Liberty

Wow, now only down 40% YTD and 92% in the past 2 years. That's surprisingly good for this company!

I'm sure it's more than one thing, and just reflexively taking the contrary position that your opponent is taking is also very common. But usually when it comes to being this wrong and killing your citizens and destroying your economy this many months into a crisis, you need to be seriously dumb and mentally inflexible, IMO. Politics is the mind-killer: All this epidemic stuff should be such a non-partisan issue. I'd be fine if Romney was in charge or if Obama was in charge, they'd do such a better job, and would save the US tens of thousands, if not hundreds of thousands of lives by the time this is over, and how many millions of jobs and trillions of dollars (both of lost productivity and of government debt)... This is such a big hole that is being dug, it's going to take years to dig out of it and get back to the spot on the trendline that the US would be if they had just copied everything almost every other country did that has a curve that is almost back to baseline...

WOW! They're really going all in on this. Weird! It's a weird mentality that changing your mind is a sign of weakness, rather than a sign of learning. The question should always be, are you changing your mind for good reasons (learned new facts, had new insight) or for bad reasons (polls are changing, following someone else, there's a new fashionable position, it's more convenient for you to think X, etc.)

The IQ-challenged virus-collaborators strike again: https://apnews.com/3db1db2c24ad60d215733cb7820892d5

Just the fact that it's illegal for government officials to endorse products is enough... 5 CFR § 2635.702 - Use of public office for private gain ("An employee shall not use his public office for...for the endorsement of any product..")

The expectation of future rate increases has fallen quite a bit with the crisis, along with the absolute levels of the rates. That has to have an impact. There's also a scarcity value, where when it becomes harder to find things that grow, those that do grow will attract more attention. Is it right, is it wrong? I don't know, but it is. Some people may be good at selling in and out of things, at rotating from growth to value and back, etc. Personally, I'm not good at that game, but I'm pretty ok at holding things. If I had sold CSU or AMZN every time people thought it was overvalued, I'd have sold many years ago.

They're busy: https://www.instagram.com/p/CCrAzKiBFUQ/ (when I saw this photo, I was sure it was a photoshop job after Ivanka's illegal product ad on her twitter... but this is from his official Instagram account)

I interpreted that as saying that they would distribute part of the shares to CSU shareholders and keep the rest, but we'll see.

Look, I'm not going to write up a VIC thesis here just to please you. I'm not even sharing what I think of the company yet, just that I think some of the ways people are thinking about it are flawed in the typical ways that traditional value investors have a hard time thinking about fast-growing companies in their growth/investment phase, which is why people like Einhorn and Watsa have been short most of the best performing stocks of the best 10-15 years and why value investors mostly got out of Microsoft just as it became interesting again in 2014-2015 and CRM was for a long time the value poster boy of a company to short because where were the earnings? (same with AMZN for a long time, NFLX)...

I think this is flawed logic, though I see it more and more. The 10Y UST with a 0.6% coupon guarantees you will receive your principal back. The equity security that relies on disrupting an industry does not. It is unknown if it will exist, how big it would be, how much it would trade for, and so on. Comparing equity security multiples to a UST makes me more and more hesitant to consider the fastest growing companies. It's mania. I'm not saying you shouldn't pay up for quality, but to equate a minority interest in the equity securities of a quality company with the debt of the United States is irrational exuberance. It's not what I'm doing. I'm just saying what Buffett is saying, that interest rates are like gravity for financial assets, not that it's directly equivalent. And right now, with the central banks saying they won't raise them until 2022 or whatever, the prospects of higher rates any time soon seems fairly low, so long-duration assets where most of the value is in the future will be impacted a lot more than short-duration asset, that's how it works. There's a big difference between paying for eyeballs in 1999 and for software companies with 70-90% gross margins with organic growth from 30-80% with almost no capital requirements, recurring revenues with very low churn, net expansion of 110-130%, global distribution from day one, massive TAMs, winner-takes-most industry dynamics, rapid tailwinds of the world transitioning to digital (still only single digits of GDP and early days for cloud vs legacy), etc. TTD doesn't fit all these because it's not quite on the same model as most of the other fast-growing SaaS companies, but to say it's just mania is missing a few important details. These types of companies were just impossible until all the right pieces were in place (the latest one being the hyperscale cloud providers that matured in the past 10 years). "This time is different" is dangerous, but so is "it's always the same".

Sure, there's definitely such thing as too expensive. But it depends on your hurdle, your opportunity set/cost, and all kinds of things. It's not an "objective price" that is the same for everyone and set in stone. I think COVID has pulled forward a lot of the world's digital transition and programmatic advertising will probably benefit (even if it could also be hurt in the short term, as advertisers have trouble... though they'll also want to move their spend to higher ROI and more trackable places.. pull and push). I also think it makes a difference that the 10Y was at 3% a couple years ago and is now at 0.6%. If you invert it as a P/E equivalent, that's like going from 33x to 166x.. So a lot of long-duration assets are floating way up, both because of the lower discount rate and because of the COVID digital wave... Very hard to know how things will shake out any time soon, but the future always is uncertain.

