RBPtechnology

@FishtownCap @Hypertonx If the $ZM CEO was smart enough to invest in Anthropic I’d bet he’s got a good shot at figuring out how to grow zoom with AI from here

@Hypertonx It’s your original post but more like a 6% FCF no growth business.

$ZM Update, Anthropic valued doubled since filing $27.5B market cap $1.72B cash $6.5B securities >$3 billion in Anthropic $1000 in $ZM is like buying $110 of Anthropic $300 of cash / securities $590 of a business that has a FCF yield of ~12% (before SBC)

@FishtownCap @BRK_Student Guess we’ll have to see if/when we have a true cycle. I’d bet when that happens the S&P could fall 30% and it still wouldn’t look cheap but wouldn’t be able to stay the same about Berkshire at that time (btw no position in Berkshire).

@rbptechnology @BRK_Student The S&P500 isn't "real" is the hottest take I've seen on this yet.

Berkshire Hathaway recouped its purchase price for BNSF in Q1 2019, nine years after purchasing the railroad for $33.5 billion. And the cash continues to pour in...$4.4 billion last year alone. 2026 will see cumulative dividends near 2x the purchase price. $BRKA $BRKB @BNSFRailway

@FishtownCap @BRK_Student Current S&P 500 price isn’t “real” for an investor with a forever holding period. It’s filled tons of cos where earnings are way overstated (SBC, perpetual adjustments, etc.) or valuations are incredible. I’d bet that BRK will beat it as it has over the last 5, 10, 20 years etc.

@BRK_Student If Berkshire had just invested in the S&P500 instead of paying a 31% premium for BNSF in November 2009 (why pay a 31% in Nov09!) it would be worth $369 Billion today. You'd receive $5.57 Billion from the S&P500.

@DannyOcean555 What’s more underrated how sophisticated the CEO and Chair are at stealing from shareholders. Convinced the board to reprice ~3.5m shares of options from $11.79-$22 strikes to a strike of $6.63 last year…

Talking about the wrong Fig(s) Underrated stock revival (just don’t look too far back) Spear’s $5M purchase @ $6.30 was premature, but looking pretty smart now

@bgurley @mjmauboussin Is it easy though? Tell that to Sears or KMart…

Some shocked that Walmart and Costco have higher multiples than software companies. When so much value is in terminal value, the haunting question is “will this company be around in 30 years?” Easy question for Walmart. For more see @mjmauboussin on CAP.

@EricBalchunas @RealEJAntoni Half of the job growth was healthcare. At least half of healthcare spending is government spending (Medicare, Medicaid, Obamacare, tax subsidies+)…

@RealEJAntoni This prob should be a big story, but instead, I just saw a headline that said ‘here’s why full employment actually isn’t good’ smh

THIS is the real story out of today's jobs report - Trump was handed an economy that was losing private sector jobs and adding gov't payrolls, but he successfully flipped the script, and one year later it's all private sector growth while cutting gov't jobs:

@FishtownCap What can they do to grow? Surely refund amount, income and homeownership data should be pretty valuable. Otherwise seems like a boring stale business where $WU trades at 5x earnings and 9.5% yield with similar terminal risk concerns is better…

$HRB H&R Block Putting money where my mouth is, long Aug $35 Calls at $2.75. We're back to 2020 valuation on vibes. Personal taxes is an weak AI use case. We have cheap SW to do the calcs, gathering and inputting the data is the work! 5% dividend and buyback 10% of outstanding shares at this valuation. Silly.

Narrative buster: The share of U.S. single-family homes occupied by renters is at 15+ year LOWS, according to Redfin. And yet both sides of the aisle want you to believe institutional investors are the boogeyman turning America into a renter nation... 🙄 Facts > Narratives.

