Trying to find moats riding S-curves. Entrepreneur, investor. It’s always Day 1. @IncreasingRtrns host. Sign up for updates: memosbyhh.com
Miami, FL
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In light of yet another WSJ hit piece on @elonmusk, let’s recall what Larry Ellison said about the WSJ back in 2018:
Marcelo P. Lima
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This blew my mind: The New York Times printed Nazi propaganda that Poland had invaded Germany, and the journalist who wrote this won a Pulitzer Prize for his efforts.
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Watch Nadella describe SaaS apps as nothing more than a CRUD database with some business logic, but once the business logic moves to AI agents, SaaS is over:
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Lina Khan blocked Amazon from buying iRobot; they had to lay off 31% of their employees and are losing money hand over fist.
Then, she blocked JetBlue from acquiring Spirit Airlines; Spirit is now contemplating bankruptcy.
Great job, Lina!
Community note
Amazon’s acquisition of iRobot was abandoned because it had “no path to regulatory approval in the European Union.” It had nothing to do with Lina Khan or the FTC.
theverge.com/2024/1/29/2403
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How much is a plane ticket to Venezuela or Mexico?
Plus a few hours’ work for the agents involved.
$5k?
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Neither the New York Times nor the Wall Street Journal have written about the historic achievement of Boom in building the first ever supersonic aircraft not backed by a government.
The FT though wrote a story accompanied by a cool graphic:
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YouTube is censoring the Joe Rogan interview with Trump by not showing the video (with over 33m views) when you search for it, and people have noticed. WTF.
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Enjoyed this vignette of @elonmusk’s work ethic at SpaceX. NASA’s chief engineer: “I guarantee you this guy is not going to fail”
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Hard to believe Ebay bought PayPal for $1.5 billion in 2002.
Market cap today:
Ebay: $39 billion
Paypal: $295 billion
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Bloomberg is such a joke.
While Perplexity does realtime call transcription for free, Bloomberg has a 15 minute lag and costs $30k/year.
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Guess who would be really happy with Trump’s tariffs?
Warren Buffett
That’s right. In 2003 he wrote an article pointing out our huge trade deficit problem and proposed a solution… tariffs!
🧵
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Just rode in my first BYD Dolphin in Brazil. The math for an Uber driver is insane: with his gasoline Toyota Corolla he used to spend R$3,000 per month on gas. Now his home electric bill is R$800. Every week in São Paulo there is one day you can’t drive (“rodízio”) but EVs are exempt so that’s one day of extra income. The Corolla had R$840 of extra maintenance every 2.5 months. Add it all up, with the BYD he makes an extra R$58k per year. The car costs R$150k so it pays for itself in a bit over 2.5 years.
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$GOOG has spent $163 billion in stock buybacks since Q4 2015 and the share count is exactly the same.
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I was told @DanielLurie had fixed it.
How come they fixed Market Street when Xi Jinping visited, but only then?
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“The United States has been busy creating lawyers while Japan has been busier creating engineers.”
— Akio Morita
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In 2016, Carl Icahn said the stock market was going to crash. Buffett was asked about it. His reply:
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According to Bloomberg, $AMZN now trades for under 12x EV/EBITDA.
Mondelez just sold their chewing gum business for 15x EBITDA.
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It should be a national scandal that Biden is emptying out our entire strategic petroleum reserve just so he can inflect gasoline prices to win short-term favor with voters ahead of midterm elections
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Puzzle: the Large Hadron Collider cost $279 million per mile to build. It has 10,000 superconducting magnets, 96 tons of liquid helium for cooling, and is all custom made.
New York City's subway costs between $1.5 to $3.5 *billion* per new mile to build 🤯
5-13x more expensive
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Square $SQ acquires Cash App customers for $5 and is getting $41 of gross profit per quarter on each customer.
That's impressive.
Incumbent banks, watch out.
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Cost to ship a 40-ft container dropped 52% in the last 12 months. More to go, but good progress. Cost now back to Jan '21 levels.
