Liberty

Wanted to point out for those who want a broker that doesn't sell your orders to HFT firms and doesn't route you first through their own dark pools even if that's not the best execution for you; Interactive Brokers has a policy of not selling order flow to 'internalizers' and other third parties. They also connect with the IEX exchange (you can use their smart routing algo and let it find the best execution, or you can specify that you want to go to IEX directly). I know most here are probably not big enough for that to make a big difference, but if on principle you don't want to support brokers who are complicit with the worst kind of HFT practices, going with Interactive Brokers might be a way (along with the low cost benefits).

So far we've been discussing LiLAC in the Liberty Global thread, but it's probably a good idea to break it off in its own thread going forward so it's easier to find what has been posted about each company :) Here's the LBTYA thread for reference: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/lbtya-liberty-global/

http://www.libertyglobal.com/pdf/press-release/7-31-Liberty-Global-ITV-FINAL.pdf ITV stake increased to 9.9%.

Ubben: http://otp.investis.com/clients/uk/rolls-royce1/rns/regulatory-story.aspx?cid=171&newsid=551060

You presume that non-iPhone user has not used/tried iPhone. You presume way too much. Apple products aren't for everybody. It's absolutely fine if you prefer something else.. I don't really care about market share past a certain point (need critical mass). I care more about the fact that they make something like 90% of the profits in a growing industry. Profit share > market share In fact, a low market share just means there's more upside potential. If they had something like 80% market share, the runway would be a lot shorter and they might more easily get in trouble with governments :)

I was asking why it is not risky to have such a large percentage of revenues derived from one single product. Wasn’t it clear? My first answer addressed that in part. Is it risky? Well, it depends how stable the iPhone business is. Then I looked at barriers to entry, table stakes, and then added barriers to exit. Things aren't risky just because they aren't diversified. Visa and Mastercard are quite secure even if they don't have 10 equally sized business lines, same with Coke or WD40 (all very different dynamics from iPhone, of course)..

Just for fun, here's another direction that my answer to your diversification question could have gone: When you have a fantastic business, you don't want to dilute it by diversifying in lesser businesses (Buffett's diworsification). Visa and Mastercard shouldn't use their FCF to turn into banks, because banking is an inferior business to their core businesses. Apple's main goal should be to protect the iPhone, strengthen it, and make sure it is a durable franchise. I've already explained the barriers to entry in the higher end phone market. Who's going to come in and compete toe to toe with the iPhone? Then to strenghten it you can have other very good businesses (though not as great as the iPhone, because nothing on Earth is) that are complementary. So Macs make iPhones better. So do Watches and iPads and Apple TVs. It all works together, and once you've bought a bunch of apps and your family photos are synched in iCloud and such, you are a very sticky customer. We know that almost everybody on Earth will have a phone, and there will always be a segment (15%? 25%? 35%?) that is ready to pay a bit more for quality. A phone (which is a misnomer, it's basically a pocket computer) is so important to everybody's life nowadays, and prices are so low compared to the value that you get, that paying a couple hundred dollars is nothing to that segment (unlike paying tens of thousands of dollars more for a top quality car -- absolute prices matter, not just % differences). Some people claim that competitors will on day become "good enough" and that people will just be satisfied with the cheapest phones and that there won't be demand for anything more, but I believe that for consumer products (where the buyer is the user, unlike in corporate world), there's no such thing as a "good enough" experience. "best" is always "best" even if the low end is better this year than it was 5 years ago. So then Apple has this fantastic business that is very hard for new entrants to compete with, and so far they've been defending it very well, as can be seen from growth and consumer sat ratings and switcher rates both ways and where developers still put their efforts first and such. They are returning massive amounts of FCF to shareholders via buybacks because their business is not nearly that capital intensive, and the buybacks are basically re-investing in the iPhone business because that's what they're mostly buying when they are buying shares (same as Visa and Mastercard doing these big buybacks-- they couldn't deploy that in M&A or organic growth without diluting the core). Anyway... This continues, but I'll stop here.

Yes, because it wasn't clear what you were asking and what was implied by the question. I mostly just picked one of many possible answers out of a hat because it was short and it seemed to satisfy you, so all ends well! ;)

Ok, then the answer is: you are wrong, and they are quite diversified already!... Again, such a difficult answer to offer? I'm sorry, I thought you knew that they had other products already, so I thought your question was "why don't they build something to replace the revenues from iPhone". That's what I'm afraid of, I don't think I can do it quickly without leaving a bunch of holes that I'll then have to explain... But I suppose the short answer is that they're not making siloed products, but they're building an ecosystem that is self-reinforcing. People who buy one thing are much, much more likely to buy others, and once you have a bunch you are very unlikely to switch to a different ecosystem... Barriers to exit, in other words. If it was a bother I wouldn't post, but it did feel a bit like "I want more, give me all the answers immediately right now even though you just wrote a thousand words about it that wasn't enough!". :-[ You were single-handedly hurting the brand ;)

