I'm not panicking over the market volatility; Walgreens is closing in on a deal to go private; Bill Ackman clarifies his comments on Warren Buffett and Berkshire Hathaway

1) The markets are tumbling again...

Yesterday, the S&P 500 Index fell 1.8% and the tech-heavy Nasdaq Composite Index dropped 2.6% amid fears over tariffs from the Trump administration – which are now in place. This Wall Street Journal article has more on the story: Trump's Canada-Mexico Tariffs Take Effect. Excerpt:

President Trump's 25% tariffs on goods from Canada and Mexico took effect Tuesday, after the president declared there was "no room left" for negotiations with America's neighbors.

"Tomorrow, tariffs – 25% on Canada, and 25% on Mexico – and that will start tomorrow," Trump said Monday at the White House. "So they're going to have a tariff, and what they have to do is build their car plants, frankly, and other things, in the United States, in which case you have no tariffs"...

Trump previously delayed the tariffs for a month after those countries agreed to help address fentanyl-smuggling and migration, but his team has indicated he wasn't yet satisfied with the progress of efforts to halt drug-smuggling, despite weeks of talks across the three governments.

The chart below from this post on social platform X from the Kobeissi Letter captures how dramatic the change might be:

Investors are concerned that the tariffs could, at the very least, be inflationary and might trigger a trade war.

In response, the Federal Reserve Bank of Atlanta significantly reduced its GDP growth estimate from 3.9% to negative 2.8% in the past four weeks – as this chart (courtesy of another post on X from the Kobeissi Letter) notes:

I think the Atlanta Fed is being way too bearish.

The first quarter is already more than two-thirds finished, and the impact of the tariffs wouldn't be felt immediately.

Also, I don't think that President Donald Trump wants to trigger a likely spike in inflation and a recession. (There's a reason his signature book was entitled The Art of the Deal!) I think there will be a deal.

When it comes to the markets, my advice is still the same: If you own good stocks or funds, ignore the short-term noise and volatility.

I make no prediction where the market goes in the short term, but my "spidey sense" isn't telling me that we're on the verge of a big (say, 10% or more) market pullback.

2) Drugstore chain Walgreens Boots Alliance (WBA) was up more than 5% earlier this morning on reports that private equity firm Sycamore Partners may take it private at between $11.30 per share and $11.40 per share. (This WSJ article has more on the story: Walgreens Nears Roughly $10 Billion Deal to Go Private.)

Regular readers will likely recall that I took a quick look at Walgreens in my September 11 e-mail when it was at $8.74 per share and concluded:

We can see that Walgreens had almost no net debt until it took on nearly $10 billion to acquire Boots. Net debt then soared to $40.2 billion in 2020... and today sits at about $33 billion.

That's an alarming amount of debt for a company that only has a roughly $7.5 billion market cap. No wonder credit-ratings agencies Moody's and S&P recently downgraded it to near-junk status – specifically to BBB-, which is the lowest rung of investment grade.

Bond investors think it's possible that Walgreens goes bankrupt, and I agree... so I wouldn't be interested in bottom-fishing the stock at these levels.

So with the stock up since then, do I regret taking a pass?

Not at all...

I'm not the slightest bit interested in betting on turnarounds of businesses with cratering free cash flows and soaring debt levels.

3) My college buddy Bill Ackman of Pershing Square did a 67-minute podcast recently with Jonathan Boyar, which you can listen to here: Bill Ackman on Investing, Politics, and Turning Howard Hughes into a Modern-Day Berkshire Hathaway. Here's an excerpt of the summary:

In this episode of The World According to Boyar, Jonathan Boyar sits down with Bill Ackman, the legendary hedge fund manager and founder of Pershing Square, to discuss his latest big move involving Howard Hughes, his unfiltered views on politics, and his growing role as an activist investor. Ackman shares his thoughts on the Trump administration, deregulation, and why he believes reducing government inefficiency could be a game changer for the U.S. economy.

On the investing front, he dives into his bid to increase his stake in Howard Hughes Corporation, his vision for transforming it into a "modern-day Berkshire Hathaway," and why he believes the market continues to misprice the company. He also addresses concerns about management fees, corporate governance, and what his long-term plans mean for shareholders.

Finally, Ackman opens up about his outspoken presence on X (formerly Twitter), why he's been so vocal on antisemitism and media bias, and how he sees this as part of a larger battle over free speech, democracy, and American values.

The podcast caught my eye in particular because of Bill's comments Warren Buffett and Berkshire Hathaway (BRK-B)...

Some of his comments led to media stories that made it seem like Bill was being critical of someone we both admire greatly. In fact, I recall when I was first getting interested in investing in the mid-1990s, when I asked Bill (who was then running his first hedge fund, Gotham Partners) how I could learn more, I remember his exact words: "Read everything Warren Buffett has ever written – and you can stop there."

I took the first part of this advice. But I didn't stop there... I became an investing "learning machine" to this day, three decades later.

On March 1, Bill posted on X to clarify his views. Excerpt:

Last week, I did a podcast which included some commentary on Warren Buffett who has been an extremely important hero for me and an unofficial mentor. The media, as they sadly often do, twisted my words about Buffett to create the impression that I "had taken a shot at him."

In short, I was asked a few questions about Buffett including why Berkshire was holding so much cash, why we had sold Berkshire during Covid and thereby owned the stock for a relatively short period, and whether our approach to corporate oversight is more Buffett or Greg Abel, Buffett's CEO heir apparent.

In the post, he expanded on why he believes Buffett is holding so much cash, why Pershing Square sold Berkshire during the pandemic, and Pershing Square's approach to governance compared with Buffett/Berkshire/Greg Abel. Again, you can check it out in full right here.

Best regards,

Whitney

P.S. I welcome your feedback – send me an e-mail by clicking here.