Opinion
Tepper calls TransDigm's price-tripling aerospace model 'slightly parasitic'
“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…”
Assertion Not checkable as stated
Tepper: Replicate expensive quality funds for 15bps using XLP, XLK, and XLV
“You can basically buy XLP, XLK, and XLV at 15 bibs and replicate with about 95% correlation a lot of these quality funds.”
Insight
Tepper: High corporate margins stem from pricing power, not efficiency
“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…”
Insight
Tepper: Economic Inequality Stems from Lack of Competition, Not Capitalism
“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…”
Assertion Supported
U.S. Antitrust Chief Makan Delrahim Was Once Google's Lobbyist
“Macon Dalrahim, for example, is the attorney general for antitrust in the US. He was Google's lobbyist for the double click acquisition.”
Assertion Supported
TransDigm Hikes Acquired Aircraft Component Prices by 500% to 700%
“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…”
Opinion
Antitrust Regulators Are Captured by Retrospective Bribes From Law Firms
“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 …”
Opinion
Warren Buffett Invests in Unnatural Monopolies Created by Regulatory Fiat
“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 …”
Assertion Supported
Tepper: About two-thirds of US industries have significantly less competition
“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…”
Insight
Tepper: Many Oligopolies Exist Due to Regulation Rather Than Economic Scale
“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…”
Assertion Partly supported
Facebook Killed Twitter's Vine Platform by Blocking Video Sharing
“Facebook effectively killed off fine by preventing that from being shared, which was Twitter's video platform. Facebook wanted to own video.”
Assertion Partly supported
Tepper: Two Companies Effectively Control 90% of the US Beer Market
“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…”
Assertion Not checkable as stated
Tepper: US antitrust regulators have blocked almost no mergers
“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.”
Opinion
Smart Money in Silicon Valley Dumped Bitcoin on Retail Investors
“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.”
Assertion Not checkable as stated
Tepper: US corporate profit margins driven by rising industrial concentration
“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.”
Insight
Tepper: Short selling is a negative carry game where time works against you
“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.”
Assertion Not checkable as stated
Tepper: Two insurers control 90% market share in some US states
“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.”
Insight
Tepper: Media Industry Destroys Capital Through Uneconomic Acquisitions
“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.”
Insight
Tepper: Immediately trimming winning stocks leads mathematically to worse returns
“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.”
Insight
Tepper: Investing with CEOs holding outsized voting control is generally ill-advised
“Being in a relationship with a CEO who has outsized control relative to their shares is generally not a good idea.”
Opinion
Tepper: Semiconductor valuations are unattractive relative to fundamentals
“And the valuations today are certainly not at all attractive relative to the fundamentals in many cases.”
Insight
Tepper: High talent and high agreeableness generally do not go together
“And I think one of the important things is finding high talent and high agreeableness. Generally, these two don't go together.”
Opinion
Tepper: Single Currency and Monetary Policy Cannot Work for Europe
“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 …”
Assertion Not checkable as stated
Goldman Sachs Is the Only Major Bank Using Leading Economic Indicators
“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.”
