Showing posts from December, 2011

Conversation Between Reed Hastings and Michael Eisner (Feb 2010)

Here's a really good video from 2010 of a conversation at Churchill Club between Reed Hastings and Michael Eisner. Michael Eisner is the former CEO of Walt Disney and, although he is a bit past his peak and semi-retired, he is still worth listening for his experienced views.  Reed Hastings is the CEO of Netflix (NFLX) and although considered by some to be the worst CEO of the year (for some strategic blunders), I still think he is one of the top CEOs in Silicon Valley. I am always impressed with Hastings and I think he is sort of like a Bill Gates, in that he is a visionary who understands not just technology but the business environment. A lot of topics are covered in this discussion: technology, media, entrepreneurship, public education, corporate culture, you-name-it. I highly recommend it if you are interested in any of those topics . There are a lot of interesting issues discussed, including, compensation for executives, Netflix's unlimited-vacation policy, how the

Classic Value Investing vs Buffett-Prime Investing

If you pursue the value investing framework, one of the key decisions you have to make is whether you want to be a, what I call, classic value investor ; or a Buffett-Prime investor . In my mind, a classic value investor largely follows an asset-oriented strategy influenced by Benjamin Graham; whereas a Buffett-Prime-type investor follows an earnings-power-oriented strategy, influenced by Charlie Munger, Philip Fisher, and Warren Buffett of the 1970's. Some might say Buffett-Prime-type investing is the same as growth investing but I don't like to call it growth investing. The reason is because there is a whole genre of investing called growth investing that appears to be not based on any value investing principles. There are many growth investors, including some successful ones, who don't pay much attention to financial statements (some may call them medium-term traders). For instance, there are many who will form a bullish or bearish opinion of, say, a stock like Google

Sunday Spectacle CLIV

Credit: " Toronto Christmas Market" by dtstuff9. Edited by Sivaram Velauthapillai Location: Distillery District, Toronto, Canada Downloaded from flickr on December 25, 2011.

Netflix's Reed Hastings Being Interviewed by Charlie Rose (from 2005 and 2011)

I have been researching Netflix (NFLX) lately and checked out some Charlie Rose interviews with Reed Hastings, CEO of Netflix. One of the interviews is from December 27, 2005 and the other one is from earlier this year. Although his star has faded recently, Reed Hastings is one of the visionaries in Silicon Valley. Not only did he build up Netflix, a DVD rental and video streaming service, but he is also very knowledgeable about technology. If you are interested in technology, media, or education—he has some thoughts on education—check out the 2005 interview. I found the 2005 interview quite insightful and it is quite impressive to see him hit the targets his laid out back then. The recent video from May 4, 2011 is more narrow and is probably best for those who are interested in media, online streaming, and technology. Unfortunately, it seems that Charlie Rose doesn't allow recent content to be embedded so click on this link for the 2011 interview . As usual, Charlie Rose, ar

Crime Never Pays

(Copyright Parker Brothers. Download source .) (This post was partially written about two months back so some additional details confirming the story have emerged in the last few weeks. The main story remains the same.) Crime never really pays. Sooner or later, criminals get caught — not all the time, of course, but most of the time (in countries with adequate policing, with "decent" culture and legal system). One big reason criminals don't get away is because it's hard to cover the tracks. There are just too many things that can go wrong when trying to mask a crime's evidence. Such is the case with the Japanese electronics company, Olympus. Readers may recall a post from a while back , pointing out how the CEO of Olympus was fired within 2 weeks of being hired. Things looked puzzling at that time and the story kept getting interesting by the minute — assuming you are not a shareholder of Olympus, of course. Over the last month, the fired CEO revealed

Poll: How do you like the new layout template?

I posted a poll on the right-hand side of this blog at the top. The question is about how well you like the new template. If you typically visit my website for your content, vote. If you have any suggestions, please feel free to e-mail me or leave a comment. Thanks.

