Showing posts from April, 2017

Sunday Spectacle CCXXIV

American Diet from 1971-2014 Here are some interesting facts about food consumption in America. Several other Western countries probably have similar trends, although the actual foods may differ somewhat (I expect Canada to be at least 90% identical to USA). The following charts depict various types of food consumption from 1971 to 2014 (there is also some data for Britain here ). I'm sure there are investment implications but I'm not sure how easy it is to predict such trends. When reading these charts do keep in mind that comparisons are complicated given that there is quantity but there is also price (not shown) i.e. some item may cost 2x what something else does. Some trends are driven by changing economics of the business. For instance, Americans used to consume less chicken (in terms of weight) in 1971 than beef but now they consume 2x as much chicken. Consumption of chicken has gone up around 2x while beef has declined and this is mostly due to cheaper cost of pr

Howard Marks: Markets Richly Valued but You Don't Have a Choice

Howard Marks gave his opinion on the markets and I thought it succinctly captured the current state quite nicely. His area of expertise is the credit market but given how stocks and bonds are all at high valuations, the views are applicable across the whole investment universe in my opinion. He basically says the market is richly valued but does not think it is overvalued or in a bubble. He thinks high-yield spreads--this is the spread between junk bonds and treasuries--needs to be smaller for it to be a bubble, at least in bonds. I also like how he thinks about the market and talks about how it is what it is and you don't get to pick how you want it to be. He states the market can be highly valued, fairly valued, or undervalued and right now it is highly valued--but you don't really pick how it is. If you are a professional investor or money manager, you kind of have to be invested in something so it comes down to earning the best out of the various possibilities. I

Sunday Spectacle CCXXIII

Cannabis (Marijuana) Stock Perfor mance Still not fully legal and market likely to be limited for a few years more but the Bloomberg Intelligence Global Cannabis Competitive Peers Index is worth around $55 billion. Not all stocks are 100% marijuana-related and most of the value is so far in the bio-pharma sector but still indicates market pricing for this emerging industry. source: " 54 Stocks Deep in the Weeds ," Laurie Meisler, Bloomberg, April 20, 2017

Sold: Khan Resources (KRI)

Some third party is making an offer (approved by Board) for $0.05 for remaining shares of Khan Resources and I figured the deal was going to be approved by shareholders so I sold out at $0.055. Overall I'm satisfied with this return given how most of the capital was returned very quickly last year. This is an ideal liquidation situation and I would invest most of my money in these situations if I could. Unfortunately the stock was lightly traded and hard to acquire many shares so couldn't build up any meaningful position. Sale Price: $0.055 Total Return: 5.1% (annualized approx. 10% -- meaningless since less than 1  year holding period)

Graham and Doddsville 2013 Li Lu Interview

The game of investing is a process of discovering: who you are, what you’re interested in, what you’re good at, what you love to do, then magnifying that until you gain a sizable edge over all the other people. -- Li Lu, Graham & Doddsville newsletter , Spring 2013 When I first encountered him many years ago, I didn't know how good of an investor Li Lu was. Now, it seems like he is one of the top ones. I don't consider him a superinvestor (yet) but that's partly because his record and his stockpicking is unclear to me. In any case, Charlie Munger is a big fan of him so Li Lu is definitely in the top 25% of the investing world. I ran across a very good interview with him in the Spring 2013 Graham & Doddsville newsletter (Columbia Business School). Some of you may have seen it already but it was the first time I read it--I was away from investing the last few years around the time of this report--and it is an excellent interview. If you haven't read it bef

Sunday Spectacle CCXXII

Source of American Government Funding (1873-1940) Ever wondered how taxation has changed in America over the last 100+ years? Following charts show the sources of government revenue in America from 1873 to 1940. Other developed countries are somewhat similar from a long-term perspective. Until the early 1900's, there was really no personal income taxes or corporate income taxes. Most of the revenue in the distant past was through customs levies and tobacco/liquor taxes. So basically nearly all government tax was consumption tax. The amount government collected was very small by modern standards (US government collected no more than 800 million in taxes in the 1800's whereas it generated 3+ billion by 1918). Government wasn't large and it didn't provide much in the 1800's (there was no standing armies for a long time, not to mention any notion of social welfare, public education, large-scale healthcare, no major public infrastructure projects, and so for

Sunday Spectacle CCXXI

American Retail Bankruptcies (to Q1 2017) So far, retail industry is on pace to set a post-financial-crisis peak. Retail is definitely overbuilt in America and consumer debt is also too high, so the shrinking of the industry is not a huge surprise to me (the industry is growing overall but most of it is in Internet sales and the number of retailers are shrinking). Internet cannibalization is also hurting retail but I think that is a slow long-term threat; the real issue is overbuilt retail with way too many retail chains, not to mention malls/shopping centers/etc. Retail is a tough industry for investors--generally no barrier to industry of any kind, and driven a lot by unpredictable hits, fads and trends (sort of like the consumer technology industry)--but I wonder if the current situation presents an opportunity. source: " Retail bankruptcies march toward post-recession high ," CNBC, March 31 2017 .

Purchase: Syngenta (SYT)

Added more to my risk arbitrage position in Syngenta (SYT). American and more importantly, European regulators approved the buyout a few days ago and I think this deal will close (a few other countries like China and India still need to approve but they generally don't challenge such deals). There is still a spread of a few percent and I figure it is a low risk bet. I think the spread should be smaller and not sure why it still exists (there is the possibility that this deal is too big and all risk arbitrage firms are tapped out; it's also complicated by the fact that the underlying shares trade in Switzerland). Purchase Price: $89.70

Sunday Spectacle CCXX

Forbes 2000 Largest Companies in the World (2016) Top public companies in the world according to Forbes, which uses a combination of revenue, profits, assets, and market value. source: " The World's Largest Companies 2016 ,", May 25, 2016.