Friday, June 12, 2020

Friday Night Links

  • The West raped the thousand-year-old borders and history of Central Europe. They forced us to live between indefensible borders, deprived us of our natural treasures, separated us from our resources, and made a death row out of our country. Central Europe was redrawn without moral concerns, just as the borders of Africa and the Middle East were redrawn. We will never forget that they did this. And when we thought that neither the arrogant French and British nor the hypocritical American empire could sink deeper than this, they could still do so. After World War II we were thrown to the Communists without heartache. The reward of the Poles, the Czechs and the Slovaks was the same as our punishment. May this be an eternal lesson for the peoples of Central Europe! Dear ladies and gentlemen! There have been many who wished to bury Hungary. There were those who wanted to deprive the Germans of an ally, there were those who wanted revenge on the Habsburgs, there were those who were driven by profit, and there were those who always hated Hungarians. They clung together to make us disappear from the face of the earth. But we are a stubborn people, and we were never willing to attend our own funeral. Our great-grandfathers didn't give up either. They did not kneel or ask for mercy. We stayed on our feet and endured. We endured the wagon towns, the Nazi camps, the Soviet gulag, the deportations, Czechoslovakia, Yugoslavia and Ceau┼čescu. Today, there is no Czechoslovakia, no Yugoslavia nor a Soviet Union. There is no British or French empire. And what's left of them is now twisting in the multicultural grip of their vindictive colonies. Even the greatest cannot avoid the justice of history. And just as it is true that what belongs together will grow together, it is also true that what does not belong together falls apart. They said it well a hundred years ago: we will be there at the funeral of those who wanted to put us in the grave. [Orban]
  • The best known historical example is the measures taken by the town of Gunnison, Colorado, during the 1918 influenza epidemic. To prevent an introduction of the infection, the town isolated itself from the surrounding area for two months at the end of 1918. All highways were barricaded near the county lines. Train conductors warned all passengers that if they stepped outside of the train in Gunnison, they would be arrested and quarantined for five days. As a result of the isolation, no one died of influenza in Gunnison during the epidemic. Several other communities adopted similar measures. Princeton University utilized protective sequestration and avoided any fatalities. In the South Pacific, the Governor of American Samoa, John Martin Poyer, imposed a reverse cordon sanitaire of the islands from all incoming ships, successfully achieving zero deaths within the territory during the influenza epidemic. In contrast, the neighboring New Zealand-controlled Western Samoa was among the hardest hit, with a 90% infection rate and over 20% of its adults dying from the disease. [Wiki]
  • In his post, Value Investing Blog alludes to a problem that minority shareholders have in these situations: a high fixed cost of fighting what the management and/or controlling shareholders are trying to do. It can be a significant cost in terms of time and attention, and for someone to rationally pay that cost upfront he would have to anticipate a higher expected benefit. An appraisal action is likely going to require dissenting shareholders to have an expert report. That suggests something important for corporate governance theory. The ownership structure of a company matters, and can be very important for the ultimate returns of shareholders. At the limit, if a company were to be owned by a large group of shareholders each holding a single share of de minimis value, it might be possible for the management to convert all of the company's equity to their benefit and rational for the shareholders to acquiesce. (In theory, the shareholders could resist as a class, but in practice those efforts have to be initiated and organized by a shareholder with an economic incentive to do so.) [Oddball Stocks]
  • The following is the inscription on the frame of the painting: "D. Hayes Agnew, M.D. Chirurgus expertissimus; scriptor et doctor clarissimus; vir veneratus et carissimus," which, being translated, reads: "The most experienced surgeon, the clearest writer and deacher, the man most beloved and venerated." [History of the Life of D. Hayes Agnew]
  • Shareholder equity then was $95 million. Now, as you'll see below, it is $242 million! Current assets net of all liabilities was only $13.6 million. Now it's $126 million. (So, the price to book is now 0.2x and the price to NCAV is 0.39x.) Part of the problem is that earnings have declined. In the 2003 fiscal year, Hanover earned $9.8 million on $290 million of sales. In fiscal 2019, earnings were only $2.6 million on $395 million of sales. The 1% return on equity translates into a 5% earnings yield thanks to the 80% discount to book value. [Oddball Stocks]
  • Through a pervasive national marketing campaign and a purposefully manipulative sales pitch, Tesla has duped consumers, including Hudson, into believing that the Model S and the suite of purportedly autonomous and semi-autonomous driving features that Tesla incorporated into the Model S can safely transport passengers at highway speeds with minimal input and oversight from those passengers. In reality, the Model S and the Active Safety Features do not and cannot function as Tesla claims and are dangerous to operate on our nation's highways. Specifically, despite Tesla's claim that the Active Safety Features are designed for use at highway speeds, the Active Safety Features are unable to reliably detect stationary objects such as disabled vehicles or other foreseeable roadway hazards, posing an inordinately high risk of high-speed collisions, severe injury, and death both to Tesla's passengers and to the driving public. [PlainSite]
  • Richard Nixon: The man is an enigma. Despite the millions of words written about him, great mystery and much speculation surround the former president's drinking habits and ability. This is largely due to the vast contradictions of witness testimony: those charged with whitewashing his reputation swear he barely touched the stuff while others say he poured it down by the quart but possessed such incredible self-discipline that he was able to shrug off the effects—usually. All this swirling obfuscation makes for a difficult opponent—how do you attack or defend yourself from a shadow? [Modern Drunkard]
