Circle of Competence Issue #105

April 5, 2020

QUOTE OF THE WEEK

 

"Never in the field of human conflict was so much owed by so many to so few." - Winston Churchill

 

 

FOOD FOR THOUGHT

 

Scratch Notes on SoftBank

 

SoftBank was busy this week. It agreed to sell off part of its stake in Alibaba to deleverage its balance sheet and buy back stock. It also backed out of its deal to rescue WeWork as well. 

 

I've written a two prior pieces on SoftBank's Vision Fund and its investment in WeWork, so I won't rehash those here. 

 

WeWork - a case study in the lollapalooza effect

 

- Masayoshi Son's Big Bet


What SoftBank is essentially doing is it is harvesting some of its massive gains from a very mature company (Alibaba) to deleverage its balance sheet into what could be a very significant recession. I agree with the moves for two reasons: SoftBank doesn't throw more money into a losing investment (WeWork) and prepares its balance sheet for turbulent waters. Golf clap for Masa, but he still has his work cut out for him to deliver the promised returns on the Vision Fund. 

 

 

Taking Flight

 

I have a small obsession with any form of innovation in human flight. I have always been fascinated by Musk's Spacex, Bezos' Blue Origin, and the space industry in general. But I've also been following a couple companies in the autonomous (electric) aviation space as well - EHang and Lilium.  This week, Lilium released a new video of its electric jet in a test flight (Lilium), and I highly recommend watching it. I welcome the future of autonomous flight. It would bring a world where time zones were no longer hindrances for daily travel, and living regionally versus hyper-locally for jobs would be possible. In light of all the news coverage on COVID-19, we still have hope to believe in a future that is better and brighter than ever.


 

LINKS

 

Investing

 

Viral prohibition, emininent domain, and the path ahead (Permanent Equity)

 

Shares of Luckin Coffee decline by 80% after COO admits to fabricating sales (CNBC)

 

Lucking Coffee Short Thesis (Anonymous)

 

The economic cost of social distancing (Absolute Return Partners)

Which way now? (Howard Marks)

 

Opportunity in the crude oil contango (Real Vision)

 

Pitchbook's 2019 Real Asset Report - real estate, oil & gas, and infrastructure (Pitchbook)

 

Chris Bloomstran on intelligent investing in a crisis (MOI Global)

 

The economics of a pandemic (London Business School)

 

 

Technology

 

Startups are getting pummeled in the 'great unwinding' (New York Times)

 

Why SoftBank is parceling off its most-prized possession (Pitchbook)

 

 

Geopolitics and Economics

 

The changing world order - where we are and where we're headed (Ray Dalio)

 

The four rules of Pandemic Economics (Derek Thompson)

 

The anatomy of the $2 trillion stimulus bill (Visual Capitalist)

 

The coder and the dictator - how the Venezuelan dictator and a cryptocurrency coder began working together (New York Times)

 

World 2.0 — “There are decades where nothing happens, and weeks where decades happen” (Tyler Cowen)

 

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