Updated to New "Glory" Template

Not sure what caused my prior template to fail all of a sudden but whatever it was, it was probably a good thing. I'm one of those who just sits on ideas and need to be pushed sometimes. I upgraded to a new template called Glory . Thanks to the creator for making this template available for free. The upgrade gave me the opportunity to try out some stuff. I decided to go for a cleaner look. It's still not a truly professional look and I didn't want that since they all look similar. Since this is a personal blog, it allows me to experiment. Hope all the readers like it. It should be easier on the eyes. As usual with any technology upgrade (in this case pretty simple), the older posts may be messed up. Also, if you notice any problems let me know.

Sunday Spectacle CLIII

Logistics of the Holiday Season

My thoughts on Moody's downgrade of Ontario's outlook

Ontario, my home province, is startling to resemble a mini-Greece :( Moody's sends a warning shot by downgrading Ontario's outlook to negative. The Globe & Mail reports , Moody's Investors Services has turned its wary eye from the basket cases of Europe to Ontario, revising its outlook to "negative" from "stable" and issuing a stern warning on the province's hefty debt burden. The decision, Moody's said in a statement, reflects the risks surrounding the province's ability to meet its medium-term fiscal targets. It noted the recent slowing of economic growth. "The negative outlook on the province reflects the softening economic outlook, Ontario's growing debt burden, and the extended time frame to achieving a balanced budget," Moody's analyst Jennifer Wong said. In his November statement, Finance Minister Dwight Duncan revised his forecasts for economic growth for both this year and next, a significant downgr

Characteristics of original video content for online streaming providers

I have been researching Netflix (NFLX) lately and I ran across a good interview from earlier in the year that described the differences between original content being financed by online streaming providers like Netflix versus traditional television companies. By original content I'm referring to sourcing of content in the first window (i.e. you are the first one to show it). Although online streaming companies are not financing much original content—Netflix is only allocating around 15% of its content budget to original content and Hulu Plus and YouTube have only spent small amounts on original content—I think it may change over time, if streaming customers are willing to pay for original content. So far, judging by the customer backlash over Netflix raising prices earlier in the year, as well as the lack of sizeable deals by YouTube—YouTube has something like 140 million unique viewers and it still hasn't been able to spend $100+ million on original content—it is probably sa

Sunday Spectacle CLII

Digital Economy's Shifting Industry Profits (source:  “Profit Migration in the Digital Economy,” by David Standridge and Christopher Pencavel, Booz & Company white paper, August 2011, ) Sorry about the small fonts (I hate extracting from the booz&co reports since they aren't designed for online layouts). In any case, this is an important chart for those interested in the digital economy. Certainly any investor in the various industries that represent the 'digital economy' should pay attention to how the market is developing. Even if you don't invest in these companies, you may find the material interesting since the digital economy will play an integral role in society. The chart from a booz&co report (read the full report for more info) illustrates how the digital economy, which includes numerous different types of industries, ranging from content creators, to service providers to software and hardware

Jim Chanos on China and the bear case for Agriculture Bank of China

Same old, same old so skip it if you are familiar with the China short thesis... but the following CNBC interview does provide some insight into what happened in China in the past. In particular, Jim Chanos talks about one of his short positions, Agriculture Bank of China, and how its balance sheet is not quite what it seems. Thanks to ValueWalk for bringing this video to my attention (there are an additional two on that site).

