Sunday Finds + 3 Thoughts From Last Week
Podcast episodes on Bumble and Silicon Valley Bank released last week
Welcome to Chit Chat Money’s Sunday Finds + 3 Thoughts From Last Week. In this newsletter you will find three topics I thought about last week, links to shows we’ve recently released, and links to some interesting articles, podcasts, and tweets. Check out the archive here.
Chit Chat Money Podcasts From Last Week:
Interview: Inflation, Q4 Earnings, and Supply Chains With Erick Mokoya
Investing Power Hour #50: Silicon Valley Bank Collapse; MSFT vs. GOOG AI War; Are Banks Investable?
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3 Takeaways from the Silicon Valley Bank crisis
Still out of the office so going to keep things short again. Here are three takeaways I’ve been stewing on since the collapse of Silicon Valley Bank.
They are who we thought they were (the venture capitalists).
The SVB executives were either incredibly negligent, unethical, or incompetent. Probably a combination of all three. I only know the bare bones of how banking works and could figure out their strategy was nonsensical.
Study financial history. Especially financial crises and bubbles. Everything repeats.
See you next week,
Brett
***Our fund, Arch Capital, may own securities discussed in this newsletter. Check our holdings page and read our full disclosure to learn more.***
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3 Good Reads
Madness, Madness, and Stupidity - Buyback Capital
The collapse of Silicon Valley Bank last weekend saw general chaos play out across social media - Twitter in particular. Intellectual and financial lightweights like Jason Calacanis glued their caps lock keys down so they could scream hysterically into the void. The slightly higher IQ crowd consisting of hedge fund manager Bill Ackman and notable Paypal Mafia alum David Sacks did their best to ‘cry wolf’ into their own megaphones.
Richardson Electronics (RELL) - Vestrule
Richardson Electronics is an engineered solution business focusing on power management, microwave tubes and digital displays. Started in 1947 by Arthur H. Richardson as an electronics overstock seller and distributor, the company moved into manufacturing through the 1981 purchase of National Electronics in La Fox, IL, still the headquarters today. The company went public 1983 and has been in the Richardson family for 76 years. Exhibit A shows revenues for since 2008.
Some Thoughts on Charles Schwab - Scuttleblurb
A public service announcement is warranted here. My memories of the GFC are all too vivid. I remember bank CDS, quoted in single digit basis points just a year ago, being traded for points up front. I remember puzzling over how to dimension liquidity needs, how big a capital crater subprime CDO exposures might leave, and how much, if any, government support would be available. I remember reasonable-sounding write-ups (like this one!) invalidated within days. I remember an otherwise stolid co-worker pushed to tears by the emotional strain of an especially harrowing week. I wish this on no one. If you think this could be you, maybe just $CSU and chill (not investment advice!).
1 Good Podcast
Silicon Valley bank collapsed at record speed. And the world is still trying to figure out what went wrong? How did a bank with a strong history, a strong brand, and a fairly conservative investment portfolio go belly up so fast? On this episode of the podcast, we speak with Dan Davies, a Managing Director of Frontline Associates, who previously worked as a bank analyst. He explains why the bank's customer base turned out to be so much more flighty than expected, and why the bank reached for yield buying long-dated Treasuries at a time of ultra-low interest rates. We discuss what to watch next, and why he's concerned that the initial salvo to stanch the bank run may not be enough.
Smart, Insightful, and Funny Tweets:
Twitter won’t load for me right now. Damn you, Elon. Will include some funny SVB memes next week, don’t you worry.