Tim Isgro

Charlie Munger once read a single magazine article, spent ninety minutes thinking about it, and made $80 million investing in the idea. The company looked like a disaster. It had a ton of debt after five spinoffs in six years, and its revenues shrunk because of the 2001 recession. Principal payments on its debt were coming due that the company couldn't make. I spent weeks reconstructing what Munger actually saw, down to finding the exact article he likely read in 2001. New series at The Owner's Memo. open.substack.com/pub/theownersm…

@darrenrovell @bespokeinvest “The fossil was discovered in 2021 on a ranch in South Dakota and named in honor of property owner Gary Licking, who died during the roughly five year excavation, restoration and mounting process.”

The all-time record price paid for a dinosaur will be broken by 11 am ET today. This is “Gus,” a T-Rex that has a 61% bone count completion rate. Expect Ken Griffin ($51B net worth) and Todd Graves ($22B net worth) to be bidders. Record is $44M. This could beat it by $20M.

The Owner's Memo #14 is out now. AutoZone's stock is up almost 450-fold since its 1991 IPO, an 18.9% annual return over 35 years. The standard explanation is that share buybacks were a big part of the story. The company has shrunk its share count by 89% over time, and Eddie Lampert, who at his peak owned 42.7% of the company, is usually credited with getting them started. But the buybacks are better thought of as a subordinate story. When Lampert began buying in 1997, the case rested on something more basic: AutoZone was an excellent business, and the evidence was sitting in plain view in the 1996 10-K. That ten-year table is my favorite detail in the piece. AutoZone laid out a full decade of results in its filings, and reading it, one gets the distinct impression that management was showing off: sales growing 20-25% every year, margins rising, and returns on capital high and steady while the store count more than tripled. The business was excellent before the financial engineering ever began, and the buybacks were built on top of that foundation. Today's piece is Part 1 of a three-part case study reconstructing Lampert's investment using only what he could have known in 1997: the 1996 10-K and the company's great and long financial history at that point.

More from Michael Burry... "a single talented analyst, working very hard..."

Joel Greenblatt from The Little Book That Beats The Market: you must do it yourself.

@tobibog @4Awesometweet Yeah, the only source I can find is Burry’s X bio, which says “called Cassandra by Warren Buffett”. But I can’t find any source where Buffett mentions Burry.

@4Awesometweet @TimIsgro According to Burry, Buffett called him Cassandra during a testimony regarding the GFC. I can't find anything that shows that the two have met or that Buffett found Burry unimpressive.

The endearing description of Michael Burry starting Scion Capital after leaving medicine. He got a cold call from Joel Greenblatt, who flew him and his wife to New York first-class and bought 25% of Burry's new firm for $1,000,000 (after tax!). Burry was so green he didn't know what to wear to the meeting. I think this would have been in the year 2000 when Burry was 28 or 29 years old.

@AZbroker I don’t think Greenblatt ever sued Burry, but in the book, Lewis says he effectively threatened to. I always thought Greenblatt got painted unfairly, especially because of the one-dimensional portrayal of him (the character Lawrence) in the movie.

Joel later sued Burry, bc he was betting the farm on derivatives not stock picking. Turns out to be one of the greatest trades in history. It’s an interesting lesson. Burry was right only bc he won. Had he been wrong he might be sharing a cell with SBF or swapped cigarette coffee futures with Skirelli.

Source: The Big Short by Michael Lewis

Alice Schroeder, recounting Buffett's work ethic in The Snowball: Warren "was a very focused person. He could focus like a spotlight, twenty-four hours a day almost, seven days a week almost. I don’t know when he slept," says Jack Alexander. He could quote Graham’s examples and come up with examples of his own. He haunted the Columbia library, reading old newspapers for hours on end. "I would get these papers from 1929. I couldn’t get enough of it. I read everything"... Warren collected information, weeding out biases imposed by other people’s way of thinking. He spent hours reading the Moody’s and Standard & Poor’s manuals, looking for stocks.

Pretty cool ad and use cases. Worth the five minutes.

💯 The models are very helpful at proofreading. Recently, I wrote a long article (12,000 words), proofread it myself, and then asked Opus 4.8 to proofread it. The model came up with ten typos I had missed. It also came up with some pedantic suggestions which I appreciated, like a second voice asking if I had considered another form of phrasing, even if I rejected most of them.

