This Week I Learned #100
020-04-27
Learning about Brown Forman and HGTV from Tom Russo’s interview from the Columbia Business School Value Investors podcast:
During the time Russo invested in BF, the stock had been punished by about 40% after a failed investment into a different alcohol beverage as they tried to diversify away from Jack Daniels. The family decided to learn from that mistake and focus on growing Jack Daniels oversees to build its brand outside of the US. They reinvested the FCF from the US branded engine to grow internationally. This meant not being profitable in the short term and it took many years for them to build a foothold internationally but being a family controlled business meant they could take a long term approach.
Similar with HGTV. Ken Lowe got support from the family controlled board of E.W Scripps to invest $150M into building the Home and Garden TV channel that went onto become a huge success.
Awesome podcast interview on the long term patience required to reinvest cashflow to compound the business. A valuable look at Alphabet as well… as many investors may think it’s too late but looking the business in a different light where the opportunities could actually still be extremely large. Russo points out how he saw the power of advertising from the digital billboards he owns and also because the companies he invested in… global consumer brands… said they ’needed’ Google and Facebook.
Overall, a lesson on the model of companies that have built a FCF engine and can use that to reinvest FCF to spur further growth. This is a model that may be ignored by many investors who are obsessed about companies that need to generate a profit.
Also cool to see how Russo focuses on a specific type of company… global consumer brands… and that’s because it interests him. It also is a great industry but as Buffett advised Russo’s class… you want to be looking at companies that interest you.
2020-04-28
Learnings from the You & Your Research lecture by Dr. Richard Hamming from Bell Labs.
"You have one life. Might as well do something significant. Significant by your definition."
You prepare yourself day to day for luck. When lightning strikes, you were either ready or you were not.
The very able people work hard all the time. Even if you’re hiking, you are always thinking about work.
If you don’t think you can do great work, you never will.
Claude Shannon’s style = I ain’t scared of nothing. Always offence.
“If what you are working on is not important. Then why are you working on it?” - if you don’t work on important problems you will never do important work.
“What appears to be a defect is an asset.” - turn the problem around for success
“Study successes. Not failures. Failures will only prepare you for the failures. Studying success is a very good way of forming your own style."
Right problem at the right time.. the right way wins… there are millions of races… get in one and win. It’s not about working hard. Working hard alone doesn’t mean you will win.
The thing that makes problems important is not the result but that you have a way of attack. If you have an idea of how to tackle a problem, they become important.
It’s not what you do.. but the way you go about doing it. The style makes the difference.
You have to demonstrate your ability to do something before you are allowed to do something.
“Repent your idle ways and become someone great."
The unexamined life is not worth living. Why not spend life doing what you want instead of letting life happen to you.
Style is what matters. I can’t describe to you how but I can show you a great painting, success etc…
2020-04-29
Learnings from Joel Greenblatt's interview on the Value Investing with Legends podcast:
Started his fund at 27 with Milken’s money after telling a friend on a whim that he’d love to run his own money… he only took half of what Milken offered so he could still run a small fund
Stay small, stay concentrated. He controlled how much he managed and had 80% of the money in 6-8 ideas. He returned all the outside money after 10 years so that he could focus on enjoying the investing process by only managing his own money.
2020-04-30
Collection of learnings from Kevin Kelly’s 68 pieces of advice I resonated with:
"You are what you do. Not what you say, not what you believe, not how you vote, but what you spend your time on."
"Pros are just amateurs who know how to gracefully recover from their mistakes."
"Don’t be the best. Be the only."
"Rule of 3 in conversation. To get to the real reason, ask a person to go deeper than what they just said. Then again, and once more. The third time’s answer is close to the truth."
"Don’t take it personally when someone turns you down. Assume they are like you: busy, occupied, distracted. Try again later. It’s amazing how often a second try works."
"Promptness is a sign of respect."
"The more you are interested in others, the more interesting they find you. To be interesting, be interested."
"Show up. Keep showing up. Somebody successful said: 99% of success is just showing up."
"Friends are better than money. Almost anything money can do, friends can do better. In so many ways a friend with a boat is better than owning a boat."
"Anything real begins with the fiction of what could be. Imagination is therefore the most potent force in the universe, and a skill you can get better at. It’s the one skill in life that benefits from ignoring what everyone else knows."
"When crisis and disaster strike, don’t waste them. No problems, no progress."
"On vacation go to the most remote place on your itinerary first, bypassing the cities. You’ll maximize the shock of otherness in the remote, and then later you’ll welcome the familiar comforts of a city on the way back."
"If you desperately need a job, you are just another problem for a boss; if you can solve many of the problems the boss has right now, you are hired. To be hired, think like your boss."
"Art is in what you leave out."
"Experience is overrated. When hiring, hire for aptitude, train for skills. Most really amazing or great things are done by people doing them for the first time."
"A vacation + a disaster = an adventure."
"Following your bliss is a recipe for paralysis if you don’t know what you are passionate about. A better motto for most youth is “master something, anything”. Through mastery of one thing, you can drift towards extensions of that mastery that bring you more joy, and eventually discover where your bliss is."
"The universe is conspiring behind your back to make you a success. This will be much easier to do if you embrace this pronoia."
2020-05-01
Learnings from Stan Druckenmiller’s 2015 interview. Investing wisdom on liquidity, diversification, betting big and mistakes.
“Bulls make money, bears make money, pigs get slaughtered. I’m here to tell you I was a pig."
“I think diversification and all the stuff they’re teaching at business school today is probably the most misguided concept everywhere."
“Never, ever invest in the present…. You have to look to the future. If you invest in the present, you’re going to get run over."
“It’s liquidity that moves markets.” -> watch the FED and central banks.
Youth, inexperience and ready to charge in the bull market. Insane. CIO at 26.
“If you see it, you got to go for it because that’s a better bet than 90% of the other stuff you would add onto it.”
“I learned something incredibly valuable, and that is when you see it, to bet big.” - from Soros.
“I would say.. about 80% of the big, big money we made was in bear markets and equities…"
“… the problem is the longer rates stay at zero and the longer assets respond to that, the more egregious behaviour comes up."
“I bought $6bn worth of tech stocks, and in six weeks I had left Soros and I had lost $3 billion in that one play. I already knew that I wasn’t supposed to do that. I was just an emotional basket case and couldn’t help myself. So, maybe I learned not to do it again, but I already knew that.
“.. If you’re with one of the lazy people or one of the people that are just doing it for the money, you’re going to get run over by those people.”
Ken Langone funded the Home Depot guys… and was an early investor of Druckenmiller’s fund.
https://focusedcompounding.com/wp-content/uploads/2017/06/311790380-Druckenmiller-Speech.pdf