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Tren Griffin
@trengriffin
, 3 tweets, 1 min read Read on Twitter
Buffett: "If we’re keeping $1 bills that would be worth more in your hands than in ours, then we’ve failed to exceed our cost of capital.”

If the money is worth more in shareholder hands, it should be returned via a dividend or buyback. The market's job is allocating capital.
Buffett's view on returning capital to shareholders is described in the 2012 BRK letter. For example: "disciplined repurchases are the surest way to use funds intelligently: It’s hard to go wrong when you’re buying dollar bills for 80¢ or less." berkshirehathaway.com/letters/2012lt…
A market is constantly trying to allocate capital based on opportunity cost and that drives efficiency/growth. An essential part of that process is moving capital away from companies that can't earn a return that is higher than what shareholders otherwise can achieve elsewhere.
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Tren Griffin
@trengriffin
Can you think of a tech company in the news today that said: "If we own this hardware via buying this company we will have a valuable distribution channel for SaaS." google.com/amp/s/25iq.com…
Hardware is the new CAC for software/SaaS. geekwire.com/2019/amazon-ac… The margins and scalability of the business comes from the software/SaaS.
Steve Jobs: "The more we look at it, for more and more consumer devices the core technology in them is going to be software. More and more they look like software in a box. And a lot of traditional consumer-electronics companies haven't grokked software." ehmac.ca/anything-mac/5…
Read 3 tweets
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Tren Griffin
@trengriffin
"Customer Acquisition Costs have risen so much, that it’s reached a tipping point where companies are finding its actually cheaper to find new customers the old-fashioned way." haydencapital.com/wp-content/upl… "CAC is the new rent.”
– Daniel Gulati
"Keeping a customer is much cheaper than trying to acquire a new one – and worse yet, likely at a much higher priced CAC than you paid years ago for the original customer you’re trying to replace." NPV is so much better when you don't need as many adds "gross" to grow "net" adds.
Some of the best ways to grow are: (1) not to shrink (2) to grow ARPU (AKA, negative churn) and (3) via organic (first party) distribution. Third party channels often deliver customers with lower quality based on a NPV analysis. Owning much of your distribution makes life better.
Read 3 tweets
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Tren Griffin
@trengriffin
"Vanguard has $1.3 trillion in actively managed funds, including $413 billion in active bond funds." bloomberg.com/opinion/articl… “Vanguard isn’t index versus active — it’s low cost versus high cost."
"If we look forward for the next 10 years, our expectations around U.S. equity markets is for about a 5% median annualized return. Five years ago, we'd have been somewhere in around 8%" cnbc.com/2019/02/11/van… Oh, you are 40% bonds? Elevator is going down. That's a price paid.
Vanguard “2.5% to 4.5% expected returns for global fixed-income markets (December 2018).” morningstar.com/articles/90737… Want to get bearish? GMO! “negative 4.1% real (inflation-adjusted) returns for US large caps over the next seven years; negative 0.2% real returns for US bonds."
Read 4 tweets

Related threads

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John Coates
@jciv
Buybacks -- some inconclusive facts and thoughts. 1/n
At its most basic, the accounting effects of a buyback is to pay cash out, and reduce shareholders' equity. If a company buys back the same number of shares from all shareholders, it is equivalent to a cash dividend. 2/n
The effect on the share price of a buyback depends on the price and size of the buyback. If the price is high, then the effect on remaining investors is to dilute their ownership, and reduce share price. If the price is low, the reverse. 3/n
Read 41 tweets
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Alan Cole
@AlanMCole
In @WSJopinion I write about why Warren's clumsy one-size-fits-all approach for taxing capital is the wrong one.

Countries have different tax systems for different asset classes for a reason. wsj.com/articles/eliza…
1. Okay, Super Bowl is over, time for a thread on how to tax assets.

Let's start with personal real estate.

Economically this is a solid tax base you can go after without too much impact on incentives, at least for high-end real estate:
2. The key insight is that nice locations will always be there, even if they're taxed.

You can't say the same for the value of construction or improvements, which is unfortunate, but it's certainly not prohibitive. Most taxes have problems. This one, fewer than most.
Read 21 tweets
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Dr Henry
@HenryJOncology
I will now proceed to go on a #tweetrant / #tweetorial with regards to #Pharmaceutical #biotech pricing (focus on #cancer).

Very timely, also see @WSJ wsj.com/articles/big-p… on price hikes.

For the record, no #COI / #FCOI. Feel free to contribute to this discussion.
Lets look at the problem from the @PhRMA / business perspective. And lets suppose you are a wonderful company, started by wonderful people who just want to make the world a better place (I know, not real, but stay with me for a minute).
You start with a great idea / or pipeline platform and start selling this concept to #VC #VentureCapital, and lets assume that this is actually a really good idea. What is the needed return on investment to make this worth while. A: further R&D must exceed the cost of capital.
Read 17 tweets
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Gautam Chikermane
@gchikermane
1/n
 Far too much energy has been depleted in condemning how the rich and the famous spend their #money (legally inherited and/or legally earned) on weddings. In one straight piece @monikahalan makes mincemeat out of them – and forces an introspection livemint.com/Money/Tzr7GQyG…
2/n
 How many of those calling such high-decibel weddings “vulgar” opt for a simple registered wedding for their children, asks @monikahalan – scathing observation on #money!
3/n
 Rather than condemning those who spend their earned/inherited #money, we need to look at how taxpayers’ money is spent on the personal upkeep of ‘public servants’ in acres-large bungalows in prime locations, argues @monikahalan
[We don’t because so few of us pay income tax.]
Read 6 tweets
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Atif Mian
@AtifRMian
1/ On Pakistan's #IndependenceDay2018 , why is the country still far from economic independence? (e.g. seeking its largest bail out ever this year)

I'll focus on last 5 years as an example ... it will get a bit technical but i'll try to be clear.
2/ Economic growth is almost entirely a function of *domestic* productivity growth. What matters is investment in building your institutions and people.

Instead pak govts have increasingly looked *outside* in what i'd call an attempt at "import-led" growth ... it doesn't work
3/ The idea is to borrow from outside, and task another country with building your infrastructure or institutions, and hope some magic others .

The latest example starts in 2013, when PML-N comes to power and decides to outsource growth to China. I'd explain why it doesn't work
Read 15 tweets
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Hector
@HectorRosekrans
To make money in the markets, you have to be right when other people are wrong.

#Buffett has been right for a long time. But he was the most right when it wasn’t obvious that you could use Graham’s principles to build Berkshire. Now it is, so that edge is gone.
The question isn’t what do these oracles of finance think about crypto now - the question is what would a broke 22 year old Buffett be doing in 2017.
In 50 years we’ll know whether it was Galaxy or Polychain or a 12 year old crypto kitty trader who found the best way to value these assets. They’ll host conferences and write books and be influential. And it will be way too late to make money the same way they did.
Read 3 tweets

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