Some interesting things I learned this year: • 33% of the world’s population (= about 2.2 billion people) have never used the internet. • 38% of Stanford students are registered as having a disability (likely many of these are gaming the system to get extra time on exams). • HIV began spreading in the early 1900s in Africa but went largely unnoticed until the 1980s, as its deaths resembled other infectious diseases common in rural areas. • Manhattan today has about 650,000 fewer residents than it did in 1910. • Humans and octopuses evolved eyes independently, but in humans the optic nerve attaches in front of the retina, creating a blind spot, while in octopuses it attaches behind the retina, so they don’t have one. • Global suicide rates have declined by about 36% since 2000. • India is a major leather exporter, despite cows being considered sacred. Most hides come from water buffalo, which are not considered holy. • About 82% of dogs used by South Korea’s quarantine agency are cloned. Training costs are less than half those of randomly selected dogs, since only top performers are cloned. • Roughly 1% of the U.S. workforce is laid off each month, whereas in Germany it’s less than 0.1%. • Light pollution is causing birds worldwide to sing longer each day, extending their vocalizations by an average of 50 minutes. • Until the late 1980s, doctors often performed surgery on babies without anesthesia, due to the belief that infants did not feel pain. • People with Down syndrome have about half the rate of solid cancers compared to the general population, likely due to anti-cancer genes on chromosome 21. • At launch, SpaceX’s Starship produces instantaneous power equivalent to roughly 10% of the entire U.S. electricity grid. • China has built, on average, roughly one large dam per day since 1949.

@Mr_Neutral_Man Seems fair: Depreciation is a real expense (office investors learned the hard way). 2/Unless assets are super scarce or cater to the top 20%, it may be challenged (look at how concentrated corporate profits and consumption has gotten). 3/ Who knows what RE needs post-AI look like

Lots of really solid REITs trading with ~6% dividend yield on 60-80% payout of FFO with the remaining retained for maintenance and growth cap ex FFO yield actually around 7-8% for some large blue chip REITs like $O with very little leverage This is 300-400 bps over 10 yr Treasuries

Hearing worse anecdotes this year from the same shop, “I had to check my calendar feels like Thanksgiving/Christmas, the phones suddenly stop ringing the last couple weeks.” Still short $SNA. Stock has underperformed (YTD, 1-year etc.) still expect that to continue…

@GavinSBaker @Atreidesmgmt Maybe Elon is a special case & agree not paying what was owed & double approved by shareholders was not fair but he also owns 13%. If the stock implodes so does his chunk (he won’t let that happen). Bufffet, Dimon, Bezos & Gates are better rolemodels for comp for shareholders imo

My firm, @atreidesmgmt, will be voting in favor of Elon Musk’s performance-based compensation package. And I would prefer that *every* company I invest in have a comparable plan. I believe shareholders should generally support thoughtfully structured performance-based CEO compensation packages because they incentivize CEOs to create transformational growth and value. The basic logic of these plans is the CEO gets 10% of the incremental value creation if they 10x the stock with a 2x hurdle. So shareholders get a 900% stock increase and the CEO gets an incremental 10%. The first Tesla plan incented Elon to >10x the value of Tesla. He achieved all of the milestones and may never be paid for this. The Axon plan incented Rick Smith to >5x the value of Axon and he did. And when milestones aren’t met (such as Farfetch), then the CEOs don’t receive the payouts. The new Tesla plan is arguably better than the first as it also includes financial and technological milestones in addition to market cap-based incentives. Tesla was founded to fight climate change and decarbonize the world. They have succeeded: because of Tesla the world is now on a glide path to significantly lower per capita emissions as EVs of all types replace combustion engines. The world is going to run on sunlight. And while Optimus has the potential to be a great product that will bring about sustainable abundance, Elon absolutely wants to make sure that it is also a safe product. We have all seen "Terminator" and ensuring the safety of Optimus is why he needs a greater voting stake in Tesla. Elon's involvement is integral to maintaining Tesla’s current course and trajectory. Without proper alignment and incentivization, I think it is possible that he will focus more on his other goals: (i) helping humanity become a multiplanetary civilization, (ii) creating a BCI to improve the lives of paralyzed and soon blind humans that also paves the way for humans to continue to add value to the world post ASI, (iii) helping to create a multipolar AI world that is safer for humans, and (iv) ensuring that at least one of these AIs is dedicated to the truth. All of these are worthy goals, but so is sustainable abundance here on earth and so is having at least one public company that benefits from his efforts and is accessible to all Americans. If this vote fails, Robyn Denholm, the chair of Tesla’s board, noted that Elon might leave. Elon is mission critical for Optimus and if he leaves, it seems possible that Optimus might be made by a company other than Tesla – whether xAI or SpaceX or some JV - with Tesla receiving some sort of revenue share in return for their contributions to date in the spirit of fairness that Elon has always followed with his investors. I believe it is highly likely that Tesla’s stock would decline significantly should Elon leave and even more should the Optimus team leave with him. If this compensation package is approved, I will be rooting for him as a shareholder as he works super hard to achieve the value-creating milestones that would benefit both him and shareholders. I do not know how other shareholders feel, but I would certainly like another 10x in Tesla and simply do not believe this is possible without Elon. Every vote matters because from my perspective many proxy voting firms are no longer primarily focused on shareholder value creation and the corporate governance departments at many investment firms feel bound to follow their decisions. The silliness of their concerns about dilution are self-evident in that the dilution would only occur after substantial share price appreciation for Tesla. I want my 10x. I should note that @atreidesmgmt is an investor in many of Elon Musk’s companies. @atreidesmgmt invests in these companies because I regard Elon as an exceptional founder who has repeatedly created significant value in different industries.

