Thursday Night Links

• Across our roughly 30 holdings, just over a third operate in oligopolies, nearly 28% in duopolies, and another third are the clear leaders of otherwise fragmented markets — dominance in one form or another, in effectively every position, with more than three quarters of the portfolio protected by wide moats. Market structure isn’t a footnote in our process — it is the process. Before we ask how fast a business grows, we ask who can hurt it. And when a market structure is truly favorable, we often refuse to pick a single winner. We call it playing the tandem. Think of Visa and Mastercard. Two networks, one moat, rational pricing, both compounding for decades. Investors who agonized over which of the two to own missed the deeper insight: the industry structure itself was the asset. Owning both meant owning the toll road, not betting on a single toll booth. [Thierry from arvy]
• In the mid-1990s, Victor Niederhoffer asked a friend of his to explore emerging markets in Southeast Asia. He reported back that in Thailand the brothels had been cleaned up and people were leaving long cigarette butts in ashtrays. It was just the kind of close-to-the-ground intel that Niederhoffer looked for, and he sensed an opportunity. [WSJ]
• When asked once at a social function if he were from Chihuahua, he was reported to have replied, "No soy de Chihuahua; Chihuahua es mío" ("I'm not from Chihuahua; Chihuahua is mine"). [Luis Terrazas]  
• A terrifying scenario which isn't even the worst case (I'm not including the "War with China" scenario): The crunch comes. Benefits get slashed 30%. But it leads to so much outcry that in the next midterms a Restore Social Security platform wins. FICA taxes get  hiked and benefits restored. The economy slips into immediate recession. Tax revenues plummet even further. Benefits get slashed again, but this time raising taxes isn't really an option due to the recession. The Fed starts to lowkey (maybe highkey) monetize the debt. Bond market sales start failing. Medicare starts skipping payments to providers. Providers stop taking Medicare. Old people start not having access to treatment. Euthanasia is legalized as millions of older people vote for it thinking it will be a more dignified way out than the long suffering in a failing Medicare system. A strange coalition of compassionate olds and "compassionate" youngs keep voting to expand euthanasia with lower and lower eligibility rules. Old age spending starts to mysteriously fall. CDC announces they are no longer tracking euthanasia cases. It is now 2045. The budget is now approaching a surplus, somehow. Life expectancy at age 70 is, strangely, still fairly high, but that's because the top 10% can now expect to live to 150 even as the bottom 10% have <1 year of expectancy. In 2055 an inquiry commission is formed and we discover that millions of old people were straight up murdered for budget control reasons. Nobody goes to jail but old people still don't go out alone, for safety. [lymanstoneky]
• Deborah Laufer has sued hundreds of hotels whose websites failed to state whether they have rooms accessible to the disabled. As the sheer number of lawsuits suggests, she does not focus her efforts on hotels where she has any thought of staying, much less booking a room. Instead, Laufer systematically searches the web to find hotels that fail to provide accessibility information and sues to force compliance with the Americans with Disabilities Act of 1990. Ordinarily, the hotels settle her claims and pay her attorney’s fees. But some have resisted, arguing that Laufer is not injured by the absence of information about rooms she has no plans to reserve. Only plaintiffs who allege a concrete injury have standing to sue in federal court. Laufer, these hotels have argued, is suing to enforce the law rather than to remedy her own harms. Laufer has singlehandedly generated a circuit split. The Second, Fifth, and Tenth Circuits have held that she lacks standing; the First, Fourth, and Eleventh Circuits have held that she has it. We took this case from the First Circuit to resolve the split. Though Acheson Hotels, LLC, filed the petition, Laufer supported the grant. After we granted review, the case took an unusual turn. In July, the United States District Court for the District of Maryland suspended Laufer’s lawyer, Tristan Gillespie, from the practice of law for defrauding hotels by lying in fee petitions and during settlement negotiations. [Acheson Hotels, LLC v. Laufer]
• When sale negotiations began between the Old Jack Daniel stockholders and the representatives of Brown-Forman, the sellers' asking price for the Old Jack Daniel stock was placed at $20 million. This amount was arrived at by two methods. First, the anticipated combined earnings for Old Jack Daniel and its sales affiliate, Nashville Sales Company, for the fiscal year 1956 were $2 million. The Old Jack Daniel stockholders considered that a sales price of 10 times earnings, or $20 million, was reasonable. The second method was that the net tangible assets of Old Jack Daniel were valued at $15 million, and to this was added $5 million as the value of goodwill. In determining the net tangible asset value of Old Jack Daniel, the bulk inventory was valued by the same method as that used for insurance valuation. [Jack Daniel Distillery, Lem Motlow, Prop., Inc., v. the United States]
• After more than a decade of under‑investment (particularly in Europe), Goldman Sachs Research analysts believe that higher real yields, geopolitical fragmentation, and supply chain rewiring have shifted equity leadership back toward tangible productive assets. They introduce the "HALO" framework—Heavy Assets, Low Obsolescence—to identify companies that are less exposed to technological obsolescence. [Goldman Sachs] 
• Now look at how a data center actually gets built. Rezoning, special use permits, comprehensive plan amendments, a negotiated “community benefits agreement” of school donations, fiber, soccer fields, and payments in lieu of taxes, public comment and then more public comment. These are not general rules. They are terms of admission negotiated with whoever holds the veto. Calling them community benefits doesn’t change the structure. Access to economic activity has become something that must be bargained for, argued for in the collective sphere, and paid for–with success determined by rents and political access. The natural state returns. (The subsidies, by the way. are the same error wearing the other hat. A sales tax exemption written for datacenters and a county moratorium aimed at datacenters both replace a general rule with a judgment about whether this industry deserves to exist. An open access order offers neither special favors nor special burdens. It offers a rule.) Opponents often complain that communities deserve more of a say. No, they do not. You did not vote on the bakery and the baker did not vote on you. That is the deal. Datacenters happen to be where this is most visible today. Their size and novelty make them easy targets for vilification and rent extraction. But the big issue is not datacenters. It is whether building depends on following impersonal rules or on securing permission case by case from those who control access. [Marginal Revolution]