Weekly Reading Round Up: 17/07/22

Interesting Things I Read This Week

The Wizard of Oz - Charlie Munger’s rare personal investment in an Australia-based mini Berkshire. Pick me next, Charlie!

““He treats the businesses with a pretty extreme decentralisation, which is very much like Berkshire,” Mr Munger said. “It’s very hard to acquire unrelated companies, earn a higher return on capital and pay market prices for them. Most people who try and do that, fail. And the only reason that Berkshire and Stonehouse succeed is that we don’t do it very often, and we’re pretty careful.””

…more of Charlie’s personal picks - purely because I fell down the rabbit hole on this one, another of Charlie Munger’s non-Berkshire personal investment stories

““One day, into my house, a very young 17-year-old Hasidic Jew came by and gave me the Hebrew Bible - in Hebrew," Mr Munger recalled during an event last year in Redlands, California, referring to Mr Mayer. They struck up a friendship and, years later, Mr Munger suggested they partner to purchase buildings”

A Genius From Mars - Scott Alexander (author of the best blog on the internet) reviewing Ananyo Bhattacharya’s biography of the great John von Neumann, The Man From The Future. Awesome, start to finish

“you don’t read a von Neumann biography to learn more about the invention of ergodic theory. You read it to gawk at an extreme human specimen, maybe the smartest man who ever lived. By age 6, he could multiply eight-digit numbers in his head. At the same age, he spoke conversational ancient Greek; later, he would add Latin, French, German, English, and Yiddish (sometimes joked about also speaking Spanish, but he would just put "el" before English words and add -o to the end) . Rumor had it he memorized everything he ever read. A fellow mathematician once tried to test this by asking him to recite Tale Of Two Cities, and reported that “he immediately began to recite the first chapter and continued until asked to stop after about ten or fifteen minutes””

“And he was especially good with children, for whom he had seemingly unlimited patience. Edward Teller wrote that "Von Neumann would carry on a conversation with my 3-year-old son, and the two of them would talk as equals, and I sometimes wondered if he used the same principle when he talked to the rest of us.””

The Looming Agriculture Crisis - blog post from commodities gurus Goehring & Rozencwajg on the brittle-and-cracking global agriculture picture (emphasis mine)

“Russia and Belarus (a Russian ally) supply almost 40% of the world’s potash. All of Belarus’s potash supply (representing 20% of world supply) is shipped by rail through Lithuania and current European sanctions block this supply form leaving the country…Over the previous 20 years, huge attention has been paid to improved crop genetics and the positive impacts on grain yields. US corn and soybean yields over the last 20 years have grown by 35%… investors have under appreciated the impact of big increases in fertilizer application that have occurred over the last decade on growing the size of the global grain harvest. Between 2000 and 2020, global coarse grain production surged by 42%. Over the same time, fertilizer application also grew by 40%. On a shorter-term basis, the same relationship holds. Global grain production grew 18% between 2010 and 2020, while fertilizer application increased 17%”

Twitter Deal Temperature-Gauge - neat blog post from Yet Another Value Blog explaining some context and likely outcomes on the Musk/Twitter deal; great overview for those looking to get some insight into key points to consider

“If Twitter wins specific performance, and Elon loses his appeal, he is going to specifically perform. Just play out what happens if a judge says “specific performance” and Elon tries not to. First, what lawyers are going to work with him anymore? I’m sure someone will take his money, but (as my partner Chris said) he’s going to have to start hiring mall lawyers, because none of the top tier firms are going to work with someone who is in open defiance of Delaware. Their whole legal practice is based on Delaware courts functioning; to have one of the richest men in the world in open defiance of the Delaware court system threatens to bring their whole profession down. Second, if Elon tries to ignore a Delaware ruling, he’s going to quickly find himself a pariah”

Bond Market Selloffs - neat historical overview of selloffs in the US Treasury markets from the folks at the New York Fed; glad they are finding some way to spend their time….

“the current one is the largest in 40 years, exceeding those seen in 1994, 2003, and 2013. As of publication date, the trough of the current selloff occurred on June 14, with a cumulative return of -26.9 percent, versus -14.1 percent in September 2013, -14.6 percent in August 2003, and -18.0 percent in November 1994. None of these episodes compares with the steep losses seen in the two Volcker-era selloffs of 1979-80 (-36.0 percent) and 1980-82 (-38.4 percent)”

(More?) Trouble in the Private Markets - CalPERS (enormous pension fund in California) taking a 10% valuation haircut to unload $6bn of PE fund stakes. No, really: everything is fine

Canadian Nuclear Energy - Saskatchewan and Ontario attempting to deploy Small Modular Nuclear Reaactors (SMRs) in partnership with GE-Hitachi; keep watching the incremental developments in nuclear, interesting space IMHO

“Each of the 300 MWe SMRs cost between $1 billion to $1.5 billion and can provide enough electricity to power approximately 240,0000 homes. As a comparison with other non-emission options, BC Hydro’s 1,100 Mwe Site C dam is expected to cost $16 billion. A 300W-solar power farm would require 1.5 million solar panels and cost approximately $300 million, provided the 1,500- to-1,800 acres of land needed was free and the sun shone steadily”

People Don’t Like Funny Names - blog post from Joachim Klement, summarising a great study effectively showing that (uneducated?) investors typically have lower return expectations for companies with names that are harder to remember / pronounce. Efficient markets, remember

“It is mind-blowing that in almost all cases students had higher return expectations for stocks with easy-to-pronounce names. There is no fundamental information in any of these artificial company names, but having an easier time pronouncing a company’s name creates a feeling of familiarity, mostly because these names are easier to remember”

Manufactured Homes in the USA - Part I of a two-parter on the US manufactured homes market (trailer park homes). Interesting

“The introduction of the 10-wide meant that mobile homes were no longer especially mobile, and marked a major shift in the industry. While early mobile homes moved on average every 20 months, by 1970 they were moved only once every 5 years on average. Manufacturers of mobile trailers used for camping or vacationing (which remained within the 8-ft width limit) split off, forming the Recreational Vehicles Association in 1963. And while previously occupants of mobile homes had largely been itinerant workers (who were somewhat more affluent than average), the larger, less mobile mobile homes increasingly appealed to those in need of low-cost housing (and were thus somewhat less affluent than average.) The industry transitioned from one that supplied movable housing, to one supplying low-cost housing.”

Cobalt: China vs. Congo - Bloomberg piece discussing the impending legal battle between Chinese mining companies and Congolese government, who claim fraud and corruption are robbing them of royalty payments.