Liberty

Quality ad: https://m.youtube.com/watch?v=sQB2NjhJHvY

https://electrek.co/2017/11/16/cheapest-electricity-on-the-planet-mexican-solar-power/

Of course, you might still get multiple bad companies, but at least it increases the chances that one of those could go in the right direction (luck of the draw, having good management, etc), and if the conglomerate model doesn't add value here, it certainly adds some friction, so removing that would probably help. It could lead to faster decisions, less bureaucracy, more focus (fewer managers moving between divisions to chase promotions and never getting to really know their verticals, etc). Just a thought. Maybe the company is rotten to the bone and can't be saved, I don't know. But I'm not against the model. It's just a tool. Some use it well, like BRK and CSU.to, and others use it terribly and just build empires with few synergies but many extra layers of fat and reduced speed and focus...

I know little about the specifics of GE. Something always turned me off before I took a closer look... With that caveat, have they shown that the conglomerate format adds value to the company? Seems to me, not really. It would be interesting if they entirely split-off/spun-off the various divisions. There might be some really interesting assets (aero engines?) in there that I wouldn't touch if attached to the whole mess.

More videos (I hate when they split up interviews like this..): Update: Full video here: https://www.cnbc.com/video/2017/11/16/watch-cnbcs-full-interview-with-liberty-medias-john-malone.html

It's not arbitrary. This is the period when the Amazon rumours started. So, the relative underperformance for WBA versus Healthcare sector is largely attributable to Amazon. Earnings were up 11%, so it's not like WBA is struggling. WBA peaked at 25x in 2015, so it needed to burn off some overvaluation. But it was in consolidation from the end of 2015 until Sept 2017 (which is when the Amazon rumors started getting hot). CVS is more complicated. Wow, we're really not good at communicating with one another for some reason. I said that healthcare/pharma has been going through a tough period, so lower valuations might not be entirely because of Amazon. You said sector was second best performer YTD (seemingly contradicting what I said about a "tough period"), so I explained that I was zoomed out a bit more. Even if there's divergence between these and the rest of the second since Amazon rumors started, explaining part of the lower valuation, I'm saying that another part of that valuation might come from a larger trend that started out before YTD. That's all.

Malone on CNBC today: https://www.cnbc.com/video/2017/11/16/john-malone-its-all-about-scale-in-media.html?play=1

Are you both saying that the stock is tremendously, tremendously overvalued, but that it's a bad idea for them to issue so much stock-based compensation to employees?

https://www.cnbc.com/2017/11/16/john-malone-says-amazon-is-a-death-star-moving-in-striking-range-of-every-industry-on-the-planet.html They used to call Malone Darth Vader during the 1990s… so does that line mean he really likes Amazon? ;)

What makes you think that Amazon doesn't make money selling things as opposed to making money but then re-investing it all elsewhere so as to show no profit but optimize for faster growth? As I said elsewhere in this thread, what do you think would happen to profit margins if Amazon targeted 10 or 15% growth (still multiples of WMT growth) rather than 25-30%?

Healthcare is the second best sector YTD (after tech). CVS valuation was already low. But WBA didn't really crack until the Amazon rumours heated up. But again, my point isn't to argue for a specific category. Just trying to point out the reality that things take much longer than expected (even for Amazon). I was looking at the past few years. YTD is a bit arbitrary. Looks like CVS peaked in 2015, same for WBA. And same for a lot of pharmas like AGN, PFE (2016, but mostly flat for years), NVS, GSK (2014), etc. I agree things take a while. My point was just that comparing to fresh food might not be the best comparison.

AirBNB is 10 years old. It still has only a tiny market share (say 3-4%) in major markets. So I think inertia is alive and well in that market. And some of that revenue is incremental (not stolen from hotels) -- for example when my parents came to visit, I put them into an AirBNB. AirBNB started from nothing, so becoming basically a common noun and getting a 30bn+ valuation in 10 years is nothing to sneeze at. Obviously Amazon isn't starting from nothing when they enter a new market, so that can have some advantages (like we saw in apparel recently). I'll take your word on market share (I also googled "AirBNB market share" and found that same report you cite, but I haven't taken the time to read it so I don't know how accurate it is and what markets they looked at). My point wasn't to say that the business model was the same, just that inertia can change rapidly if you offer good value. People went from "that's so weird, I wouldn't do that" to "Hey, let's call a Uber" in a pretty short amount of time. If I can suddenly order my asthma meds online and get a better price, I'll do that for sure. That's a lower psychological barrier, IMO, than sleeping in a stranger's guest bedroom. Costco already offers low prices online. It only has 0.6% market share (and that includes the warehouse stores). Walmart also offers cheaper drugs. It only has 5% market share (including retail stores). I'm not saying Amazon can't figure this out eventually. I'm just saying it is much harder in practice than it is in theory. Amazon has been looking at entering this category since the 90s. The reason they haven't entered yet is because it is hard. But again, this isn't specific to drugs. It also applies to grocery, industrial distributors, auto parts, and other Amazon victims. It just happens that the drugstores/PBMs are a category that offer attractive valuations combined with the least advanced "amazon effect". Fastenal (25x) and ORLY (18x) also have Amazon risk. The only reason why CVS/WBA seem to be selling at such a discount is because of the availability bias. There is a lot of discussion about Amazon and prescription drugs right now. Once they actually enter the category, the buzz will die down and CVS/WBA will go back to trading on fundamentals. Do you think that Amazon is the only reason for the depressed valuations? The whole US healthcare/pharma sector has been going through a tough period lately... Personally, I'm not looking at those as investments, so I don't have much to add on that side. I never said the market was pricing those things rationally or not or that Amazon would crush everyone. I just think this is indeed a large, attractive market for Amazon to go in if they can figure out a model that works.