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$META is already in a net debt position despite generating $45 billion in free cash flow.
This is because it's spending an average of $29 billion per year in buybacks, $16 billion on taxes for equity awards, and $5 billion in dividends (avg of last four quarters on ttm basis)
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She’s much worse than you imagine but it hasn’t been reported by the mainstream media. Maybe it will be now, after they throw her under the bus.
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Tesla, which does hard engineering and manufacturing, appears to be more efficient at scaling than the vast majority of software businesses
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Larry Ellison’s rant on Tesla and @elonmusk is just awesome
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“You can build a billion-dollar startup from your computer, but you can’t build a shed in San Francisco without a billion permits.”
— @balajis, on the “why” of creating a new state
Our physical helplessness is learned.
You aren't supposed to even put up a street sign yourself, to build without permission, to help in any way. The physical world is a read-only environment — only the state or those it permits can edit it. Needless to say, it wasn't always so.
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from the book “The Gray Lady Winked”
amazon.com/dp/1736703307/ref…
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In light of *yet another* WSJ hit piece on @elonmusk, let’s recall what Larry Ellison said about the WSJ back in 2018:
Marcelo P. Lima
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CNBC reporter in China said the government is blurring the televised audience in the World Cup stadiums because people were questioning why nobody was forced to wear masks.
Orwell’s 1984 redaction in real-time.
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Coca-Cola stock just hit a 52-week high.
27x next year's earnings (according to Bloomberg)
This is a business that struggled to grow its revenues by a mere 9% over the entirety of the last decade or so.
High-growth tech is in deep value territory and low-growth, the opposite.
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Great point. I voted for Biden in 2020 and I had no idea about the NGO stuff and I certainly didn’t vote for the woke DEI insanity. Lesson learned, Trump 2024 🇺🇸
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I think Ackman is wrong here on $UBER: if Google chooses to do so, it could put Waymo inside Google Maps (1 billion MAUs) and match riders to vehicles. Tesla is another threat. Either would obviate the need for Uber. All likely to happen a lot sooner than "many years".
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Unilever CEO: "Let me be clear. Coronavirus is NOT positive for Unilever on a commercial basis. (Despite growth in consumption of many items.) Only in the US are we seeing this dramatic pantry hoarding. US consumer has bigger house size and more appetite for credit card debt."
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You're getting ripped off. Buy the tires yourself and have them delivered to a small shop. Anyone can swap tires.
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He said exactly the opposite:
piped.video/Qau9ILf3exk?si=K8Q-…
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Anyone who is long $GOOG or who works there should watch this starting at 5:55
The All-In Podcast
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Satya is 100% right: the AI hype will be justified when GDP grows at 10%-type levels. Otherwise it’s just hot air.
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If I were Buffett, I'd be buying American tech stocks right now.
At current multiples and growth rates, highly likely to earn 15%+ IRRs from here.
Not investment advice, but $GOOG is an obvious example.
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“Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays.”
— Warren Buffett, 2013 letter to shareholders
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A charming email from Jeff Raikes of Microsoft to Buffett, explaining the business and the investment merits, Aug 1997:
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Unions
Biden loves unions and hates to praise anyone who doesn't have a union workforce
Which is why he didn't even invite Elon for the EV summit at the White House and claimed GM's Mary Barra is responsible for the EV revolution, which is patently ridiculous.
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Every $FB call:
Zuck: I’m excited
Sheryl: This little store in Ireland made 5x ROAS
Wehner: Everything is going to suck don’t buy the stock
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“People would be so much better off if they didn’t have a stock market in terms of buying businesses.”
— Warren Buffett, 91
Echoes something Keynes wrote in 1936, too: that stock market liquidity is a liability for most people since they can’t handle the volatility.
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Companies I wish were public:
Lego
Mars
Ferrero
Depository Trust Corporation
Which others?
