- Recommended by Quintin Price, head of Alpha Strategies at Blackrock (the $1trn active arm that is making a comeback against the firm’s passive dominance) on this excellent podcast, is an intriguing essay – “Why Should Anyone be Led by you?“
- The authors, two business school professors, find that there are four qualities that make a great leader.
- First, leaders must expose vulnerabilities, revealing their approachability. This builds trust, a collaborative atmosphere, and solidarity. Never reveal a weakness that can be seen as a fatal flaw, jeopardising central aspects of one’s professional role.
- Second, good leaders must be great situation sensors. They can sense unexpressed feelings. This requires a fine balance as it needs to be validated i.e. observations must be grounded in reality and not just projections.
- Third, leaders should care, intensely, about the work employees do, something that is hard to fake. This can’t be soft but requires tough empathy – a respectful “grow or go” mentality.
- Finally, and most importantly, leaders must be different and show that difference. This takes time to discover and can’t be over done.
- Although these sound like rules to follow it is incredibly hard to fake and authenticity is key as the article concludes – ““Be yourselves—more—with skill.” There can be no advice more difficult to follow than that.“
Persistence of Profitability
- Nice, though self-serving, chart from Terry Smith’s 2021 annual letter.
- It shows that firms with high returns tend to hang on to those returns, while firms with poor returns also stay that way.
Japanese Equities
- Fundamentals in Japan are improving.
- Japanese companies bloated their balance sheets with low-yielding cash and unproductive assets. This has meant that companies delivered just 3% return on capital compared to 6% fo the developed world for the majority of the past four decades.
- Returns look to be improving according to GMO, the change is structural and not cyclical, and the result of improving margins and not improvement in inefficient balance sheets.
Spotify’s TikTok Problem
- 63% of TikTok users (1bn worldwide) discover new music on TikTok before any other platform.
- This is worrying for SPOT.
- TikTok has already launched a competing service – Resso – in key emerging markets (Brazil, Indonesia and India).
- iOS App download rank data for the recent 90-day period from App Annie (pictured, link) shows it still hasn’t hit Spotify’s dominance (it has only reached 2nd place in Music category in Indonesia, and lingers in 4th for the other two launch countries).
Crypto Exchanges
- Binance dominates spot crypto trading volumes (66%) share and this continues to grow.
- The chart was taken from this excellent Digital Asset Outlook 2022 by The Block.
Analysts Resources
- Great set of mostly free resources for investment analysts.
- A few choice examples:
- iBorrowDesk – Borrow rates and short availability data.
- Shortsqueeze – data on short interest.
- OpenInsider – track insider stock transactions.
- Dataroma – famous hedge fund portfolios.
- 10x – collection of activist position presentations.
- CamelCamelCamel – Amazon product price tracker.
- The Tools section of our site has many more analyst resources.
Probabilistic View of Private Equity
- The probability that a mature private equity fund will deliver 2x on investment fell in the 1990s and has since held steady at 30-35%.
- In other words the probability of NOT achieving 2x is 65-70%.
- For >2.5x the probability of NOT achieving is nearly 90%.
- The data uses North America and EU strategies, >$100m, across buyout, growth and turnaround. 2011 vintage year is used to eliminate non-mature funds. This filter led to 1,200 funds.
- Source.
Impact Investing
- Pretty cool historic visual review of Impact Investing from Collaborative Fund.
Ocean Temperatures
- Global oceans continue to warm (measured by OHC).
- Source: Advances in Atmospheric Science.
Science Funding
- Altos Labs has come out of stealth and announced record breaking funding ($3bn) from Bezos and Milner and poached CSO from GSK – Hal Barron.
- This was a great article from the Atlantic surveying the rise of various new science funding approaches and labs, backed by Silicon Valley $.
- The US has a long history of the wealthy backing science. (h/t The Diff)
- Web 3.0 is also getting in the game with for example VitaDAO.
Mid-Term Elections 2022
- Incumbent President’s party typically loses seats in mid-term elections.
Archegos
- Credit Suisse, who suffered $5.5bn in losses in the Archegos debacle earlier in 2021, have published a full report of what happened by an external firm.
- Nice read for those interested in the inner workings of the Prime Brokerage business.
- If you aren’t familiar with it, this is a brilliant introduction and history (paywalled).
Export Share
- China has taken full advantage of the pandemic, gaining the most share of export growth.
