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Notes from https://www.youtube.com/watch?v=vT5-cV4oMY8 - Why Aldi Is America’s Fastest Growing Grocery Store | WSJ The Economics Of - 2023-10-31
grocers
Aldi, Grocery outlet, publix, sprouts, H-E-B, Whole foods market
Aldi
Average supermarket ~ 48,415 sq ft; Aldi and Trader Joes's ~ 12,000 sq ft
Average number of items per store
Supermarket - 31,530
Trader Joe's - 4,000
Aldi - 1,650
compensatory inferences
peers: Aldi, Trader Joe's, Albertsons, Whole foods, Walmart, Dillons, Costco, Kroger, Sam's club, Target, Safeway
known value items
Trader Joe's
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Notes from https://www.barrons.com/amp/articles/shein-ipo-news-sec-fe778f69
Shein
Singapore-based fashion retailer
was founded in China but shifted its headquarters to Singapore in 2019
valued at about \$66 billion in a \$2 billion May 2023 fund-raising round
famed for its ultralow apparel prices
world’s most popular shopping app
2023-11-13
Notes from https://www.barrons.com/amp/articles/stocks-rallied-as-treasury-yields-fell-dont-get-used-to-it-80103173
Notes from https://www.acquired.fm/episodes/charlie-munger
Richard Galanti
Jim Sinegal
covenant-free debt
Costco
Costco parking spaces were 10 feet wide instead of eight or nine feet or whatever they normally are.
They have no investment in inventory. They make the suppliers wait until they've been paid and then they're scheduled to pay only after they're scheduled to sell.
Costco just specializes in the good locations, where the rich people lived.
is successful because of its culture and model.
Sol Price wanted the rich man trying to save money. Picky wealthy customers.
That little grocery store chain here in Los Angeles, Gelson Brothers
do a lot of reading, thinking, and visiting
Jeff Brotman
You don't want to make money by screwing your investors and that's what a lot of venture capitals do.
ride pari passu
Bernie Marcus
Floor & Decor is a Costco imitator
Home Depot is a Costco imitator
Walmart was too weathered by the ideas they already had
Sam Walton
Japan's trading companies were really entrenched old companies. They had all these cheap copper mines and rubber plantations.
Charlie Munger does not like style companies such as Nike
Hermes is on the eighth generation. It is a great company.
Hermes, LVMH got a brand people trust so much. It took them a century to do it.
Kirkland is a brand the way Tide is a brand
Charlie See was a playboy, and his brother ran the company, his older brother, and dominated it completely. And when he died, Charlie made his brother as executor, and now he needs a lot of money to pay death taxes. He doesn't have it. It's due eight months or something later. They really wanted to sell it so they can pay the death taxes. See, it was only making $4 million pre tax when we bought it.
Heinz is able to have pricing power while Kraft is not
Heinz ketchup
Kraft cheese
In Korea, one guy, a Chinese guy, controls all the sauces. Every single major sauce, he controls at least 95% of them.
Once I had enough money on my own, I'd rather just operate with my own money. That is a much better way of doing it than being forced to sell, being forced to deal with investment bankers, being forced to deal with investment consultants, being forced to deal with venture capital.
You don't need other people. The point of getting rich is so you don't have to need other people, so you don’t have to get along with other people.
almost everything has three things: intelligence, hard working, and being lucky.
It takes a very patient person to get rich in insurance. It takes forever to get anything, and it takes forever to push anybody aside. It's very hard to make money.
crumbums of the world
Charlie Munger does not carry fire insurance anywhere.
Everybody needs some significant participation in the 12 companies that do better than everybody else. You need two or three of them, at least.
Apple got to about 10 times earnings when Warren bought in.
venture capital that's classically power law–distributed
if something is really cheap, even though it's a crappy company, Charlie Munger is willing to consider buying it.
Howard Marks
One type of company is the cigar butt. Other type of companies are great brand companies.
the system that nature uses to get smart is kind of unpleasant for the people who are losing
you only have to get rich once. You don't have to climb this mountain four times. You just have to do it once.
When Costco tried to open their first store in China, somebody wanted a $30,000 bribe. Chinese culture. Costco wouldn't pay it. That made such a bad impression on Jim Sinegal. He wouldn't even talk about going into China for about 30 years thereafter.
“a young man knows the rules, and an old man knows the exceptions” - an old saying of Peter Kaufman
hanging out my hat while I lurch around the track
BYD, this year will sell at least two and a half million cars. Most of them are electric, that's unheard of. That's way more than Mercedes, for instance.
