused companies. And yet there is Amazon.”

The $31 Billion Hole in GE’s Balance Sheet That Keeps Growing – Bloomberg, June 16, 2017 | “Pension shortfall is the biggest among S&P 500 companies. Top brass ‘living in fear’ of activists with short-term goals.”

Amazon’s Move Signals End of Line for Many Cashiers – New York Times, June 17, 2017 | “Imagine this scene from the future: You walk into a store and are greeted by name, by a computer with facial recognition that directs you to the items you need. You peruse a small area — no chance of getting lost or wasting time searching for things — because the store stocks only sample items. You wave your phone in front of”

How self-driving trucks can create more jobs than they kill – Yahoo Finance, June 5, 2017 | “The economic buzzword of the moment is automation. The robots are coming, we’re told, for our jobs, our money, and our cars, among other things. But this one-way view of automation as a job-killing tidal wave that leaves mass unemployment and poverty in its wake — requiring a universal basic income — misses that re-orienting the economy around new technology often creates new opportunities and, by extension, new jobs to be filled. And potentially even better jobs.”

HEDGE FUND READING LIST: Hundreds of investors say these 10 finance books are must-reads – Business Insider, May 20, 2017 | “The list is based on 1,120 responses, and ranked from least to most recommended. You can consider it a hedge fund reading list.”

In Swedish

Grov Di-miss i HM – Dagens Industri, 26 juni, 2017 | “Di identifierade symptomen, men tog dem inte på allvar. Köprekommendationen i H&M för ett år sedan blev ett dyrköpt misstag.”

Exklusivt med H&M-Persson: “Det är nu vi ska börja skörda” – Aktiespararna, 21 juni, 2017 | “H&M-vd:n Karl-Johan Persson om: aktiekursen, konkurrensen, digitaliseringen – och arvet efter grundaren Erling Persson.”

Exklusivt: Från bubblare till storsäljare: ”Enorm resa” – Aktiespararna, 21 juni, 2017 | “I Bergslagens djupaste skogar för en av de svenska aktiekurskometerna sin vardagliga tillvaro. Nu berättar Kopparbergs vd Peter Bronsman om hur bolaget tagit Sverige och inte minst Storbritannien med storm, om hur inledande motgångar byggde ett världsimperium av cider och om drömmen att bli ännu större på hemmaplan.”

Teknisk analys: Storbolagen du ska sälja – Dagens Industri, 21 juni, 2017 | “I förra veckan gick analysfirman Investtech igenom OMXS30-bolagen med starkast köpsignaler. Denna vecka presenterar de aktierna med tydligast säljrekommendation.”

Forskare: Klarna kommer sno storbankernas kunder – och vända upp och ner på hela sektorn – Veckans Affärer, 20 juni, 2017 | “Att Klarnas ansökan om bankoktroj nu har blivit helt godkänd ger betaltjänstföretaget en möjlighet att erbjuda sina kunder en bredare produktportfölj.”

Trots raset – H&M populärt bland sparare: “Glansdagar är förbi”– Aktiespararna, 20 juni, 2017 | “Kursen har rasat över 40 procent på två år – och bolaget kritiseras hårt. Trots det köps det massvis av aktier i H&M. – Jag tror att H&M:s glansdagar är förbi, säger Nordnets sparekonom Joakim Bornold.”

The Value Investor v.23 Köp inte H&M – Tradingportalen, 9 juni, 2017 | “Samtidigt som resultatet och framförallt utsikterna har försämrats är det uppenbart att många småsparare ökar sina innehav i tron att det nu är ”billigt” att köpa H&M eller med hänvisning till att ordföranden Stefan Persson köper jättelika volymer. Problemet med detta är bara att Perssons har köpt under många år oavsett aktieutvecklingen och att H&M vid PE 19 visserligen handlas lägre mot vinsten jämfört med tidigare då PE har legat på 22-25, men absolut inte kan ses som billig om man jämför med andra storbolag med idag betydligt bättre utveckling och utsikter.”

#WeeklyInvestorReader | wk. 24

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. 

Another Swedish Company Aims to Be the Spotify for Books – Fortune, June 15, 2017 | “Fast-growing audio books company Storytel will expand into several new markets in the coming years while steering clear of English-speaking countries where rival Audible dominates, the Swedish company’s chief executive said.”

Mo’ Margins Mo’ Problems – Eric Cinnamond, June 14, 2017 | “Investors have a tendency to gravitate towards leading brands and high margins. Such traits are often an indication of a high-quality business and meaningful intangible assets. While brands can be very valuable, they are not free. Brands require considerable investment and ongoing maintenance. Furthermore, similar to many things in business, there are cycles, trends, and risks associated with even the best brands.”

HomePod – Above Avalon, June 14, 2017 | “Apple unveiled a brand new product category last week at WWDC: HomePod. On the surface, HomePod seems like an unusual product for Apple. The company’s most recent new products (Apple Watch and AirPods) form the foundation of an expanding wearables strategy. How does a stationary smart speaker fit into such a product strategy?”

Market Folly’s Summer Reading List – Market Folly, June 14, 2017 | “If you’ve got a vacation / holiday coming up and need some reading material, here are some recommended books on investing, hedge funds, business, decision making, and life in general. Some are newer books, others are classics you might have missed and should catch up on.”

10 Business Books For Your Summer Reading List – Dr. David Kass, June 14, 2017 | “The University of Maryland’s Robert H. Smith School of Business is excited to announce some favorite books in the 14th Annual Top-10 Summer Reading List for Business Leaders for 2017, as recommended by faculty members.”

How Adobe Got Its Customers Hooked on Subscriptions – Bloomberg, June 8, 2017 | “The switch to the cloud was risky, but revenue is way up.”

Is Wall Street Giving Netflix a Pass on Sky-High Content Costs? – The Hollywood Reporter, June 14, 2017 | “Netflix CEO Reed Hastings caused heart palpitations in Hollywood on May 31 when he said he wants to cancel more of his original shows. “Our hit ratio is way too high right now,” Hastings told CNBC.”

New: The Behavioral Economics Guide 2017 – Behavioral Economics, June, 2017 | “At the beginning of this year, I came across an attention-grabbing headline: “Behavioral Economics Isn’t Dead Yet”. It was written by Noah Smith on Bloomberg View. Despite some voices that may have questioned the future of behavioral economics (BE), Smith pointed to evidence that behavioral models may be slowly infiltrating macroeconomics.”

