The Ledger, every show

“You have some like Transdime, for example, which relies on FAA certification and are pretty open about they triple the pricing when they purchase a little part, and they raise prices over six percent per year, regardless of what the underlying cost of producin…”

“You can basically buy XLP, XLK, and XLV at 15 bibs and replicate with about 95% correlation a lot of these quality funds.”

“That paper itself started tied the high profit margins to competition and pointed out that it's not because these firms are just that much better and more efficient. They're getting a higher return on assets and it comes from scale. Rather, they end up with pr…”

“What Piketty talked about certainly does happen, which is that you end up with an increase in inequality. And it doesn't come because there's a fatal flaw in capitalism. It comes because essentially there's not enough competition. Capitalism itself is not func…”

“Macon Dalrahim, for example, is the attorney general for antitrust in the US. He was Google's lobbyist for the double click acquisition.”

“A classic one that hedge funds love and that I think is horrific is Transtime. Basically, there's not competition because to get an FAA part approved takes a very long time, and so you and I can go and provide seat belts cheaper than Transtime, and anytime the…”

“What they're ultimately doing is, it's what Nassim Taleb called the retrospective bribe, where it's not like someone's giving them a suitcase of cash, but rather they're very aware and conscious that if they're going to go back to their law firm, they want to …”

“Buffett tends to like what I call the unnatural monopolies, right? So he's an owner of Moody's. That only exists because it was an act of Congress which created the NRSRO designation, and it's easier to raise an armed militia in the U.S. Than it is to start a …”

“And the issue was he was trying to look at for the median industry. Are there fewer competitors? Is there less competition at the national level today versus 10, 20 years ago? And the answer is for about two thirds of industries, the answer is there's a lot le…”

“There are just many industries where there's absolutely no reason why they should be a duopoly or an oligopoly. And a lot of this comes down to regulation. And so the myth of capitalism in my mind is that we're not really looking at a true capitalist system be…”

“Facebook effectively killed off fine by preventing that from being shared, which was Twitter's video platform. Facebook wanted to own video.”

“It's very difficult for companies to get national distribution, so that those who do have it have a pretty big advantage, and then through a series of mergers, because the regulators don't honestly care, you've ended up with two companies having over 75% marke…”

“And in industry after industry, what's happened is that the DOJ and the FTC over the years, the level at which they will scrutinize mergers has sort of gone up and up. And then effectively, they've blocked almost no mergers and scrutinized almost no mergers.”

“Bitcoin, I think it's a pretty bad investment. All the smart people I know in Silicon Valley who made loads and loads of money bought early and sold early. And, you know, it was all the sort of dumb retail people who piled in late.”

“It's not the only reason, but it's certainly a very important reason was the rise in industrial concentration in the U S. So the rise of monopolies, duopolies and oligopolies.”

“And often now with high borrow costs and all hedge funds shorting the same names, you end up paying a lot more than you would have previously. So you're running a negative carry game where time's against you.”

“The U S spends more on healthcare and medicine than almost any other country with worse outcomes because you have some states with two insurers having about 90% market share.”

“Media itself tends to lead towards Uneconomic decision making, which is to say that whether it's the arts or music can't be judged on financial metrics. And so therefore a lot of capital gets destroyed in pursuit of acquisitions and growth.”

“Returns tend to have a Pareto distribution, and I think as a manager, if you immediately start trimming a winner, you're going to have worse returns, just mathematically.”

“Being in a relationship with a CEO who has outsized control relative to their shares is generally not a good idea.”

“And the valuations today are certainly not at all attractive relative to the fundamentals in many cases.”

“And I think one of the important things is finding high talent and high agreeableness. Generally, these two don't go together.”

“And I thought the Euro was an incredibly stupid idea because, you know, I was looking at the correlation of employment shocks with Netherlands and Germany and Spain and Germany, and the sort of core periphery issues quite were already evident then, and it was …”

“And then if you look at, like, the big banks, only Goldman has a few leading indicators. Most economists, like the Fed, ignores them. The Wall Street banks ignore them.”

“And those are very, very useful because they tend to lead the economic leading indicators themselves by about six months, and they tend to lead asset prices too. So we have a lot of our liquidity indicators will lead commodity prices. They'll lead even stock p…”

“I don't want to denigrate some of the gurus who I still admire, but I thought that that's not repeatable. They might be able to hire someone and train them and teach them, but it's probably like a one-off. And I thought surely the best thing to do is to create…”

“The McCarran-Ferguson Act essentially Devolved regulation down to the state level, which meant that the state insurance commissioners are the ones who decide things, so you essentially have a duopoly or three players in almost all states when it comes to healt…”

“There was Wilson's disease was the classic with Valiant, where absent regulation, they would not be able to charge 300 grand a year for a life threatening drug that really should cost pennies, right?”

“There's extensive evidence that mergers, particularly under six players, lead to higher prices.”

“But ultimately, the Sherman Act and the Clayton Act were much more political than purely economic, meaning that there was a decision that we don't want to live in a society where one or two people control entire industries.”

“Thiel praised monopolies, but interestingly, if you read his book, The only examples he gives the monopolies are essentially ones that have very strong network effects, you know, and feedback loops where you do end up with a winner-take-all dynamic.”

“Gold essentially could be a useful investment given that it's the inverse of the real rate. So to the extent that real rates are negative, it might be good investment, but gold mines themselves are terrible. And gold has a limited function in terms of a bet on…”

“I felt economics was in a way too mathematical and theoretical and not really tied to the real world in many ways.”

“Broadly, globally, I think there's between 500 to 600 companies, and some markets are obviously a little harder to invest in than others internationally.”

“And so you can write the best write up you want, make the most amazing model that's accurate down to the penny. But if management goes out and blows all their cash on a terrible acquisition, they just destroyed a tremendous amount of value. So getting to know …”

“Sometimes we've misjudged management, so we did own a financial exchange, and then they went out and spent half a billion dollars on a crypto exchange, and they surprisingly wrote down the acquisition the same quarter that they made it. To me, that was spectac…”

“So 10 to 20 stocks, but we've really averaged sort of 16 over the life of the fund.”

“We will only double down once. If you start doing more than that, you're essentially following the Martingale strategy, which is also known as gambler's ruin, and it's always the house that wins, not the gambler.”

“If you look at academic research, family run owner operator businesses tend to outperform.”

“But as a business, what I'd love to do is to Close the fund to outside investors. Focus on long-term capital-weighted returns, not just time-weighted returns.”

“Nine out of 10 economists had missed the last four recessions where we had the blue chip consensus estimates”

“It doesn't matter whether the economy is good or bad. What matters is the change in the direction. So markets are all about surprise.”

“So on the leading economic side, there are certain things that tell you where the economy is going to be in three, six, nine, or 12 months, and it's generally difficult to look out past that, particularly on the growth side.”

“Aggregates and cement tend to be local monopolies. You just don't ship these things hundreds of miles. And so if you have the quarry, you'll have that local monopoly.”

“When the fund launched in May, 2020, the bottom in the market was in March, but people were still very fearful of COVID and no one was traveling. And so we felt that we were able to buy booking Close to a 10% normalized free cash flow yield with a terrific CEO…”

“We own Norbremse, which is a German rail brakes company. And globally, it's basically, for the last century, been a duopoly between Wabtec in the US and Norbremse in Germany producing rail brakes.”

“On the inflation side, because inflation is so lagging, so if you think of supermarkets don't immediately start raising prices until they're sure the demand is there, they don't start cutting prices until they're sure that it's dropping off, and then wage cycl…”

“Believe it or not, the insurance industry is exempt from antitrust supervision under McCarran Ferguson, right?”