  • Given the Company's history of destroying shareholder capital, as one of the Company's largest shareholders (and one who—like other shareholders—has seen the value of their investment decrease by more than 40% this year), it was disturbing to read in the Secret November 1 Letter that Driver's exercise of its rights as a shareholder—rights that any shareholder, whether they own 1 or 100,000 shares, might exercise—to question the strategic direction of the Company and request that the Company's board of directors take steps to increase shareholder value "placed and will continue to place, significant strains on the ability of the Company's board and management team to manage the Company and the Bank" and that "if left unchecked," Driver's exercise of its rights as a shareholder "could present a risk to the continued safety and soundness of the Company and the Bank." By the Company's own admission, a single shareholder, exercising its fundamental to question the strategic direction of a public company and request that its board of directors take actions to increase shareholder value, was so distracting as to overwhelm the Company's board of directors and management team, to the extent of putting the safety and soundness of the Company and the Bank at risk. If the burdens of managing a public company—and responding the concerns of its owners—are so onerous as to rise to the level of a risk to the safety and soundness of the Company and the Bank, the Maryland Commissioner should immediately investigate whether the Company's management has the capacity to manage the Company and the Bank without further jeopardizing the Company's and Bank's safety and soundness and take such steps—whether causing the board of directors to replace, augment or upgrade the Company's management team, eliminating unnecessary distractions taxing the attention of Ms. Rodeheaver and other members of senior management or otherwise—as the Maryland Commissioner may see fit in order to ensure the safety and soundness of the Company and the Bank. [EDGAR]
  • An even more obvious constitutional flaw of Section 16(b) is that it does not meet the Supreme Court's requirement for Article III standing because it purports to authorize a "suit to recover such profit... by the issuer, or by the owner of any security of the issuer in the name and in behalf of the issuer" even though the issuer has not been harmed. In Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, the Supreme Court found that one could not sue for damages unless the party alleged that (1) it suffered an actual injury as a result of the defendant's actions and (2) that a favorable ruling would compensate the plaintiff for the injury suffered. [Phillip Goldstein]
  • I have no idea why Section 28(a)'s prohibition on windfall monetary awards has never been raised in a Section 16(b) case. Whether or not the short swing profits recoverable under Section 16(b) are classified as punitive damages, it seems indisputable that they are a windfall for a corporation and not its actual damages. Could a Section 28(a) defense alleviate what the Supreme Court has called "the harsh result of imposing §16(b)'s liability without fault?" All fair-minded persons should certainly hope so. [Phillip Goldstein]
  • Richard Nixon was proud of his Martini making skills. Nixon called them "Silver bullets." After one Nixon would be drunk, having a low tolerance for alcohol. A drunken Nixon was a loquacious Nixon. Here is Nixon's recipe which told me was given to him by Winston Churchill. Obtain a bottle of large-sized olives. Drain the juice. Fill the olive bottle with Vermouth. Refrigerate the bottle. Put three fingers of gin or vodka over ice in a silver martini shaker. Shake vigorously until shards of ice permeate the alcohol. Pour in a chilled Martini glass. Drop in one olive from the jar. [Roger Stone]
  • The following analysis is motivated by a discussion that took place in front of the Third Precinct as fires billowed from its windows on Day Three of the George Floyd Rebellion in Minneapolis. We joined a group of people whose fire-lit faces beamed in with joy and awe from across the street. People of various ethnicities sat side by side talking about the tactical value of lasers, the "share everything" ethos, interracial unity in fighting the police, and the trap of "innocence." There were no disagreements; we all saw the same things that helped us win. Thousands of people shared the experience of these battles. We hope that they will carry the memory of how to fight. But the time of combat and the celebration of victory is incommensurable with the habits, spaces, and attachments of everyday life and its reproduction. It is frightening how distant the event already feels from us. Our purpose here is to preserve the strategy that proved victorious against the Minneapolis Third Precinct. Our analysis focuses on the tactics and composition of the crowd that besieged the Third Precinct on Day Two of the uprising. The siege lasted roughly from 4 pm well into the early hours of the morning of May 28. We believe that the tactical retreat of the police from the Third Precinct on Day Three was won by the siege of Day Two, which exhausted the Precinct's personnel and supplies. [link]
  • Shareholders frustrated by these low returns have set-up a website called Concerned Shareholders of Life Insurance Company of Alabama (LICOA) and are asking the company tough questions. Like, why are the results so poor? Why is the CEO spending $4.7k on a desk chair when the company is losing money? Why are insiders (most of whom are related) paying themselves 84% of 2018 pre-compensation income? The website contains all of this shareholder correspondence, and also financial reports from the company, different documents of interest, and links to some of the shareholder lawsuits. [Tim Bergin]


Stagflationary Mark said...

Train conductors warned all passengers that if they stepped outside of the train in Gunnison, they would be arrested and quarantined for five days.

Our house is currently very similar to Gunnison, if one thinks of delivery trucks as trains and non-perishable food items as passengers.

Will the coronavirus survive in the refrigerator or freezer?

We can’t quarantine refrigerated and frozen goods effectively, so we clean the packaging as best we can.

We’re taking the virus seriously in this household. Better to be too cautious than not cautious enough.

Allan Folz said...

A tweet I saw this week made me think of my manz that likes to brag he's not easily bored and refuses to go to Argentina on even the President's dime. ;)
Selection against nuttiness may also help to explain the distinctive Nordic personality: in other words, why they’re so boring. The positives to being sane are obvious; the downsides are that you find yourself living in a country where people stare at a burning log on Christmas.

Allan Folz said...

That Orban speech is inspiring. I'd never bothered to read up on anything he's said or done. Heretofore, I've used my rule of thumb that since all the people I hate, hate him, he's a solid. Nice to see my rule holding true.

Anonymous said...

based Magyar guy!