The California Club
Cash flow margins
John Malone
specialized industrial company
Half of the marriages in America work pretty damn well. And they would have worked just as well if they were both married to somebody else, by the way.
The best way to have a great spouse is to deserve one. As long as both parties feel that way, then it's a recipe for success.
boondoggle
2023-11-10
Notes from https://www.ft.com/content/b08c3159-982e-4831-8897-e35f8aca49e1
US Treasuries is $25 tn market
Fedwire, a real-time payments platform operated by the US Federal Reserve
BNY, the world’s largest custodian bank
US Treasury secretary Janet Yellen; China’s vice-premier He Lifeng
The Securities Industry and Financial Markets Association (SIFMA), which represents banks and asset managers
ICBC is the only Chinese broker with a securities clearing licence in the US. It created the business after buying the prime dealer services unit of Fortis Securities in 2010.
Charlie McElligott, a cross-asset strategist at Nomura
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Notes from https://www.barrons.com/amp/articles/annaly-capital-sports-mortgage-reit-dividend-stock-price-3972cdfb
Annaly Capital Management (NLY)'s dividend yield is 17%
splashy colors on a rainforest frog
herpetologist
South America’s fire-bellied snake is said to be the only natural predator of the golden poison dart frog
NLY cut its payment early this year to 65 cents a share each quarter from 88 cents
NLY share price has already fallen by nearly half over three years
Mortgage REITs
lend money to developers, both commercial and residential, or buy mortgage securities, including ones that are backed by government agencies.
They make money from a lending spread—for example, by borrowing shorter than six months to buy securities that mature in two to five years
they use more leverage than equity REITs - sometimes two to three times as much as a percentage of assets.
Dividends for mortgage REITs are more of a slide whistle than a steady drumbeat
Resi MREITs
TBV is tangible book value, or what securities are worth
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Notes from https://www.barrons.com/articles/china-graphite-exports-ev-batteries-4bdab59?mod=hp_LEAD_4
The batteries found in an average electric vehicle each need about 175 to 200 pounds of graphite
In the U.S., there are 4 lithium-ion battery plants in operation and 21 in development.
spherical graphite — a refined form used as anodes in lithium-ion batteries
Graphite can be produced either from naturally mined material or in a synthetic process using petroleum feedstocks.
China is the largest miner of natural graphite, followed by Mozambique and Madagascar, and Brazil.
Bipartisan Infrastructure Law
Graphite can also be manufactured from other carbon-based products such as petroleum coke. The process is more expensive and energy intensive, but the synthetic graphite anodes usually perform better, helping batteries charge faster and last longer.
gallium and germanium - metals critical to the manufacturing of semiconductors.
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Notes from https://minesafetydisclosures.com/blog/2018/6/18/costco
Costco stocks only 4,000 SKUs vs. Walmart'ts 120,000 and Amazon's 600,000,000.
Costco has the highest “revenue per employee” and “profit per employee” of all major retailers.
Costco generates highest “revenue per store” and “profit per store” than any other major big box retailer.
Inventory is turned over (i.e. from supplier → Costco → customer) once every 26 days.
Accounts Payable: Inventory
Working Capital
The average Costco employee makes $22/hr, receives health insurance, 401k, company stock, etc.,
Costco's annual employee turnover rate is 5% vs. the retail industry average of 59%.
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Notes from https://www.barrons.com/articles/instacart-ipo-stock-price-18556f27?mod=hp_LEAD_1
Instacart
based in San-Francisco
founded in 2012
formally known as Maplebear
last year revenue = $2.55 billion
net income = -\$70 million 2020, -\$73 million in 2021, \$428 million in 2022 (includes \$358 million tax benefit)
Instacart IPO
sold 22 million shares @ $30 each
market value $9.9 billion, based on fully diluted share count
raises \$660 million out of which \$420 million goes to the company
ticker CART
price to sales = 4
competitors - DoorDash, UberEats, Shipt
Shipt is owned by Target
Notes from https://onepercentamonth.com/2023/08/28/instacart-profitable-yet-with-real-business-concerns/
Instacart
1,400 retail partners including Costco, Aldi, Kroger, Publix, Wegman, Bestbuy and Walgreens.
Customer Acquisition Cost (CAC)
Walmart
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Notes from (https://www.youtube.com/watch?v=PdvGEI-P3-M ; Stack vs Heap; Abdul Bari; 2015-09-07)
A computer memory is divided into three major sections: [code, stack, heap]
code can access stack memory directly by using address
code can only access heap memory indirectly by using pointers
| | stack memory | heap memory |
| access | direct | indirect |
| size | static | dynamic |
Notes from (https://www.youtube.com/watch?v=OqLt2GfX6jg ; Why Pointers?; Abdul Bari; 2015-09-15)
pointers are called as address variables.
