Friday, February 3, 2023

Time is running out to watch Herb Greenberg's latest presentation; Why America Should Ban Crypto; TikTok Dealt Another Hit as Democratic Senator Joins Calls for Banning the App; Pitches for Meta Platforms and Quálitas Controladora

By Whitney Tilson

1) I've been friends with my now-colleague Herb Greenberg since 1997...

I watched him go from taking Wall Street to task in his six-day-a-week column at the San Francisco Chronicle... to acting as the fulltime "voice of reason" on CNBC... to spearheading a number of successful research firms over the years.

But none of Herb's past achievements could have prepared me for what he revealed in his latest presentation...

It's a wake-up call for all Americans. It's also a situation that could be catastrophic for folks who don't heed his warning... while extremely lucrative for folks who make one simple money move today.

If you haven't seen Herb's presentation yet, don't delay... It's only available until midnight on Sunday. Watch it here.

2) I don't remember the last time investing legend Charlie Munger felt strongly enough about something to publish an op-ed about it: Why America Should Ban Crypto. Excerpt:

In the U.S. in recent years, privately owned companies have issued thousands of new cryptocurrencies, large and small. These have later become publicly traded without any governmental pre-approval of disclosures.

In some cases, a big block of cryptocurrency has been sold to a promoter for almost nothing, after which the public buys in at much higher prices without fully understanding the pre-dilution in favor of the promoter.

All this wild and wooly capitalism is much like that described in a remark often attributed to Mark Twain, who was thought to have said that "a mine is a hole in the ground with a liar on top."

Such wretched excess has gone on because there is a gap in regulation. A cryptocurrency is not a currency, not a commodity, and not a security. Instead, it's a gambling contract with a nearly 100% edge for the house, entered into in a country where gambling contracts are traditionally regulated only by states that compete in laxity.

Obviously the U.S. should now enact a new federal law that prevents this from happening.

I think Munger (and the Chinese government) are correct.

I'm all in favor of investment and innovation in blockchain technology, but all cryptocurrencies should be banned because, as I've said before, they are a techno-libertarian pump-and-dump scheme.

3) Speaking of things that should be banned, three cheers for my friend Sen. Michael Bennet of Colorado, the first Democrat in the Senate to call for an outright ban of TikTok: TikTok Dealt Another Hit as Democratic Senator Joins Calls for Banning the App. Excerpt:

Another prominent Democrat has joined Republicans seeking to hobble TikTok, with Sen. Michael Bennet (D., Colo.) calling on Apple and Google to bar the Chinese-owned video platform from their app stores.

Republicans have been the most outspoken critics of TikTok, but in recent weeks, Democrat Rep. Raja Krishnamoorthi of Illinois joined with Republicans to sponsor legislation to ban TikTok outright.

Sen. Bennet weighed in with a letter Thursday to Apple Chief Executive Tim Cook and Sundar Pichai, CEO of Google and its parent company Alphabet Inc., saying TikTok is a national security risk because Chinese law compels companies to comply with any demands from Beijing linked to state intelligence operations.

"Beijing's requirement raises the obvious risk that the Chinese Communist Party ("CCP") could weaponize TikTok against the United States," wrote Sen. Bennet, an Intelligence Committee member. He said Beijing could demand data on U.S. users and require TikTok to "manipulate the content Americans receive to advance China's interests."

I sent this article to five members of Congress I know, calling on them to follow Bennet's lead...

4) The second day of Guy Spier's VALUEx conference in Klosters, Switzerland was just as fun and interesting as the first!

Here's a picture of Guy addressing the room:

Following up on yesterday's e-mail about one of my favorite stocks, Meta Platforms (META), I was particularly interested in the presentation on it by Evan Tindell, CIO at Bireme Capital, whose price target for the stock is $500 per share. You can see his 14-slide presentation here, and below are the highlights:

5) My old friend Norman Rentrop – who, we discovered, has also been to the past 25 Berkshire Hathaway (BRK-B) annual meetings – pitched Quálitas Controladora (QUCOF), which is the largest auto insurer in Mexico with approximately 32% market share.

My Mexican friends tell me it's the GEICO of Mexico. You can see Norman's slides here, and below are two of them:

6) A hat tip to Bill Ackman for flagging this interesting thread on the 20 most powerful paradoxes in life. Here are the first three:

Best regards,


P.S. I welcome your feedback at [email protected].