Castanza

Small adds to RTX, BRK, WFC (yee haw)

Yeah for sure, can’t decide how far otm I want to go though. My SAVE leaps (which I'm still holding) left a bad taste in my mouth....other than GOOG I haven’t had good experiences .

BRK, WFC, MSGS, RTX

My understanding, from speaking to friends in the industry, is that WFC has much more legacy plumbing that requires a significant amount of manual intervention vs. the other two (who have consistently been pivoting away as much as is possible from legacy systems)..........be it regulatory reporting or something as simple as global transaction services.........all things told Wells not only has a bloated branch / retail employee network for the digital age but under the hood they have been less successful in taking the monkey out of the machine (so to speak). Having a surprising amount of processes carried out manually or requiring manual checks meaning large dead head carrying costs. While all banks run on legacy code and on prem solutions (vs. cloud)....WFC has been less aggressive in (a) updating its code base to modern / cloud first tech & (2) given those legacy systems have been unable to take advantage of newer tech in the areas of AI, ML, RPA technologies (robotic process automation) or STP (straight through processing) to the extent that other large players have. To some extent my potential investment in WFC is predicated upon the new CEO driving technology solutions to drive down cost and drive up ROA/ROE........in effect WFC has hidden earnings power that will be unlocked over the next few years Good stuff. Thanks! +1

I don’t work with enterprise finance stuff, but I can’t imagine it being so difficult that it takes more than a year to roll out a fluid efficient tech stack. I mean what exactly are JPM and others doing that WFC can’t? It’s banking....not VR, AI. I’ve been apart of enough enterprise projects dealing with top secret security standards, HIPAA, and finance data to know it can’t be that difficult. Anyone with experience in this sector? I think what your wrote is correct if you start from scratch, but most likely not correct if you need to seamlessly replace legacy systems that are working together and need to work very reliably without errors for hundred thousands of employees and millions of customers. Imagine if an IT transition blows up and thousand of customer see error sin their statements etc. The CEO will be in front of Congress with a subpoena and defends his “cost cutting”. I think Viking is correct to see the banks partly as tech companies too and I don’t think that Wells Fargo scores that well right now. I don't disagree. It absolutely has to be precise and flawless in the banking sector. If you start blowing up apps, services, and DBs on legacy systems heads roll. This past year I've had a lot of experience migrating legacy servers and databases to new VMs. Not very exciting stuff.... but this one in particular (an HR server) was so old that we didn't know what would happen if we brought it down. The lubricant on the physical disk was so old it might have hardened up during the downtime before we brought it back up. Ended up working out okay in the end. In the end, I think it's more of a "time/effort/money spent" than a "outpaced proprietary tech" thing. WFC will catch up and JMP, BAC will likely all be relatively even keel for a bit until we see new systems and tools developed. But one thing to note is as we move forward, specifically with backend related stuff, I think the competitive advantage is diminishing. Newer systems today are far more flexible and the containerization we have today makes new tool implementations as easy as a click of a mouse. Hell, most of the cloud stuff I have worked with is basically self service for business unit customers. We set them up with their own little portal and if they need more disk, they check the cost and click the button themselves. Parsad is correct, WFC is not that far behind and once they reach a certain threshold, I don't think JPM and BAC will have a "competitive advantage" like once thought. Of course I could be wrong :p. I've seen the backend of so many companies its funny how they are essentially all running the same stacks. Can't imagine banking will be much different.

Well said. I guess I don’t understand the competitive advantage. If you have your average Joe the app for all the major banks, I doubt they would really have any significant preference. Sure there will be some who care about all the functionality etc. But hell, even my shitty little local credit union has an app which lets me mobile deposits check, check my balances, transfer funds, blah blah blah. Sure, it’s not pretty, but who cares. As long as my balance shows up accurately I really couldn’t care less about the app. WFC is a massive bank, I find it hard to believe they couldn’t pay some major firm to build out a tech suit in a year. But all you here is how far they are behind. Far behind in what? Is there some teleportation peripheral device that will spawn stacks of cash in my house that JPM is offering that WFC?

I don’t work with enterprise finance stuff, but I can’t imagine it being so difficult that it takes more than a year to roll out a fluid efficient tech stack. I mean what exactly are JPM and others doing that WFC can’t? It’s banking....not VR, AI. I’ve been apart of enough enterprise projects dealing with top secret security standards, HIPAA, and finance data to know it can’t be that difficult. Anyone with experience in this sector? If it is fairly easy and can be done relatively quickly why is WFC (apparently) so far behind? Saputo in Canada has been trying to migrate its worldwide food operations to a new system (order entry, warehousing and delivery) and it looks to me like it has been an abject failure (taking years longer to execute in the various countries, costing hundreds of millions more than budgeted and causing issues with customers). Saputo underinvested in tech for years (which likely boosted profits in the short term). Yeah but that deals with physical goods, logistics integration, all types of peripheral devices. That’s a whole different ball game. I’ve helped to roll out a few supply chain systems and they can be a real pita. Banking is essentially just moving numbers. Again, I don’t know for sure. If I had to guess the pipes and backend are probably pretty complex. Especially being that the latency with transactions need to be flawless. I have a friend who works for BAC so maybe I’ll pick his brain a bit.