They store address of the data.
They are useful for indirectly accessing the data.
Usages of pointers
Accessing heap memory
Call by reference
Accessing files
Accessing any peripherals (ex:- keyboard, monitor, printer, disk etc.,)
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Notes from https://wwsg.com/speaker-news/ex-fdic-chair-what-bank-depositors-really-need-from-regulators/
Bair serves on the corporate board of Bunge BG (pronounced BUN-ghee), an oilseed producer and agribusiness based in St. Louis
Banco Santander, the large Spanish bank
US is the highest in terms of number of banks
Canada has ~80 banks. Canada's population and GDP are 10% of US.
a George Bailey moment - a reference to the protagonist, played by Jimmy Stewart, of It’s a Wonderful Life—a banking movie from a previous era.
Bair wrote
2023-05-26
Notes from https://www.barrons.com/articles/yield-hungry-investors-are-feasting-on-t-bills-5185e488
noncompetitive bids at T-Bill auction is a good proxy for individual investor demand
Data source for the amount of noncompetitive bids in Treasury auctions - U.S. Treasury Department
junk bonds, emerging market debt, high-grade corporates, mortgage securities
unlike CDs and corporate bonds, interest from Treasuries is exempt from state and local taxes.
The Treasury auctions 4-week, 8-week, 13-week, 17-week and 26-week T-bills each week and 52-week bills every four weeks.
reinvest the proceeds of maturing T-bills in newly auctioned ones, a process known as rolling
It’s best to hold a T-bill until maturity; a sale prior to the redemption date can be costly, due to fees charged by securities brokers
BIL and SGOV have average maturities of just over a month
one risk in T-bills is “reinvestment” risk - the next bill you buy might yield less than the one you own
US delayed some payments in 1979 (in part because of a debt-ceiling debate)
When the ceiling is raised, there could be a deluge of T-bill issuance over two months - perhaps up to $700 billion
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Notes from https://www.barrons.com/articles/debt-ceiling-medicare-healthcare-dd8c586d?mod=hp_LEAD_3
the federal government is a large source of revenue for many medical providers, in the form of payments for Medicare and, to a lesser extent, Medicaid
The average payer mix at U.S. hospitals is an estimated 20.5% Medicare and 13.2% Medicaid
hospitals could respond by canceling all elective procedures and focusing on emergency services
Federal law bars hospitals that participate in Medicare and have a dedicated emergency department from discriminating against ER patients on their ability to pay
nursing homes and rehabilitation facilities
Many nursing homes get a large portion of their revenue from Medicaid
Medicaid is jointly funded by the federal government and the states. The exact breakdown varies by state but it is roughly 70% federal and 30% state.
Rehabilitation facilities, where patients go to recover from surgeries
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Notes from https://www.ft.com/content/da9f8230-2eb1-49c5-b63a-f1507936d01b
Charlie Munger
He lives in Greater Wilshire, a leafy neighbourhood of Los Angeles. He lived there for 60 years and designed the property himself.
He grew up in Omaha, Nebraska, a few hundred feet from where Buffett now lives. The two met in 1959, when Buffett was 28 and Munger 35. Munger, who at one point worked in a grocery store owned by Buffett’s grandfather, trained as a lawyer before being coaxed into investment by his soon-to-be partner.
“Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices.”
He made most of his money from just four investments: Berkshire, Costco, his investment in a fund managed by Li Lu’s Himalaya Capital and Afton Properties, a real estate venture that owns apartment buildings in California and New Jersey.
“In the good times you get into bad habits . . . When bad times come they lose too much.”
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Notes from https://www.barrons.com/articles/earnings-stocks-gains-rally-outlook-fff4ad0c
S&P 500 year-over-year earnings growth
ISM Manufacturing Index, a measure of the level of activity in that part of the economy
ISM dropped to about 46 for March from a post-Covid peak of just over 60.
Such weak ISM results historically have correlated to fewer than 70% of S&P 500 companies beating quarterly profit projections
the S&P 500’s price/earnings multiple is at a not-inexpensive 18.3 times analysts’ full-year forecast
Full-year guidance often accompanies first-quarter reports.