Moderna
- Two part investigative report into Moderna.
- The first part looks at the company pre-Covid – “From 2016 right up until the emergence of COVID-19, Moderna could barely hold it together, as it was shedding key executives, top talent, and major investors at an alarming rate.”
- The second part covers how the Covid crisis “bailed” the company out and the circumstances around this.
- A very deep and in places troubling read.
Sustainable Flows by Region
- Interestingly, but not surprising, Europe leads in terms of sustainable strategies as a percentage of inflows.
- US is starting to catch up but Asia lags well behind.
Net Income by Sector
- Nice chart from GS showing contribution of total S&P 500 net income by sector.
- Interesting to see Financials pretty much hold up over a long period of time, with a blip for the financial crisis.
- Tech has been steadily increasing and Energy declining.
Nike Amazon Searches
- This is a testament to the power of Amazon as the start of product searches, as well as the recognition of Nike’s brand.
- Despite Nike stopping selling any products directly on Amazon, its search rank on Amazon has not changed.
- From the always excellent Marketplaces Pulse – Market Places Year in Review 2021.
CO2 Pledges
- Governments are getting serious about reducing CO2 emissions – with over 80% of global CO2 emissions “pledged” to be eliminated if we include what is currently in policy documents.
Dynamism
- Despite the prevailing narrative, dynamisms in the US has been consistently falling since the last 1970s.
The 12 Best Financial Blogs
Below is a list of the twelve best financial blogs.
- Abnormal Returns – going since 2005 this daily email contains a delightful smorgasbord of links to articles, podcasts and posts across the financial web. Always a gem to be found for those who like to dig.
- The Browser – arguably the only non-finance resource you will ever need. A daily curation of the best five articles from the man who reads 1,000 per day. The resource is paid but worth every penny for those looking to broaden their horizons (something all investors should do).
- 361 Capital Weekly Research Briefings – a weekly tour of the US financial markets with charts, articles and more. Always something to ponder.
- FT Alphaville – the godfather of financial blogs and what got me interested in finance in the first place. The writers always deliver the most interesting and contrarian morsels of analysis on the major financial topics of the day. The further reading posts are also a rich seam of fascinating articles.
- Daily Shot – They say a picture paints a thousand words, so can you imagine what 80-120 charts a day can do*. This is a paid daily email that consist of charts covering global markets and economic trends. The broad coverage is a great way to survey everything, as certain markets (e.g. credit) or geographies (e.g. Asia) tend to see trends unfold faster than others. [*for the geeks out there a weeks worth of Daily Shot will get you just about a War and Peace worth of words].
- The Bear Cave – written by fintwit powerhouse Edwin Dorsey this letter is full of useful analyst resources and short ideas. The free version has a great list of management resignations and short reports.
- TheMarketEar – As market structures have changed, paying attention to technicals is becoming even more important. This site provides a supercharged twitter-like feed of charts, indicators and snippets from sell-side that does a pretty good job of surveying the short term market direction (and calling it at that). Although the service is now paid you can still get a free daily email.
- SITAL Week – written weekly by Brad Slingerlend of NZS Capital this site has been my favourite recent discovery. Like Snippet, Brad finds interesting topics/articles, especially from non run-of-the-mill sources (like academia) and adds a lot of fascinating insights when discussing them.
- Marginal Revolution – another old kid on the block this site, written by professor Tyler Cowen, is regarded as the best economics blog out there. Yet it is so much more than that. Like Snippet, I feel the interests are very broad and there is always something insightful to be found. Their assorted links posts are also some of the best out there.
- The Diff – reading Byrne Hobart just makes you automatically smarter. His real magic is akin to mathematics – he observes businesses, generalises their features as concepts, and then works with these concepts to build useful theories. It is a paid newsletter but the return on investment is outstanding.
- Glimpse – I look forward to this monthly most of all. Glimpse gives you exploding trends before everyone else discovers them (not boring ones; think alcohol gummies, limb extension surgery and veneers). The way they are described is my favourite part – I always learn something new and surprising. If you sign up you get a few glimpses for free but their value, especially for investors, makes it worth paying.
- Snippet Finance – That is this blog. What I do is read all the above and a lot more. I then curate the best bits (a decade of investing really sharpens one’s information processing skills) into short easy to digest Snippets. So save yourself time and subscribe – two emails per week, 3-4 snippets. There will always be something to inform and inspire.