Insights

Written by a Russian journalist living in Russia, the book provides valuable insights into Putin’s bloody path to absolute power in Russia. The author reviews Putin’s unlikely rise from an undistinguished KGB bureaucrat in St. Petersburg to his reign as president of the world’s largest land mass and stockpile of nuclear warheads. She details the difficulty investors like Bill Browder (we reviewed his book back in 2020) have had operating in the country. The book has aged well as it ends with the Russian invasion and annexation of Crimea in 2014 and hints at troubles to come in Ukraine, which remains an important topic for global markets today. (armscontrol.org) (bbc.com)

There are probably hundreds of books written about Warren Buffett. The team has read many of them, but this one sticks out as being unique. Buffett started buying Berkshire Hathaway in 1962 and took control in 1965. The author provides financial details and interesting tidbits behind some of the important early transactions that propelled the company beyond its textile mill roots. Cost-cutting, tax loss carry-forwards, share buybacks, and stock purchases all contributed to the early Berkshire transformation. The purchase of National Indemnity and See’s Candy – the combination of float, a value focus, and excellent businesses – were the key raw materials for the Berkshire compounding machine.

Former U.K. star fund manager Neil Woodford built his reputation and track record on three key events: his large investment in beaten-down tobacco stocks in the late 1990s, his avoidance of the dot-com crash, and the financial meltdown in 2008 and 2009. The success clearly went to his head and his Equity Income Fund strayed into illiquid, private companies that were in sectors beyond his circle of competence. The ‘Oracle of Oxford’ had up to two-thirds of his Equity Income Fund in unlisted securities and a big weight in the biotech industry (which rarely pays any sort of a dividend). There is a lesson here for all aspiring stock-pickers: stick to your knitting and remain humble and intellectually honest throughout an investing career

Like in investing, the game of poker represents a balance between skill and luck. The author, a psychologist, approached Erik Seidel, the winner of numerous World Series of Poker bracelets, with the intent of learning the game and more about herself. The book traces her fascinating journey through the poker world and adds many investing insights along the way. Seidel is a better psychologist than mathematician and his teaching leads the author to incredible success in just one year. Konnikova stresses the world has gone overboard with the quantitative and overlooked the value of intuition.

U.K. fund manager Terry Smith has a common-sense, three-step approach to investing: 1) buy good companies, 2) don’t overpay, and 3) do nothing. It appears the approach has worked – as of 9/30/2021, the Fundsmith Equity Fund had returned +18.4% versus +12.5% for its MSCI World Index benchmark since its inception in November 2010. Smith articulates his view, through a collection of fund letters and Financial Times articles, that investing in quality companies is a more advanced version of value investing. Advantaged businesses with reinvestment opportunities should avoid dividends and only repurchase shares when they trade at a discount. The book makes his approach seem simple, though we know, through experience, that nothing in investing is easy.

Pulitzer Prize-winning author Daniel Yergin provides a deep dive into the hydrocarbon realities and the issues facing the major global energy players. Yergin brings to life the birth of horizontal drilling and hydraulic fracturing that led to the United States shale revolution. He then spends considerable time outlining the geopolitical tensions facing the United States, Russia, China, and the Middle East. The final segment of the book does a nice job of highlighting the compelling setup for energy investors over the next three to five years.

Written by an actual descendant, the author chronicles the remarkable rise and subsequent fall of the Vanderbilt family fortune. Cornelius Vanderbilt, the ‘Commodore,’ exemplified a rags-to-riches story as this ‘Staten Island water rat’ reached railroad baron status and, at one time, the designation as the world’s richest person. As unlikely as the Commodore’s rise to prominence (side note: he could barely read yet he gave $1 MM to found Vanderbilt University and prove he valued education), so was the family’s relatively quick descent from the ranks of the wealthy. There was not a millionaire left among the 120 descendants within one hundred years of his death in 1877. Perhaps it was a sign of the times as the birth of the family fortune coincided with the Gilded Age and many of the family’s country estates still stand today (e.g. Marble House, the Breakers, Biltmore, Florham). Or perhaps it was the slow and steady family detachment from the Commodore’s magic formula – like the owner/operators we seek out for our investments – he epitomized that ‘passion bordering on obsession’ that legendary institutional investor David Swenson seeks out for his chosen managers.

The author, a noted geopolitical strategist, makes a convincing case that the world has reached a tipping point. The emergence of the world’s first ‘Global Order’ began with the conclusion of the second World War, as the U.S. offered total protection and economic growth for any nation willing to join its fight against the Communist Soviet Union. The fall of the Soviet Union in the late 1980s brought with it the end of this Order and, in its place, an underwhelming foreign policy that had the U.S. bouncing from crisis to crisis while either abusing, ignoring, or insulting its Allies. Countries around the world, including the U.S. and the United Kingdom, have shifted their focus inward as competition takes the place of cooperation. After presenting his thesis, the author then outlines the strengths and weaknesses of the leading nations around the world and we learn why France will become the most powerful country in Europe, Saudi Arabia will be a larger threat than Iran, and China is more likely to collapse than North Korea. Certainly a provocative book, but also an enjoyable read and an excellent resource for international investors.