A U.S. Shoe Town Tries to Rebuild From Warren Buffett’s ‘Worst Deal’ Ever – Bloomberg, June 13, 2017 | “Two decades after Dexter Shoe closed, $325 hand-sewn penny loafers may hold the key to keeping the craft alive in Maine—and U.S. jobs onshore.”

P&C Insurance – A natural hedge against rising interest rates – S&C Messina Capital Management, June 11, 2017 | “The general consensus is that interest rates will rise. But the key question is when.”

Alibaba Stock’s Peculiar Legal Structure – The Conservative Income Investor, June 7, 2017 | “To receive capital from American investors—or investors anywhere outside China for that matter—Chinese business executives have begun to create variable interest entities (VIEs) that are designed to mimic the effects of foreign stock ownership.”

We Need to Talk About Uber: A Timeline of the Company’s Growing List of Problems – Longreads, June 10, 2017 | “In a piece for the Financial Times titled ‘Fire Travis Kalanick,’ Kadhim Shubber wrote of the founder of Uber: ‘One day we will look back at what will hopefully be the smouldering wreckage of Kalanick’s career and ask how a person so lacking in basic human and corporate ethics was allowed to run a company for so long.'”

2016 Financial Restatements Review – Audit Analytics, June 12, 2017 | “The annual Audit Analytics report on financial restatement trends is now available. This report provides a detailed analysis and comparison of trends in financial restatements over a sixteen-year period.”

JIM ROGERS: The worst crash in our lifetime is coming – Business Insider, June , 2017 | “Legendary investor Jim Rogers sat down with Business Insider CEO Henry Blodget on this week’s episode of “The Bottom Line.” Rogers predicts a market crash in the next few years, one that he says will rival anything he has seen in his lifetime. Following is a transcript of the video.”

Free Shipping Is A Lie – Fast Company, November 1, 2016 | “Free shipping is a top priority for online shoppers, but many merchants are struggling to keep up with the costs.”

Who Will Survive the Retail Reckoning of 2017? – Knowledge@Wharton, June 2, 2017 | “Legacy retailers’ ongoing struggle to stay relevant in a landscape increasingly dominated by Amazon and online upstarts has come to a head in the past year. Companies will close thousands of stores this year – and some may not survive at all. While it may seem that retail is headed for an apocalypse dominated by dead malls, in reality it’s a needed industry shakeout.”

Zalando’s Whizzy Website Doesn’t Come Cheap – Bloomberg, May 9, 2017 | “Online growth doesn’t come cheap. That has been the message from Europe’s big online retailers lately.While internet shopping is outpacing that in physical stores, avoiding the burden of bricks and mortar is no guarantee of runaway profit growth. The cost of fulfilling orders, dealing with a high level of returns and the need to enhance customer service is inescapable.In addition, traditional chains are improving their digital offerings, while Amazon.com Inc. is pushing ever-deeper into clothing.Zalando SE is the latest online retailer to spell out just how much it is spending in an attempt to stay one step ahead. The danger for it, and its rivals, is that profit growth doesn’t keep pace with sales expansion.”

Is the Company’s Product Attractive – Investment Masters Class, June 13, 2017 | “Charlie Munger has long reiterated the need to have multiple mental models to aid the investment process. This short essay looks at some of the product attributes that appeal to the Investment Masters.”

Judging GE’s Jeff Immelt Versus Jack Welch – Bloomberg, June 12, 2017 “The two chief executives of General Electric Co. were dealt very different hands.”

The Mall of the Future Will Have No Stores – Morningstar, June 12, 2017 | “As retailers close bricks-and-mortar stores at an accelerating pace, shopping-center landlords like Starwood Capital are facing a vexing question: What to do with all this empty space? Their solutions are varied but all have a common element: reducing, or even eliminating, retail from the equation.”

Going Private Possible for Nordstrom – Morningstar, June 12, 2017 | “Nordstrom’s (JWN) share price soared after the June 8 announcement that the Nordstrom family is exploring the option of taking its namesake company private. Combined, the family owns just over 30% of the department store.”

Amazon and Walmart’s all-out price war is terrifying America’s biggest brands – MSN Money, March 31, 2017 | “Grocery suppliers are feeling the squeeze — big-time.”

Can Retailers Escape the Scourge of Free Shipping? – Knowledge@Wharton, June 6, 2017 | “If retailers are hurting today, among the wounds — both self-inflicted and imposed from outside — is free shipping. On the demand side, customers are increasingly expecting free delivery and even free returns. The problem for retailers, of course, is that free shipping cuts deeply into profits.”

The death of brick-and-mortar retail – Axios, June 9, 2017 | “First, it was Main Street. Americans stopped going to their neighborhood diners, grocers, haberdashers and five-and-dimes, shifting their business to big malls, and blighting the central business districts of towns and cities across the country. Now it’s the malls’ turn: Americans are snubbing them, and flocking to shop on-line, mostly at Amazon. Will brick-and-mortar retail survive?”

Amazon’s Pivot to Poor People – The Atlantic, June 6, 2017 | “On Tuesday, Amazon announced that it will slash the price of membership to its Prime program by almost 50 percent for low-income shoppers on federal welfare. The move might seem like a unique form of private-sector charity for poor Americans, after decades of disappointing wage growth. But it’s also a direct challenge to Walmart, the reigning king of American retail, which relies heavily on low-income shoppers and receives nearly one of every five dollars of its revenue through SNAP, or food stamps, each year.”

Apple Spruces Up the App Store – Bloomberg, June 6, 2017 | “About halfway through Apple’s more than two-hour product demonstration on Monday was a moment that wouldn’t have raised the heart rates of die-hard technologists but may be the most significant of the announcements Apple made.”

Why Amazon Is Buying Whole Foods – Forbes, June 16, 2017 | “We all know Amazon is the most powerful retailer online. They have been marching like a conquering army to increased dominance every day. The customer experience they provide, a critical part in consumers’ judgment about their satisfaction with retailers today, is second to no one. So why would a company with so much power and potential online, invest over $13 billion to buy Whole Foods, a business that functions virtually entirely in physical stores?”

