ASB Partners Nuggets 9.13.24

This is a short weekly email that covers a few things I’ve found interesting during the week.

Sep 13, 2024

Interesting Links/Reads

Bloomberg article about a man who arbitraged Spotify by making his own songs and playing them 24/7 to generate millions in royalties
Pretty Balanced Critique of Ray Dalio
Is Dalio, as some see him, a) the great American success story personified? A middle-class kid from Long Island who bootstrapped himself to Harvard Business School, married a descendant of Gertrude Vanderbilt Whitney, built the biggest hedge fund in the world, and is now a generous donor to charitable causes and a philosopher king (with 2.6 million followers on LinkedIn)?
Or is he, as others see him, b) a scheming master of the universe who had to be pried loose from his “cultish” organization (as numerous commentators have suggested it is), a company rife with turnover and for many a difficult work environment (as myriad news stories tell it), a firm that has lately produced mediocre returns, and as such, feasted mostly on the “2” component of the 2-and-20 hedge fund formula (2% of annual assets and 20% of the return), while Dalio feels compelled to stay in the public eye?
But isn’t it always c)—all of the above, or at least some of both? A recent, loving tribute to Dalio on his 75th birthday by one of his sons is rife with caveats, describing him as “bullheaded and blunt…he interrupts. He makes the same point until he has drilled you into submission…he can cause people pain. In fact he thinks that pain is a good thing.”
Dalio naturally would prefer to keep the conversation focused on the “a” part of the equation. To be fair, it seems he’s more or less moving on from Bridgewater (after a 12-year decoupling process), though he is still on the board and calls himself a “CIO mentor,” which is open-ended enough to mean just about anything. (His 1,640-word “Our Founder” bio on Bridgewater’s website is the very definition of hagiography.)

Blurbs on Portfolio Companies / New Investment Leads

Update on Valaris ($VAL)

Let’s start with the reason never to go long a commodity producer/and or company that is directly affected by the price of an underlying commodity: Supply is Elastic, i.e., High Prices will cure High Prices.

To quote Tyler Cowan, this is what is potentially “wrong” with this thesis (at least in the short to medium term)

But Valaris and pretty much everything in the energy complex have been weak this year which makes it worth a look:

What makes Valaris so interesting is that they don’t profit directly from the price of oil, which has been weak, but generate revenue from renting out various drillships and jack-up rigs, which are contractually rented by the day from a couple of months to a few years.

Investor Deck