State of the Stash – November

Hello people! It has been a minute. If you missed my mediocre content, I’m sorry. I’ve been buried with work (and 2020). But I’m back baby (just like value stonks and Bitcoin)! Let’s go ahead and crack the seal, on the monthly update to my personal finance and investing journal.

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Fun Fund: Q3 2020 Update

This post is about the performance of my “Fun Fund.” I am going to discuss the performance of this actively managed investment account in the recently ended third quarter of 2020 and share some thoughts on a few positions.

As a reminder, most of the prior posts about this account (which is really just a small Roth IRA that I am messing around with) are located on this page.

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Paying in Cash? Who Does That?

In the time of covid-19, paying in cash definitely seems like an anachronism. This is an investing post, however, and I’m not writing about buying items with paper money. Rather, I’m thinking about companies that do not pay their execs and boards by issuing stock.

This is probably even more rare than cash payments during covid. It could also be a telling signal about the culture of a company and its people.

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State of the Stash – August

It is time for another update to my monthly personal finance journal. The stock market continued to rally strongly in August. While my portfolio did not keep up with the stock market, my balances continued (modestly) to increase.

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“A Single Family Home is a Great Investment”

This will be a short personal finance post. There is an odd series of claims made in the ongoing debate about the merit of home ownership in the personal finance community. Some very famous financial personalities/authors have said rather controversial things about buying a home. Among these takes are: “your house is not an asset,” “your house is a liability,” “renting will make you rich,” and “all debt is evil.”

A lot of these statements can probably be partially excused as attempts to have a “hot take” to shock readers into undertaking a critical examination of the conventional wisdom that owning a home, rather than renting, is a no brainer or “the best way to build wealth.” Similarly, the slogans in favor of buying homes are also probably attempts to shock people into the (huge) action of buying a home. So what is the right answer?

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The SPAC Daddy: Sir Martin Franklin

Martin Franklin is an interesting investor. He has a fantastic track record, including returns in Jarden, which has to be among the best performing investments of all time. I think he was probably a prime candidate for the next cut of the Outsiders (the one about capital allocation, not pony boy).

He also might be credited, at least partially, with popularizing the Special Acquisition Company (“SPAC”) structure. Basically, a SPAC is formed to acquire a business via a “blank check” and often will acquire private businesses, bringing them to the public markets via a sort of “reverse i.p.o.” This structure is hot right now with a lot of the S.V. set.

In my opinion, SPACs are usually not a great deal for investors because of the incentives paid to the promoters. They often have an incentive to get a deal done and they then recognize a big windfall. For example, a common structure results in the pormoters owning 20% of the post-SPAC enterprise (though the incentives may not be that much worse than a normal IPO, when you think about who is selling and why). Yet, the arrangement has worked pretty well for Franklin’s investors.

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