Anzac Day


This post is by John Hempton from Bronte Capital


Click here to view on the original site: Original Post




It is ANZAC Day morning and I can’t sleep quite right. I am going to the Dawn Service – but it isn’t the same without Alice.

Alice was a war-widow who looked after me as a child, and I looked after a little in old age.

In memory, here is a post from 2009, the last time I went to the remembrance parade with Alice.

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The original ANZACs were the Australian and New Zealand Army Corps.  They landed on 25 April 1915 at Galipoli in the Dardenelles for what was to become a protracted and punishing military defeat.
Australians (and New Zealanders) still commemorate Anzac Day as their national day of remembrance and with numerous dawn services, remembrance parades followed by war stories, stories about the (great) grandkids and drinking with your mates.  It’s a day that is both sombre and joyous, reverential and light-hearted.  We remember our dead

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Mattel: Buybacks, Barbie and dead babies


This post is by John Hempton from Bronte Capital


Click here to view on the original site: Original Post




I used to be of the view that suggested that buybacks were just another way of distributing to shareholders – a bit like dividends, selectively applied.

You could turn a buyback into a dividend by selling your own shares in precisely the proportion that the company bought shares back. Then your percentage ownership was unchanged and you would have (in cash) your share of the monies that the company distributed to its owners.

I used to think that. But it isn’t quite true because companies can impair themselves with buybacks in ways that you just couldn’t with dividends. Few companies support paying dividends at 2x underlying cash generation. But debt funded buybacks of this size are alas fairly common.
Debt funded buybacks, applied to their illogical limit, will corrupt you, and turn you into a gebbeth – inhabited by the debt (and its evils) you have allowed into your body.

Visa, Mastercard, Huawei and spying


This post is by John Hempton from Bronte Capital


Click here to view on the original site: Original Post




In the days before smart-phones if I wanted to develop a ubiquitous mechanism of spying on people I would probably start with an electronic payment system that tracked everything that people bought and where.

This is not an original thought – and there is a reason why Visa and Mastercard cannot crack the Chinese market.

But the Chinese government and its (compromised or stupid) proxies in the West tell us we should open ourselves to Huawei (which provides a much better mechanism for spying).

I would normally bet that wouldn’t happen – but given the quality of Western political leadership these days nothing much would surprise me.

Just making an obvious observation that I have not seen elsewhere.

John

Afterpay: a regulator view


This post is by John Hempton from Bronte Capital


Click here to view on the original site: Original Post




The Australian Securities regulator (ASIC) has come out with a long review of buy-now-pay later arrangements in which it has decided to do nothing monitor the companies going forward.

This is perceived by some as very bullish for Afterpay. The stock is up fairly hard as I write this.

Afterpay (ASX:APT) is the big player in this industry and a cult stock and cult product amongst Australian millennials. There are several other players and ASIC’s study covered six of them.

ASIC does not have a reputation as an aggressive regulator so that they are monitoring the company going forward is the expected result.

But the ASIC report (available here) does give some insight into Afterpay.

Here are a few extracts:

First an example of underwriting:

Case study 1: Debts on top of further debts 

Vicki was in her early 20s and a mother to three

Continue reading “Afterpay: a regulator view”

Afterpay: a regulator view


This post is by from Bronte Capital


Click here to view on the original site: Original Post




The Australian Securities regulator (ASIC) has come out with a long review of buy-now-pay later arrangements in which it has decided to do nothing monitor the companies going forward.

This is perceived by some as very bullish for Afterpay. The stock is up fairly hard as I write this.

Afterpay (ASX:APT) is the big player in this industry and a cult stock and cult product amongst Australian millennials. There are several other players and ASIC’s study covered six of them.

ASIC does not have a reputation as an aggressive regulator so that they are monitoring the company going forward is the expected result.

But the ASIC report (available here) does give some insight into Afterpay.

Here are a few extracts:

First an example of underwriting:

Case study 1: Debts on top of further debts 

Vicki was in her early 20s and a mother to three

Continue reading “Afterpay: a regulator view”

Schadenfreude: reposting a 2011 post on Sears


This post is by John Hempton from Bronte Capital


Click here to view on the original site: Original Post




I posted on Sears in 2011

They finally filed bankruptcy.

I am surprised it took that long.

Here though is the post again. It reads okay.

—-

We have been short Sears Holdings, publicly, albeit in small quantity. Being summer in Australia I did not even look at the market for the last couple of days – but got into work for some congratulatory emails as Sears stock is off very hard on an announcement of truly awful sales, the closure of 100 to 120 stores and $1.6 to $2.4 billion of non-cash charges. (More about the charges later on.)

I look pretty smart putting a Sears short on in November – and kudos is gratefully accepted but undeserved. I was short Sears at my old firm when the Eddie Lambert controlled K-Mart took them out for considerably more than they were worth. It was

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The last day of the quarter (Tesla edition)


This post is by John Hempton from Bronte Capital


Click here to view on the original site: Original Post




Hedge fund managers who actively trade to produce profit specifically on the last day of the quarter should be treated with scorn. They are marking their book and that is bullshit.

It doesn’t mean that it doesn’t happen. Just treat it with the contempt it deserves.

Companies that do things to produce results on the last day of the quarter should be treated with similar scorn. Channel stuffing, shifting expenses into the next quarter and other forms of abuse lay there.
I am completely staggered by an SEC filing by Tesla today detailing an email by Elon Musk to staff. I will quote in full:

EX-99.1 2 tsla-ex991_6.htm EX-99.1
Exhibit 99.1 

The following e-mail was sent by Elon Musk to all employees of Tesla, Inc. on September 30, 2018.

