Whitney Tilson’s e mail to buyers discussing the school dishonest scandal; JetBlue & Alaska airways; Tesla; ideas on wealthy youngsters.
1) In my last e-mail on Friday, I received a whole lot of good suggestions on my reflections on the school cheating scandal (including vintage footage of me with Invoice Ackman and my wife), however it was buried at the finish of the email, so in case you missed it, test it out (I additionally posted it on Fb here).
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In it, I included my favorite Harvard joke (How many Harvard guys does it take to screw in a lightbulb?), which led somebody to ship me one other one: How are you going to inform that anyone went to Harvard? No want – he’ll inform you!
Ah, one of the best humor is rooted in fact – LOL!
As you possibly can imagine, the late-night comics are having a subject day with the scandal. This one from The Every day Show made me giggle out loud: Michael Kosta Makes the Case for School Bribery. This movie clip of Alec Baldwin did as properly.
On the end of this e mail are additional ideas on rich youngsters…
2) I also discussed JetBlue in Friday’s e-mail, however forgot to include the hyperlink to the 5 articles I wrote concerning the airline in 2003, which set me up to buy the stock a dozen years later and triple my money – here it’s.
JetBlue is doing one thing sensible that I haven’t seen on some other domestic airline: having a free open snack and drink bar. This is what it seems like:
It’s tremendous buyer pleasant – just rise up out of your seat and take whatever you need, everytime you want.
3) I’m on an Alaska (ALK) flight proper now to Baltimore from San Francisco, where I spent the weekend with my cousins, in what is turning into an annual custom (I posted footage on Facebook right here).
I haven’t flown Alaska in years, however like what I see: snug leather-based seats, electrical plugs and video screens at each seat, and good snacks – especially the barkTHINS chocolate, which I really like. But I still give the edge to JetBlue resulting from its snack and drink bar and the free high-speed wifi (vs. $17.95 for slower Gogo, which I’m utilizing proper now). And for those of you fortunate sufficient to fly first-class, JetBlue’s Mint crushes what I saw of the first-class cabin on this flight.
I took a quick look at the stock. At 0.9x trailing income, 6.5x EBITDA and 15.8x P/E, ALK doesn’t look especially low cost – and you MUST buy airline shares low cost.
I all the time bear in mind what the CEO of Mesa Airlines, Jonathan Ornstein, advised me greater than 15 years ago: “You can’t own airline stocks; you can only rent them.” (He went on to prove the truth of this, as Mesa later went bankrupt… Consider it or not, it’s now public once more beneath the ticker MESA – and he’s nonetheless the CEO!)
4) Somebody posted a well-articulated brief thesis on Tesla on ValueInvestorsClub. It’s a personal website, but somebody posted it on Twitter here.
5) Anton Wahlman revealed a new article yesterday, Elon’s Last Days, on the SEC’s growing strain on Tesla and its CEO Elon Musk. I’ve read plenty of letters from the SEC, and this one REALLY stands out for its indignant tone. Summary:
- The SEC’s February 26 letter to Tesla’s lawyer is devastating.
- It says Tesla just isn’t conscious of its earlier questions.
- It additionally asks new probing questions, all pointing to new strains of assault and aggressiveness.
- The key going ahead might be if the Tesla board of directors really feel like they could be topic to non-public liability.
- If that equation flips, they could need to drive Elon Musk away from the Tesla CEO place — or more.
6) Never let it’s stated that I don’t current the bull case on Tesla. Another pal wrote:
Critics are utterly off base about Teslas being poorly constructed, in the store on a regular basis, and so forth… I’ve had mine for almost 4 years and 56,000 miles and it solely goes in for normal (each 12,500 miles) maintenance and nearly zero issues.
I hardly acknowledge the Tesla your good friend is describing. And dwelling in Westport, CT, which I consider nonetheless holds the document (at the least pre-Mannequin 3) for probably the most Teslas per capita and understanding so many people who personal them, love them and have no of the problems he described … sort of wondering what his agenda is. BTW .. I do know Jags not have their incredibly properly deserved popularity for spending weeks/months in the service department and have been so unreliable back in the day that many homeowners had corvette engines put in to exchange the manufacturing unit issued “engine” from Jag … so I could not help but chuckle when he made reference to Teslas within the service department with a direct comparability to Jaguar.
Yes, there’s numerous competition coming and as you’ve got precisely pointed out, Tesla has challenges that go beyond the automotive (stability sheet, and so forth.). The question is will the explosive progress predicted for EVs more than compensate for the additional competitors. And I think that these new entries into the world of Electrical automobiles may have their very own bugs to work out. And that is coming from a multi-decade Audi proprietor (nonetheless have a Q7 for my wife) who has lots of respect for the brand however remembers the struggles that they had with their aluminum engines (the 100 collection) .. and that little problem with the automobiles accelerating just like the 737 MAX that nearly put Audi out of enterprise at one level. After which there’s VW and their emission scandal … and so forth., and so on.
