The Rational Cloning: Weekly Ideas #43

310 Value on Equinix, Yellow Lab Life Capital on Vale, Tweets That Make You Go… Hmm 🤔

Welcome to the 43rd edition of the Rational Cloning Newsletter (Weekly Ideas Series).

Helping you discover the best ideas of others.

Happy cloning.

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Weekly Investment Ideas

(1) Why the Bears are Wrong About Equinix

I think the bears fundamentally do not understand how the cloud is delivered to customers via interconnected data centers. They believe that it is the cloud players that hold all the cards in the relationship, when in fact it is the interconnected data centers who hold the cards, as they are the choke point between the cloud providers and the customers. Furthermore, the use of GAAP numbers for earnings multiples and returns calculations on the surface tries to appear to be morally pure, while in reality it is a disingenuous attempt to prove their narrative that data centers have low returns and are expensive.

Why the Bears are Wrong About Equinix

(2) Volatility is the Ally of Quality, Don’t Let Anyone Tell You Otherwise

Bottom line – if you are a high quality / high margin commodity producer, you obviously want a high average spot price over time, but you actually benefit from the volatility of that spot price being higher instead of lower. Even if it drives your shareholders crazy.

So how does the koala think about Vale trading at a ~$60Bn market cap?

It’s just a part of the investment, and the volatility makes Vale’s longer term position only stronger.

You have to learn to love volatility and chaos if you are going to invest in commodities and commodity producers such that you make it work to your longer term advantage.

Volatility is the Ally of Quality, Don’t Let Anyone Tell You Otherwise

(3) Time for a walk (taking a summer break)

Great piece and selection of ideas, worth a read.

Time for a walk (taking a summer break)

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Tweets That Make You Go… Hmm 🤔

Deep Sail Capital @DeepSailCapital

Anyone have any new ideas in 10-100 Bagger land? As a reminder they generally need to: •Be small enough (below $5B) •Have the ability to reinvest capital at high rates •Have a large addressable / potential market •Have a good management team https://t.co/TroxfXrsOo

Deep Sail Capital @DeepSailCapital

Anyone have any new ideas in 10-100 Bagger land? As a reminder they generally need to be: •Small Enough (below $5B) •Ability to reinvest capital at high rates •Have a large addressable / potential market •Has a good management team https://t.co/xjEnqNL91i

The Onveston Letter @onveston

"Some people get rich studying artificial intelligence. I get rich studying natural stupidity." Carl Icahn

Doomberg @DoombergT

1/ The US, Canada, and Mexico have enormous proven energy reserves and the technical know-how to become the dominant energy-producing region on the planet. It can be done cleanly, safely, and domestically – all while reducing the strength of our geopolitical enemies.

Shai Dardashti @ShaiDardashti

Bloomberg Wealth: Sam Zell — h/t @DM_Rubenstein, an absolutely phenomenal interviewer.

youtube.comBloomberg Wealth: Sam ZellSam Zell, Equity Group Investments founder and chairman, talks about inflation, the real estate market and the perks of being a lawyer. He’s on “Bloomberg We...

SparticusZorro @Sparticuszorro

The most important paper in finance It will make you wealthy Print it

Dave Waters @alluvialcapital

What's your most asymmetric investment? Where there's a serious risk of failure but if it works it REALLY works and you like the risk/reward? I own some Spanish Broadcasting System $SBSAA. It's a $15m market cap sliver atop $300m of debt. Enterprise value is 5% equity.

Jimmy Moncrief @jimmymoncrief

Had lunch with a guy worth over $100 million. Asked if he had any RE for sale. His response: real estate is for buying, not selling.

Ray @heartof_thesea

Two new short posts: Buffett/OXY: canuckanalyst.substack.com/p/what-is-buff… Profile of Coca-Cola Company at the peak of its momentum:

canuckanalyst.substack.comProfile of The Coca-Cola Company - 1997The Coca-Cola Company capped off another very successful year in 1997 of 9% unit case volume growth and a 19% increase in EPS. Entering 1998, Coke had incredible 10 year CAGRs in revenue of 9.4% and EPS of 18.5%. The Coca-Cola Phenomenon: “Coke” was the second-best known word in the world after OK.…

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Check out previous issues of Weekly Ideas👇 

• The Rational Cloning: Weekly Ideas #42

• The Rational Cloning: Weekly Ideas #41

• The Rational Cloning: Weekly Ideas #40

• The Rational Cloning: Weekly Ideas #39

• The Rational Cloning: Weekly Ideas #38

And check out previous issues of Mosaic Musings (now The Rational Cloner’s Library)👇

• Mosaic Musings #3: Royalty Companies: Inflation, I win; Disinflation, I Don’t Lose Much. [Inflation Crisis Series]

• Mosaic Musings #2: Disinflation → Inflation Inflection Point? [Inflation Crisis Series]

• Mosaic Musings #1: Tin [Molecule Crisis Series]

The Rational Cloner’s Library

• Table of Contents

• Fertilizers

• Royalty Companies

• Tobacco

• Black Stone Minerals (BSM)

Authored Books

• Nick and Zak's Adventures in Capitalism: Words of Wisdom from the Nomad Partnership Letters

• The Little Book of Investing Ideas: A Curated Collection of Investing Wisdom