Thursday Morning Links

• If you cannot finance your assets profitably by semi- matching debt maturities to the assets’ or if you cannot make the math on an asset purchase work with 20 yr bonds instead of 5 yr bonds...well I think that company is run too close to the edge. [Canuck Analyst]
• So when there is a rare individual like Ron Unz who is willing to fund dissidents, even those he disagrees with (!), and that money gets mostly wasted on a loud mouthed buffoon, and this causes said wealthy guy not to want to sponsor other researchers in that area, this is a matter of concern worth blogging about. [Emil Kirkegaard]
• In July 2020, LICOA agreed to repurchase stock from the family of Mayo Clark. The price paid was $400,000 for 5,346 shares of LINSA class stock and 1,440 of LINS class stock. Since the LINS stock has 5 times the economic interest of the LINSA stock, this is economically equivalent to repurchasing 12,546 shares of the LINSA stock, which would be equivalent to paying $31.88 for LINSA stock. This was higher than the lowest trade price in July 2020 of $11.85 per share, but lower than the amount of capital and surplus per A share. [Oddball Stocks]
• This guy lost millions of dollars in unvested stock by picking a side in a dispute that was of no economic importance to him. Perhaps he thought that his side would win and he would make more money by raising his stature in the company, but he risked millions and lost. It sounded like the people in the company who have been there for any length of time are savvier about staying on the payroll. [CBS]
• Among non-banking, commercial corporations, this is a matter of settled law and boards are largely loathe (whether to avoid liability or predictable repercussions) to take any corporate action that would thwart the effectiveness of a shareholder vote, such as attempting to prevent a contested election of directors. Yet boards of banking organizations—almost as a matter of course when confronted with an activist investor—will shamelessly take actions with the obvious “purpose of obstructing the legitimate efforts of dissident stockholders in the exercise of their rights to undertake a proxy contest against management.” The reason for this disparity is simple: shareholders and others charged with policing bank directors’ compliance with their fiduciary duties have simply failed to grasp that otherwise lawful (or at least, colorably permissible) actions (including those regarding banking laws and regulations) nonetheless violate boards’ fiduciary duties to shareholders when they are taken for the purpose of disrupting the shareholder franchise. [corpgov.law.harvard]
• As a self-proclaimed visionary, Elon Musk may not spend much time considering mundane tasks like scraping bugs and dung off windshields, but they are all a necessary part of life. Machine vision is not exempt from the need for a clear view. In fact, it’s more sensitive to such obscurants than the human brain, which can actually do a shockingly good job of seeing around such annoyances. Until Elon Musk can handle the mundane, Teslas will never have Level 5 automated driving capability. [link]
• Think of a Venn diagram of types of investors. There is a very large circle, representing a lot of capital, interested in owning things that are doing well or "going up" - the momentum investors. There is a much smaller circle that represents people interested in grim situations - the vultures or distressed investors. Satyajit describes what happens when the tide goes out, "Investors belatedly reviewed the value of investments. Glamorous companies, touted as 'best-of-breed' world beaters, turned out to have no earnings, no cash flows, and no value. Most seemed to be vehicles for property speculation." Then a sharper breed comes in and picks through the rubble. [CBS]
• Construction begins with the 'High Agency Massing' which secures legacy by delivering many useful lives. A house can be reduced to its masonry superstructure again and again without loss to the building's identity or cultural significance. This massing stage is followed by the conventional, 'Low Agency Outfitting' which secures the economy of mainstream practice. This aspect of the build survives along the high agency substrate, and encompasses everything attached to, or resting upon, the massing. Low agency elements provide the convenience and comfort of our age, and have one or two useful lives. The bifurcated model takes two very different approaches to building, and rather than asking either to oppose its own nature, assigns to each the duty to which it is best suited: 'Mass Wall' for authenticity and long life, 'Convention' for amenity and cost effectiveness. [Clay Chapman]
• We speculate that this finding might be caused by the specific environmental factors of this animal. Greenland sharks are reported to live predominantly in 4°C cold waters in the Arctic deep sea with remarkably slow movements with potential low aerobic metabolism and little mitochondrial oxidative stress as well as and high concentrations of e.g. trimethylamine that might be neuroprotective. It is further suggested that Greenland sharks feature a relatively low blood pressure compared to other sharks that might reduce the risk of hypertension-related CNS damage such as stroke or cognitive decline. [link]
• Orwell didn’t get it, and so he managed to fail at being a middle-class socialist writer in mid-century Britain. Not by historical standards, no. Very few of the grey, boring men who repeated the party line no matter what it was are remembered today, certainly none as well as George Orwell. But by any metric of a good life, Orwell failed, and maybe that’s what matters more than such lofty and useless postmortem achievements such as being remembered and revered throughout the centuries. The later works of Orwell burn with frustration, some of which is probably personal. [CC]
• Solar and wind power are not new energy sources – we had to “wean off” low efficiency wind- and solar-based power to fuel humanities technological revolution. While there is nothing extraordinary or revolutionary about these power sources, their efficiency has greatly improved over recent decades. Moreover, these sources are getting close to their physical limits. The Schockley-Queisser Law states that a maximum of 33 per cent of incoming photons can be converted into electrons in silicon photovoltaic (PV) with modern PV reaching 26 per cent. In wind power, the Betz Law states that a blade can capture up to 60 per cent of kinetic energy in air. Modern wind turbines reached 45 per cent. The era of 10-fold gains is over. There is no Moore’s Law in energy and therefore, what is seen in the domain of computers, cannot be expected from energy. Costs will not continue dropping and it is time that a whole-system view is taken when looking at solar and wind or any form of power generation. [link]
• The inexorable march of technology progress for things that use energy creates the seductive idea that something radically new is also inevitable in ways to produce energy. But sometimes, the old or established technology is the optimal solution and nearly immune to disruption. We still use stone, bricks, and concrete, all of which date to antiquity. We do so because they’re optimal, not “old.” So are the wheel, water pipes, electric wires ... the list is long. Hydrocarbons are, so far, optimal ways to power most of what society needs and wants. [link]
• Thirty years later, in a twist worthy of a Jordan Peele movie, Fairfield County has come to resemble Compton in the monomaniacal focus on sports. “There’s no more school,” a parent from the town of Darien told me flatly. (She, like Sloane and several other parents, did not want to be identified for privacy and recruitment reasons.) “There’s no more church. No more friends. We gave it all up for squash.” She says she is working on a memoir that she intends to self-publish, titled Squashed. [The Atlantic]