Tesla’s charging network advantage is HUGE … with out it you simply can’t take street trips in all the other EVs available on the market until you need to spend four or five hours on the aspect of the street charging (versus 35-60 minutes at a SuperCharger) … and sure, ultimately that may not be a competitive advantage. The truth is, God forbid Tesla goes down, the consortium ought to make a suggestion to buy the SuperCharger community and convert it to work for all automobiles. That might be a huge bounce start. Within the meantime, building out that community (just like the one they’ve in Europe) will take longer than they assume. Within the meantime, their EV’s can be great “second cars” as long as you’ve gotten one thing else in the garage to go to your ski home in Vermont or place on the Cape.
I might go on … and consider me, if Tesla folds or is bought by some company that screws it up, I’ll be heartbroken. However no matter what happens they’ve changed the automotive enterprise eternally … and having owned plenty of enjoyable automobiles together with my beloved Porsche 911 … owning and enjoying my Tesla has been an amazing expertise .. one I hope to take pleasure in for many years to return.
Thanks for all the ink on the topic.
This solely scratches the surface of the good stuff I sent to my Tesla-only e-mail record over the weekend. You’ll be able to sign up for it by sending a blank e-mail to firstname.lastname@example.org.
7) Turning back to the school dishonest scandal, I assumed this Facebook publish was thought-provoking, although principally inaccurate. Excerpt:
I’m gathering from my feed that this entire school admissions scandal is actually surprising to lots of people.
Nicely, sit down, infants, because I’m about to deal you a hard blow.
This is nothing.
I feel a lot of people significantly do not know how completely the system is rigged. I spent a number of years as a for-hire author who couldn’t afford to show work away. This means I accepted a number of jobs I really feel icky about now, however it additionally signifies that I’ve seen firsthand how this all shakes out.
…See, getting little A$shole McGloatyFace III into Harvard is simply the first domino en path to prestige and pedigree. That’s why it’s so essential; the primary domino begins the chain. The richest of wealthy mother and father get him there by donating a library assortment or shopping for a building. The middling rich, like those in right now’s story, cheat (and don’t for a single second assume the individuals indicted in the present day are the only ones, as a result of they don’t seem to be, not, not).
The lowly wealthy hire individuals like me to write down their youngsters’ essays and letters, pull together their resumes, and work out learn how to make years of abject mediocrity sound good.
So are rich youngsters principally spoiled, incompetent nitwits who don’t deserve the highest schools they attend and successful careers they have?
Based mostly on my 4 many years of experience and statement, I don’t assume so.
Although I don’t come from money (my mother and father are academics who have been among the many first couples to satisfy and marry within the Peace Corps in 1962), I’ve lived full-time on the earth of massive cash and elite faculties ever since I left public faculties after sixth grade. We have been dwelling in rural western Massachusetts and my mother and father didn’t like what they noticed at the native public highschool, in order that they sacrificed to ship me to a elite personal faculty, Eaglebrook, for 2 years, before I continued on to Northfield Mt. Hermon (the prep faculty both my mother and father worked at), Harvard, Harvard Enterprise Faculty, the hedge-fund world, the Upper East Aspect of Manhattan, and so forth.
Among the hundreds of privileged people I’ve met through the years, there have for positive been a couple of undeserving bozos. But whereas it feels good to take photographs at them, it might be mistaken to assume that they are consultant of the entire. In truth, I consider that the vast majority are the other: they’ve taken the presents that their mother and father gave them (a safe, supportive loving setting day by day of their lives, never a concern about cash, the perfect personal faculties, trips to see the world, after-school enrichment packages, coaches/tutors, summer time camps, and so on.) and have taken full benefit. They have all three issues that Warren Buffett talks about on the lookout for in individuals: they’re incredibly sensible and competent, work super exhausting, and have very excessive integrity (as for the 33 mother and father indicted within the cheating scandal who obviously don’t have excessive integrity, needless to say the plural of anecdote is just not knowledge).
A pal of mine captures this nicely in an e mail he despatched me:
What all of the articles decrying the disproportionate amount of youngsters of the very wealthy in Ivies misses is this: being wealthy truly can make a child smarter.
Think about it. Long before some mother and father bribe the system to get underachieving Johnny or Sally into Harvard, wealthy households provide what everybody is aware of are the experiences that make youngsters smarter: the most effective preschools, elementary and high faculties, mind-expanding journey, publicity to other vibrant individuals, growing up in an setting of high expectations.
So regardless of the “dirty 30” caught in the sting, the wealthy do get richer truthfully. The overwhelming majority of these rich youngsters rightfully earn their means into the highest educational schools.
Is it truthful to those that come from deprived backgrounds? In fact not as a result of the luck of the draw had them touchdown in families who could not present these advantages. But if a kid, having had all the benefits that rising up in a high-achieving, financially in a position family can provide, rightfully earns his/her place at the prime universities, ought to we punish him or her?
Look, we all know that there are many methods to beat the system and get your kid into Harvard, and I am not defending these one bit. But I also don’t need this scandal to forged an entire adverse smear on the vast majority of wealthy youngsters who truly labored exhausting in class, studied, and earned their means into the most effective schools.