Here is an example of a real work use case with Codex and 5.6 Sol I have a new book coming out in October, it has gone through rounds of editing and proofreading. I gave it the full PDF, the AI took 30 minutes & gave me dozens of notes. None were wrong (but plenty were pedantic)

Gavin's point is subtle too, I think. Expressing gratitude is good for mental health, yes, but it also takes you out of the mode that its you versus the person on the other side of an argument. If you can truly be grateful for an opposing view, you stop seeing it as an attack against your position and start seeing it as a blessing of potentially valuable information.

Gavin Baker says Michael Burry is exactly the kind of bear the market needs "I make a big effort to be grateful every day. And in that spirit, I'm so grateful to Michael Burry." "His Substack is a godsend. He's a really smart, intelligent guy who's making a really credible bear case every day. And I'm grateful to him man. We want that. We want a really smart person who's incredibly banging a bearish drum."

My best guess is he loved the game. At that point in his life, 2001, I think the vast majority of his wealth would have been in Berkshire stock. He also did some real estate investing throughout his life, so he would have had some fraction of his wealth as non-Berkshire. I think he just enjoyed investing. There is at least one similar story about Buffett investing his personal account across a basket of Japanese investment banks that were cheap. Didn't move the needle on his net worth. The guy just loved the process.

@TimIsgro @F_Compounders Why didn’t he invest more? That would be a small bet for him

Charlie Munger read Barron’s for 50 years and only found one investment That investment made him $80million, which he gave to Li Lu, who turned it into $400 million

Seth Klarman warning against investors setting a return hurdle. From his classic 1991 book, Margin of Safety.

@leevalueroach @twitter is there no way to detect spam replies like these using @grok?

Found a pretty interesting setup. It’s a well known deep value play. Round trip net net multiple times. Stocks up a ton recently but looks like there’s more juice to squeeze. Still has great value multiples and their order book is up a ton. Digging in here.

@maddenpt1 Do you know their records?

@TimIsgro Li Lu Norbert Lou

From my latest article, some of the best long-term returns from great investors. Would you add any to the list? 🟢 Warren Buffett: From 1957 to 1968, he produced annualized returns of 31.6% for his partnership. 🟢 Charlie Munger: From 1962 to 1975, 19.8% annualized for his partnership. 🟢 Walter Schloss: From 1956 to 1984, for 28 years, 21.3% per year. 🟢 Ted Weschler: From 1989 to 2012, he turned $70,385 into $131 million in his IRA account, equivalent to about 39% per year. 🟢 Joel Greenblatt: From 1985 to 1994, a stunning 50% per year. 🟢 George Soros: From 1969 through 1994, the Quantum Fund produced 35% annualized returns. 🟢 Stan Druckenmiller: Returned 31% per year over 30 years. I believe this record overlaps with Soros’s above. 🟢 Jim Simons: From 1988 to 2018, Renaissance Technologies’ Medallion Fund generated an incredible 66.1% average gross annual return. 🟢 Peter Lynch: From 1977 to 1990, for the Fidelity Magellan Fund, he produced a 28.9% annualized return. The fund grew from $18 million to $14 billion. 🟢 Bill Ruane: From 1970 to 1984, the Sequoia Fund generated 17.2% annualized returns for investors. (Bill also produced 14.7% annualized returns from 1970 to 2015, a 45-year record.) 🟢 Tom Knapp: From 1968 to 1983, for Tweedy, Browne Partners, 20.0% annualized returns. 🟢 Lou Simpson: From 1980 to 2004, 20.3% per year for the GEICO equity portfolio. 🟢 Nick Sleep and Qais Zakaria: From 2001 to 2014, the Nomad Investment Partnership generated 20.8% gross returns for investors.

The performance of John Henry's hedge fund (at least the "financials & metals" portion). 29% per year. He was managing about $2.4 billion at peak prior. Henry would go on to purchase and own the Boston Red Sox, Pittsburgh Penguins, and Liverpool F.C. and still does today.

@michaeljburry, what was the name of this book?

Great anecdote about Michael Burry doing the hard work to create, with the investment banks, subprime MBS credit default swaps. From The Big Short.