Some things and ideas: May 2022
Some random thoughts on articles that caught my attention in the last month. Note that I try to write notes on articles immediately after reading them, so there can be a little overlap in themes if an article grabs my attention early in the month and is similar to an article that I like later in the month.
My monthly overview (Monthly recurring piece)
I consider YAVB my “empire” with four core pieces: this blog / substack (the free side), the premium side of this blog, my podcast (also on Spotify, iTunes, or YouTube), and my twitter account. You can see my 2022 vision and goals for the empire here. If you like the blog / free site, I'd encourage you to check out the pod, follow me on twitter, and maybe even subscribe to the premium site!
I try to be as helpful as humanly possible to anyone whose research / writing I enjoy. In almost every post I do, you'll notice I link to other subscription services or investors who I like. I don't get referral fees or anything for that; these are almost always organic links and highlights that I do not because I was asked to but because one of my goals with the (very small) platform I have is to shine light on other people who are doing good work and make sure they have a platform big enough to encourage them to keep doing good work!
If you're launching a subscription service, or a new blog, or you're an investor who has done some really good research and wants to get some more eyeballs on it, please drop me a line and let me know. If the quality is there, I would love to link to your blog post or subscription service or research (and if the quality isn't there, I'm happy to provide feedback! I have done so with several services and I think my advice is good / appreciated / helpful!), and I'd love to have you on the podcast to talk about all of it. I can't promise anything, but most podcast guests / people I've linked to have been very happy about the reception / feedback they've gotten (I've even been called the king of the sub bumps / almost as good as Twitter / a big sub bump, and I've generally heard from investors with LPs who come on the podcast that they're delighted by the response). My DMs are always open, so feel free to slide into them if I can be helpful!
A bonus note: I get asked from lots of people about how to break into the finance industry. I detailed it more here, but my top advice would be to go out and start a substack.
Follow up to when are activists coming for energy
I wrote a piece asking when activist and private equity funds were coming for energy.
I got lots of questions on that piece, the most common one was “won’t ESG stop activists and PE funds for going for them?”
The answer to that question is “sure, some funds won’t invest in energy!” But there are a lot of funds and a lot of money out there; there are plenty of funds that would have not such issues with ESG. Or, given the current environment, I wouldn’t be surprised if there are some funds that talk themselves into buying an oil company being an ESG investment.
Since that piece, energy has continued to climb. The out months for nat gas in particular have gotten insane. While energy companies have generally done well, I’d argue the gap between their cash flows at the current curve and their stock prices is even higher today than it was when I wrote the piece.
An interesting piece that I hadn’t discussed at the time but that increasingly becomes an issue / opportunity as the curve screams higher: a lot of these energy companies have lots of untapped acreage that they could drill at some point. It doesn’t seem like many investors have the appetite for a public company to undergo a big drilling program, but given where energy prices are the returns to a drilling program are getting increasingly ridiculous; when do investors start clamoring for energy companies to drill and take advantage of the curve?
One other interesting energy thing: I talked to ~5 oil and gas companies last week. Across the board all of them were pretty clear that
They are seeing zero appetite for growth capex in public companies
Private companies are proving much more nimble / willing to drill and grow given the current curve.
The M&A market is mess; buyers are willing to give credit for the near term curve, but go out past 18-24 months, and buyers are applying huge discounts to where the curve currently sits. So sellers are faced with a choice: take the high bid, even though it reflects a huge discount to the case flows the curve implies the assets are worth, or hold on to the assets and milk them for cash flow.
I liked Bison’s piece on the opp in small cap E&P
Follow up to be greedy, not fearful
I posted earlier this month “be greedy, not fearful”. Markets have stabilized a little since then (who knows what they do in the near term anyway?), but prices still look pretty attractive. And it’s not just me who thinks that; Uncle Warren agrees!
Anyway, be cautious out there, but if you’ve got a long term time horizon stock prices today seem quite attractive. Warren rarely deploys capital aggressively; when he does, it’s generally a good time to join him in doing so.
Not investing advice! But personal finance / I-Bonds
Nothing on this blog is ever investing advice (check out our disclaimer)…. but series I-Bonds look very attractive right now. Please check out all of the Q&A (both in the WSJ follow up and on the treasury website), but it looks like a very nice risk-adjusted option for a piece of personal savings.
Speaking of personal finance: a NYC / big city centric hack
While I’m tossing around personal finance stuff let me give a small hack for people who live in NYC and some other big cities: download Seated (that’s a referral link that gives you $15 back on your first download). It’s one of those “upload your receipts and get cash back from restaurants” apps; they have a good selection of restaurants but the real juice comes from their fast casual restaurant selection if you tend to hit those for lunch. For example, I get a burrito from Dos Toros ~3x/week, and Seated has them on there with 10% cash back. Between the Dos Toros app / rewards program and getting cash back on Seated, I get ~20% cash back from every burrito order. Not bad!
