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- 🍋 Buffett Hates Bankers
🍋 Buffett Hates Bankers
Short Squeez
March 23, 2022
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“Say it with me... Stocks only go up. Only losers take profits.” — Dave Portnoy
Good Morning! Fed Chair Powell said one way or another, the Fed will line up supply and demand in the economy. A double edged sword - nice to see the Fed is serious about inflation, unnerving to think about what aggressive actions they may take. BuzzFeed's got a sword of their own, being used to cut employees in their news division to increase profitability. Pilots may also be removed... from their own planes... The market for self flying aircraft could grow 25% a year between now and 2040, and in the next 10-20 years, we could see autonomous aircraft everywhere.
Obviously y'all know how smart tech is getting. Just look at TikTok. The algorithm for TikTok's FYP feeds you exactly what you want to see, probably without you realizing it. Amy Poehler said her FYP knows she's having a bad day before she does. Celebrities are also talking about esports. FaZe Clan has added Snoop Dogg, Stephanie McMahon (exec at WWE), Ross Levinsohn (CEO of Sports Illustrated), and Zach Katz (founder/CEO of Carte Blance) to its board.
If you are looking to get exposure to real estate investing (while the equity/crypto markets keep dipping), check out today's sponsor, LEX, that has created a new way to invest in real estate.
1. Story of the Day: Buffett Hates Bankers
I'm sure you've seen the news about Warren Buffett's latest acquisition. (If not, make sure you subscribe because we mentioned it yesterday.) Turns out, the takeover wasn't the only news The Oracle of Omaha was sharing. He also wanted everyone to know how much he hates bankers.
The odd price of $848.02 per share that Alleghany stockholders will get from Berkshire Hathaway is apparently a lowkey jab at Goldman Sachs. Buffett offered up $850 a share, saying he didn't want to pay for any banking fees. Those fees would have to come out of proceeds for Alleghany's shareholders. Subtract out roughly $27 million for GS, and you arrive at the takeover price above.
This hip hop-esque feud has been going on for years with Buffett dropping "diss tracks" (annual letters) calling bankers "money-shufflers" that "clamor to be fed." Oh it's like that Warren? That hurts. That letter came out in 2015, but the beef goes deeper. In 1996, when he was a director of Gillette, he tried getting fees slashed in the company's acquisition of Duracell. The attempt was unsuccessful, but clearly he came back with a vengeance.
Buffett did have a soft spot for one "money-shuffler" in the past. Byron Trott, former Goldman banker, helped Berkshire buy McLane, a food distribution company, from Walmart. In 2004, Buffett said, "He understands Berkshire far better than any investment banker with whom we have talked and -- it hurts me to say this-- earns his fee."
Short Squeez Takeaway: Chins up soldiers! First of all, Buffett used to be an investor in Goldman, so he clearly understands the value that y'all provide. Second, Warren Buffett is an exceptionally smart financial mind. One of a kind, with the emphasis on "one." Most other participants in banking transactions don't have the knowledge or expertise that y'all do, so they'll continue to need the valuable services that you provide.
Source: Bloomberg
2. Markets Rundown
All markets were up and bank stocks led the way thanks to higher Treasury yields. Crypto got a bump with improved sentiment, as investors shift back into riskier assets.
Movers & Shakers
(+) Forge Global Holdings ($FRGE) +60% because former JPM exec Blythe Masters' SPAC, Motive Capital, merged with the pre-IPO trading platform company.
(+) GameStop ($GME) +31% thanks to Chairman and Chewy co-founder, Ryan Cohen, buying more shares. He tweeted, "I put my money where my mouth is."
(–) Oric Pharmaceuticals ($ORIC) -29% because the company announced they will not continue developing their experimental cancer drug.
3. Top Reads
Donald Trump Jr. is launching a news aggregation app (Axios)
Indonesian man becomes billionaire after shares of data center company surge 10,000% (BBG)
There "very well could be a recession or even worse,"- Carl Icahn (CNBC)
Tesla looking to take back European EV market, opens first manufacturing factory (Axios)
But could war make Europe's switch to clean energy more difficult? (NYT)
Global fixed income in worst drawdown on record (BBG)
Why GDP growth doesn't necessarily mean better stock market returns (MS)
El-Erian says to cut stock holdings as stagflation looms (BBG)
The US is rolling back Trump-era tariffs on UK steel, UK lifts duties on American whiskey and jeans (NYT)
A Message from LEX: Can Office Buildings IPO?
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Traditionally, commercial real estate investing has been a lucrative (but not particularly accessible) investment opportunity. Even if you did have the money and accreditation to get involved, the best deals were hard to come by.
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4. Book of the Day: Mistakes Were Made (But Not by Me): Why We Justify Foolish Beliefs, Bad Decisions, and Hurtful Acts
Why do people dodge responsibility when things fall apart? Why the parade of public figures unable to own up when they screw up? Why the endless marital quarrels over who is right? Why can we see hypocrisy in others but not in ourselves? Are we all liars? Or do we really believe the stories we tell?
Backed by years of research and delivered in lively, energetic prose, Mistakes Were Made (But Not by Me) offers a fascinating explanation of self-deception—how it works, the harm it can cause, and how we can overcome it.
“History is written by the victors, but it's victims who write the memoirs.”
5. Short Squeez Picks
6. Daily Visual: Inflation Outpacing Wage Increases
Monthly percentage change for average cost of gas, rent, and hourly earnings
Source: Axios
7. Daily Acumen: Things You Can’t See
"Do you remember all the elements you didn’t used to notice?
It might be the way you see typography now, or the tuning of an orchestra. Or the alignment in the mouldings of a house you’re inspecting or the way an engine sounds… (or whether you put a ‘u’ in moulding)
Expertise is about learning new ways to notice.
Often, once we learn to see, we assume we’ve always known. And that allows us to believe that the things we can’t see, we’ll never be able to see.
But it doesn’t work that way unless we get complacent.
There’s always something just below the surface, the elements that most people simply don’t notice. But we can if we choose."
Source: Seths Blog
8. Crypto Corner
Katie Haun left Andreessen Horowitz and raised $1.5 billion for a couple crypto VC funds
The SEC is "terrified" of setting a crypto standard in the US
Could there be green Bitcoin mining?
A small town in Tennessee is battling noise from Bitcoin miners
You can now get Bitcoin exposure through your Acorns account
NFT-funded racing seeks to disrupt sponsorships
9. Memes of the Day
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