Signal_or_noise
Brazil keeps making the news pages everywhere, nowhere more than in the Financial Times – sometimes the extra attention doesn’t translate into quality reporting. That’s not the case with recent FT articles we highlight in this post, but even so, the articles are all about things one can’t predict, control or truly get to know… So perhaps the most interesting of the recent FT stories on “Brazil”, so to speak, was a “Business Diary: Nizan Guanaes” piece highlighting one of our true geniuses in advertising.
In recent coverage of Brazilian “boom or bust” theme, some of it is well written – that’s the few we have linked to here. While not even local writers get everything right, in other articles getting better sources or digging deeper would have really made those stories better or more balanced. We have been around since 1988 and we still don’t pretend to know which precise direction Brazil is taking at any point in time. We seek to assess major risks and find that, most of the time, conservatism is best served by knowing very well the companies that go through our filters and patiently waiting for opportunities.
We wrote last Thursday about LinkedIn’s IPO, which closed the first day of trading up almost 110% with some “interesting” valuation metrics. While there’s talk of other Web 2.0/ Socialmedia companies IPOing, Vanity Fair had a recent profile on Zynga – a “Web 3.0″ company, certainly a buzzword we’ll hear a lot in the next few months. We remain interested in the business models arising from social media – if not in the valuations surrounding the sector.
Two stories we’ve read today, one bearish in China and another cautious about the whole “emerging Asia”, make for interesting reading – especially if one applies the same framework to Brazil.
A Bloomberg reporter is flabbergasted by Rio’s “ski lifts” that are actually a inter-slums transportation system. Part of a larger article on the increased access to credit for people in Brazil’s lower income brackets. Nothing new, but we’d like to repeat words of caution against excessive optimism.
A Bloomberg news story on Buffett’s “interest” in Brazil has the local markets reacting today. Explaining: Bloomberg compiled a list of 27 companies that “fulfill Buffett’s criteria” as explained in his Owner’s Manual – but while Buffett’s criteria are subjective, Bloomberg had to put numbers to the qualitative descriptions, so it’s little more than guesswork. The market reacted as if Buffett himself was issuing buy orders… We could easily see Buffett warming up to Odontoprev or Marcopolo, but it still wasn’t this time around.
Two quick notes: One on the irony of Brazil’s iBovespa index dropping along with the US’s indexes after the negative S&P outlook, despite two more bullish stories about Brazil. Another on Carl Icahn’s profile in the NYT highlighting succession issues at his firm (“key-man risk”).
We have had for years a section in our Intranet on Tax legislation and another on interesting corporate structures that save money in any way – operationally, fiscally, etc. The overall idea is to study the state-of-the-art in all espects of corporate life – it’s useful to understand companies’ performances/ strategies/ cultural aspects, and if it’s good it can eventually be shown to companies we invest in. Of course, in the case of tax practices there’s a thin line between aggressiveness and innovation and falling into regulatory traps… Reading this NYT article out today, we still have no idea where GE fits in this range, but it’s safe to say that they’re certainly innovative in the tax department.
Goldman Sachs spent considerable resources and 8 months in an internal review of its business standards and practices, and this culminated in a 63-page report released on January 11th. In it, it highlights areas for improvements and lists some of the 39 recommendations that were approved and are being implemented. Leaving aside the obvious quip about their motivation for releasing this 63-page report (trying to stop the unending flak from the general opinion, politicians and even some customers since the crisis in 2008), we seldom see documents like these. We comment on a few items.
Two articles about the same subject: even scientific “truth” has been called into question. The New Yorker piece is more eloquent and, as usual, they do a fantastic job of creating a certain tension and drama regarding even the most mundane or technical subjects. The NY Times article is a bit more technical (despite the ESP attention-grabbing headline). One doesn’t need to get too philosophical to say that “truth”, or at least the one found via the scientific method, is often in the eye of the beholder – ie., subject to the same randomness, bias, incentives, mishaps and flaws that define human nature.
