We recently met with the fine folks (folk singular?) from the Williams Inference Center (WIC). Shown below is the menu for the Spring 2010 quarterly meeting.
This was one of our shortest sessions yet with Syd, but there was some good stuff in the materials. Naturally, we pay for the service to get some investment ideas and/or to divine relevant trends that will impact investments, but the societal anomalies and observations are intriguing in their own right.
Considering the former, there were four folders–or agenda items from the list above–that pertained to investments. As always, the trick is figuring out to play them. Here’s a quick run-down of the folders/items.
4. CASH – THE GREEN MONSTER
We’d been aware that cash as a % of assets on company balance sheets was at a record high, and we considered it a bullish factor for certain sectors of equity markets. That is, we expect that cash to be used for capital expenditures, with the likely first priority being to replace aging information technology systems. One thing that came out in discussions around the table–including anecdotes and first-hand accounts from participants in our meeting–was the supposition that companies are hoarding cash because they’re scared.
This merits monitoring for several reasons. First, companies are in the trenches, seeing sales roll–or not roll–in. Second, if the fears end up being unmerited then it’s probably–as is said–game onfor cap ex spending. Third, we need to begin screening for companies with outsized net-cash-per-share positions.
Here’s an excerpt from an article excerpt that was featured in the file,
“Nearly four kilometers above seal level in the Bolivian Andes lies the Salar de Uyuni, the world’s largest salt flat. But there is more to this sureal, moonlike landscape than meets the eye. Flowing in salt-water channels beneath the surface is the worlds largest supply of lithium–and possibly the future of transportation.”
But this is going to be a tough one to figure an investment angle on. The car manufacturers might be an idea. Toyota was cited as having inked a deal to source lithium from Argentina, but for now battery-operated cars are small parts of the auto makers. Hitachi might be an idea since it’s a supplier of lithium-ion batteries, but HIT is so diversified that heavy earthmoving equipment moves the dial at that company far more than does lithium. Finally, not surprisingly, there’s no exchange-traded fund (ETF) for Bolivia. The search continues, but our antennae are now up for mentions of lithium.
While nuclear was the title, the scene stealer seemed to be thorium. The folder included a number of statistics supporting the increase in nuclear power facilities around the world, but it might be that thorium is preferred over uranium as a fuel source. A synopsis of an article in the folder said this, “replacing the fuel in conventional uranium reactors with a thorium-uranium mix would make the plants cheaper and safer.” Again, though, we’re left wondering how to take advantage of this trend.
Our position on these last two items exemplifies one of the WIC’s mottoes: we don’t have answers; just questions.
There was just one folder that I thought spoke to intriguing societal issues.
5. LINKAGE EXPLOSION
The WIC lead in to the folder said this: “For us, this is the most important file this quarter.” The folder included five articles.
- The first was from the New York Times and featured an iPhone user scaning a check for deposit with the devicel.
- The second was from The Seattle Times, and it featured the rapid uptake of “digital delivery” of home video at Best Buy and Netflix.
- Entertainment in India–as in much of the developing world–is bypassing traditional channels in favor of the cellphone. One service there allows users to dial a number to hear Bollywood tunes, with one user describing it as “the poor man’s iTunes.”
- Jump Point is a recent book by Tom Hayes, the subtitle of which is, How Network Culture is Revolutionizing Business. The internet is expected to add its three billionth user shortly, and that will mark, “one of the most explosive combinations in human economic history. The resulting economy will be big, really big–of a scale the likes of which we have never seen before.”
- An article from The Economist featured the growth of mobile phone subscriptions versue the decline in fixed-line subscriptions–nothing new in that sentence. What the article featured as new was the iPhone and other smartphones that allow for downloading/installation of applications. Sound bite: ten years ago there were 500 million mobile phone “subscriptions” (crazy Brits); today there are 4.6 billion.