Kit Winder, CFA

“A great business at a fair price is superior to a fair business at a great price… The investment game always involves considering both quality and price, and the trick is to get more quality than you pay for in price. It’s just that simple." - Charlie Munger @ByteTree Quality is an investment research service which does exactly that. #Quality #Investing bytetree.com/bytetree-quali…

Chris Hohn's TCI actual portfolio, not the 13F reported everyday.

Crazy that $MICC the Magnum ICE CREAM Company is down today*! London is breaking temperature records! *This tweet is unserious

@Rory_Johnston It's like sitting centrally for a Nadal-Djokovic baseline battle. Relentless back and forth. My neck hurts.

Brent crude back above $100/bbl

@TihoBrkan Agreed. And some of these names are now back to levels where investors can get interested again.

The crowd's psychological drivers of today’s AI and semiconductor sectors closely mirror the buying euphoria of 2021. In 2021, you couldn't find a soul on this platform who didn't showcase FOMO — the fear of missing out — that propelled valuations into nose-bleed territory. In both environments, 2021 and today, I think the crowd sentiment has completely detached from underlying financial realities — always driven by the convincing narratives and the promise of never-ending growth. For a market to be genuinely accurate in price discovery and value assets efficiently, its individual members must make independent and diverse decisions. It doesn't actually matter if there are many ultea bulls alongside parma-bears — since both of their errors cancel out into decently efficient prices. However, during the 2021 post-COVID bubble, independent analysis was entirely replaced by social imitation that led to "herd behaviour." I think the conditions today are strikingly similar, if not even worse. When it comes to comparisons with the 2021 bubble, I am not only discussing speculative unprofitable stocks. Even some of the highest quality businesses (at least they were considered as such at the time) were pushed to such high expectations that it detached them from reality, let alone built-in redundancy (margin of safety). I've included 9 popular quality names in the chart below, all of them peaking in 2021 and on course for a lost decade. Honestly, one could add dozens more. Stocks like Shopify, PayPal, Sea Ltd, Coupang, and Alibaba (e-commerce) or Kering, Burberry, and LVMH (global luxury) come to mind. Even mighty Hermes is about to print a 5-year period of negative returns (even more negative when inflation is accounted for), starting from its late 2021 peak. If you were to turn back time and scroll through the commentary, the tweets, the blog posts, the YouTube videos and CNBC/Bloomberg discussions — you would ONLY notice outright bullish certainty and ever-increasing expectations of performance. Once again, strikingly similar to today. I sense that the market has caught the same type of psychological disease, as market participants herd like lemmings into a total illusion of what the future expected returns will look like from here onward. Many investors will be gravely disappointed. Just to spell it out for you: the situation might play out as disappointing as the charts below show was the case for many of the 2021 high flyers.

"I started hearing immediately from other investors, who called to say they would have given us capital for a lower price. But with you, it’s just money, I said. No one other than Warren could have given us an equivalent confidence boost. Or, by doing a deal with us, enabled us to sell common equity to other investors at a higher price rather than a steep discount. Given the demand, we decided to double the amount of our planned offering to $5 billion, and eventually to $5.75 billion. We were able to do it at $123, rather than at a discount to our pre-Berkshire investment share price, which had fallen as low as $86 five days earlier. By the end of the day, the order book for our offering was so oversubscribed that we could have accepted $20 billion. For Goldman, at least, the capital markets were back open. The better terms on the common equity we raised offset the high cost of Berkshire’s terms. The market, in effect, paid Buffett’s premium. It was good value all around." GS History Page on this here: goldmansachs.com/our-firm/histo…

Came across an amazing Buffett story in a bookshop over the weekend... Written by Lloyd Blankfein, about 2008, when he was CEO of Goldman Sachs $GS. "Buffett makes an exception [to disliking investment bankers] for his friend Byron Trott, who had been at Goldman for decades. On the morning of Tuesday, September 23, Trott called Buffett, who said that if we were looking for capital, he, Buffett, was interested. During that call, I was on my way down to Washington and got a message en route: CALL WARREN. As soon as I arrived at our DC office, I did. Buffett does business in a way only he can pull off: a fair offer, no negotiation, that’s it. With Warren, you get one shot. If he doesn’t like your proposal, or you don’t like his, it’s over. He proposed putting $5 billion into the firm as preferred stock, which is really more like a loan, with a 10 percent dividend and ten-year warrants to buy an additional $5 billion of shares at the current price—$115. It was expensive capital, but reasonable under those market conditions. I started talking to him about how we would execute his investment and was about to go over some open questions. Warren interrupted me. “That’s all fine,” he said. “I trust you. I’m taking my grandson to Dairy Queen.” “Maybe it’s the lawyer in me,” I said, “but I feel I should tell you some of the things I’m nervous about.” “You can worry for the both of us,” he said. “You don’t need to tell me.” “I’d feel better if you at least had someone talk to my CFO.” “Lloyd, for Berkshire, five billion dollars isn’t even a couple of hurricanes on the East Coast,” he said. “Let’s just chat at the market close and establish the strike price for the warrants. And just one other condition. I don’t want you, Viniar, Cohn, or Winkelried to sell any of your stock until I exercise my warrants.” “I’ll get everyone to sign an agreement,” I said. “I don’t need anything in writing - just your word.” Done. Elapsed time from Trott’s call to consummation: five hours, during which Buffett was mostly engaged with his grandson, not Goldman." Black-dashed-line shows the day $BRKB bought. Two months before $GS bottomed. It's up 10x since.