I don’t work with enterprise finance stuff, but I can’t imagine it being so difficult that it takes more than a year to roll out a fluid efficient tech stack. I mean what exactly are JPM and others doing that WFC can’t? It’s banking....not VR, AI. I’ve been apart of enough enterprise projects dealing with top secret security standards, HIPAA, and finance data to know it can’t be that difficult. Anyone with experience in this sector?

What pushed you to sell DIS? Hi HM - I still like DIS in the long term, but prefer ALX and WFC for now. I bought DIS between $85 and $80 and would likely start buying again under $90. Also, added to WFC and started a new position in DOW. Thanks Lance Got it, that makes sense. WFC has been left for dead. Trump doing his best to put a bullet in the back of their head. https://twitter.com/realDonaldTrump/status/1260206276216266754

Which foreign utopia are you from?

WFC

Yeah, sure developing countries have healthy populations. They are just crushing this chart: https://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy Please all go to Africa and work in subsistence farming. You'll be so healthy. Just leave all your stuff for people who decide to stay and suffer in the first world countries. They need it. ::) Healthy with respect to blood pressure and diabetes particularly is what I meant. And those are key issues for this virus as I understand it. Diabetes by country: https://www.indexmundi.com/facts/indicators/SH.STA.DIAB.ZS/rankings Hypertension prevalence by country: https://www.who.int/gho/ncd/risk_factors/blood_pressure_prevalence/en/ Hypertension deaths by country: https://www.worldlifeexpectancy.com/cause-of-death/hypertension/by-country/ Here is my source for rural Africans as I initially mentioned: https://nutritionfacts.org/2017/04/06/high-blood-pressure-normal-but-not-natural/ I don't know who (population) your source includes. In another article, the same source, Dr. Michael Greger, says the same thing applies to rural Chinese. The key point is a largely vegan whole food diet, with meat a couple of times a year, leads to the good outcomes in blood pressure and diabetes. That is not what rich countries typically have. If Africans and Chinese adopt our diets, they will have the same results. The results cited by Dr. Greger refer to rural Africans with traditional diet. FWIW my sister lives in rural Laos and the diabetes rates are crazy high because of all the sticky rice.

This is being looked at by many (need models and statistics though :) ). {i live in a socialized medicine world and there are costs to waiting just as there are costs for excessive care}. It appears clear that delaying major cardiac surgeries has resulted in people dying while waiting. Also, anecdotally and progressively from more solid evidence, because of imposed shortages and people actively avoiding care, patients tend to come late for various conditions (heart attack, stroke) and obviously this limits the options that could reverse, at least partially, the consequences. The answer will become clearer when excess mortality data will be collected and analyzed. There will be excess mortality from COVID-19 and from the above but it also appears that there will be much less mortality from accidents. i read Spekulatius mentioning that hospitals are open for business but this is far from being the case in my province (especially urban centers). There are many places where a large part of the workforce is either CV+, in quarantine or simply decide to avoid work. Definitely. There are still a lot of hospitals and outpatient centers near us which are not allowed to perform many elective surgeries. In fact, my Mom had to have a series of back surgeries for a herniated disc. She had one surgery in early March and he second follow up one has been postponed (tbd). Now she isn't in immense pain or on any drugs at the moment, but it's still frustrating because he lingering issues still bothers her. Not to mention where my parents live there is not a single Covid-19 patient. I'm no surgeon, but I imagine the timing of a series of surgeries plays some type of role in effectiveness, outcome, and path forward. I imagine there are individuals in much worse situations. The hospital my wife used to work at in Ohio has cut employee pay and laid off a lot of staff simply because they are getting crushed revenue wise for not being able to perform elective surgeries. Not sure how widespread this is, but I have read reports of this happening in other states as well. Unintended consequences...truly a shame...

Exited all but one GOOG $1500 Jan 2022 leaps I bought about a little over month ago at 5.5 for 16.9 F&^k me....could I have missed out on more? Almost certainly! But damn, how can I pass this up in the short term? options = increased risk/reward and emotions Would you have taken profits?

Nothing airline related

I sold out of my equity when it hit 15 as well and took about a 43% loss on it. I still have a few leaps with strikes of $25, $27.5 and $30 that I will let ride. Who knows....it's a very small position for myself so I haven't followed it much since I sold out of my equity. Hopefully I'll wake up in two years and see Spirit is trading at 30+.

