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Notes from
March 14, 2024

  • AES, a Virginia-based utility
  • Sempra Energy , which operates public utilities in California and Texas
  • Equinix , one of the nation’s largest data-center companies
  • Vertiv , a leading provider of power and cooling infrastructure equipment
  • AI server maker Super Micro
  • Historically, the two most popular areas to build data centers were Northern Virginia and Silicon Valley.
  • DigitalBridge , an asset manager that invests in digital infrastructure


Notes from
Updated March 13, 2024

  • Publix
    • grocer similar to Kroger
    • net margin = 7% vs. 2% for Kroger
    • 250,000 employees
    • stock price is set quarterly by the company
    • 859 stores in Florida; total of 1,360 stores
    • similar chains - H-E-B in Texas and Hy-Vee, a Midwestern chain that is also employee owned.
    • founded in 1930 by George Jenkins
    • Costco like culture
  • supermarket chains usually trade at about 12 times earnings
  • distribution centers


Notes from
Updated June 22, 2021

  • Nonbank mortgage lenders in the U.S. issued 68.1% of all mortgages originated in 2020, up from 58.9% in 2019
  • Rocket Cos.’s Quicken Loans, the nation’s largest mortgage lender
  • Nonbank mortgage lenders
    • Rocket Cos
    • PennyMac Financial
    • UWM Holdings


Notes from
JPMorgan Invests in Mortgage Clearinghouse
Updated June 22, 2021

  • “private-label“ mortgages, which are packaged and sold to investors without a guarantee from a government-backed firm like Fannie Mae.
  • Maxex LLC
    • a growing digital exchange for residential mortgages
    • It provides a clearinghouse where mortgage lenders can sell loans and where large banks and asset managers can buy them.
    • launched in 2016
  • Today, government-backed giants Fannie Mae, Freddie Mac and Ginnie Mae guarantee more than three-quarters of the mortgages originated last year.


Notes from
Certain Stocks Hit Valuations That Will Be Hard to Sustain

  • net margins = net income divided by sales
  • net margins = {Nvidia: 56%, Apple: 25%, the average company in the S&P 500: 10%}
  • Lilly's GLP-1 diet drugs Mounjaro and Zepbound
  • Costco historically has traded at 35 times forward earnings
  • noncash goodwill amortization
  • stock compensation becomes a costless expense in non-GAAP earnings.
  • Apple, Microsoft, Meta Platforms , and Alphabet , emphasize or only report GAAP earnings


