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Third Quarter 2017 Letter: The Other Side of the Trade

Click here to read our third quarter letter exploring the implications behind who’s on the other side of the trade.

Speed Read:

  • We had another good quarter of performance, +8.0% for the Traditional composite and +8.1% for the Global Micro composite (+31.5% and +29.7% YTD respectively)
  • We explore the views of our counterparties in EXOR, Bolloré, TripAdvisor, Rolls-Royce and Telecom Italia (over half our invested portfolio)
  • Robots are increasingly on the other side of the trade in U.S. markets, and we explore some of the implications
  • We discuss our suggested ways to defend “against the dark arts” of robot obsolescence by exploring ways that humans will likely always have competitive advantages over computers in investing.
  • For the first time since creating our portfolio display, we’ve changed the Y-axis to show our assessment of dozens of qualitative factors that we are always trying to optimize, in addition to the risk-adjusted return of each security. Our portfolio’s risk-reward is at an all time high, as we continue to deliver a very actionable portfolio.

Third Quarter 2017 Letter.

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Disclaimer:

This article has been distributed for informational purposes only. Neither the information nor any opinions expressed constitute a recommendation to buy or sell the securities or assets mentioned, or to invest in any investment product or strategy related to such securities or assets. It is not intended to provide personal investment advice, and it does not take into account the specific investment objectives, financial situation or particular needs of any person or entity that may receive this article. Persons reading this article should seek professional financial advice regarding the appropriateness of investing in any securities or assets discussed in this article. The author’s opinions are subject to change without notice. Forecasts, estimates, and certain information contained herein are based upon proprietary research, and the information used in such process was obtained from publicly available sources. Information contained herein has been obtained from sources believed to be reliable, but such reliability is not guaranteed. Investment accounts managed by GreenWood Investors LLC and its affiliates may have a position in the securities or assets discussed in this article. GreenWood Investors LLC may re-evaluate its holdings in such positions and sell or cover certain positions without notice. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of GreenWood Investors LLC.

Past performance is no guarantee of future results.

This Post Has 5 Comments

  1. Hi Steven,

    I noticed that TRIP is greyed out now on the Research page. Does that mean you’re out of the position now? If so, what changed your mind? Thanks.

      1. Wonder if you saw this note from CS on Nov. 10:

        Phocuswright Travel Conference Day 2 Takeaways
        Google fireside chat takeaways: Oliver Heckman (VP, Travel and Shopping) surprised attendees and indicated that Google is in the process of launching a new, revamped hotel search experience for mobile that includes a completely new tech stack separate from local search (launched in 5 countries, 1% of traffic). Historically, changes in Google’s search have created volatility for online travel companies, and it is unclear if Priceline’s reallocation of marketing dollars is a reaction to the planned update. The new experience emphasizes content and appears to display hotel pricing trends prominently. Mr. Heckman also evangelized the potential for the Google Assistant to remove friction from all facets of the travel experience.

  2. Hi Steven,

    If Telecom Italia decides to spin-off its fixed-line network, how do you think it could affect Telecom Italia’s business ? and much do you think fixed-line network is worth?

    1. Hey Anu – we’ve published on that in the past and are prepping another note on it too, but honestly, it depends on multiple factors – how many employees are going to be part of the network company and do they include the business services (secure lines)? However they strike it, it’s massively accretive to the current valuation. Either the company will contribute most of its employees and the value will be lower (so the government can afford to take a stake) or it looks more like a tower company and gets valued at a very rich price. We prefer the first scenario.

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