Ok, therefore you are suggesting: No, they are not differentiating away from the i-phone, nor and I think they should! Instead, I would like to see them using their cash to keep improving the i-phone for the next 100 years! Have I interpreted tour thought correctly? If so, was it such a difficult answer to offer? ??? Gio That's not it either. It's also a weird question. You're asking if they're diversifying. Well, they have Macs, iPads, iTunes store, App store, Apple Pay, a music streaming service, Apple Watch, Apple TV (due for a major update), and they are rumored to be working on electric cars among other things, on track to spend over 10 billion on capex/year. If the iPhone was spun-off, the remaining company would still be one of the largest in the world. But diversification away from the iPhone is still the wrong way to think about it... Anyway, I wrote a book chapter above, sorry but I have other things to do this morning. And every time you write "iPhone" with a dash, a kitten dies ;)

I don't think you're asking quite the right questions, but keep reading and thinking and I'm sure things will clarify. Rome wasn't built in a day. ;)

Liberty, I think you are right 100%. What keeps me from pulling the trigger with Apple is the fact it still relies so much on one product: the i-phone of course! And of course the rest of the world is trying to find something better, which could replace it… Do you see that changing? I mean: do you think Apple’s revenue might become more diversified in the future? Or do you think Apple today is so cheap that you are not really worried about it? Thank you, Gio I encourage you to read this thread, Gio. A lot of your answers are within. Basically, you have to look at the structure of the market. You can't take the model that you use to look at a levered subscription business and try to apply it to Apple, for example. Here's a few important points that help the analysis, IMO. They have to do with barriers to entry and what I can "table stakes" (minimum that you need to even be at the table). So say you want to compete with the iPhone for the profitable end of the phone market. What do you need? First of all, you need a modern mobile operating system and an app store with at least a few hundreds of thousands of apps so that everybody finds most of what they're looking for (easy to get the top popular apps, but everybody has a few different apps that they want that aren't just the top ones). Only about three companies even have the resources to pull off a modern mobile OS, and microsoft has already failed to get traction there. Microsoft also never even got to the part where they had a good app store. Google's approach is to make its OS availble to everyone, so by definition it can't be a differentiating factor. This means that if you try to make a high-end phone with Android, as Samsung or HTC tried, you are asking your customers to pay more to basically live in the same OS as people who buy the cheapest phones. A hard sell. Then you need high quality user experience. That's tough for Android because the carrier wants to do one thing and add some crapware, the phone maker wants to try to differentiate (but they are all attrocious at software because software is really hard), and the OS maker is trying to do its own thing. So you have a kind of committee working on every phone. I won't even talk about good industrial design, but let's just say it's hard to get right and you need a very specific culture that values it and has "taste". Then if you really want to appeal to the higher end and convince people to pay more, you need high quality hardware. But for that you need to invest a lot in manufacturing and R&D, molded plastic and commodity parts won't cut it. But if you aren't making money - don't have margins - it gets very hard to keep up with Apple on manufacturing and R&D. So far everybody other than Apple is losing money except Samsung, and Samsung isn't doing too well because their OS isn't differentiated so the lower end is always nipping at them at the margin. Anti-Apple people will always say stuff like: Oh, the Sony is thin and power efficient, the Nokia has great build quality and a good camera, the Samsung has a big screen and very fast internals, the Nexus has an OS that you can actually upgrade and no crapware, the HTC has good industrial design, etc. As if people were buying 7 different phones. What matters is 1 phone vs. iPhone, and so far, none are close when it comes to the overall experience (which includes buying in stores, service, software upgrades, etc). Anyway, the list goes on and on, but I think the barriers to entry and the table stakes are pretty scary. What's then left is: Can you trust Apple not to screw it up? That's where being very familiar with the way they work and their culture matters. People think they're about big flashes of innovation, but the money is made on incremental improvement, and they have a great system for that. The original iPhone was a flash of brilliance, but the iPhone 4 was better, and the 4s was better, and the 5 even better, and the 5s the best one yet, the 6 was even better, etc... Either when I see a competitor structure itself in a way that they can win, or I see Apple stumbling down, I'll sell. But so far I don't see it, and what we're left with is a long-term oriented company growing EPS above 40% with 200bn in cash that if you ex out, they are selling at a very low multiple. As an added barrier of safety, Apple's strong Brand means that they can try things and think more long term and have some screw ups and people will stick with them, but if you're HTC and you have a screwup, people will abandon you in droves. If you look at the switcher rate form Android to iPhone, it's been increasing. This probably means that a wave of people who bought Android as their first phone because they thought it was just like the iPhone that their friend had but cheaper haven't been satisfied. The rate of switchers from iPhone to Android is very low, it's a very sticky product that people tend to buy again and again every few years. Tim Cook tends to be a guy you can take at his word, and when he says that we're just at the very beginning of the phone revolution, I believe him. The personal computer wasn't running out of steam in the mid 80s, and I don't think Apple is running out of ways to improve the iPhone quite yet.

