KochBank Weekend Reading

The new "circular economy"...or problems you´re running into, when you have too much money (click).

Django Davidson of Hosking Partners is looking at the AI-boom from a "capital cycle perspective". And it´s not looking pretty: "If we reach the level of infrastructure build out envisaged by GPU-salesman Jensen Huang, revenues of close to $3 trillion and FCF of c$900bn will be required to make a 10% ROIC on this spend. These are sobering numbers even when set against the extraordinary ‘game changing’ power of any AGI. For context, a 10% ROIC is broadly equal to the 9-11% of allowed regulatory return permitted by US utility regulators." Sectors with prior under-investment and now improving ROICs (Banks, Metals & Mining) are already outperforming the "getting capital-heavier" (aka: declining ROICs) Mag7.

At 35% Mag7 weighting in the S&P500, this is also a problem for the market (aka: passive universe). Of course, you could argue that rising AI capex (IC) is offset by higher profits (RO) at Nvidia, for a offset on the aggregate market ROIC. But again, a sign for a very narrow, "self-referencing" economy (see above)

"We live in the age of National Capitalism" is one of Russel Napier´s core thesis. In a recent FT interview he´s looking at Germany and their "Made for Germany" program, which he thinks will have dire consequences for France. He also explains, why he ultimately sees capital controls, as governments try to inflated their debt away

Hosking Partners: The AI Paradox: Capital Questions
FT: Interview with Russel Napier
Eagle Point Capital: Reading Roundup August

Once again, Eagle Point Capital provides us with excellent summaries of their recent readings

Krones is the global market leader for bottling and packaging equipment. The shares have compounded at 12% p.a. for the last 25 years. We visited the CMD at the Drinktec trade fair in Munich and have written a review.

Benedikt Baumann is bullish on WIIT, a European sovereign / private cloud company, listed in Italy

Kerrisdale is short CoreWeave

KochBank: Krones CMD Recap
Baumann Capital: Bull Case WIIT
Kerrisdale Capital: Short Case CoreWeave

In his podcast, Shane Parrish tells the (very colorful) story of Ed Stack, who built Dick´s Sporting Goods from a small fishing gear shop into an empire

Copy/Paste: In his podcast, John Mihaljevich tells the (very colorful) story of Carl Icahn. His recent track record is not good. Also, some ethics are "doubtful". I always liked his "no-bullshit" attitude and Queens accent. He surely was involved in the best ever markets-related television showdown (click)

A Bloomberg Terminal costs USD 30k p.a. - Here´s how you can bootstrap it (click)

Podcasts & Videos:

The Knowledge Project: Ed Stack: Lessons from Dick’s Sporting Goods
Latticework: Carl Icahn´s Journey
Effekten Spiegel: Interview with Pfisterer CEO Johannes Linden

There´s a massive new Formula 1 exhibition in Oberhausen (click)

I enjoyed watching this Netflix series on the rise and fall of Bernard Tapie (click)

A trader by the Grace of God...what a self-obsessed schmuck...

Enjoy the Weekend !

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