We are very close to achieving profitability and proving the naysayers wrong, but, to be certain, we

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Crypto Pot Stock


This post is by John Hempton from Bronte Capital


Click here to view on the original site: Original Post




There is a point in the cycle when it is impossible to separate comedy from stock promotion.

Examples in the past:

But now the promotes are crypto and marijuana. So I give you this from a genuine promotional email. I could not make this up. Needless to say I do not recommend buying this stock.

ATTBF Is The ONLY Cannabis-Crypto Stock
YOU Need To Watch On Monday!
Dear Fellow Traders,

My New “Crypto Pot Stock” Alert for Monday is: ATTBF

ATTBF Joins The

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Crypto Pot Stock


This post is by John Hempton from Bronte Capital


Click here to view on the original site: Original Post




There is a point in the cycle when it is impossible to separate comedy from stock promotion.

Examples in the past:

But now the promotes are crypto and marijuana. So I give you this from a genuine promotional email. I could not make this up. Needless to say I do not recommend buying this stock.

ATTBF Is The ONLY Cannabis-Crypto Stock
YOU Need To Watch On Monday!
Dear Fellow Traders,

My New “Crypto Pot Stock” Alert for Monday is: ATTBF

ATTBF Joins The

Continue reading “Crypto Pot Stock”

Thinking aloud about China Biologic Products


This post is by John Hempton from Bronte Capital


Click here to view on the original site: Original Post




There are stocks which you never get right – and where the facts and history is just so ambiguous that you don’t think you will ever get them right.

China Biologic Products (Nasdaq:CBPO) is one of those that leave me perplexed. It is a blood processor in China with a strange political and arguably unsavoury past followed by years of spectacular performance and a few failed takeover bids.

I am short. And I think now I have probably made a little money – but hardly enough to justify the stress I have gone through. And after all this time I am still far from sure what the underlying reality is.

So I will lay out what I know and what I think I know.

The creation of China Biologic Products and the arrest and imprisonment of Dr Du

Australia has a long history in blood processing to provide

Continue reading “Thinking aloud about China Biologic Products”

Thinking aloud about China Biologic Products


This post is by John Hempton from Bronte Capital


Click here to view on the original site: Original Post




There are stocks which you never get right – and where the facts and history is just so ambiguous that you don’t think you will ever get them right.

China Biologic Products (Nasdaq:CBPO) is one of those that leave me perplexed. It is a blood processor in China with a strange political and arguably unsavoury past followed by years of spectacular performance and a few failed takeover bids.

I am short. And I think now I have probably made a little money – but hardly enough to justify the stress I have gone through. And after all this time I am still far from sure what the underlying reality is.

So I will lay out what I know and what I think I know.

The creation of China Biologic Products and the arrest and imprisonment of Dr Du

Australia has a long history in blood processing to provide

Continue reading “Thinking aloud about China Biologic Products”

How the Chinese business elite think of America…


This post is by John Hempton from Bronte Capital


Click here to view on the original site: Original Post




China Properties Group is a Hong Kong listed property developer with operations in Shanghai, Beijing and Kunshan. The business conditions description in the last interim report gives a reasonable appraisal of what the Chinese business elites think of America.

To quote:

Business Review and Outlook 

10 years ago, the U.S. printed money like crazy and exported U.S. dollars all over the world. Now, the U.S. has become a global enemy, trying to bring back the exported U.S. dollars (the U.S. dollar debt of the emerging market in the first quarter was close to 3.7 trillion) and supply chains, as well as to undermine the asset markets of other countries and the global supply chain order. No wonder the U.S. has made a lot of enemies. Fortunately, Trump does not have the same wisdom as Mao Zedong in making alliance with one while

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Dear Bayer shareholders, what are you thinking?


This post is by John Hempton from Bronte Capital


Click here to view on the original site: Original Post




Bayer is a life-sciences company. It sell drugs with litigation risks (especially Xarelto), it genetically modifies seeds (which I guess has litigation risks). It sells herbicides and pesticides all of which have litigation risks.

If you do “life sciences” you muck around with living things and that has litigation risks.

On twitter recently I sought out discussion on risks of Bayer stock and litigation was the key one.

Today Bayer stock is down 12 percent on a California court case where a dying plaintiff claimed that roundup caused his cancer and a jury agreed.

The damages were set at $289 million.

Having watched lots of legal stuff in American stocks I would be surprised if this were not rounded down at least 90 percent on appeal, and if the agglomeration of future cases didn’t cost a lot of money.

But whatever. Here is a list of the biggest

Continue reading “Dear Bayer shareholders, what are you thinking?”

Xero


This post is by John Hempton from Bronte Capital


Click here to view on the original site: Original Post




I was quoted in the Australian Financial Review on Monday stating that Xero is the only Australian company with the potential to be a $100 billion global tech behemoth.

As the market cap is less than USD5 billion now I am saying a 20 bagger is possible.

The $100 billion number was a matter of some dispute in the office – and a discussion is in the appendix. However suffice to say there is huge upside provided it all works.

Xero however have a few hoops to jump through on that path. This post is to explain my view and also what I hope management improve. I do not think they have done a great job of it so far (even though the stock and business have been a success).

But for the uninitiated I am going to explain what Xero does and why it has such potential.

Xero is

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