Circle Of Competence Issue #5

April 1, 2018

Department of General Finance


How bad was P/C insurer's underwriting loss in 2017?

- Great article on 2017 performance (or rather, lack thereof due to tough hurricane season) of P/C insurance industry

 

Inside the strange odyssey of hedge-fund king Eddie Lampert

- VERY exclusive interview with Eddie Lampert of Sear's Holdings on his current strategy with Sears and other folks' opinions of how he has handled the situation thus far. Normally, I'm not a Vanity Fair type guy... but this was juicy. 

 

Libor's rise accelerates, squeezing short-term borrowers

- Interesting article on Libor and how rising rates are affecting consumers and corporations alike

 

Warren Buffett Predicted the Fall of Eddie Lampert in 2005

- Good quotes from Buffett back in 2005 on retail companies in decline, Eddie Lampert taking on a failing retailer, and his advice not to test history when it comes to a tough industry.

 

Fight the Fed Model. 

- An interesting, data driven post from Cliff Asness from AQR Capital on why the comparison between the 10 year treasury yield and P/E isn't quite the right approach for forecasting returns. 

 

Department of Real Estate

 

Self storage: how warehouses for personal junk became a $38 billion industry

- Great article with some historical facts on the self storage industry and where it's headed. 

 

Department of Blogs

 

Great blog post from Rangeley Capital - their thoughts on market valuation with some interesting tidbits on Sears over the years, Fairholme's and Lampert's bumbles, and sports betting. Also, Rangeley Capital's take on current market valuations vs. interest rate environment. Compelling.

 

Department of Technology

 

Inside Amazon's Artificial Intelligence Flywheel

- Fascinating article on Amazon's fly-wheel approach and how they integrated deep-learning into almost every corner of their business

 

Musk probably won't move to Mars after $2.6 billion pay approved

- Very interesting article on how shareholders are footing the bill to keep Musk in control of Tesla. One has to wonder how this will all end!

 

Department of 10-K's and Annual Letters

 

Fairholme Funds - Bruce Berkowitz's annual letter describing some of their positions. I did not read the entire letter, but does shed light on their recent difficulties and the path ahead.

 

Third Point Re - interesting reinsurance company managed by Dan Loeb's Third Point Hedge Fund

 

InterDigital, Inc. - company owning ~ 19,000 patents relating to 2G, 3G, 4G, 5G, and IoT communication devices which licenses these patents to the largest device manufacturers in the world (Apple, Sony, Huawei, etc.). 

 

Ross Stores, Inc. - Discount department store chain.

 

Stamps.com, Inc. - internet based mailing and shipping solutions for all kinds of ecommerce shipping, business solutions, etc.

 

Synchrony Financial - consumer credit and financial services company which is largest provider of private label credit cards by transaction volume.

 

Morgan Creek Capital 4Q17 Letter and Outlook  - always a fun and cerebral read. I particularly liked the section on the history of John Keynes and how he developed his investment style over time as well as the portion on cryptocurrencies (I can hear Mr. Buffett chiding me now)...

 

Weekly Favorite:

Jordan B. Peterson on 12 rules for life

- JUST. WATCH. THIS. 

 

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