That's a common error in thinking. People look at a company with very loyal customers and they go "oh, that's why they sell so much stuff at such high margins". That's like saying: "Oh, you have a runny nose, that's why you're sick." Confusing a symptom with the cause. People don't think the products are good because you have a good brand first, you get a good brand in the first place because people think your products are good. I wish it was a cult, the economics would be even better. But the reason for the loyalty is because Apple has been making products that are very attractive to the higher end of the market for years and years, and their products are differentiated, giving some pricing power. The products have built a brand, and all that a brand does is reduce searching costs, so a lot of people trust Apple. But it's not a free pass. Start making products that the target segment of the market thinks is crap and very quicklly that trust goes away and so does the loyalty. The brand is a symptom of the good products, not a cause. It's like Google's brand for search; many people won't compare different search engines all the time, because over time they've started trusting that Google has the best search. The other common error in thinking is: "Apple stuff doesn't appeal to me, so I can't see how anyone else could find it worth paying up for, hence everybody else is being irrational and is either being fooled or there's a strange cult effect." Meh. I might not find it worth paying up for a Porsche, but I can see why some people would.

-6% organic from FX. If you adjust for that, which isn't under the company's control, I'm very satisfied with the performance of the business. Who knows what Mr. Market will think, though. Expectations were obviously high.

I don't think it's ever been tested at a large scale. I found this article from 2013 on put-back risk, but I'm not really left with a clear answer: http://business.financialpost.com/news/fp-street/how-the-banks-stay-in-cmhcs-good-books I feel like if there's a large-scale enough problem that voters become aware of it, politicians will do whatever make them look like they are preventing voters from being the patsies in this thing, even if it's retroactive or even if it means changing the law.

Of course. But it certainly puts doubt on the whole billion, and that's for 2014. What if they originated many other billions over the 5 years prior? What if there are other bad brokers that haven't been found in this investigation? Where were the internal controls to avoid this kind of stuff? If this is the system working as it should, why is everybody jumping ship? A question I have: Can CMHC later turn around and say "X% of all these mortgage are retroactively not insured because the paperwork wasn't pristine?" Not just for HCG, but others too?

If you want to make a billion dollar company, you start with a trillion dollar company and then get into the car business. ;) +1 Making phones, like making cars, is a terrible business. There are always exceptions if you can avoid being commoditized. If Apple ever makes cars, they won't make them like GM, with lots of capital-intensive company owned factories and lots of factory workers on the payroll, making products that offer the same thing as everybody else and compete in large part on price. They'll make them like iPhones, with their suppliers dealing with that messy stuff, only keeping the high value parts of the value chain in-house and proprietary, and outsourcing the rest.

I don't know the details of HCG simply because, as I said earlier, I wouldn't touch anything that has to do with Canadian RE until we're out of this bubble, but I'm watching with my popcorn. Here are some tweets from tonight that I found interesting: These I wrote: "So HCG has 4000 brokers, but the 45 "bad" ones closed 12% of total new mortgages in 2014? Talk about productive fraudsters!" "What if among the 4000 there's just another 100 bad apples that hasn't been found yet and is as productive as the 45?"

When you have inflation for a long time people say it's the natural order, it'll always be like that. When you have little inflation for a long time people say it's the natural order, it'll always be like that. I don't know. Markets tend to end up doing whatever surprises the most amount of people, so we'll see what that is, but it probably won't be quite what people expect (on all sides -- there's always more possible events than actual widely held projections in these complex systems with feedback loops and lots of variables). tl,dr: No idea, but probably not what people extrapolate from the present day, as they always do.

http://www.bloomberg.com/news/articles/2015-07-29/samsung-profit-misses-estimates-as-galaxy-s6-phone-disappoints

Presentation on LBRDA: http://valuexvail.com/presentations/#!mg_ld=1101

Q2 is out: http://www.csisoftware.com/wp-content/uploads/2015/07/SR_Q2_2015.pdf http://www.csisoftware.com/wp-content/uploads/2015/07/PR_Q2_2015.pdf

He owns 1,436,136 shares. http://www.csisoftware.com/wp-content/uploads/2015/04/MIC_Eng.pdf

SIRI's customers skew older and more rural. People who love the ease of paying less than 50 cents a day to have the ability to just push a button on their dash and have hundreds of channels of ad-free content of all kinds. As Maffei said, it's a "lean back" type of product rather than lean forward (so as simple as possible, as few choices to make as possible, everything in one bundle). Is it the best content? Is it the best technology? Maybe not. That doesn't mean it can't be a very profitable product that attracts tens of millions of people. The main competitor is terrestrial radio still, because that's even easier and free. Auto OEMs are getting a cut of these revenues, so they have a big incentive to keep it in their cars. Who else in the audio content business is even making enough money to share with autos? CarPlay and Android Auto (or whatever it's called now) will make it easier to listen to other things, but they'll also be a really nice interface for SIRI. Lots of cars already have bluetooth and so you don't even have to connect your phone to listen to things, yet that doesn't seem to be slowing down SIRI subs too much (and they're barely starting to tap the used car market)... Young urban engineers or whatever might never subscribe to SIRI, but I'm not sure if they would even without Carplay or whatever.

What do you mean CHTR will get customers from Comcast? Cable companies don't have much overlap, and I don't think they'll go overbuild in comcast territory..