Some thoughts from Jeremy Grantham's Fourth-quarter Letter

(Not sure what's wrong my blog template; it seems to be messed up. Oh well...) Most of you probably already read this but if not, here are some interesting points Jeremy Grantham made in his GMO 4Q 2011 Letter (if you have never heard of Jeremy Grantham and are macro-oriented, you should definitely put his quarterly letters  on your reading list): Well, 15 years ago, Ben Inker and I designed a model to explain (not predict) the ebbs and fl ows of the P/E ratio. It had a surprisingly high explanatory power. We found that everything that made investors feel comfortable worked. That is to say, it was a behavioral model. Fundamentals like growth rates did not work. The two (out of three) most important drivers were profit margins and inflation. The seemingly unsustainable profit margins is what keeps some who are bearish, like me, on the sidelines. Graham (elsewhere in the letter) feels that normal weight in equities is ok but I'm not so sure. The long-term behaviour of

Warren Buffett's Evolution and his Three Investment Styles

A Young Warren Buffett In a comment to one of my posts , Mark Carter, who incidentally appears to have a  good blog worth checking out , asked: "Buffett Prime is 1970's to early 1990's" Could you elaborate? I have vaguely indicated how I view Warren Buffett in the past, but I thought I would detail my view of his investing behaviour. This is more of an opinion piece and many others would disagree with me (if you do, I'm curious to hear your thoughts). I don't follow Warren Buffett as closely as many value investors so I may get some facts wrong. My view is that Warren Buffett went through three different phases, with each consisting of different investment techniques. The overall investment theory remained the same—what people call value investing—but his execution, tactics, and strategy differs across the three phases. Some people may break up his career into additional periods but my feeling is that the three I will describe essentially capt

Interview with Reed Hastings of Netflix (req: free registration)

I have been following Netflix (NFLX) as a potential investment for a few months now and I ran across an audio interview with Reed Hastings that you may be interested in. Anyone interested in the company (or the online-video/television/cable/media markets) should check out the audio broadcast linked below. Unfortunately, it requires free registration and I can't link to it. UBS 39th Annual Global Media and Communications Conference - Discussion with Reed Hastings of Netflix (if link doesn't work, try going here and going through the free registration ) Reed Hastings rarely gives public presentations and, although many people think he is the worst CEO in America right now ;), I think he knows his stuff. Not only did he build up Netflix, but he is also a visionary who is closer to an Internet entrepreneur than 'old media.' He just needs to signficantly improve his capital allocation skills ;) I don't usually post about media stories requiring registration—altho

Something to watch... Australia potentially slowing down

The Globe & Mail reports on the possibility of Australia slowing down : The boom Down Under may soon be over. Australia’s central bank has cut its benchmark lending rate for the second time in as many months, confirming fears that Europe’s debt crisis and a slowdown in China are threatening the resource-driven economy. The Reserve Bank of Australia lowered its cash rate by 25 basis points to 4.25 per cent, Tuesday. That followed a similar reduction in November. Much like Canada, Australia was a global leader among developed countries in weathering the 2008 financial crisis. A stable banking system, coupled with demand from China and other Asian nations for its commodities such as oil, iron ore and coal, helped Australia endure the downturn. Why is this important? Because it could be an early signal to a potential global slowdown. While about 70 per cent of Australia’s exports are destined for Asia, a struggling Europe and potential collapse of the European Union wa

Sunday Spectacle CLI

Steve Jobs on Life (h/t: " The Secret of Life from Steve Jobs in 46 Seconds " by Maria Popova. Brain Pickings)

Articles to start off the last month of 2011

The year is almost done... hope everyone has had a good year. Now that I'm Twittering , a lot of the articles will be duplicates for any Twitter follower. (Highly Recommended) John Paulson's arbitrage notes (Anh Hoang): John Paulson, before he became popular for short-selling mortgage bonds, was a successful risk arbitrageur. Special situations investing is something that amateur investors should look at. (Recommended) Charlie Rose interviews superinvestor Seth Klarman (CanadianValue for GuruFocus): Arguably the top value investor in the world right now, Seth Klarman rarely gives interviews so you should check this out. However, unfortunately, there isn't anything insightful about investing in the interview. One thing Klarman does point out is that he is still a Graham-type investor whereas Buffett has moved on to a, what I call, 'modern Buffett' investing style. The style that I aspire to is what I call 'Buffett Prime'. Roughly speaking, I would say