Notes from
Warren Buffett's 2023 letter to Berkshire shareholders

  • Berkshire has more than three million shareholder accounts.
  • investor-relations officer or communications consultant
  • serving up optimism and syrupy mush
  • Bertie - Warren Buffett's Buffett's sister
  • It begins on K-1 and extends for 124 pages.
  • From page K-72, “Net earnings (loss) attributable to Berkshire Hathaway shareholders” shows \$90 billion for 2021, (\$23 billion) for 2022 and \$96 billion for 2023
  • Financial Accounting Standards Board (“FASB”), Securities and Exchange Commission (“SEC”), Deloitte & Touche (“D&T”)
  • Operating earnings: \$27.6 billion for 2021; \$30.9 billion for 2022 and \$37.4 billion for 2023
  • For Berkshire, unrealized capital gains or losses at times can exceed \$5 billion a day
  • In 1863, Hugh McCulloch, the first Comptroller of the United States wrote “Never deal with a rascal under the expectation that you can prevent him from cheating you.”
  • Berkshire's GAAP networth at 2023 yearend = \$561 billion.
  • GAAP networth of the other 499 S&P companies was \$8.9 trillion in 2022.
  • Berkshire now occupies nearly 6% of the universe in which it operates
  • Issuing shares will immediately juices net worth
  • Berkshire has no possibility of eye-popping performance
  • make a couple of good decisions during a lifetime and avoid serious mistakes
  • Niagara of diverse earnings
  • During the 2008 panic, Berkshire generated cash from operations and did not rely in any manner on commercial paper, bank lines or debt markets.
  • Coca-Cola and American Express each accounts for 4-5% of Berkshire’s GAAP net worth
  • American Express began operations in 1850, and Coca-Cola was launched in an Atlanta drug store in 1886.
  • Rip Van Winkle slumber
  • What is sensible at a discount to business-value becomes stupid if done at a premium.
  • one wonderful business can offset the many mediocre decisions that are inevitable
  • At yearend, Berkshire owned 27.8% of Occidental Petroleum’s common shares and also owned warrants that, for more than five years, give us the option to materially increase our ownership at a fixed price.
  • In 1975, U.S. production was eight million barrels of oil-equivalent per day (“BOEPD”). By 2007, production fell to five million BOEPD.
  • the U.S. government created a Strategic Petroleum Reserve (“SPR”) in 1975
  • U.S. now produces more than 13 million BOEPD
  • Occidental itself has annual U.S. oil production that each year comes close to matching the entire inventory of the SPR
  • Vicki Hollub’s leadership, Occidental
  • Berkshire now owns about 9% of each of the five.
  • all five companies – Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo – follow shareholder-friendly policies that are much superior to those customarily practiced in the U.S.
  • Our Japanese purchases began on July 4, 2019
  • Operating earnings: {2023: \$37,350 millions, 2022: \$30,853 millions}
  • Rail is the most efficient way – measured by cost, fuel usage and carbon intensity – of moving heavy materials to distant destinations.
  • BNSF is the largest of six major rail systems that blanket North America. Our railroad carries its 23,759 miles of main track, 99 tunnels, 13,495 bridges, 7,521 locomotives and assorted other fixed assets at \$70 billion on its balance sheet. But my guess is that it would cost at least \$500 billion to replicate those assets and decades to complete the job.
  • depreciation charge
  • the replacement value of the property
  • North America’s rail system moves huge quantities of coal, grain, autos, imported and exported goods, etc. one-way for long distances and those trips often create a revenue problem for back-hauls.
  • an American population of 335 million
  • a 100-car, extraordinarily heavy train that can’t be stopped in less than a mile or more.
  • American railroads are required to carry many dangerous products every day that the industry would much rather avoid.
  • BHE → large electric-utility businesses, extensive gas pipelines
  • convective storms
  • BHE’s forest-fire losses
  • A confiscatory resolution of our present problems
  • the public-power model
  • Underwriters can’t be optimists at the office, however desirable that quality may generally be in life
  • Greg Abel, runs all non-insurance operations for Berkshire
  • Jamaica’s sprinters, Kenya’s marathon runners, Russia’s chess experts


Notes from

  • New York State Common Retirement Fund (NYSCRF)
    • is a pension fund
    • is one of the biggest public pensions in the U.S. by assets
    • \$248.5 billion audited value
    • fund gained 19% in 2023 vs. 24% in SP500
    • the office of New York State Comptroller is the sole trustee responsible for NYSCRF


Notes from

  • Outstanding distress (bankruptcy, default, tenant problems, other known issues)
  • Potential Distress (delinquent repayments, forbearance, leasing problems, etc.)

Notes from

  • In just eight years, the United States has rocketed from barely selling any gas overseas to becoming the world’s No. 1 supplier.


Notes from

  • Anywhere Real Estate, one of the country’s largest real-estate brokerages
    • owns several brokerage brands including Corcoran, Coldwell Banker and Century 21


Notes from

  • core retail sales, a metric that strips away sales of cars and fuel


Notes from

  • Based on trailing earnings, the S&P 500’s multiple is 24.18, above its 10-year average of 20.36. The index’s forward multiple, at 20.38, recently rose above 20 for the first time in two years. Its longer-term average is 17.96.
  • book value, a measure of total assets minus liabilities
  • P/B is typically used to evaluate financial stocks, particularly banks, and shares of companies with tangible assets. It is less useful for tech companies because their growth prospects often aren’t captured on company balance sheets.
  • The S&P 500 is trading at a forward price-to-book ratio of 4.15, above its 10-year average of 3.26 and its 20-year average of 2.76.
  • Equity risk premium is calculated by taking the gap between a company’s earnings yield and that of a Treasury.
  • Earnings yield is computed by dividing a company’s reported or projected earnings over the next year by its stock price.
  • To calculate PEG ratio, divide a company’s price/earnings ratio over the past 12 months by its projected annual future earnings growth. A PEG of 1 indicates the stock’s price is in line with its growth expectations.
  • CAPE ration - cyclically adjusted price-to-earnings ratio