Free Research Report: Village Supermarket – Gannon on Investing, June 16, 2017 | “Supermarket stocks are a good area for value investors to research now. One way to learn about the supermarket industry in the U.S. is to read the report Quan and I wrote on Village Supermarket (VLGEA) back in 2014. That stock is now at roughly the same price – $25 a share – it was when we wrote about it.”

‘Betting on Zero’ documentary achieves desired results: Righteous outrage, moral superiority – Washington Post, March 16, 2017 | “When “Betting on Zero” was shown at the National Portrait Gallery’s 346-seat auditorium as part of last year’s Investigative Film Festival, half the seats to the screening of the documentary — a searing exposé arguing that the nutritional supplement company Herbalife is a Ponzi scheme — went empty. According to the festival’s organizers, several employees of Herbalife’s Washington lobbying firm, Heather Podesta + Partners, bought tickets in large batches, which were never used. Earlier in 2016, at the world premiere of the film at Tribeca, paid protesters handed out leaflets in an attempt to discredit the movie, according to the “Betting on Zero” website. Why all the fuss?”

In Swedish

Flera analytiker sänker riktkursen för H&M – färsk analys tror på en svag halvårsrapport – Veckans Affärer, 16 juni, 2017 | “Analyshusen väljer att sänka riktkursen för klädjätten och affärstidningen tror på dåliga försäljningssiffror framåt.”

Bäddat för ännu ett svagt H&M-kvartal – Dagens Industri, 15 juni, 2017 | “Sveriges mest välmående krisbolag bjöd på en ny försäljningsbesvikelse i maj. Det är därmed upplagt för ännu ett svagt kvartal med sur lönsamhetsutveckling när H&M presenterar halvårsrapporten 29 juni.”

Så har det gått för årets nynoteringar – Affärsvärlden, 16 juni, 2017 | “Årets nynoteringar har följt två trender: de nya bolagen på Stockholmbörsen har i de flesta fall gått starkt, medan tillskotten på smålistorna har haft det tuffare.”

Getinge planerar nyemission på 4 miljarder kr – Privata Affärer, 14 juni, 2017 | “Getinge planerar en nyemission om cirka 4 miljarder kr i syfte att stärka koncernens balansräkning genom att sänka belåningen och därigenom skapa ökat handlingsutrymme.”

Så blev Gardell en beryktad aktieaktivist – Dagens Industri, 2 juni, 2017 | “Snabba räder under radarn, offentliga attacker för att snabbt höja värdet och ständigt en blick mot utgången. Det är receptet som har gjort Cevian så segerrikt och Christer Gardell så kontroversiell.”

#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.

#WeeklyInvestorReader | wk. 22

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. 

50 Of The Best Investing Blogs On The Planet (2017) – The Acquirer’s Multiple, May 29, 2017 | Every year Tobias and I sit down to pick out fifty of the best investing blogs on the planet. This list is by no means complete and is certainly not in any particular order. If you’re an investor take some time to read through the great blogs on this list, they’ll provide you with an awesome starting point for your investing education.

A Dozen Thoughts from Charlie Munger from the 2017 Berkshire Annual Meeting – Tren Griffin, June 2, 2017 | Teaching people anything, particularly about investing, is hard.

The big missteps that brought an American retail icon to the edge of collapse – Wahington Post, June 1, 2017 | Walk into a Sears these days, and you’ll see an icon of American retailing collapsing before your eyes.

Uber, But for Meltdowns – NYMag, May 29, 2017 | Sexual harassment, corporate-espionage charges, taking advantage of drivers: The company that practically courts bad PR is in an existential crisis.

Why Is Amazon Building Brick-and-mortar Bookstores?– NYMag, June 1, 2017 | Amazon’s first physical bookstore in New York, located in the high-end shopping center at Columbus Circle, was quietly bustling when I visited on a recent muggy spring day around lunchtime.

Iceland’s first Costco is so popular that one-fifth of the population has joined its Facebook group – Quartz, May 30, 2017 | Costco, the US-based chain of warehouse stores, opened its first branch in Iceland on May 23. This year.

The Security I Like Best Checklist #Buffett #GEICO – Greg Speicher, June 1, 2017 | This simple checklist was produced by inverting Warren Buffett’s classic article on GEICO: what mental or written checklist can we imagine Buffett used to think about GEICO and write the article?

DEAR FELLOW SHAREHOLDERS… Over 30 Years of Value Insights from Martin J. Whitman – Marty J. Whitman, November 10 , 2016 | For over 30 years, Legendary Value Investor, Martin J. Whitman, has written comprehensive shareholder letters that provided readers with thorough lessons in his investment philosophy, security analysis and value investing. The collection of excerpts from letters in this book comprise the “best of” Marty’s writings organized thematically to give readers an opportunity to dive into specific topics of interest.

Why the Construction Industry May Be Robot-Proof – strategy+business, May 24, 2017 | What gives? Well, there is something unique about housing. Typically, home construction activity is custom work — remodeling, renovation, teardowns replaced by a single home, maybe a few homes built on a cul-de-sac. And it is difficult to gain economies of scale — or to automate processes — when every job, or close to every job, is unique. If every T-shirt were made to order — different sizes, styles, cuts, fabric — it would be very hard to get a $3 T-shirt. Think about the sheer, overwhelming amount of choice people have when building a home: gravel or asphalt in the driveway, 500 different shingle styles to choose from, gas or electric heating, landscaping, appliances, bathrooms, and windows. To be sure, there are plenty of planned developments and apartment buildings built in the U.S. But even here there is a great variation from project to project, and within projects.

The Housing Market Is Ripe for Tech Disruption – Bloomberg View, May 31, 2017 | The process of buying and selling a home in the U.S. is needlessly inefficient. That will inevitably change.

Finding Moats: The Best Opportunities Require More Than A Surface Scan – Geoff Gannon, May 31, 2017 | The way to compound your money is to find a wide moat stock at a 12 to 15 P/E, hold it for a long time and then sell it at a 25 to 30 P/E.