Anyone have any thoughts on how many deaths will be related to elective surgeries being canceled? I guess you could also look at potential factors that lead to premature death as a result of postponing surgeries or treatments but I’m not sure you could quantify that.

FWIW, look up your local spin class prices. Around me the going rate is $15 per class and this requires you to schedule a time, drive to the studio/gym, etc. 5 days a week at $15 dollars would be what 3.9k a year? I don't think it's that hard to justify the price of the bike and subscription service to people who "spin".

MSGS, BRK

From this perspective, is the (to me at least) high cost of Peloton a feature, rather than a bug? I would guess that it is a feature. You can find other exercise equipment (see sunny bike) which is very similar mechanically, yet costs about 1/3rd of the price.

Look, Peloton is not a new concept. It's simply not. There have been workout videos and home workout equipment since at least the dawn of Television. Someone please show me the long-term use statistics on these home exercise pieces of equipment/videos. And I'll grant you that most people need human reinforcement, such as a coach or a class. How many exercise studios are there out there? How many of them earn an economically significant/attractive return to their owners/operators? Would you want to compete against an irrational competitor? That's pretty much what Peloton does because their competition is constantly evolving with new fads (Barre, OrangeTheory, Spin, Crossfit, Yoga, Pilates, Insanity, Resistance Band Training, Zumba, Jazzercise, the Shake Weight, and the list could go on and on). That's a very competitive environment where market share changes quickly. If there is one thing I've learned, a business is much less likely to providing enduring investment returns if market share in that industry changes at a rapid pace (meaning relative market shares can move dramatically over the course of a decade). I think exercise equipment probably witnesses dramatic changes in customer behavior on a more frequent pace than that. The difference is Peloton is quickly becoming a cultural status item like the iPhone did. The branding/marketing difference is unreal. Those previous exercise equipment fads have a stigma of becoming nothing but clothes hangers that you hide in some backroom of your house. Peloton is something you put in a front room so every friend who comes over sees your big dick swinging Peloton "piece of art" and thinks to themselves, "damn, what am I doing wrong". Add in the best in class platform and you may have a recipe for success. As I said, no position currently. But I think there is more to consumer perception with PTON than people are giving credence.

If the model proves profitable, what is there about it that can't be copied by a competitor? Or do you believe there will be a significant first-mover advantage that would be very difficult to overcome? Go up to any person on the street and ask them to name an exercise bike company. I guarantee the majority of people will say "Peloton". At this point PTON is better at marketing and branding themselves as a premium lifestyle choice. Similar to what Apple has done. That may well be true today, just as it was once true of Yahoo and MySpace. My question was about tomorrow on the assumption that this business model proves profitable. It's a valid point, and I am by no means saying there won't be competition. Just pointing out in the near term PTON definitely has an advantage. The big questions down the line I have no answer for. Also why I have no position. I just know the people who have them love them and don't shut the hell up about them. I've never heard someone brag about their Nordic Track or Echelon.

If the model proves profitable, what is there about it that can't be copied by a competitor? Or do you believe there will be a significant first-mover advantage that would be very difficult to overcome? Go up to any person on the street and ask them to name an exercise bike company. I guarantee the majority of people will say "Peloton". At this point PTON is better at marketing and branding themselves as a premium lifestyle choice. Similar to what Apple has done.

If PTON is going to have a moat it's not going to be found in the equipment. It's going to be in the software/platform and quality of instructors. There are a lot of people out there buying either the Sunny Health & Fitness bike ($300) or the Keiser M3i to avoid monthly bike fees. Couple this with the Pton app and you have a peloton lite version. You miss out on the functionality of riding stats, but to some that's not as important as having good trainers. Isn't this a win/win situation? The app's marginal cost is zero, and if consumers like certain instructors and like riding with their friends, then the cost of $10 bucks/month is prob not going to dissaude them to switch to a cheaper alternative. Precisely. With just the app it becomes more akin to NFLX. The customers who own the bike will have a stickier relationship though. Near term issues seem to be related to their logistics. Most areas don't get the "white glove" service that is promised(big deal? probably not). However, I've seen reports of customers taking delivery of un-assembled bikes simply to try and beat the 1-2 month shipping backlog. Draw from that what you may. Simply out of curiosity I'd like to see what they are paying these instructors. If I had to guess I bet they are paying out the ass and also have some solid stock option plan as well. I don't have a position or nor do I own a bike. But I think it's a false equivalence to compare this to the bowflex type trend of previous decades. PTON is about software integration/platform building as well as social network stickiness.

If PTON is going to have a moat it's not going to be found in the equipment. It's going to be in the software/platform and quality of instructors. There are a lot of people out there buying either the Sunny Health & Fitness bike ($300) or the Keiser M3i to avoid monthly bike fees. Couple this with the Pton app and you have a peloton lite version. You miss out on the functionality of riding stats, but to some that's not as important as having good trainers.