Note I apologize to readers who don’t live in big cities; I try not to have an NYC-bias when I post stuff (though sometimes that rule is tough to follow). Honestly, this bullet was very much targeted at an audience of one (my friend who I share an office with who refuses to follow this hack), but hopefully it’s helpful to anyone else who lives in NYC or somewhere else Seated operates. I’ve been using Seated for ~3 years and probably gotten close to $500 cash back from it at this point, so I just wanted to highlight something that’s pretty easy to use / can generate a decent bit of bash back / I think is criminally underfollowed.
Podcasts (Monthly recurring piece)
I launched the Yet Another Value Podcast in August 2020; the goal of the podcast is to do a deep dive into a high conviction idea from a sharp investor. No talking about the investor’s philosophy or history; just one well research idea broken down (I provided a longer piece on my vision for the podcast at the start of 2021). They've been a blast so far.
A big update: I moved the podcast to a dedicated section of this blog. If you already subscribe to the podcast, no need to do anything. If you don’t….. well, you should!
This month’s podcasts:
Nerd Corner (Monthly recurring piece)
There’s no hiding it; I’m a massive nerd. I read 3-4 fantasy books a month, my favorite past time is playing board games with my wife and friends, and I religiously watch every new entry in the Marvel Cinematic Universe (MCU) and listen to fantasy show recaps on Binge Mode (so much so that I even did a Twitter Space talking about the MCU!). Plus, I was an eager supporter of the Brandon Sanderson Kickstarter (yes, I splurged and went for the hardcover books).
Anyway, I figured a few of you are nerds like me, so I’m starting this segment to give recs of what I’m nerding out over currently, with the hope that you’ll either try it and enjoy it or recommend me similarly nerdy things that I’ll enjoy. This month’s recs:
Nothing worth recommending this month! I read a few books, but nothing I’d be eager to share. Might be because I read Way of Kings (stromlight book #1) last month, and that’s just a tough act for any fantasy book to follow! I’m going to read Words of Radiance (stormlight book #2) next month, and I cannot wait!
PS- outside of my monthly recs, I constantly get asked what my favorite fantasy books are. So I’m just going to throw this list out monthly:
Anything Brandon Sanderson writes; he’s by far the best fantasy author out there. I’d probably start with Mistborn.
Kingkiller is probably the best books I’ve ever read; waiting for the third is agony.
Gentleman Bastards is right up there with Kingkiller; the mix of fun and world building is outstanding.
Red Rising series is more sci-fi, but my god is it good. I would literally stay up all night to read every book the day they came out (note: I’ve only read the first trilogy; I’m going to read the second when the last book comes out later this year).
If you’re looking for something a little more under the radar (most of the books above are widely regarded as some of the best fantasy books / series ever), the Licanius Trilogy was fantastic.
First Law trilogy is excellent. It can get a little brutal though; there are a bunch of sequels and spins, but I’ve never been able to finish them because one of them got so brutal I just put the book down and never picked it up agia.
The Cradle series probably isn’t as “good” as the books above, but I binged them and every fantasy fan I’ve recommended them to has said something along the line of “I read all ten books in two months after I opened the first one.”
Other things I liked (Monthly recurring piece)
Something I’ve been thinking about a lot recently (and I was quoted in it)
Enjoyed Jon Boyar’s presentation at the London Value Investing Conference
Your dog is not ready for you to return to the office
Saw this article as I was leaving the apartment to head to the office on Penny’s birthday; obviously I instantly vowed to never leave the apartment again!
Bloodsong was really good. Like "great series" level good (you and I have a fairly similar list at the top). Unfortunately the rest of the series is hard to recommend. "The Magicians" first book was also excellent... but the rest of the series isn't as good. Lightbringer series was a lot of fun. Definitely not meeting the quality bar of the other stuff you've listed, but really just... fun. Thanks as always for your posts!
(PS Kingkiller is, without question my favorite fantasy series written. At this point though, I seriously wonder if the third book will even land like the other two did given where I am in life now compared to then. I think the phase of life where a story like that hits you is important. Rothfuss' communication has improved a lot recently, and I am starting to be optimistic again that he may actually be planning to finish the series after all - we shall see)
Hi Andrew- As a long time individual stock picker really enjoy the pod. You might include your own writeups once in a while. Own a small RIA based in Vegas so if you ever come out please give me a shout. Continued success on all the great work you do and for helping others out.
Yale Bock, CFA
Y H & C Investments