Debt pile-up in US car market sparks subprime fear – Financial Times, May 30, 2017 | In an echo of the subprime housing crash, delinquencies of US car loans are rising amid allegations of mis-selling

When High Yield Becomes Low Yield – Pension Partners, May 30, 2017 | In December 2008, as the “world was ending,” European junk bonds hit a record high yield of 25.97%. Forecasts of financial Armageddon were widespread, and few could envision a scenario in which subordinated bondholders would receive anything but pain. But the world did not end in December 2008. And over next five years, European junk bondholders would receive nothing but pleasure, earning a record return of 23% per year. Fast forward to today and we have reached the opposite extreme, with European junk bonds at an all-time low yield of 2.67%.

First impressions of an Amazon bookstore – The Shatzkin Files, May 29, 2017 | The new just-opened Amazon bookstore in Manhattan made my wife think of an airport bookstore or a “gallery, where the books are displayed rather than sold”. Everything is faced out. The selection is limited. An airport bookstore would almost certainly have a different mix of titles: far fewer cookbooks (the Amazon store gives them quite a bit of space) and a much bigger selection of novels, particularly genre novels (of which there seemed to be relatively few at Amazon).

Suppliers Bargaining Power – Dr. Andrew Stotz, May 30, 2017 | Michael Porter’s five forces analysis is a framework for understanding the degree of competition in an industry. Strong forces drive down industry profitability. The five forces model acknowledges that a company operates in a system of suppliers, customers, and existing competitors. In addition, there is always the threat of new entrants and in some cases substitutes.

Airbnb might go public if Spotify has a successful listing – Business Insider, May 30, 2017 | Airbnb is apparently keeping a close eye on Spotify’s rumoured listing.

Apple is stepping up its war to steal Android customers – Business Insider, May 30, 2017 | Apple is trying to steal away Google’s customers.

Proximate vs Root Causes: Why You Should Keep Digging to Find the Answer – Farnam Street, May 29, 2017 | The mental model of proximate vs root causes is a more advanced version of this reasoning, which involves looking beyond what appears to be the cause and finding the real cause. As a higher form of understanding, it is useful for creative and innovative thinking. It can also help us to solve problems, rather than relying on band-aid solutions.

A legendary hedge fund that raised $5 billion in 24 hours expects ‘all hell to break loose’ – Business Insider, May 25, 2017 | A hedge fund led by an investing legend expects “all hell to break loose.”

Iconic hedge fund manager Seth Klarman says investors are missing huge risks – Business Insider, May 26, 2017 | An iconic hedge fund manager says investors are misperceiving risks in the markets – at a time when markets are hitting historic highs.

Route to Air Travel Discomfort Starts on Wall Street 584 – New York Times, May 28, 2017 | “There’s always been pressure from Wall Street,” said Robert L. Dilenschneider, a veteran public relations executive who advises companies and chief executives on strategic communications. “But I’ve been watching this for 30 years, and it’s never been as intense as it is today.”

Amazon Just Invented Borders Books – M.G. Siegler, May 22, 2017 | A quick trip to Amazon Books in NYC…

Ipsos Global Trends– Ipsos, May, 2017 | The Ipsos Global Trends survey is the largest study of its kind, providing a unique snapshot of the world today. It explores the attitudes and behaviours of over 18,000 consumers and citizens in 23 key countries around the world and with over 400 questions, covers everything from tradition to trust, from brands to business, from society to social media and much, much more. Our analysis features both ‘Megatrends’ – the known technology, demographic and environmental changes happening now and in the future – alongside eight global master trends. We also share the full data, which shows trends from our 2014 study along with downloads for additional material.

Transcript: A16z’s Marc Andreessen with Barry Ritholtz on Masters in Business – Zach Ullman, May 26, 2017 | Andreessen Horowitz’s Marc Andreessen was a guest on Masters in Business hosted by Barry Ritholtz. The content is timeless, so I transcribed the interview. That way, we can refer back to it from time to time.

Were Munger, Dalio and Soros CIA Trained? – Investment Masters Class, May 28, 2017 | Mr Fogerty cited “ The Psychology of Intelligence Analysis’ from the CIA’s website by Richards J. Heuer [CIA Book] as guiding his investment principles. Always interested in finding an edge I printed out a copy. I think Mr Fogarty has stumbled across one of the most useful guides an investment analyst could find on improving one’s investment decisions.

Why Brains Are More Reliable Than Machines – Wall Street Journal, May 26, 2017 | The data part may be easy for machines, but the human part isn’t.

#WeeklyInvestorReader | wk. 21

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. 

Being Wrong in an Interesting Way – Hussman Funds, May 22, 2017 | My friend Mark Hulbert once had a philosophy professor at Oxford, who distinguished two ways of being wrong: “You can be just plain wrong, or you can be wrong in an interesting way.” In the latter case, Mark explained, correcting the wrong reveals a lot about the underlying truth. The willingness to learn from our own errors, and those of others, is how a great deal of learning comes about. That’s certainly true biologically, where most of our skilled movements rely on feedback and progressive error-correction. It’s also true of invention and research. As Thomas Edison said, “I have not failed. I’ve just found ten thousand ways that won’t work. Many of life’s failures are people who did not realize how close they were to success when they gave up.”

What a Weakening Dollar Really Means for Investors – Morningstar, May 24, 2017 | I keep hearing that the dollar is weakening. What does that mean for investors? Will stocks decline, too?

Lessons about leases and liquidation value: a bebe stores, inc case study – Cigarrfimpar, May 25, 2017 | I got a comment in the BEBE analysis post related to their $186M in operating lease obligation and what my view was as the company announced that they are closing down all their remaining stores. As I started to write an answer in the commentary section I came to realize that this might be a good time to put my view about operating leases into print. Also, as the BEBE situation is currently playing out in real-time it makes it a good live case study for how to view operating leases when it comes to investing in net-nets and companies selling below liquidation value. At least I hope it makes the post about operating leases a bit more interesting.

Ultimate Stock-Pickers: Top 10 High-Conviction and New-Money Purchases – Morningstar, May 23, 2017 With over 95% of our Ultimate Stock-Pickers having reported their holdings for the first quarter of 2017, we have a good sense of what stocks piqued their interest during the period.

Value Investing In A Bull Market – Science of Hitting, May 25, 2017 I am currently looking at a company that has a pretty good underlying business. It has grown like a weed over the past decade and has attractive economics. The only problem is the stock trades for roughly 45 times forward earnings (based on management’s guidance).