Might be premature but wonder if/when $MSTR busting their “mNAV / bitcoin yield concept” echos what happened in 2000. “History doesn’t repeat itself but it often rhymes”…

@RagingVentures Bought some $FDS recently for a trade. Mainly for reasons above + thinking the new CEO was highly motivated to sandbag guidance ahead of a big incentive award he wanted struck more favorably ($22m; struck after earnings).

Two out-of-favor stocks that currently intrigue me: $FDS and $ARE FactSet is trading at valuation levels it last traded at post-GFC with strong cash flows and balance sheet. Shouldn’t AI be more of a growth opportunity than risk? Alexandria owns scarce pharma/lab space in key SF, Cambridge, and San Diego markets. Market got oversupplied and investors are worried about government cutbacks. But valuation is very undemanding and balance sheet is high quality for a REIT. Feels a bit like $SPG coming out of Covid. Thoughts?

@Austen The market’s temporary stupidity isn’t the same as creating wealth. Excluding compensation in litigation, Musk has been paid more than $50B since IPO, despite $TSLA earning less than $35B in aggregate during that 15+ years. This package will be the same when all is said and done.

I’ll make you a deal. If you create $8 Trillion in wealth you can keep $2 Trillion of it.

@FishtownCap Old write up but some data as a reference for that. I’m watching $TGT, hoping it continues to decline maybe into a total capitulation when the new CEO kitchen sinks guidance after taking over in Q1 next year… pro.morningconsult.com/instant-intel/…

@rbptechnology Wouldn’t have guessed $TGT skewed more left but I have no data either way so maybe. Still a stark valuation difference. Walmart was a 15x stock for a longggg time

Walmart $WMT vs Target $TGT Just wild. WMT at a 40x P/E versus TGT at a 12x.. Goes against the "poor/middle getting squeezed" narrative a bit.

@FishtownCap A big chunk of multiple compression in $TGT happened in the past year or so as sale softened (consumer base skews more left). Less sure what’s going on at $WMT seems like a similar dynamic to other retailers $COST or $HD where no price is too high for competitively advantaged cos

@rbptechnology I'm not sure what the takeaway here is? In all honestly, this is more about multiple re/de rating versus how either company is doing. But if you told me "lower middle and below squeezed, upper middle and above doing great, who's the winner, $TGT or $WMT?"

@FishtownCap Seems like their prospects have gotten a lot worse in the near and long term though (SNAP cuts, MAHA, GLP-1s including pill forms in the pipeline)? $HRL looks kind of interesting to me: decent organic growth, more protein focused / narrow portfolio, good long term record etc.

Wild part in the CPG carnage is the worst performing co's have deleveraged a lot $KHC $30B debt in 2019 -> $18.6B $CAG $10.5 debt in 2019 -> $8B Both cut in half since 2018 and not very obvious looking at the P&L's. But big narrative shift from quasi-UTE to vulnerable.

@Citrini7 Sounds like airline ticket prices need to go up…

My flight is overbooked and they’re trying quite desperately to get 2 passengers to accept a later flight. Bid up to $1000 and nobody has blinked an eye or expressed the slightest interest. Inflation might be back?