Bullish news for Tripadvisor's stock; Steve Ballmer as a 'non-investing guru of investing'; Javier Milei and Argentina as a potential 'turnaround' case study

1) I'm not surprised to see shares of online travel agency Tripadvisor (TRIP) on the move...

Regular readers will recall that I took a first look at the company in my January 7 e-mail. And then, the next day, I shared the bull case for the stock made by my friend Glenn Tongue, who was my business partner for eight of the years I was running a hedge fund. (TRIP shares closed at $15.08 that day.)

In his analysis, Glenn concluded that:

A sum-of-the-parts valuation exceeds a price of $30 per share.

The disclosures in – and the implementation of – the upcoming transaction should provide a number of meaningful catalysts for the stock... including a possible acquisition from one of the many suitors who were actively looking at the company within the last year.

I think there are many ways to win here – and likely quickly.

I agreed – writing, "I think this is a compelling idea – Glenn makes an excellent bullish case for Tripadvisor."

Sure enough, the stock soared 14% yesterday (through yesterday's close, it's up 19% since January 8). To understand why, I again turned to Glenn...

In a private e-mail, he sent me the following and gave me permission to share it with my readers today:

Right on schedule, Liberty TripAdvisor Holdings (LTRPA) and Tripadvisor filed the merger proxy agreement I highlighted in my analysis earlier this month.

As I expected, the news is very good. Most importantly, the company disclosed that there was a sales process last year in which there were bidders in the high $20 per share range (the stock, even after yesterday's jump, is still only at $17.93.

Glenn also highlighted this key point from the proxy:

On January 17, 2025, the Tripadvisor special committee received a non-binding indication of interest from Party 7, which included a proposal to concurrently acquire both Tripadvisor and Liberty TripAdvisor, subject to diligence and other customary conditions. The terms of the proposal by Party 7 included (i) the acquisition of all outstanding shares of Tripadvisor not held by Liberty TripAdvisor for $18.00 to $19.00 per share in cash, (ii) the acquisition of all outstanding shares of Liberty TripAdvisor common stock for $0.3080 per share in cash and (iii) the acquisition of all outstanding shares of Liberty TripAdvisor preferred stock for $102 million in the aggregate. The following day, pursuant to the terms of the merger agreement, representatives of the Tripadvisor special committee sent the non-binding indication of interest from Party 7 to Liberty TripAdvisor.

And as Glenn translates:

This means there is at least [a] bidder interested in topping the current deal with a goal of buying all of TRIP.

The story is playing out and it's hard for me to see how this saga doesn't end with a much higher stock price.

Once again, thank you Glenn for sharing this great idea with my readers! I agree that there is more upside for Tripadvisor ahead.

2) I enjoyed this Wall Street Journal article from last month about how former Microsoft (MSFT) CEO Steve Ballmer manages his personal fortune: Steve Ballmer, the Non-Investing Guru of Investing. Excerpt:

The ultrawealthy tend to follow a time-honored model of investing: diversifying.

Much like universities and pensions, the richest people on earth spread their money across stocks, bonds and a cadre of alternatives, such as private equity, hedge funds and real estate.

Or at least most of them do. There is one very glaring exception: Steve Ballmer.

The former Microsoft chief executive has put nearly all his eggs in one basket and kept them there for years. Ballmer has virtually no exposure to alternative investments. Instead, he keeps more than 80% of his portfolio in Microsoft stock and the rest in stock index funds.

To be clear, I am not recommending the average investor follow Ballmer's approach of putting 80% of one's portfolio into one stock. He's an extreme case.

However, the general concept of owning a concentrated portfolio of stocks of quality companies you know well – and then holding for a long, long time – is a sound one.

Here's an example I shared in my June 20 e-mail:

My friend Chris Stavrou, who ran a small hedge fund called Stavrou Partners for decades, bought A-class shares of Berkshire Hathaway (BRK-A) back when he was a stockbroker in the 1970s.

Chris started buying it for his clients at around $400 a share, even after it had risen more than 2,000% over the previous decade, because he didn't fall into the "I missed it" trap.

A decade later, he opened up his own hedge fund. By then, Berkshire was trading at an all-time high of $1,800 per share.

So did he say to himself, "Wow, this stock has moved up a lot – I think I'll wait for a pullback" or "Drat, I missed it"?

No. He saw that it was a great company run by a brilliant investor and the stock was still attractive at $1,800. So he bought it for his nascent fund.

And as I continued, Chris did something even more important than buying the right stock – he didn't sell:

Chris didn't sell when Berkshire shares soared past $5,000, $10,000, $25,000, $50,000, $100,000, $250,000, and even $500,000. (They closed Tuesday at $615,000.)

He didn't sell even when the stock grew to become more than 50% of his fund.

And he didn't sell when he closed his fund (he distributed to stock in kind to himself and his investors).

To this day, long into retirement, Chris still owns the BRK-A shares he bought a half-century ago.

And it wasn't just Berkshire – Chris still owns a handful of stocks he bought long ago like insurer Progressive (PGR) and Microsoft (MSFT) in which he has made more than 100 times his money.

3) In my September 4 e-mail, I shared a fascinating thread on social platform X about Argentina. As I mentioned, Argentina was one of the five richest countries in the world as recently as the end of World War II, but due to socialism and total mismanagement – bad ideas executed poorly – it fell into total chaos and poverty.

Argentina was on my mind yesterday when I read this story on the front page of the WSJ: How Javier Milei's Tough Remake of Argentina Made Him a MAGA Hero. Excerpt:

Before Javier Milei became president, Argentina gave some government workers a guarantee that, upon death, their children got their jobs. Vegetable stands received a bonus if they sold what the government considered "normal" potatoes. And diners were strongly discouraged from putting tips on their credit cards, causing them to leave wads of inflation-hit cash for a gratuity.

Those regulations and hundreds of others are now gone. A year into his term, the self-described anarcho-capitalist who rules Argentina has taken a chain saw to the red tape and unchecked public spending he inherited from a Peronist administration that left the economy in ruins.

And as the article continues:

"This is a fight against the status quo," said Federico Sturzenegger, a 58-year-old former Harvard University economist Milei tapped as his deregulation czar.

The cost-cutting resulted in a rare fiscal surplus and brought down inflation from 26% a month in December 2023 when Milei took office to 2.7% a month a year later. The economy is expected to grow 5% this year after contracting 2.8% in 2024, according to the International Monetary Fund.

I'll note that part of the reason the article caught my eye is because of my New York City mayoral campaign – I want to apply and examine the best (and worst) lessons from around the country and the world. As such, Argentina is a brilliant case study of both.

Meanwhile, I see a lesson here for investors because there are parallels to buying the stock of a company with a new leader engineering a turnaround.

Done right, it can be massively profitable... but only if the turnaround is successful.

As I said in my December 30 e-mail when I discussed how I recognized a new CEO's efforts to right the ship at fast-food giant McDonald's (MCD) back in 2003:

I focused on a high-quality business and, when my investment quickly fell, I didn't panic.

I put my emotions aside, sought additional information, and bet big when I became convinced that my variant perception – a belief that a company will perform much better than most investors expect – was correct... and that I had uncovered an incredible inflection point for a turnaround.

It's one of the keys to building a good long-term track record in investing: Recognizing when you have valuable information that gives you an edge... and then betting accordingly.

Best regards,

Whitney

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