The Unbundling Of Excel – Tomasz Tunguz, May 24, 2017 | Microsoft Office has more than 1 billion users globally. Assuming a 33% penetration of Excel, that’s a user population 300M users. Like Craigslist in the consumer world, Excel became the tool for nearly everyone to get stuff done at work.

The Other Auto Story – Morningstar, May 22, 2017 | Everyone talks about Tesla (TSLA), and for good reason: Its stock is up 48% year to date as of this writing, and it sold 25,000 cars in the first quarter, a quarterly record for the company. But while Elon Musk’s car company may seem to be the stock of choice for auto stock-buyers these days, it’s not the only auto story investors should be paying attention to.

Tulips, Myths, and Cryptocurrencies – Stratechery, May 23, 2017 | Thanks to Mackay’s vivid account, tulips are a well-known cautionary tale, applied to asset bubbles of all types; here’s the problem, though: there’s a decent chance Mackay’s account is completely wrong.

Pandora Media Facing Stiff Competition As First-Mover Advantage Fades – Forbes, May 22, 2017 First-mover advantages erode quickly when first movers ignore new competitors.

Waiting for the Market to Crash is a Terrible Strategy – SVRN Asset Management, May 19, 2017 In my experience, investors sitting on a lot of cash are usually worried about equity valuations or the economy, and tell themselves and others that they’re going to buy gobs of stock after a crash. The strategy sounds prudent and has commonsense appeal—everyone knows that one should be fearful when others are greedy, greedy when others are fearful. But historically waiting for the market to fall has been an abysmal strategy, far worse than buying and holding in both absolute and risk-adjusted terms.

Uber has no incentive to keep cars empty – Felix Salmon, May, 2017 I’m perennially fascinated by the way in which different people read the same news story. After reading Eric Newcomer’s Bloomberg piece on Uber pricing, Marshall Steinbaum wrote a short tweetstorm about what it implies for Uber’s incentives, which I suspect is exactly wrong.

iPhone Evolution – Above Avalon, May 23, 2017 The iPhone’s most remarkable quality is the degree to which its role in our lives has changed.

Confirmation Bias: Why You Should Seek Out Disconfirming Evidence – Farnam Street, May 24, 2017 “What the human being is best at doing is interpreting all new information so that their prior conclusions remain intact.” — Warren Buffett

Tweedy Browne’s Letter to AkzoNobel’s Supervisory Board re: PPG’s Buyout Offer – Tweedy, Browne Company LLC, May 4, 2017 Tweedy, Browne has owned shares in Akzo Nobel since 1992, and we think we brought patience and a long-term perspective to our investment. Being shareholders for 25 years has unfortunately not been a fruitful experience and our patience is wearing thin. In our calculations, the growth of the value of each Akzo Nobel share hardly held up with inflation.

Uber Starts Charging What It Thinks You’re Willing to Pay – Bloomberg Technology, May 19, 2017 | The ride-hailing giant is using data science to engineer a more sustainable business model, but it’s cutting drivers out from some gains.

Stock Spinoffs and Indiscriminate Selling – Stock Spinoff Investing, May 21, 2017 So the key takeaway from my analysis is its good to wait for at least 6 trading days to buy a spinoff that you suspect will be indiscriminately sold. You should also track how many of the spinoff’s shares outstanding have traded. Avoid establishing a position until at least 30% to 40% of the spinoff’s shares outstanding have traded.  There will always be exceptions to the rule, but following this advice will generally serve you well.

Today in Market History: Netflix – The Irrelevant Investor, May 23, 2017 | Netflix has done incredible things for its customers and for its shareholders, or share traders, anyway. Over the last fifteen years, Netflix is up 14,500%, the NASDAQ 100 is up 383%, and consumer discretionary stocks are up 268%..

Why I am an Optimist – Pragmatic Capitalism, May 22, 2017 The key lesson here is, when we understand the financial markets inside a capitalist system our natural starting point is one of progress, of optimism. In my opinion, this is the great lesson of the financial crisis.

Barriers to Entry in the Markets – A Wealth of Common Sense, May 23, 2017 Being a pioneer in the business world can give you a huge edge over the competition. Being a pioneer in the investment world can give you an edge but the opportunity set can close very quickly these days. There’s simply more competition than there’s ever been and when you add the growth in computing power into the mix it makes it very difficult to continue earning easy profits.

Tesla: Over-Hyped, Lousy Company Destined for Bankruptcy (Vilas Capital) – Investor Almanack, May 21, 2017 Tesla is an over-hyped, lousy company, from a financial perspective that is destined to go bankrupt

‘Moat’ Is the Latest Jargon Encircling Silicon Valley – Bloomberg Technology, May 13, 2017 Tech executives are fond of using an old term to describe the strength of their businesses.

Marc Andreessen Answers the Tech Valuation Question – Bloomberg View, May 22, 2017 | The venture capitalist says many investors don’t grasp what’s changed.

The Qualities of a Good Analyst; 100-to-1 Master Class – CSInvesting, May 22, 2017 | Without fail, the aspiring investment professionals will eventually ask about the characteristics we look for when we hire analysts at Oakmark or, more generally, What do you think makes a good investment analyst? Perhaps the answer might give some insight into how we think at Oakmark.

The Most Contrarian Theme: Long-Term, Fundamental Investing – Bank of America Merrill Lynch, March 16, 2017 | Whatever happened to “stocks for the long term”? A seismic shift in assets and resources toward data-driven, fast-money strategies leaves a gaping opportunity for long-term, fundamental investment strategies, in our view. One of today’s greatest market inefficiencies may stem from the scarcity of capital devoted toward long-term, fundamental investing. The risk/reward of holding stocks decreases with time horizons, and our work continues to support the fact that fundamentals grow more, rather than less effective as time horizons increase.

The First 8 Things to Look at When Researching a Stock – Gannon on Investing, May 22, 2017 | Basically, I start by finding the longest series of financial data I can (GuruFocus, Morningstar, whatever) and then look at that along with reading the newest 10-K and the oldest 10-K in detail. So, 10-year+ financial data summary, 20 year old 10-K (or whatever), this year’s 10-K, and then the investor presentation if they have one, and the going public/spin-off documents if that’s online. Also, I read the latest proxy statement and the latest 10-Q as needed for info on management, share ownership, the balance sheet etc.