Notes from

  • So-called front-of-store offerings, like candy and batteries, account for just a quarter of sales at Walgreens and CVS.
  • Pharmacies buy their prescription drugs from a distributor like Cardinal Health , then get reimbursed by pharmacy-benefit managers, which contract with the patients’ insurer.
  • The pharmacy-benefit managers (PBMs) have accrued enormous power in the drug chain.
  • Three large PBMs, including CVS-owned Caremark, process 80% of U.S. prescriptions.
  • Of the roughly 58,900 pharmacy counters in the U.S. in 2022, 16,800 were located inside of supermarkets or mass-market merchants like Walmart.


Notes from

  • cyclical value stocks - financials, industrials, materials, real estate, and energy
  • financials
    • sensitive to economic growth
    • Examples: Visa , Mastercard , Wells Fargo , and Fiserv
  • energy and industrials
    • sensitive to inflation
    • Examples: Boeing, CSX, Schlumberger, EOG Resources, and FedEx.

Notes from

  • regional banks that collapsed last year (2023) are Silicon Valley Bank, Signature Bank, and First Republic Bank.
  • Signature Bank was acquired by New York Community Bancorp and that is in trouble now.

Notes from

  • First Republic had been sold to JPMorgan Chase.
  • Signature Bank had significant exposure to cryptocurrency.
  • On March 19 2023, the New York Community Bank (NYCB) agreed to purchase around \$38.4 billion in Signature's assets for \$2.7 billion.


Notes from

  • reverse repo facility (RRP)
    • It is a place where money-market funds and others park excess cash to earn short-term interest from the Fed
    • It is a good gauge of excess liquidity in the U.S.
    • It is currently at \$571 billion; It is down sharply from its peak of \$2.6 trillion about a year ago.
    • A short-term 4-week government debt recently offered 5.390% in annualized investment rate, while RRP offered 5.30%. So institutions are exiting RRP and going for Treasury bills instead.


Notes from

  • BlackRock is heavily invested in Invitation Homes. A company that owns and operates over 80,000 rental homes in the U.S.


Notes from

  • Trust is something that you earn in drops and you may lose it in buckets.

Notes from

  • sogo shosha, or general trading companies
  • the five largest sogo shosha, or general trading companies, which are historic and sprawling conglomerates that play an influential role in the Japanese economy. These companies are defined by their highly diversified holdings, touching natural resources, energy, chemicals, metals, manufacturing, retail, real estate, and healthcare.
  • Sumitomo, Mitsubishi, Mitsui, Itochu, and Marubeni

Notes from

  • BlakRock acquired Global Infrastructure Partners
    • for $12.5 billion
      • $3 billion cash + 12 million shares of BLK
      • 30% of the total consideration, all in stock, will be deferred and is expected to be issued in about five years
  • digitize power grids, fund renewable energy projects, and capture carbon from the air
  • GIP - Global Infrastructure Partners
    • private equity fund
    • one of the largest independent equity and debt fund managers focused on infrastructure
    • $100 billion AUM
  • Infrastructure is a $1 trillion market
  • BlackRock
    • AUM in ETFs at the end of 2023 = $3.5 trillion


Notes from

  • Berkshire Hathaway
    • eighth most valuable U.S. company
  • Canadian Prairies
  • Ron Olson, a longtime Berkshire director and a partner at Munger Tolles & Olson, the law firm co-founded by Munger.
  • the company driver gushed about Abel
  • publicly traded utilities were often expected to return more than half of earnings to shareholders in the form of stock dividends
  • Buffett Kremlinologists
  • corporate chieftains
  • Olson, the Berkshire director
  • Kyle Krause
    • He is a close friend of Greg Abel
    • His company, the convenience-store chain Kum & Go, is a competitor of sorts to PTC


