Value Options Letter @ValueOptionsLtr

CHARLIE MUNGER ONCE EXPLAINED WHY CAPITALISM BEATS EVERY OTHER SYSTEM IN ONE STORY Warren Buffett's partner of 40+ years didn't use a chart or a theory. He pointed to a single number out of China: "When the Chinese went away from collective agriculture and let each peasant have his own plot of land, and he got to keep the crop after his cost, the grain production went up 60% the first year." "Now who in the hell would want collective agriculture when it was that inefficient compared to capitalist agriculture?" His point: people take care of what they own. "If you're managing your own affairs you're going to be pretty efficient because you're taking care of your own property. If you're working for somebody else, no matter what, you care more about yourself and your family than the telephone company you work for." The Chinese communists agreed. They'd rather have the extra 60% of grain. So they changed the whole system.

Warren Buffett: “We make business predictions about what individual businesses will do over time. And we compare that with what we have to pay for them.” “We’ve never made a decision based on an economic prediction.”

A cautionary tale for SpaceX and Anthropic buyers: “There are zillions of IPOs every year and buried under those IPOs are few cinches that a really intelligent person could find and pounce on.” “But an average person buying IPOs is going to get creamed.” - Charlie Munger. 2004

Berkshire Hathaway has done 3 major Google buys: > Q3 2025: $5B > Q1 2026: $11B > June 2026: $10B private placement The $26B Google investment is ~$32B after gains (3rd top equity holding after Apple and Amex). Google bet getting close to $36B Apple bet Buffett did in 2016.

Bill Ackman bought a third of a $20 billion company after it crashed to $100 million - the stock went from 34 cents to $34 it's the most contrarian bet in modern Wall Street history "I called the CEO, he didn't return my call - I called again, he didn't return my call - six weeks later they spun off the company, the CEO got fired, then he called to thank me for his exit package" "there are analogies to 2000 - people got excited about internet stocks and Berkshire traded at the lowest valuation in its history because people said that's all old stuff a similar thing is happening today to Amazon, Meta, Microsoft - they're undervalued" bookmark and watch it today - 29 minutes that will change how you think about AI, markets, and what makes a great investment ↓

Сarm1ne @carm1nee

2 days ago

Ron Baron put $1.7 billion into SpaceX while it was private - it turned into $15 billion he just placed a billion dollar order at the IPO and said "10 trillion, 20 trillion, 30 trillion and I could be very low" he started with $100 million in 1992, made his clients $61 billion

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Speculative growth appetite is back near bubble-era peak levels. Valuation dispersion is wide again. Historically, some of the best future relative returns for profitable small- and mid-cap value stocks have emerged when investors become most enthusiastic about unprofitable growth.

Julian Klymochko @JulianKlymochko

3 days ago

The more things change, the more they stay the same. The GS Non-Profitable Tech index has surged 200% over the past year, nearing its 2021 peak.

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Value investing and options income share the same foundation: you need a price at which you'd genuinely want to own the business. Without that anchor, strike selection is just guessing. No momentum chasing, no lottery tickets.

A cash-secured put is not a yield trade — it's a conditional purchase agreement priced by implied volatility. If you wouldn't buy the stock at the strike, the premium doesn't justify the obligation. Free primer on the mechanics: valueoptionsletter.com/free

Lots of opportunity.

Rob Anderson @_rob_anderson

2 days ago

With Technology approaching 40% of S&P 500 market cap, many sectors have felt the squeeze: Consumer Staples and Utilities are at record-low weights in the index, Health Care has its lowest weight since 1994, and Financials is at its lowest weight since 2009.

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Not one, not two, but three S&P 500 sectors are testing either Dot-Com or GFC extremes. Relative to the rest of the market, Healthcare is back to March 2000 specifically. Consumer Staples = Dec. 1999. The S&P 500 Financials sector just broke March 6, 2009.

Truist's Keith Lerner took a look at 30 major IPOs. The Year 1 max drawdown column stands out.

Akre Capital Management is pivoting out of its long-term holdings into software: Sells: $MA -24% $MCO -28% $KKR -17% $V -39% $ORLY -42% $BN -37% $ABNB -41% Buys: $CRM (New Buy) $NOW (New Buy) $PRM (New Buy) $ROP +14% $CSGP +8% $FICO +31% $CCC +27%

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Mohnish Pabrai remembers Charlie Munger on @myfirstmilpod. "In every way possible, he selflessly tried to be useful." "I met so many partners he had in different businesses — [and he] always gave them the better deal." "One day before he passed away, he was in the hospital — he knew he was dying — [and] he was trying to get one last grant done to a non-profit. No upside to him. He was dying." "Charlie extracted everything he could from his mind and his body."

Peter Lynch: "There’s a 100% correlation between what happens to the company and what happens to the stock. The trick is it doesn’t happen over a week or even 6-9 months... That’s terrific. Sometimes fundamentals get better and the stock goes down. That’s what you’re looking for."

Can someone help me with the math if we’d held our 6.5% sale given today’s market cap of $129 billion?

Patrick OShaughnessy @patrick_oshag

6 days ago

We found the clip of @andrewrsorkin breaking the Dan Loeb Sony story live on CNBC in 2013, 15 minutes after it happened. It was one of my favorite stories from the conversation with Dan. "The first time we invested in it, it was basically a conglomerate. It had obviously

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Thank you for having me on your podcast @patrick_oshag There’s nobody I’d rather have done my debut with.

Patrick OShaughnessy @patrick_oshag

a week ago

My conversation with @DanielSLoeb1, his first ever podcast and one I've been wanting to do for years. Dan started Third Point in 1995 with $3 million. Today the firm manages over $24 billion across equities, credit, venture, and insurance. Along the way he wrote some of the

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Dan Loeb started Third Point with $3 million. it's now $24 billion. when asked which books shaped how he invests, he named four, each one representing a different phase of his evolution as an investor: phase 1. event-driven deep value: "You Can Be a Stock Market Genius" by Joel Greenblatt. "most of the people i know in that world use that as their framework." spin-offs, privatizations, post-reorganization equities. buying things cheap that nobody else was doing the work on. ....

Here is a fun table (one of many great tables/charts in the report!) showing how much money investors would’ve lost if they waited for earnings estimates to start falling before they sold.

I am determined to live my life this way. Thank you Charlie Munger and Epictetus for setting an example I can follow.

Kevin Carpenter @kejca

a week ago

Charlie Munger, the Stoic: "Life will have terrible blows in it. Horrible blows. Unfair blows. It doesn't matter. And some people recover and others don't." "There, I think the attitude of Epictetus is the best. He thought that every mischance in life was an opportunity to

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Berkshire Hathaway (-12%) has underperformed the S&P 500 (+33%) by 45 percentage points since Warren Buffett announced on May 3, 2025 that he would be stepping down as CEO on December 31, 2025