If America Were a Company, Would You Keep Trump as CEO? – The Big Picture, May 19, 2017 | So out of all the ways in which Trump might want to be measured, judging him as a chief executive would seem to be the fairest to him. Forget about ideology, his political agenda, or whether you voted for him; just judge him on whether he has been a competent executive. Would you want to leave him in charge? Or would you be calling an emergency board meeting?

Almost all iPhone users will buy another iPhone, says survey – The Loop, May 19, 2017 A recently published survey by Morgan Stanley shows that 92 percent of iPhone users are “somewhat likely” or “extremely likely” to upgrade their phone in the next 12 months plan on getting another iPhone. The research note was distributed on Wednesday and later picked up by CNET. In comparison, the same Morgan Stanley survey found that Samsung had a 77 percent retention rate, while LG had 59 percent and Motorola had 56 percent.

Who’s Afraid of Amazon? 9 Surprising Retail Winners – Barron’s, May 21, 2017 | Traditional retailing is far from dead, to judge by the success of Best Buy, Home Depot, Wal-Mart, and others.

Which Companies Have the Highest Revenue Per Employee? – Priceonomics, May 24, 2017 We decided to analyze every company in the Standard & Poor’s 500 Index to see which ones had the highest and lowest revenues per employee.

#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.

#WeeklyInvestorReader | wk. 19

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. 

Omnicom Group Inc. (NYSE:OMC) $OMC – Singular Diligence, 2016 | Omnicom Group Inc. (NYSE:OMC) is one of the world’s largest “marketing services” companies. It is a publicly traded holding company that owns many different agencies. Omnicom breaks its revenue down into four categories: advertising (50% of revenue), customer relationship management (34%), public relations (9%), and specialty communications (7%).

The Local News Business Model – Stratechery, May 9, 2017 | It’s hardly controversial to note that the traditional business model for most publishers, particularly newspapers, is obsolete. Absent the geographic monopolies formerly imposed by owning distribution, newspapers have nothing to offer advertisers: the sort of advertising that was formerly done in newspapers, both classified and display, is better done online. And, contra this rather fanciful suggestion by New York Times media columnist Jim Rutenberg that advertisers prop up newspapers for the good of democracy, nothing is going to change that.

Investment Insights from Jim Chanos of Kynikos Associates – C4K Investor Series, March 1, 2017 | We had the rare opportunity to sit down with the world-renowned, President and Founder of Kynikos Associates, Jim Chanos. Read our full interview with him in the latest edition of the Capitalize for Kids Investor Series.

The Michael Milken Project – Institutional Investor, May 1, 2017 | How did a 70-year-old ex-con barred for life from Wall Street become one of its most respected men?

How Pixar’s Billions Mock Fear of IP, Theft, Robots, and Recessions – Real Clear Markets, May 11, 2017 | Many readers are familiar with Pixar Animation’s endless streak of #1, globally popular computer-animated films.  They include Toy Story, Toy Story 2, Monster’s Inc., The Incredibles, Inside Out, and many, many more.

How to Judge a Business’s Durability – Geoff Gannon, June 13, 2015 | 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 Big Difference Between “Moat” and “Durability” – Geoff Gannon, March 2, 2017 | Durability is about the product and the product economics of the industry. Moat is the ability of the specific company to sell more of the product and have better product economics than competitors.

Why Facebook Keeps Beating Every Rival: It’s the Network, of Course – The New York Times, April 19, 2017 | The tech world just witnessed a robbery. The heist was so brazen you kind of had to admire it, even if it was pulled off with all the grace of a gas station stickup.

What in the World Is Causing the Retail Meltdown of 2017? – The Atlantic, April 10, 2017 | The number of malls in the U.S. grew more than twice as fast as the population between 1970 and 2015, according to Cowen and Company’s research analysts. By one measure of consumerist plentitude—shopping center “gross leasable area”—the U.S. has 40 percent more shopping space per capita than Canada, five times more the the U.K., and 10 times more than Germany. So it’s no surprise that the Great Recession provided such a devastating blow: Mall visits declined 50 percent between 2010 and 2013, according to the real-estate research firm Cushman and Wakefield, and they’ve kept falling every year since.

In Swedish

H&M måste möta marknadens krav – Di, 9 maj 2017 | Det faktum att H&M:s aktie har tappat 40 procent av sitt värde de senaste två åren är ett ofantligt misstroendevotum från investerarna. Samtidigt köper storägaren Stefan Persson aktier. Det innebär rimligtvis att det finns ett informationsglapp mellan storägaren och resten av marknaden, som inte förstår hur värderingen ska kunna försvaras.

H&M:s tystnad upprör ägarna – Di, 9 maj 2017 | Klädjätten H&M är sämst bland börsens storbolag på investerarrelationer, tycker många stora fonder och institutioner. ”Vi tror att en ökad informationsgivning gagnar både bolaget och dess aktieägare”, säger Ramsay Brufer, ägaransvarig på Alecta.

#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.

#WeeklyInvestorReader | wk. 2-3

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. 

To survive in an increasingly unpredictable world, we need to train our brains to embrace uncertainty – Quartz, January 9, 2017 | We don’t like experts to express uncertainty. Imagine a politician running for president who promises “I’ll try to make good decisions most of the time. Our policies will probably improve the economy.” Would you vote for them? Probably not. We also want doctors devoid of any doubt over treatments and scientists with perfect foresight about climate change variables. That’s because we believe that leaders and authorities are supposed to know and tell us exactly what’s going to happen, thereby absorbing our uncertainty. But life is rife with risks. Misperceiving and underestimating these risks can lead to vital mistakes. Therefore, to make well-informed decisions, we need to become comfortable with uncertainty.

Inside Sears’ death spiral: How a billionaire who was ‘the next Warren Buffet’ drove an iconic American brand to the brink of bankruptcy – Business Insider, January 8, 2017 | Lampert, a former Wall Street prodigy, took control of Sears more than a decade ago and became its CEO in 2013. But he’s rarely seen in the office, typically visiting about once a year for the shareholder meeting and projecting into videoconference rooms at Sears’ Hoffman Estates, Illinois headquarters the rest of the time, according to interviews with employees. He prefers to stay on Indian Creek Island off the coast of Miami, behind a desk dressed up with the Sears logo. The island has been dubbed the “billionaire bunker,” partly because of a private police force that protects the island’s 86 residents.

