Friday Links

• In this opinion, we hold that, when a Section 220 inspection demand states a proper investigatory purpose, it need not identify the particular course of action the stockholder will take if the books and records confirm the stockholder’s suspicion of wrongdoing. We also hold that, although the actionability of wrongdoing can be a relevant factor for the Court of Chancery to consider when assessing the legitimacy of a stockholder’s stated purpose, an investigating stockholder is not required in all cases to establish that the wrongdoing under investigation is actionable. [AmerisourceBergen Corp v. Lebanon County Employees' Retirement Fund]
  
• Profit at community banks—small, local lenders—jumped 10% in the third quarter from the same time last year, according to the Federal Deposit Insurance Corp. Total loans rose 13.4% in the third quarter, compared with 4.9% for the industry. Deposits surged 16.7%. Noncurrent loan rates have risen slightly this year but are still far below levels seen during the last financial crisis. [WSJ]
• November saw 24 banks announce new buyback plans after 22 did so in October, and that two-month fourth-quarter total already surpasses the 30 announced in the entire third quarter, according to data from S&P Global Market Intelligence, which collects the information on a best-efforts basis. The data also show that 14 banks have announced reinstatements in October and November combined, up from eight in the third quarter. [S&P]
• We live in an age of serial asset bubbles and spectacular busts. Economists, policymakers, central bankers and most people in the financial world have been blindsided by these busts, while investors have lost trillions. Economists argue that bubbles can only be spotted after they burst and that market moves are unpredictable. Yet Marathon Asset Management, a London-based investment firm managing over $50 billion of assets has developed a relatively simple method for identifying and potentially avoiding them: follow the money, or rather the trail of investment. Bubbles whether they affect a whole economy or merely a single industry, tend to attract a splurge of capital spending. Excessive investment drives down returns and leads inexorably to a bust. This was the case with both the technology bubble at the turn of the century and the US housing bubble which followed shortly after. More recently, vast sums have been invested in mining and energy. From an investor's perspective, the trick is to avoid investing in sectors, or markets, where investment spending is unduly elevated and competition is fierce, and to put one's money to work where capital expenditure is depressed, competitive conditions are more favourable and, as a result, prospective investment returns are higher. This capital cycle strategy encourages investors to eschew the simple 'growth' and 'value' dichotomy and identify firms that can deliver superior returns either because capital has been taken out of an industry, or because the business has strong barriers to entry (what Warren Buffett refers to as a 'moat'). [Capital Returns: Investing Through the Capital Cycle]
• A good 45% of my stocks have no P/E. Which means they’re losing money. Then there are companies like Tesla — P/E 1,254 — and Peloton — P/E of 1,065. Why, on that scale, Shopify with only a P/E of 685 looks positively cheap. Dirt cheap, no less. My latest “technique” is to buy a handful of overpriced shares and watch them. I listen to the buzz, read about them, watch their movement and then buy more or sell them. [Technology Investor]
  
• There is not a single centimeter of flat road in Andorra, in the Pyrenees between Spain and France. I know because I checked. I went looking in 2015, on assignment for Strava to recce the course of that year's Vuelta a Espana Stage 11, and I didn't find one bit. The mountain principality is tiny, and is caught in a long steep valley between high rocks which, if you follow it from the capital, Andorra La Vella, at the Spanish end, takes you up over the highest road in the Pyrenees, the 2,408-metre Port d'Envalira, and down to another valley and the ski resort of Pas de la Casa. Pass through that and then you're out. France and the Col de Puymorens (1,920 metres.) That's it. Andorra is an awful lot of uphill even if you stick to the valleys; if you branch out, you pass green terraces of land, beautiful, well-kept houses and gardens, sunflowers lashed upside down to barns to dry out, and deep dark forests on beautiful, tortuous roads that rise and fall at sometimes eye-watering gradients. Branching out is all that Stage 11 of the Vuelta does. It was designed by Andorra resident Joaquim 'Purito" Rodriguez of Team Katusha. In so doing he revealed himself to be both a sadist (he was tasking the pro peloton and also the forthcoming amateur 'Purito Cyclosportive' with some truly horrendous climbs) and a masochist (he would be riding it himself, and no doubt giving his all to win it). His route butterflied deviously in loops on both sides of the valley, passing multiple ski resorts on the way. [Higher Calling]
• Helium is rare on Earth - so rare that it was first discovered in the sun, not here on terra firma. In 1868, astronomers performing spectroscopy during a total solar eclipse noticed a yellow spectral line that did not correspond to any known elements.  It was not until 1895 that helium gas was isolated on Earth, by Scottish chemist William Ramsey who studied the gasses released by uranium ore when dissolved in acid. In a spectroscope, one of the gasses isolated exhibited the same yellow line as the mystery gas in the sun's chromosphere. Thus, helium was named after the Greek word for sun (ήλιος). [CBS]
• We know exactly what a genuinely secure physical and electronic counting system looks like. It looks like Vegas. We know exactly what a genuinely secure 21st-century voting system looks like. It looks like Sweden, Mexico or even Iraq. Ours looks nothing like any of these things. It looks, in fact, like a typical American shitshow. (Or, as the New York Times put it in 2016, horror show.) And anyone who lacks quick and savage comebacks for the above questions is ill-positioned to educate us out of this Bayesian prior. [Moldbug]
  
• Donald Trump never had a list of men and women who are independent of the existing power base that runs this country. He would be a real threat to the powers that be if he had such a list. Agents of the powers that be are now rushing into the vacuum. By January 20, the deal will be done. Let me give you examples of what would constitute a revolution. If his choice for Secretary of State were Angelo Codevilla, I would be impressed. If his choice for Secretary of the Treasury were Paul Craig Roberts, I would conclude that he really has an economic agenda. If his choice for the Department of Defense were William Lind, I would assume that Trump knows what he is doing. If his choice for the Department of Homeland Security were Sibel Edmunds, I might have some hope. As for the Department of Justice, Andrew Napolitano is the obvious choice. But, in the words of John Wayne in The Searchers, that'll be the day. Here is the problem that Trump now faces. He doesn't know anything about the federal government. He really doesn't. He doesn't know who's on first. He doesn't know the good guys from the bad guys. He is surrounded by people like Newt Gingrich (CFR) and Rudy Giuliani. We already know where this is headed. [Gary North]
• Madame First Lady—Mrs. Biden—Jill—kiddo: a bit of advice on what may seem like a small but I think is a not unimportant matter. Any chance you might drop the “Dr.” before your name? “Dr. Jill Biden ” sounds and feels fraudulent, not to say a touch comic. Your degree is, I believe, an Ed.D., a doctor of education, earned at the University of Delaware through a dissertation with the unpromising title “Student Retention at the Community College Level: Meeting Students’ Needs.” A wise man once said that no one should call himself “Dr.” unless he has delivered a child. Think about it, Dr. Jill, and forthwith drop the doc. [WSJ]