When interest rates are basically zero, long-duration assets like hyper-growth companies can get pretty crazy valuations. Not sure what's to be done about that, but I do know that no high-performing company never gets optically expensive, and that those who think they're going to dance in and out usually tend to stay out and watch them run away from them... There's pitfalls in investing in beaten down companies, and there's different pittfalls in investing into high-quality, high-growth companies. Nothing's easy or obvious...

I didn't even mention capex. I'm only saying that TTD is growing roughly as fast as their markets. Their competition is likely increasing their market share advantage. I really like how well-run TTD is, but I think being the largest pure play leads to TTD being overvalued. TubeMogul is bigger and arguably has better tech to scale. I would definitely pay a premium to the market to own TTD. I'm a huge fan of Jeff Green. I would caution though that I don't think there's any evidence to support that these "income statement investments" are actually happening or high return if they are. What do you mean there's no evidence? They're building the products, improving existing products, building the offices, increasing headcount, and growing quite nicely at very high margins. Their dev velocity is pretty high compared to most companies that I look at. Any time you're looking at a company that isn't mature and building new things, you have to rely on your judgement to know if they're making good investments; if you wait for it all to be reflected in the numbers, that's fine, but by then it'll be mature and a very different company. There's nothing special about one rotation of earth around the sun, nothing says that expenses paid today have to paid off before then. A lot of it is also about building confidence through due diligence that you can trust management to make good, value-creating decisions and to be able to navigate unforeseen troubles. That's why the best management teams are often undervalued even when they look really overvalued compared to their competitors; they keep finding ways of increasing the TAM and of creating new products that weren't even on the map when you made your initial investment and that competitors aren't good enough to have come up with, and they avoid huge mistakes that their competitors fall into... Their pure play nature also has benefits in that their independence puts them in a favored position for a lot of big advertisers to trust them more and share proprietary data with them, which helps improve ROIs on spend. Their incentives are aligned with their customers, and they're not competing with them or conflicted because they own media or an agency or whatever.

I know what's been said publicly + what I posted here about Topicus. Haven't seen anything new since, but TSS has made a few more acquisitions, so it's a good sign that they aren't too distracted. I don't know when it'll take place.

Maryland governor on his COVID experience: https://www.washingtonpost.com/outlook/2020/07/16/larry-hogan-trump-coronavirus/

They didn't waste any time:

People ignore investments through the income statement too often, focusing on capex, when most of the value comes from the IP and employees. They're hiring quickly, building out new things like CTV and audio that could someday be huge, they're expanding internationally, building new offices there, investing in partnerships with lots of huge companies (more software and infrastructure to build for them), etc. A lot of these costs are upfront and the returns will be later.

New acquisition by Vela in Australia: https://www.dataminesoftware.com/datamine-acquires-snowden/ h/t @pearnick

Also:

Does it get you a good company, though? TTD's operating margins have declined every year for the past 3+ years (1,550 bps decline in total). ROIC, ex-excess cash, is ~15%. From that perspective, at least the smaller competitors are trending in the right direction at similar ROIIC. But is that the right way to look at it? Is TTD investing more in growth than these competitors, and will it get good returns on those investments? Is it capturing territory and building scale that the smaller competitors simply won't be able to compete with later, whatever their current margins are? With growing companies like this, one of the most important thing to do is to try to understand what's growth and what's maintenance expenses.

https://www.medrxiv.org/content/10.1101/2020.07.15.20151852v1 The mortality rate is high of about 25%. The number of days since symptom onset 9 days before medicine administration On oxygen or ventilation at baseline: 67% Many doctors who use Hydroxychloroquine say 1) It works better with Zinc, and optionally Azithromycin. 2) Works when given early but not when given later when symptoms of pneumonia have started. For example Dr. Harvey Risch from Yale says: I think that there has been confusion about treating the cold versus treating the pneumonia. These medications don’t seem to work so well for treating the pneumonia. As early as possible is crucial, within the first five to six days of symptoms. https://medicine.yale.edu/news-article/25085/ While I've got you here, what's your take on nuclear fusion? You a fan of tokamak reactors?

Speculation isn't investing, comparing the two generates more heat than light, IMO. Some people *do* win the lotto. Playing the lotto was smart *for them*, ex post facto. Doesn't mean you can know beforehand if you'll be "them".

https://www.medrxiv.org/content/10.1101/2020.07.15.20151852v1

Management teams are going to present Q2 like this:

Excess death data for Spain, Italy, UK, Belgium: Also, how crazy is this: https://www.cnn.com/2020/07/14/politics/trump-administration-coronavirus-hospital-data-cdc/index.html What if this administration worked as hard at trying to contain the virus (like how almost every other country has done) instead of trying to contain information and science and play propaganda games?