Lessons from the Strategy Crisis at Netflix – strategy+business, September 6, 2016 | Netflix would seem to be on a roll. The world’s largest online entertainment distribution business has seen its streaming revenues grow from US$1.2 billion in 2007 to $6.8 billion today.

How to Analyze a Company – Science of Hitting, January 10, 2017 | A fellow GuruFocus reader recently sent me an email with the following question: “Which books would you recommend if I want to start investing in individual companies?”

Poker Is the Latest Game to Fold Against Artificial Intelligence – Technology Review, January 11, 2017 | Two research groups have developed poker-playing AI programs that show how computers can out-hustle the best humans.

SoundCloud Vows Growth In 2017, But Time Is Running Out – Fast Company, January 6, 2017 | At a crossroads, the company is desperate to turn its massive music platform into a real business.

Why I don’t use watch lists – Oddball Stocks, January, 2017 | I remember as a kid sitting in a chair near our kitchen with my grandfather two chairs away.  I was leafing through a toy catalog.  The catalog’s pages were worn and I knew the items and their prices by heart.  Suddenly my grandfather looked at me and said “What are you doing?  Looking at all the things you can’t buy but wish you could?”  I was stung by the criticism, but he was right.  I had almost no ability to purchase any of the items.  I was just envying items I couldn’t have.  As I reflected on this story recently it reminded me of why I don’t keep a stock watch list or research stocks that I wish I can buy someday.

No More Moats in Self-Storage Stocks – Morningstar, January 13, 2017 | After taking a deeper dive into the self-storage industry, focusing on how the efficient scale moat source applies to competitive dynamics, we have downgraded  Public Storage’s (PSA) economic moat rating to none from narrow. Peer  Extra Space Storage (EXR) already has a no-moat rating. The main reasons for Public Storage’s rating change were (1) moaty qualities related to intangible assets were identified in only 25% of the portfolio, while switching costs were determined to be too small to retain tenants; (2) new supply can easily challenge the company’s presence in less densely populated areas; and (3) occupancy is decreasing as competition pressures market share. Our fair value estimates stand at $229 per share for Public Storage and $85 per share for Extra Space.

Three ‘Uninvestable’ Industries for 2017 – Scott Fearon, January 13, 2017 | Today, three industries (and others I have yet to identify) are facing severe disruptions.

How to Read a 10-K Annual Report Efficiently – Rational Walk, January 8, 2017 | Effective techniques for reading books have been well documented for years but the same isn’t really true for S.E.C. filings.  S.E.C. filings are legal documents that a company is required to file on a periodic basis and the consequences for making mistakes can be significant.  Depending on the nature of the company, risks and disclaimers of a legal nature can vary in length.  Nearly all companies include information that is, in some regards, repetitive or unenlightening due to the need for legal cover.  While all information in a filing should be read prior to making an actual investment decision, trying to read filings sequentially on a page-by-page basis when just getting to know a company is not the best approach.

Importance of Knowing Your Investment Boundaries (Sears Mini-Case Study) – Base Hit Investing, January 12, 2017 | A week ago I read an article in Business Insider that referenced a Q&A from 2005 where Buffett was talking to a group of students from the University of Kansas and he was asked about the chances of success of the Sears/Kmart merger (which had just recently occurred at that time).

Lifelong learning is becoming an economic imperative – The Economist, January 14, 2017 | Technological change demands stronger and more continuous connections between education and employment, says Andrew Palmer. The faint outlines of such a system are now emerging.

Amazon is Eating the Retail World – Ben Carlson, January 18, 2017 | Amazon is the first place I look to price check just about anything I buy these days.

Amazon Stock’s Exceptional Price History Meets Value Investing – The Conservative Income Investor, January 14, 2017 | Revenues have grown from $10 billion to $134 billion in the past twelve years. The market cap has increased from $10 billion to something approaching $400 billion. And yet, Amazon’s profits are below $3 billion. That is 133x earnings for one of the ten largest corporations in the United States. History shows you tend to get into trouble when you pay much more than 25x earnings for even an excellent, fast-growing company.

How streaming saved the music industry – Financial Times, January 16, 2017 | Spotify and Apple are making money for the big labels but technology is likely to change the equation again.

Economics is messy – Seth Godin, January 17, 2017 | We still teach a lot of myths in the intro to economics course, myths that spill over to conventional wisdom.

The 10 Cheapest Stocks in the Wide Moat Focus Index – Morningstar, January 19, 2017 | In December, the Morningstar Wide Moat Focus Index swapped out 11 stock positions.

Netflix Stock Still Has A Profit Problem – The Conservative Income Investor, January 19, 2017 | When you see the price of Netflix stock climb to $143 per share in after-hours trading, the $60 billion valuation for the streaming giant at first sounds reasonable. But the reality is more complicated than that. Netflix is distinguishable from firms like Pepsi, Colgate, or Johnson & Johnson because its fixed costs are enormous. It has to pay obscene-sounding licensing fees to have access to the content it streams to its consumers. And, the more appealing the content, the higher the fees.

Netflix Ends 2016 on High Note; Margin Improvement Expected to Be Steady, Not a Hockey Stick – Morningstar, January 19, 2017 | Netflix ended 2016 on a high note with stronger international subscriber growth (5.12 million net adds, versus guidance of 3.75 million) and U.S. growth (1.93 million net adds, versus guidance of 1.45 million). Despite the impressive fourth quarter and better-than-expected guidance for next quarter, the most important information from the conference call may have been management’s admission that the operating margin will improve modestly on a yearly basis, as opposed to a “hockey stick manner.” Our long-term model for the company still projects that the operating margin for the international segment will improve slowly but will remain well below that of the U.S. segment over the next five years. We retain our narrow moat rating and are modestly increasing our fair value estimate to $73 from $69 to account for the time value of money from rolling our model forward and an additional year of margin expansion for the international segment. With shares trading well above our new fair value estimate, we advise investors to steer clear of this very high uncertainty company.

“Leaked Documents From Startup Maple Show the Brutal Economics of Food Delivery” – Climateer Invest, January 8, 2017 | On average, the restaurant-in-an-app lost money on each meal in 2015.

