Wednesday, June 20

Things from my Newsblur; 2018 Part III


Time for another edition of “Things from my Newsblur”.   Our Man has recently been thinking a lot about how to use time more productively, so today’s edition begins on that note.  It soon diverges into more lighthearted fare including LaCroix flavors and the Muppets.   As usual, the most investment-related stuff is at the end. 

On the Phenomenon of Bullshit Jobs
Anthropologist David Graber has just published a book – “Bullshit Jobs” – that stems from this article written 5-years ago.  After the article’s publication, hundreds of people across the world reached out to Graeber to talk about their white collar bullshit jobs!  Our Man will let you guess which of Graeber’s 5 categories - Flunkies, Goons, Duct Tapers, Box Tickers, and Taskmasters – he might fall into!  (David Graeber, Strike Magazine)
For those who’re curious about the book; Nathan Hellers, in the New Yorker, has a good review.

Maker vs. Manager: How Your Schedule Can Make or Break You
Most office jobs impose the same work rituals on people, yet different types of work require different types of schedule.  This concept was originally described by Paul Graham of Y Combinator in 2009.  He defined the two broad types of schedule – Manager and Maker.  The Manager’s schedule reflects the traditional appointment book, with the day broken up into blocks (typically of an hour) and meetings pre-set for these blocks.  The Maker’s schedule is less fixed and the units are larger (perhaps half-a-day), since you can’t write or think or program or even analyze an investment well in units of one hour.  As office jobs have consistently migrated to the Manager schedule, how do people whose job consists of both Managing and Making adjust?  What about those who are Makers in a Manager-styled firm?   The secret is in creating and defining your schedule, especially setting aside dedicated time for the Making even if that is at odd (i.e. very late night) hours.   This is something that Our Man is wrestling with as he thinks about investing (Maker) and ‘working’ (Manager, as it entails some investing, but mostly internal meetings, responding to clients, presenting, dealing with legal/tax/etc. questions, and all the other things that surround investing).  (Farnam Street Blog)

What’s the Most (and Least) Popular LaCroix Flavor?
Our Man is no fan of fizzy water, but he does live in Brooklyn where LaCroix is a thing!  Like Oat Milk is a thing!  Yeah, Oat Milk!  I know, people are weird!  So for all you Brooklynites, and fizzy water fans, here’s some research on the most popular LaCroix flavors.  (Pricenomics, and Oh My Green) 

It’s Not Easy Being Evergreen: An Oral History of the Muppets
The Muppets started as adult-focused entertainment on variety shows, before hitting the big-time on kid-targeted Sesame Street.  They eventually secured their own show in the late 1970s, but it was produced in England after no US network was willing to take the chance.  Despite numerous efforts, including recent movies (quite successful) and a 2015 TV show (not so successful), they have no hit the same heights since.  (Studio 360, Slate)  

Why Doesn’t Anyone Answer the Phone Any More
The headline says it all – unless you’re in OM’s contacts, the chances of him picking up the phone are almost exactly zero!   Sure, over the last decade Whatsapp, iMessage, WeChat, Twitters, Facebook, etc., have all become alternative ways to communicate.  However, the answer is simpler; spam and robocalls.  Answering these only ensures you’ll receive yet more of them!  (Alexis C Madrigal, The Atlantic)   

Facebook’s Gollum Will Never Give Up Its Data Ring
The recent debate about Facebook and ‘your’ data has largely missed the point.  Facebook doesn’t sell ‘your’ data, it merely leases it!  What folks should be more worried about is how it gets that data; by seeking to capture as much attention of as many people as possible, in just about any way possible.  The leasing of data from this, well that’s just how it monetizes you.  (Azeem Azhar, NewCo Shift)
Azeem is also the curator of the excellent free weekly Exponential View newsletter; let OM know if you’re interested in finding out more!  

The Luck of a Gecko
OM is in the midst of writing a blog post about his investment philosophy, and it’s thus timely to share this old article (2013) with you.  The article looks at the impact of GEICO on Benjamin Graham’s and Warren Buffett’s Success.  In particular, it’s the investment that Ben Graham (the father of value investing) built his reputation on; the profits from GEICO were larger than those from all of his other investments combined.  It’s also an investment where Graham broke numerous of his own investment rules; “the one company for which Graham threw out the playbook was also the company that accounted for most of his success”.  (Mark Hebner, Index Fund Advisors)
For those after a longer, and more detailed analysis, read the Wedgewood VIC presentation from 2013.


Sunday, May 6

2018: First Quarter Review


Portfolio Update  
The recent portfolio updates covered the portfolio changes in Q1, so OM won’t spent too much time on them: 

- International: Our Man continued to add to the International portfolio.   The continued positive economic information out of Greece, encouraged OM to increase his exposure (GREK).   OM took advantage of the pull back in the markets, to enter an initial position in Vietnam (VNM).

Performance and Review 
The first quarter saw the  portfolio fall -0.3%, which was broadly in-line with the S&P 500 Total Return (-0.7%) though ahead of the MSCI World (-2.2%).  The flat quarter disguised some substantial volatility within the quarter, with the portfolio rising 11.3% in the first 3 weeks of the year before giving almost all of that back within 2 weeks.  The portfolio continued to bounce around to a lesser degree throughout February and March.



Despite the volatility in equity markets, the Equities positions were the largest gainers led by Vipshop Holdings (VIPS, +147bps) and Texas Pacific Land Trust (TPL, +54bps).  After its Q4 announcement of a partnership with Tencent and JD.com, who both also took stakes in the company, VIPS announced strong Q4 results during February.  TPL also had strong results, with 2017 marking “the most successful year in the Trust’s 130-year history”, with the new “Water Service” business getting off to a strong start.  TPL also continues to slowly dissolve itself, buying back another 1.7% of the company in 2017.

The International book was all over the place; large contributions from Brazil (+196bps) were offset from just about everywhere else led by Argentina (-104bps), India (-60bps) and Greece (-30bps). 

The Uranium positions, in the Commodities book, continue to frustrate with both the Uranium ETF (URA, -160bps) and Nexgen Energy (NXE, -37bps) falling back.  The price action remains disappointing (at best) while the fundamentals are attractive – the impact of capacity reductions “should” be felt during the second quarter, especially if companies have to enter the spot market.  Unfortunately, one item of note is that the underlying index for the ETF was changed to reduce the exposure to small mining companies and introduce some nuclear component companies.  These smaller mining cos were part of the attraction to Our Man, thus URA’s leash has been shortened further.   


Portfolio (as at 03/31/18 - all delta and leverage adjusted, as appropriate)
49.4% - International (Brazil ~25%, Argentina ~11%, Greece ~5%, India and Vietnam)
27.7% - Technical (DDM, QLD and SSO)
17.9% - Equities (JD, VIPS, TPL, FNMA & IBB)
10.2% - Funds (CWS, GVAL, and CAPE)
8.0% - Commodities (Uranium through URA & NXE)

0.6% - Cash 

Disclaimer:  Nothing above represents a recommendation in any way, shape or form so please don’t even think of trying to take the above that way.  For added clarity, while Our Man is invested in all of the securities mentioned that’s a terrible reason for anyone else to do so.  Our Man also holds some cash and a few other securities (of negligible value).  You should not buy any of these securities because Our Man has mentioned them, but should do your own work and decide what’s best for you given your own circumstances/risk tolerance/etc.