High active share – where portfolios differ markedly from the benchmark – does well (+2% pa outperformance) but only if holding periods are over two years.
So having high active share isn’t enough if the fund trades a lot.
Being patient isn’t enough – as those with low active share do worse.
“In 2023, for the first time, investment in solar energy is expected to beat out investment in oil production. It’s a stark difference from what the picture looked like a decade ago, when oil spending outpaced solar spending by nearly six to one.”
Interesting analysis of Tesla’s purported business model compared to other automotive manufacturers – make cars that don’t break vs. the razor/razor blade (i.e. zero margin cars with high margin service and parts) typically adopted by others.
“Tesla does not have an existing fleet and that the auto industry, the reason incumbents succeed and newcomers fail, the biggest reason is that the incumbents have a large fleet, and they’re able to sell new cars at close to 0 margin and then sell spare parts at a very high margin, sort of razors and blades type thing.“
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In case you missed it – Loeb’s latest missive from Q1.
His purchase of UBS is interesting – though CS will undoubtedly have more skeletons (see here) and lose more AuM (as clients diversify), the uplift to UBS book value (74% accretive, putting UBS post deal on 0.74x P/TBV), state loss guarantees (CHF 9bn post first 5bn), and liquidity provision (CHF 100bn) are all positives.