A Century of Opinions: Companies with auditor tenure over 100 years – XXX, January 20, 2017 | There are 13 companies that have engaged the same auditor for at least a century. The Big Four auditors account for all of these engagements.

BOOK REVIEW: “THE ART OF THE DEAL” – DONALD J. TRUMP (WITH TONY SCHWARTZ) – Value and Opportunity, January 20, 2017 | As with stock analysis, I am a big fan of “Primary resources” and so I decided that I should at least read one book co-authored by “his Trumpness” himself. There are many Donald Trump books out there but the first one from 1987 is “the Art of the deal”. I thought that maybe the first one is also the most authentic one.

It’s Time to Shake Up the Legal Industry – Craig Shapiro, January 6, 2017 | Close your eyes and picture the dream industry waiting to be disrupted. What’s it look like? Probably: It’s massively important to the functioning of society but doesn’t work for most people. It’s dominated by old incumbents that enjoy huge profit margins. Those incumbents don’t have much, if any, consumer brand recognition. But this isn’t a dream. This is the law industry, and it desperately needs to be shaken up.

Retailing In America: Brick & Torture – Danielle DiMartino, January 18, 2017 | Outright bankruptcies, nonetheless, are not where the pain is most acute. That preserve is on reserve for a different kind of demise, an appreciably slower descent into irrelevance. At first, the disruptive power of E-Commerce appeared to apply only to things that could be read or viewed on a screen. More recently, though, any product that’s quantifiable at any level is fair game whether it be Jimmy Choo’s, a trip to Katmandu or Vintage Scooby Doo. Hence the frantic game of catch-up so many retailers are playing to raise their online visibility. The problem is catch-up can be costly. Just ask any retailer closing stores, one not-quite-lethal cut at a time, and they’ll set you straight.

Mohnish Pabrai’s Approach To Beating The Market – Forbes, January 16, 2017 | Since inception, Mohnish Pabrai has beat the stock market by triple digit returns. What was the key to his success?

Are H&M store sales cannibalising online growth? – Just-Style, May 16, 2016 | Swedish retailer Hennes & Mauritz (H&M) risks cannibalising store sales through the growth of its e-commerce business, analysts believe, adding that this could be detrimental to margins.

Cassandra’s Song – John P. Hussman, January 16, 2017 | While valuations are extremely informative about full-cycle returns and potential risks, returns over shorter segments of the market cycle are primarily driven by the inclination of investors toward risk-seeking or risk-aversion, which is best inferred from market action. The challenge in the recent half-cycle had to do with Fed-induced yield-seeking, which disrupted the historical tendency for deteriorating internals to accompany or quickly follow extreme “overvalued, overbought, overbullish” syndromes as they had in other cycles across history. In the face of zero interest rates, one had to wait for market internals to deteriorate explicitly before taking a hard-negative outlook.

Harnessing automation for a future that works – McKinsey Global Institute, January 17, 2017 | Automation is happening, and it will bring substantial benefits to businesses and economies worldwide, but it won’t arrive overnight. A new McKinsey Global Institute report finds realizing automation’s full potential requires people and technology to work hand in hand.

BlackRock Continues to Impress – Morningstar, January 20, 2017 | We continue to be impressed by  BlackRock’s (BLK) ability to generate solid organic growth, especially considering the size of its operations. With $5.148 trillion in total assets under management at the end of 2016, BlackRock is the largest asset manager in the world. Unlike many of its peers, BlackRock is generating organic growth in its operations with its iShares platform, which is the leading domestic and global provider of exchange-traded funds, riding a secular trend toward passively managed products that began more than two decades ago. We recently increased our fair value estimate to $410 per share from $385 to reflect changes in our assumptions about AUM, revenue, and profitability since our last update.

Think savvy business owners make savvy public investors? Not necessarily – The Globe & Mail, January 19, 2017 | Having talked to dozens of successful private business owners in this country over the years, I have found they generally display a few consistent cognitive characteristics when talking about the operation of their business. Yet, when they invest in the stock market, it is almost as if they have completely lost their senses. As owners they are rational, logical and business-like; as investors they are ruled by emotion and irrationality. So while they have succeeded as private owners, many have failed as public investors. My conclusion after being in the investment business for so long: Public and private owners are not just different; they are opposites. Armed with this foreknowledge, I believe there is opportunity. Let me explain further.

THERE’S A MASSIVE RESTAURANT INDUSTRY BUBBLE, AND IT’S ABOUT TO BURST – Thrillist, December 30, 2016 | Semmelhack is not the only restaurateur looking to duck and cover. The American restaurant business is a bubble, and that bubble is bursting.

Articles in Swedish

Catena Media en tillväxtmaskin – Swedbank, January 17, 2017 | Catena media är ett snabbväxande företag med globala tillväxtambitioner inom en ganska okänd, men betydelsefull nisch av spelsektorn. Swedbank anser att vinsten per aktie kan öka med 150 procent fram till 2019 och tar upp aktien till bevakning med rekommendationen Starkt Köp.

Larmet: Tiotusentals jobb på väg bort – Dagens Industri, 20 januari 2017 | Nästan 42.000 svenska butiksjobb riskerar att försvinna inom mindre än tio år. Den dystra profetian kommer från Svensk Handel, som också varnar för lägre lönsamhet och färre aktörer. ”Tre handelsföretag om dagen går i konkurs”, säger vd:n Karin Johansson.

Uppgifter: Analytiker tvingas ge positiva omdömen – Dagens Industri, 20 januari 2017 | En ny intressekonflikt inom finansbranschen har kommit i fokus i spåren av de krympande courtageintäkterna: att analytiker känner sig tvingade att ge positiva aktierekommendationer för få tillgång till bolagens högsta beslutsfattare, för egen eller för sina kunders del.

Axelssons i konkurs – Dagens Industri, 16 januari 2017 |Modevaruhuset Axelssons har gått i konkurs, rapporterar Katrineholms-Kuriren.

Arctic Securities sänker Fingerprint – Affärsvärlden, 10 januari 2017 | Fingerprint Cards besked till marknaden om sänkt intäktsprognos 2016 vid kapitalmarknadsdagen var nedslående, men risk föreligger för att även prognosen för 2017 kan behöva sänkas.