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Lots of empty seats at the $ADBE investor day probably means not that many people left to sell the stock
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Coca-Cola stock is trading at ~25x pre-tax profits, estimated, in 2024 (EV/EBIT).
Google (Alphabet) is at ~13x the same metric in 2024, estimated.
One of these is growing much faster than the other.
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Four life-changing books I’ve read that will help you live longer:
- Metabolical by @RobertLustigMD
- Breath by @MrJamesNestor
- Why We Sleep by @sleepdiplomat
- Lifespan by @davidasinclair
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Four years ago today, $FB was trading at 26x trailing free cash flow, and during the following four years sales grew 37%, 27%, 22%, and 37%.
And yet... the total return on the stock since then is 8.3%.
Investing is hard.
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In 2 minutes, during after hours trading, $TWLO retraced its entire -23% YTD performance, before most humans even had time to read the press release.
Markets are insane.
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Tariffs 101:
1. Buffett's 2003 article: berkshirehathaway.com/letter…
2. Bessent in All In: piped.video/lSma9suyp24?si=Q8CL…
3. Lutnick in All In: piped.video/182ckTL2KBA?si=WVT1…
4. Lighthizer interview: piped.video/p0IUh8kNSqY?si=cTRL…
5. Vance Dynamism speech: piped.video/live/YAgoUvuyLik…
6. Stephen Miran interview: piped.video/YP8ii_jPcCs?si=sWYF…
7. Stephen Miran paper: hudsonbaycapital.com/documen…
what are the best pieces you've read on the tariffs? trying to understand this from a variety of perspectives.
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This article assumes the tariffs were chosen to be academically correct. They weren’t. They were chosen as an extreme number to bring the parties to the negotiating table for bargaining.
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If Steve Jobs rose from the dead and got rehired at Apple today, how many days would it take for him to get cancelled, too?
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Moderna is developing a personalized cancer vaccine. They sample / sequence your cancerous tissue, find targets, manufacture the vaccine and deliver to you in weeks. If this works… 🤯 $MRNA
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This needs to be shut down immediately @GovRonDeSantis
Why are people with ties to Muslim Brotherhood running schools and getting government funds for it?
@SecRubio & @AGPamBondi take a look
👇🏻
rairfoundation.com/taxpayer-…
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They are here illegally.
How much could legal costs possibly cost?
This isn’t complex defense work.
Anyway, I don’t think anywhere near $100k makes any sense.
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LVMH has about 7% of its sales and 33% of its pre-tax income in France, yet France accounts for 40% of its taxes.
With the new tax law, its taxes will increase by 800 million euros and LVMH alone will pay 4.5% of all corporate taxes in France.
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$SNOW expects $10 bn of product revenue in FY '29, with 15% fcf margins. Put that into a DCF, include share count dilution, at 30x FCF you get a 3.9% IRR from the current share price.
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Why did the Bay Area folks fall for this fraud?
This person/company should be sued and the $250k returned to the city.
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The difference is Berkshire has underlying free cash flows, meme coins do not
Therefore, Berkshire is not a meme coin
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Apple has 147,000 full-time employees. About 1.4% of them didn't like it that Apple hired @antoniogm (2,000 signed a petition for an "investigation" on his views). Apple then turned around and fired him.
Why this crazy minority rule? The tail wagging the dog? Spineless mgmt?
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This right here summarizes military contracting. Military Officer trying out the Oculus Rift:
MO: Amazing, how much does it cost?
OR: 300
MO: Any chance you could do it for only $250,000
OR: Sorry I meant just $300
MO: 🤯
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It’s hilariously ironic how nearly every moat evaluation in this book is dead wrong
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When was the last time a miracle pill worked as intended without adverse effects after many years of use?
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$ARM appears to be trading at just 55x sales, 111x earnings, 163x FCF, and 99x EBIT
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If Matt Levine left Bloomberg and did his own Substack he could probably 5x his income.
Why hasn’t he?
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