@sidecarcap Said no one, in 1932-50 in America, 1990-2020 in Japan, 2000-2010 everywhere

Investors wait for great businesses to become demonstrably cheap. But this is how the market works:

Both $ZTS and $INTU have suffered 20% drops in single days since Terry Smith bought. Brutal.

There is a particular kind of quality business we like. It’s one that owns an irreplaceable physical asset and uses it to generate healthy cash flows on long-term contracts, with a built-in ability to pass through inflation. Examples include things like railways, airports, pipelines, royalty companies, motorway concessions, and more. Today’s note recommends such a company, and it’s one that has reached a powerful inflection point. Full write-up by @AtlasPulse and @WinderKit on our website👇 bytetree.com/research/2026/…

New hedge activated

UK 10Y Yield falls back below 5% level reached during the panic of last week... Or maybe it was just the oil price all along? $CL1 #Investing

Min vol investors seeing high beta outperform by 300 basis points every day

Consumer weakness strikes again as Walmart $WMT falls -7% today. Probably nothing to do with the fact that it was trading on a multiple of sales last seen in 2000... Starting valuations matter, and there is a price too high for #quality.

@ksmetrics It does say inflation rate falls to be fair…

Inflation falls. Inflation never falls. It has increased by 2.8%, it's just increasing at a slower rate (if you believe these statistics).

@Rory_Johnston Bear Sterns will be fine, the problems isolated to the CDS department

Largest weekly US crude stock draw on record confirmed. Crude price:

What links old sayings, Darwin's theory of evolution, contrarianism, Arsenal FC, and investing? The saying "it's always darkest before the dawn" was coined long before anyone had empirical evidence to prove it (some say as far back as 1650). Yet it captured something true: things often feel worst just as they're about to turn. Old sayings survive for a reason. They get applied to new situations, new generations, new domains. That is the cyclical nature of life. Make hay while the sun shines. History is a kind of evolution. The wisdom that survives does so because it repeatedly and successfully explained the lived experience of each generation: survival of the fittest, applied to ideas. Why am I writing this today? On Monday night, I hit rock bottom with Arsenal. They finally broke me. I lost my resistance to fear, lost all confidence, hope, even joy. Toiling to a 1-0 at home to relegated Burnley was too much to bear. We'd never win at Palace, I thought. But the next day, we won the league, as Man City crumbled. Therein lies the contrarian truth. As one artist put it: "When you feel like giving up, know you're close." I am a contrarian by nature, comfortable outside the crowded opinion. I don't gamble, but have made occasional bets when there's maximum outcry in one direction. I backed England to win after Bairstow got run out at Lord's, Root to score a hundred after the first Test down under, and Arsenal to beat Spurs and win the league after we drew at Wolves. Tiny sums, for skin in the game. All at moments when hope seemed lost. This might read like a post in favour of contrarian investing, but after a year at ByteTree, that view is being challenged by the remarkable work we're doing on momentum investing, which I'll write about next. There are many ways to skin a cat. #Investing #Contrarian #Momentum

World - Equity Earnings Yield Minus 10-Year Government Bond Yield. Guess who the outlier is... $SPY en.macromicro.me/charts/141449/…

@Barchart So… 60/40 is back on?

Stock/Treasury Yield correlation plunges to lowest level since 1999 🤯👀

@DrewCohenMoney That feels fair for $LULU, a narrow, recent, one time trend success. But $NKE has longer history, broader reach in terms of product and geography, the best athletes, an unbelievable culture, and more… no doubt it faces challenges, but they are not in the same basket I feel?

A beginning investor usually learns that they should avoid apparel businesses because it is very hard to judge consumer's taste in the long-term. Sometimes it makes sense to just follow the sterotypes instead of hoping for exceptions.

@OptaAnalyst @GNev2 Another win for the computers!

Sorry @GNev2!