I don't happen to believe that Amazon destroys any industry that it enters. But I also don't see why a majority of common, routine drugs couldn't be sold at lower prices online by a company that hires a bunch of pharmacists. A lot of the arguments about inertia were the same arguments that people had for Uber, AirBNB, and even e-commerce in general (including most recently apparel). Of course drugs are in some ways a lot more sensitive, but in many other ways, a lot easier to get people to swallow (ugh) as a mail-order-service than to go sleep in some stranger's bed or get in a stranger's car. I think over time the market will likely segment itself, and the more complex stuff might stay face-to-face and the routine stuff can be mail-order. But I have no idea how fast. I think that Amazon, as a trusted online source with the best logistics network in ecommerce, is well positioned to do well there if they can figure out an approach that makes sense.

CSU.to Diversified across hundreds of niche businesses (in multiple industries) that tend to dominate their niches and be very sticky with customers (highly recurring revenue, negative working capital), as well as diversified geographically. Asset-light (the assets mostly go home at night + IP, so highly variable costs), little debt (mostly long-term and non-callable), proven track record of capital allocation, in a downturn they will be able to deploy more capital at higher rates (they're already getting ROICs in the 30s) and maybe snag some bigger businesses. When things go well it should do fine, as it has in recent years, and when things go south, it should create lots of value through M&A or by taking share from less well-funded mom & pops operations. Even in very tough economic circumstances it'd be extremely hard to kill (the last thing its customers will cut is the software that runs their back-end operations and allow them to operate and make money -- that software is typically a small fraction of their total costs anyway). Worse case scenario is they can't deploy capital through M&A at a decent rate, in which case the multiple would compress a few turns and they'd start returning excess capital through special dividends and invest more into organic growth initiatives. Hardly a catastrophic risk.

I think groceries is kind of specific. Amazon tends to run small experiments and expand them when they work. I think with groceries, the problem is that until you have scale in both inventory and demand, you just waste too much food and/or don't have what people want as fresh as people want. Their problem was always getting to that scale, which they're now trying to solve with Whole Foods, jumping directly to being scaled in most major cities. Drugs aren't perishable (at least not in the way that fresh food is), so the barrier to entry is a bit different. Seems to me like it would be mostly a regulatory/safety kind of challenge. But I wouldn't take the fresh food experience and necessarily extrapolate it to drugstore supplies. They might pass on it if they can figure how to make it work, but I doubt it'll just stay a small experiment for 10 years if they decide to go for it.

The numbers are just noise at this point; the reality is that they are distribution channel with name recognition - that isn't going to be going away anytime soon. The only real question is where their highest valuation will be over the next 2-3 years. SD If net income was up 50% and origination up 85%, would you be calling it noise?

http://awealthofcommonsense.com/2017/11/introducing-my-new-podcast-animal-spirits-with-michael-ben/ Two guys that I've been following on Twitter for a while, Ben Carlson and Michael Batnick, have started a new podcast. So far, it's mostly them talking about their investing histories and such. It's not a current events/news podcast, or a very specific investing ideas podcast, so if that's what you're looking for, this might not be for you. It falls more into the "two dudes talking" genre. Don't know what it'll evolve into over time, but so far I'm enjoying it. https://itunes.apple.com/us/podcast/animal-spirits-podcast/id1310192007?mt=2

http://www.homecapital.com/presentations/investor2017/Q3%202017%20Investor%20Slides.pdf Net income fell over 50% year-on-year in Q3... Mortgage origination dropped 85%.

One more at Volaris, in the hospitality industry: http://www.csisoftware.com/2017/11/volaris-group-a-constellation-software-company-completes-acquisition-of-hospitality-101-inc/

Amazon launching the Echo in Canada (about time!): http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=RssLanding&cat=news&id=2317019 Also added Amazon Music to Prime subscribers in Canada. Starting with 1 million songs, which isn't that much, but guessing it'll grow over time like the Prime video library has been slowly growing in Canada..

Acquisition at RE business unit: http://www.prweb.com/releases/2017/11/prweb14905196.htm

Looks like the equity will soon fit into a Honda Fit.

Here's an example of what I was saying here: "The U.S. Energy Information Administration (EIA), in 2006, predicted that 0.8 gigawatts (GW) of solar power would be installed in the USA by the end of 2016. The actual number was closer to 40GW – 4,813% greater." And that's just for a 10 year forecast... https://electrek.co/2017/11/14/solar-power-underestimated-4813-percent/

http://www.reuters.com/article/us-china-amazon-cloud/amazon-sells-off-china-cloud-assets-as-tough-new-rules-bite-idUSKBN1DE0CL

Cobalt isn't destroyed by use, unlike fossil fuels, so over time a large part of the supply will come from recycling. And if demand for things like cobalt goes up a lot, then a lot of mines that weren't viable previously might become viable, and a lot of those are probably in places where conditions are a lot better (hence the higher costs of production). Of course bad cobalt mines should be fixed (environmentally, socially, etc), but the problems are not usually specifically with one mine, it's usually about a whole country that is failing, so blaming the mineral is kind of silly. And even that is still a relatively tiny problem compared to all the coal mines and oil wells in the world, including some operations in similar African and ME countries where fossil fuel extraction props up horrible regimes (they get all the wealth they need from resource extraction, so don't have to build up a normal functioning society that creates wealth). Nobody said there isn't problems with the new, better ways to do things. Nothing's perfect in this world. But they're still smaller problems than what we're dealing with now, and they are fixable.