2023-04-17
Notes from https://www.barrons.com/articles/berkshire-class-a-stock-premium-b-warren-buffett-c8ed2dd3
Buffett holds virtually all his roughly 15% economic stake in Berkshire through the A shares
The Class B stock was issued in 1996
Class B stock is more liquid and widely owned than the A stock due to its lower share price and inclusion in the S&P 500 SPX index
Class B share carry 1/10,000th of a vote
Economically, Class B share is 1/1,500th of a Class A share
Buffett maintains a 31% voting stake with just a 15% economic interest
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Notes from https://thefinancebuff.com/brokerage-account-safe-no-fdic.html
Charles Schwab has a banking arm — Schwab Bank
Vanguard, Fidelity, and Charles Schwab all have a money market fund that invests only in Treasuries and government bonds.
The federal government guarantees to pay the principal and interest on Treasuries.
The big-3 brokers Charles Schwab, Vanguard, and Fidelity
You can buy Treasuries either as new issues or “pre-owned.”
Customers were eventually made whole after MF Global went bankrupt but it took five years.
Brokerage accounts are insured by SIPC up to $500,000 but the insurance doesn’t cover the payback from your investments. It only covers missing assets if the broker goes down. If customer assets aren’t missing, the SIPC insurance isn’t needed.
from comments
Schwab Value Advantage Money Fund Investor Shares (SWVXX)
Schwab U.S. Treasury Money Fund Investor Shares (SNSXX) invests primarily in Treasuries
All money market fund yields are quoted after fees are already deducted
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Notes from https://www.bloomberg.com/opinion/articles/2023-03-06/silvergate-and-the-problems-of-crypto-related-deposits
Silvergate Capital Corp is based in California.
money-transfer businesses - MoneyGram International, Western Union
82% of Silvergate's deposit base is crypto customers
highly liquid - Deposits at the Federal Reserve or other banks, short-term Treasury bills
Large banks must keep enough high-quality liquid assets to cover 30-days’ worth of deposit withdrawals under stressed conditions.
JPMorgan Chase & Co., for example, held \$733 billion of such assets at the end of 2022 against \$2.3 trillion of diverse, traditional deposits.
Three-quarters of those liquid assets were on deposit at the Fed and other banks, the rest was in a mix of Treasuries, and government-sponsored mortgage bonds.
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Notes from https://www.wsj.com/articles/blackstones-hefty-concession-is-a-warning-to-investors-11672840068 dated 2023-01-04
University of California’s endowment, known as UC Investments
BREIT fund
fees for small private investors - 1.25% a year and 12.5% of profits
chose to focus on Sunbelt housing, warehouses and data centers
In December 2022, investors asked for 5.44% of the fund back, but only 0.23% was available because of withdrawals in the two prior months.
Blackstone will use up to $1 billion to pay UC Investments if it fails to earn 11.25% a year after fees.
During the height of the 2008 financial crisis, Warren Buffet put $5 billion into Goldman Sachs for 10% annual dividend and option to buy discounted shares
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from https://www.wsj.com/articles/what-is-cardiac-arrest-what-to-know-about-why-damar-hamlin-collapsed-11672767432
Cardiac arrest is when the heart abruptly stops beating.
It occurs when the heart’s electrical system malfunctions.
Abnormal heart rhythms or arrhythmias can be triggered by congenital defects, heart damage and certain medications
arrhythmias can lead to cardiac arrest
ventricular fibrillation, a serious type of arrhythmia
commotio cordis
Both heart attack and heart failure can lead to cardiac arrest. But they are separate conditions.
A heart attack occurs when blood flow, which carries oxygen, to the heart muscle is reduced or stopped. It is usually caused by blockages in the coronary arteries.
Symptoms of a heart attack can include chest pain, shortness of breath and pain in the arms and back
Heart failure is a chronic and progressive condition in which the heart can’t effectively pump blood around the body. Possible contributors include build-up in the coronary arteries, previous heart attacks, high blood pressure, obesity, congenital defects, lung disease and diabetes.
Cardiac arrest is sudden and characterized by abrupt collapse and loss of consciousness. A person in cardiac arrest will have no pulse and won’t be breathing.
Defibrillator is a device that delivers an electric shock to the heart and can restore a normal heartbeat in cardiac arrest patients
While waiting for a defibrillator to arrive, CPR should be administered.
Chest compressions can help to manually circulate blood, which can be life-saving to a person whose heart is not beating properly.
Everyone should learn how to administer CPR and use an AED (automated external defibrillator).
Cardiac arrest is usually fatal. Fewer than 12% of people who have a cardiac arrest outside of a hospital survive. CPR significantly increases the odds of survival.