1) In my November 19 e-mail, I shared the in-depth presentation my college buddy Bill Ackman of Pershing Square Capital Management gave on housing-finance giants Fannie Mae (FNMA) and Freddie Mac (FMCC). In it, he detailed how the federal government could monetize its 79.9% stake in these two government-sponsored entities ("GSEs").
I concluded that "I think the shares of both GSEs are very interesting speculations." Three weeks later, they're up 5% and 10%, respectively.
On Monday, another old friend, Michael Burry of The Big Short fame, published a 6,000-word analysis explaining why he owns both Fannie Mae and Freddie Mac common stock "in good size."
The full post is behind a paywall requiring a $379 annual subscription. So if you don't want to pay that, Bloomberg has a summary of his bullish stance and why he thinks a relisting of these GSEs is "nearly upon us":
[Burry] examined the current political dynamics and how shares may be valued in a sale and beyond. The offering price "is a key determinant of the intrinsic value of these companies, and I will certainly revisit this thesis as those numbers come into focus."...
For a public offering to occur, Burry argues that regulators will need to ease Fannie and Freddie's capital requirements, convert certain preferred shares into common stock and scale back the government's claim on the companies, warning that without the latter, their common shares are "worthless."
Still, he noted "there remains a final steep, windy and rocky climb to IPO for both."
I continue to think these GSEs are very interesting speculations. If you're compelled by this idea, my advice is to treat it as you would any other speculative stock.
2) In Monday's e-mail, I discussed the battle for autonomous driving supremacy between Waymo, owned by Alphabet (GOOGL), and Tesla (TSLA).
Following up on this, yesterday Waymo posted an essay about safe AI for autonomous driving on its website, including numerous graphics and a video. It explains how it's using AI to achieve "a more than ten-fold reduction in crashes with serious injuries compared to human drivers."
A lot of the technical jargon goes over my head, but I chuckled when I read this line (Waymo is clearly throwing shade at Tesla CEO Elon Musk's big promises): "Achieving demonstrably safe AI – where safety is proven, not just promised – requires a holistic approach."
Also, Waymo emphasizes that its "foundation model fuses camera, [light detection and ranging ("lidar")], and radar inputs over time, producing objects, semantics, and rich embeddings for downstream tasks. These inputs help our system make fast and safe driving decisions." This is in contrast to Tesla's autonomous driving system, which relies entirely on eight cameras, with no lidar or radar.
I continue to believe that Tesla, in the absence of lidar and radar sensors, will be unable to achieve the full autonomy and level of safety that Waymo has demonstrated. And when investors realize that Musk can't deliver on what he has repeatedly promised, Tesla's stock will decline sharply. That's one of the reasons it's on my "Stinky Six" list of stocks to avoid.
3) With the first arctic blast hitting New York City the past couple of days, I pulled all of my winter clothing and gear out of storage.
In last Wednesday's e-mail, I shared a holiday gift list of my favorite travel gear, clothing, and electronics. Many readers appreciated it, so today I want to share several items that keep me warm when temperatures plunge...
I have to take extreme measures because my fingers and toes have never been the same after getting frostbitten at the 24-hour World's Toughest Mudder race outside Atlanta in November 2018.
The temperature dipped to 26 degrees Fahrenheit overnight, and 40% of the racers dropped out due to hypothermia. But I never quit, completing 60 miles and 200-plus obstacles, ultimately winning the 50-plus age group by 10 miles!
Here's a picture of me at the end of the race, still wearing my Arc'teryx ski jacket (which saved me) over my 5mm wetsuit, hood, and gloves:
First, here are some moderately priced battery-heated socks ($79.99):
If money is no object, these heated socks are the ones to get – the batteries connect to your smartphone via Bluetooth, so you can control the heat and monitor the battery life ($544.95):
These battery-heated gloves are good for normal winter days ($99.99 for the medium size):
For skiing on very cold days, I paid up for these high-end battery-powered mittens ($339):
Susan and I each have a pair of these down pants and love them. We throw them over our pants when we're walking the dogs on cold mornings like yesterday and also wear them under our shell pants when skiing ($290):
I bought this battery-heated vest at Costco a few days ago, and it worked great in the bitter cold yesterday morning. It was $50 in the store, and online it's $56.74:
I'm a coat and jacket junkie – I own way too many of them...
For dressing up, I wear this stylish Peter Millar Suffolk coat ($220 with the holiday discount code):
For the lightest, thin jacket that stuffs into its own sack and easily fits in your pocket, try the Patagonia Houdini ($109):
I just bought this Spyder jacket at Costco for only $32.99:
For a lightweight shell/rain jacket, try the Patagonia Torrentshell 3L ($179):
This Patagonia Nano-Air Light Hybrid Hoody is light enough to be worn as a sun-shirt in the summer, but it's surprisingly warm if you pull up the hood ($299):
I buy this puffy Patagonia Down Sweater Hoody every year, wear it constantly until it's in tatters, and buy another one. I just bought it again in Cascade Green yesterday and I love the color ($329):
A similar jacket but thicker and warmer is the Arc'teryx Thorium Hoody. It's normally $500, but it's on sale now for $350:
For the coldest days, I recommend this jacket by Seattle-based Feathered Friends ($749):
(I also bought my high-end sleeping bag from this brand, so I highly recommend it!)
Lastly, the Lofoten Gore-Tex Pro is the most expensive jacket I own. I wear it over one of the three puffer jackets above (and, if necessary, the heated vest). The list price is $1,199, but I found it here for $899:
Happy shopping, and stay warm!
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.