In this Q1 2010 report, we describe how the last few months were a period of much study and few operations. We have found ourselves in a phase with few new situations in which we could have great convictions. We also announced the “Prêmio Investidor Profissional de Arte – PIPA” to our clients.
Nielsen (of TV ratings fame) is set to make a return to the equity markets merely 4 years after being taken private. The former VNU was one of our international holdings that were LBO’d in the final stages of the booming markets in 2006 and early 2007, along with others. These cycles make for interesting opportunities to reacquaint ourselves with companies we admire in businesses we like, and hopefully our efforts to understand these companies in the past will again pay off.
This roundtable on “The Demographic Dilemma” by Booz & Co. reminded us of the informational challenge as Ms. Wang insisted on it: what are the actual measures of the “impact” of aging, what should we be looking at? Without information that leads to intelligence and then action, it’s just an empty debate. Our main point is that this informational dilemma occurs in plenty of other fields and that we must always be mindful of the fact that sometimes there’s simply not enough information to draw insightful, actionable conclusions.
Update (April 6th, 2010): Please see inside for Mike Burry’s op-ed in the New York Times ranting on the Fed. On tour to promote his book “The Big Short”, Michael Lewis interviews have been popping up all over the Internet. Required reading is the excerpt from the book at Vanity Fair. We especially liked this bit: “I hated discussing ideas with investors,†(Mike Burry said), “because I then become a Defender of the Idea, and that influences your thought process. Once you became an idea’s defender, you had a harder time changing your mind about it.â€
Brazilian newspaper Valor Econômico featured an article today on one of our global favorites: Thermo Fisher. It’s an opportunity to continue learning about a company that we’ve dealt with since 2006 and discussed in our Q3 2009 and Q4 2008 reports. It’s always great when a global analysis effort pays unexpected dividends.
Official immigration decreasing, previously “hot” areas with unprecedented swings, NY’s staggering numbers… Sure, a data point does not a trend make, but demographics are too powerful to ignore as a long-term driver. And it’s hard to argue that the US is well-positioned. This WSJ story has lots of interactive charts and features, and here’s the primary source.
Now that the U.S. Healthcare bill has passed and just been signed into law, it’s interesting to notice the amount of noise generated in the past two days. Newspaper and sell-side reports are booming with articles and so-called analysis of what this means to investors, but right now it’s probably better to “do something by doing nothing”.
It’s been 20 years since the “Confisco”, the seizure of assets from current and savings accounts designed (so to speak) to deter then-rampant hyperinflation. Brazil was then in default on its external debt and had precious little reserves… But the point here is not to judge decisions taken under extreme distress. Twenty years. The very fact that it seems like ancient history shows how far we’ve come, yet it still serves as a fresh warning.
There’s lots of interesting content in Amazon.com’s launch page for “No One Would Listen”, a book by the main whistleblower in the Bernie Madoff saga. The timeline in particular is very impressive: it shows that it took ten years to uncover the mess – nine since the first contact with the SEC – by which time the problem was irreversible. And that’s far from the only case, which begs a question… How do we justify still having institutions supposed to keep watch so unready and unwilling to investigate red flags?
A rare but always welcome interview by Charlie Munger embedded inside, courtesy of an attentive reader and the Stanford Law School. Some highlights inside as well. The main theme is the economic/ financial crisis (what else?).