Gustavo Ballvé on March 31st, 2011

Dave Sokol, CEO of MidAmerican and Netjets (both Berkshire Hathaway businesses) and heir apparent to Buffett’s CEO role, has left Berkshire and one of the reasons doesn’t smell too good. Reading the letter from Buffett discussing the resignation, it’s clear that he had to go: the mere appearance of a Berkshire “luminary” practically “front-running” Buffett and Berkshire would be unacceptable (we don’t like it but can’t call it, and we’d discount any strong opinion emanating from anyone other than Buffett or Sokol).

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Gustavo Ballvé on March 30th, 2011

Two notes: a strong-worded LEX column about the need for Brazil to “grow up” and face its longer-term, big-picture issues such as lax government spending and poor labor and tax regulations. The other is an Economist article about investors’ growing interest in hedging “tail risk” – Nassim Taleb must have cringed when he read some parts.

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Gustavo Ballvé on March 29th, 2011

Nice note yesterday on regarding some differences between Brazilian and US buyout firms/ practices. The most relevant, of course, is leverage (the lack of it in Brazil). The optimism surrounding Brazil has made some of these firms’ jobs more difficult, and as they highlight, there’s bound to be more competition – from local and foreign firms – as the cost of leverage decreases… The really difficult part is remaining in the sidelines when prices are not attractive, and when there’s a mandate to invest it can be hard to be truly disciplined about it.

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Gustavo Ballvé on March 25th, 2011

We have had for years a section in our Intranet on Tax legislation and another on interesting corporate structures that save money in any way – operationally, fiscally, etc. The overall idea is to study the state-of-the-art in all espects of corporate life – it’s useful to understand companies’ performances/ strategies/ cultural aspects, and if it’s good it can eventually be shown to companies we invest in. Of course, in the case of tax practices there’s a thin line between aggressiveness and innovation and falling into regulatory traps… Reading this NYT article out today, we still have no idea where GE fits in this range, but it’s safe to say that they’re certainly innovative in the tax department.

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Gustavo Ballvé on March 24th, 2011

We’ve stumbled upon a series of videos by Bloomberg Television on Game Changers, and the first episode we saw is fantastic and profiles Steve Jobs. There are many interesting moments and lessons, but one that stuck with us concerns the power of ideas and the inspiration/ motivation they bring – not just to potential customers but, in Apple’s case at a time when morale was at the lowest point, also internally. That’s when the team finally “awoke” and all that brilliance in engineering/ product design/ marketing was brought together to create, as a VC says in the video, “the greatest comeback in corporate history”.

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Gustavo Ballvé on March 22nd, 2011

The WSJ published a story about the possible tactics that Buffett used in the Lubrizol acquisition. This part sounded like music to our ears: “(…) Buffett undoubtedly told Lubrizol that he would refuse to participate in an auction. And here is where you see Buffett’s cleverness at work. He puts his targets in a dilemma that really only has one answer: take the price that looks very good or let Buffett walk away. Buffett’s real genius is a mix of these tactics and his ability to identify undervalued companies combined with the courage to act quickly on his analysis. That mix has been a recipe for big profits for Berkshire.”

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Gustavo Ballvé on March 21st, 2011

Two notes on concentration, attention span or taking the time to think. First Seth Godin wonders why people who get the chance to hear and interact with great speakers choose instead to tweet 140-character blurbs to people who are not paying that much attention – many of whom don’t care as much as the person who chose to be there… Then we highlight an article about reading and thinking alone (via Farnam St. blog).

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Gustavo Ballvé on March 18th, 2011

We don’t have Baupost Capital’s full 2010 letter, but these excerpts are still very interesting. Seth Klarman’s straight talk is always refreshing. Bits on Cash as strategic asset (being able to pull triggers in the midst of panic), “Short-termism” and how that affects everything, and Edge are particularly interesting.

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Gustavo Ballvé on March 16th, 2011

Two quick notes. First, a relatively superficial story about Brazil’s pre-salt oil’s potential for changing the country for good – or bad. It’s interesting to see how this story is being told abroad. Second, an interesting story on Jeffrey Kaplan, who for 24 years was involved with M&A – including some of the largest deals such as the HCA LBO. The interview is an interesting inside view on M&A, private equity, even debt markets.

Read more about Brazil’s pre-salt and an inside look at M&A

Gustavo Ballvé on March 16th, 2011

The subject is very dear to us: Education and how technology can improve its productivity (and accountability), reduce costs, leverage social aspects and increase reach, convenience and even – dare we say it – the fun factor in education… A TED 2011 talk by former hedge-fund analyst Salman Khan almost has it all, and the technology is here now. It appears to address many – obviously not all – of our “wishlist items” for Education, not the least of it the empowerment of teachers, education managers, parents and even students themselves through data and its analysis (individually, by classroom, school, district, demographics, whatever).

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