Notes from

  • Hoka owner Deckers Outdoors

Notes from

  • Mastercard SpendingPulse
  • Mastercard Economics Institute

Notes from

  • U-Haul
    • dominates the do-it-yourself moving business
    • nationwide fleet of trucks
    • Competitors
      • Penske and Budget
    • Competitors are a fraction of its size
    • 23,000 locations around the U.S. and Canada
    • 200,000 rental trucks
    • nonvoting stock trades under the ticker UHAL.B
    • There is no Wall Street coverage of U-Haul
    • It is run like a private company by the Shoen family, which owns about half the company

Notes from

  • Pipeline stocks
    • Alerian MLP
  • U.S. pipeline infrastructure is largely built out and it’s hard to get regulatory and environmental approval for new construction. That’s favorable for pipeline operators.
  • The industry is divided into partnerships like Enterprise Products Partners and Energy Transfer and corporations like Kinder Morgan , Williams Cos. , and Oneok . Many investors favor the corporations because they prefer simpler 1099 tax forms to K-1s.
  • Enterprise Products yields 7.6%, Energy Transfer pays out 9%, while Kinder Morgan and Williams offer yield in the 5% to 6% range.
  • Some investors prefer Williams due to its natural gas focus, given that long-term U.S. gas demand is probably better than oil.
  • TMUS
    • plans to return \$60 billion to shareholders in dividends and buybacks from 2023 through 2025. Its current market value is \$189 billion
  • The biggest mortgage ETFs are the \$29 billion iShares MBS and \$18 billion Vanguard Mortgage-Backed Securities.


Notes from - 7 Things to Do in the New Year for a Longer, Healthier Life

  • Exercise regularly. Eat healthy. Drink moderately, if at all, and don’t smoke. Get enough sleep. Maintain strong relationships. Challenge your brain. Manage stress.
  • Dr. Peter Attia, in his book Outlive: The Science and Art of Longevity
  • Schimpff, in his book Longevity Decoded: The 7 Keys to Healthy Aging
  • healthy diet, regular exercise, healthy weight, no smoking, and moderate alcohol intake
  • Exercise helps prevent heart disease; it helps ward off depression and dementia; it even helps prevent cancer by revving up our immune system.
  • Cardiorespiratory fitness
  • The best way of testing cardiorespiratory fitness is the VO2max test, which measures the maximum amount of oxygen your body can consume during vigorous exercise.
  • Exercise at least 150 minutes of moderate exercise or 75 minutes of vigorous exercise a week
  • To maximize your fitness, include some interval training into your exercise regimen. Once a week, do 4×4 interval training: four intervals of intense exercise lasting four minutes apiece, separated by rest between each interval.
  • do full-body, multi-joint movements such as squats, dead lifts, and overhead presses that stress your hips, spine, and shoulders.
  • Weightlifting—along with diet—is also key for avoiding osteoporosis.
  • People who have atrial fibrillation, or AFib, should avoid drinking. Even moderate drinking can bring on episodes, and AFib increases the likelihood of stroke.
  • Mediterranean diet - whole grains, vegetables, fruit, legumes, nuts, and fish is healthy.
  • blue zones where people live longer
  • sweet potatoes in Okinawa, Japan, or tortillas, beans, squash, and fruit in Costa Rica
  • consume a lot of plant-based food
  • Not sleeping enough wreaks havoc on our immune systems, weight, brains, and general health.
  • People need at least five hours and 45 minutes of sleep a night. Some people require eight hours or more a night.
  • have a regular bedtime, avoid computers and smartphones before bed, and sleep in a cool dark room.
  • A challenging job helps keep your brain healthy. So does learning a new language, or traveling to new places, or learning new skills.
  • you should get a hearing aid if you can’t hear what people around you are saying
  • People with untreated hearing loss have a 90% higher rate of dementia than others in their age group
  • Chronic stress, however, puts you at greater risk of anxiety, depression, memory problems, weight gain, digestive issues, muscle pains, heart disease, stroke, and sleep loss
  • Regular exercise, meditation, yoga, and even participating in a religion can be useful ways to understand and possibly alleviate stress.


  • Reverse chronological order
public/sotm/reading_2024.txt · Last modified: 2024/03/14 13:34 by raju