“On March 3, 2020, we disclosed that we had acquired large notional hedges …
“On March 23rd, we completed the exit of our hedges generating proceeds of $2.6 billion for the Pershing Square funds ($2.1 billion for PSH), compared with premiums paid and commissions totaling $27 million, which offset the mark-to-market losses in our equity portfolio. Our hedges were in the form of purchases of credit protection on various global investment grade and high yield credit indices. Because we were able to purchase these instruments at near-all-time tight levels of credit spreads, the risk of loss from this investment was minimal at the time of purchase.”
“We have redeployed substantially all of the net proceeds from our hedges by adding to our investments in Agilent, Berkshire Hathaway, Hilton, Lowe’s, and Restaurant Brands. We have also purchased several new investments including reestablishing our investment in Starbucks which we sold in January. The proceeds of the hedges have enabled us to become a substantially larger shareholder of a number of our portfolio companies, and to add some new investments, all at deeply discounted prices. Even after these additional investments, we maintain a cash position of about 17% of the portfolio. “
Interesting impacts of Covid shutdown cited by companies.
Best Buy – “We are seeing a surge in demand across the country for products that people need to work or learn from home, as well as those products that allow people to refrigerate or freeze food“.
Music streaming might not actually be going up (here and here).
Grub CEO interview – “But demand from consumers is really a mixed bag. In some markets it’s staying stable, some are doing much better, and others are slowing. It’s not obvious how it will impact business in the long-term as the supply of restaurants are transitioning now and up to 30% of them could close because it’s too expensive to run.”
“…when we looked at the Chinese recovery, what we have seen is 90% to 95% of large manufacturers in China are now back to work in some capacity. Closer to 65% to 70% of small businesses in Mainland China are coming back to work from a manufacturing perspective. So we believe output is in around 65% to 75% and we are seeing that rebound.” Fedex Call.
“There is currently evidence of increased customer activity in the Group’s Casino and Poker products that might, in part, compensate for the sports betting disruption for a period of time.” 888 Trading Update.
This is a great list of interesting ideas, from a wide range of fields, to understand how the world works.
Some examples.
Principle of Least Effort: When seeking information, effort declines as soon as the minimum acceptable result is reached.
The 90-9-1 Rule: In social media networks, 90% of users just read content, 9% of users contribute a little content, and 1% of users contribute almost all the content. Gives a false impression of what ideas are popular or “average.”
Bizarreness Effect: Crazy things are easier to remember than common things, providing a distorted sense of “normal.”
Second Half of the Chessboard: Put one grain of rice on the first chessboard square, two on the next, four on the next, then eight, then sixteen, etc, doubling the amount of rice on each square. When you’ve covered half the chessboard’s squares you’re dealing with an amount of rice that can fit in your lap; in the second half you quickly get to a pile that will consume an entire city. That’s how compounding works: slowly, then ferociously.
Clinicaltrials.gov counts 104 active studies in the US.
There is also SOLIDARITY, a WHO megatrial announced on Friday.
Drugs in Clinical Trials:
Chloroquine (Plaquenil) – 70 year old treatment for malaria repurposed. Only small open label trials done so far (here, here and here) show encouraging early results.
Siltuximab, Sarilumab and Tocilizumab – all IL-6 inhibitors (for anti-inflammatory conditions) repurposed and being clinically tested.
Remdesivir – previously tested for other viruses including Ebola. Two phase III studies initiated.
