Reading books is one of the aspects of what I do that I like the most. Generally speaking, this is a great pastime and in most cases what usually starts with “I have to read this book because I need to know more about this industry/company” usually ends in me being so engaged with the story that I start reading a lot of other related material and really educate myself about the topic. To borrow a term from Charlie Munger, I believe that reading is a great “ignorance-removal” tool and each investor should engage in that activity. But how do you come across good books to read?
How do you buy your books?
Nowadays most people buy their books through online and the process is that they either get a recommendation from someone and go buy the book or they browse the store and buy something based on the search results and Amazon’s matching algorithm. I do it too, most of the time. I read most books on my Kindle, but, there is a little problem here. I have a lot of free time on Saturday’s afternoon but in that time, I can’t use my Kindle because it’s Shabbat. That forced me to buy some hardcover books and soon you’ll see how something that at first glance seems like an annoying limitation turned into a true blessing.
I live only a few blocks from the Singapore’s National Library. I won’t spray too many words about this library but let’s just say that like many other things in Singapore, it is truly a world class or even a class of its own. Below the library there is a second-hand book shop and this is where I go to buy books to read during Shabbat. Every time I go there it feels like a treasure hunt as you never know what you will end up buying. Every trip has a huge ROI (return on investment): I usually buy two books at a time and it’s amazing how much knowledge one can buy for S$19.8! More than that, exploring those book shelves is real fun, it is an experience that I just can’t get at Amazon.
The first half of 2015
I have to admit that in that half, I didn’t read as many books as I wanted but this is because I had too many financial reports to read. Also, I omitted two books that I read in Hebrew from this list as they have nothing to do with the theme of this blog–they were about the history, achievements and blow-ups of Israel’s secret service, the Mossad. Time to cut to the chase so here is the list of books and a very short review of each one. In addition, I will start to grade the books I read on a scale of one to five, five being a must read and one being “not worth your while.”
Call me Ted (3/5)
This book, by Ted Turner, tells his life story and the story of Turner Broadcasting. It goes from his early days growing up, to him running his father’s billboard company, acquiring radio and TV stations and all the way to the development of CNN, TBS and TNT, which are Turner’s most valuable assets. Tuner Broadcasting was bought by Time Warner and that led me to read a lot of material about Time Warner, but that deserves a separate post. If you have any interest in media business, whether it is cable or content, then this book is a must-read for you. Ted shares a lot of inner workings of this business with the readers and he even shares details from meetings he held with the industry’s titans. One scene that I found particularly fascinating is a meeting of Warren Buffett, Tom Murphy, John Malone and Ted Turner! Can you imagine that? to be it felt like watching an All-Star game!
One of lessons I draw from this book is that it is not enough to have a CEO who is a great business operator. Knowing how to allocate capital is at least as important and being a bit lacking on that front led Ted Turner to a tailspin that ended up with him losing control of his company and eventually, being pushed out of it. On a positive note, this book shows how a person with very little means (compared to those he was set to compete with) and a lot of motivation can beat giant companies and climb up the ladder.
The reason this book gets only 3 points is that some chapters are dedicated to sailing, which was Ted’s passion, but not mine. In the same time, the chapters that actually deal with decision making and the business dynamics could have had more flesh. I guess it didn’t take much market research to know that most people won’t be interested in all the details of his boat racing career but if you read the book and understand Ted’s personality, it’s no wonder why those chapters found their way into the book (“because I want it that way!”)
American Icon: Alan Mulally and the Fight to Save Ford Motor Company (5/5)
Ford was in my investment portfolio for some time and back then, while the company was cheap, one of the arguments for holding it was the focused, value-creation oriented management team that is led by a good CEO. I have to admit that I didn’t know much about Alan Mulally back then. Reading this book helped to understand why that investment worked out so well, as in many cases of good investment, the “culprit” is found in an exceptionally strong leader. I would divide the things that Mulally did into two groups:
“Standard” turnaround actions:
- Gather data and quantify things “If it can’t be measured, it can’t be managed”
- Narrow down the scope of activities and focus the business on a limited number of segments (nameplates in this case)
- Streamline and make operations more efficient
- Deep cultural change, it reminded me of Lou Gerstner book “Who Says Elephants Can’t Dance.” Mulally literally destroyed and rebuilt the culture at Ford. This is the type of action that in my opinion is the most difficult to achieve because there is no recipe for that, it involved politics, influencing people and getting them to act together and this much tougher to do than some restructuring and “realigning the cost structure with the business’ reality.”
- Prepared for the storm: Mulally knew that Ford is in trouble and that he will need to strengthen the balance sheet in order to have the means to survive the aggressive restricting. However, he also thought that it would be smart to prepare for a recession, just in case. And so he did. While the recession wasn’t a walk in the park for Ford, big part of the reason why Ford weathered the storm is Mulally’s decision to go further than others would in raising money for the tough time that lied ahead. Mulally could have gotten everything right except for this and then Ford would have gone down the drain. Charlie Munger put it best in the last shareholder meeting: “we do not necessarily think a storm is about to him, but we must be prepare in case one does.”
- Handling various stakeholders: Apart from the union and change-resistant managers Mulally had to also deal with both Washington and Wall Street. You can read more about how he did that, but he passed the test with flying colors, showing exceptional skills in handling the various stakeholders in the business.
So there you had it, some exceptional things that Mulally has done; and if that’s not a good enough reason to read the book then I’ll also tell you that the book is very well written. The author, Bryce Hoffmanm, did one hell of a job here.
The next question that some of you will ask is which company is Alan Mulally leading now? Unfortunately, it seems like all he does is warm a seat in Google’s board of directors. He is probably tired, but you should be on the watch: if a company hires him it could make a good investment opportunity. At the right price of course, as always. And what is a better way to end this review than a Mulally quote:
Running a business is a design job. You need a point of view about the future, a really good plan to deliver that future, and then relentless implementation.
Decision Points, by George W. Bush (4/5)
This book has nothing to do with investing but it received a high score because it taught me many things that I didn’t know because I was brainwashed by the media to see George W. Bush in a certain way. If you would make an experiment and ask people from all over the political spectrum what one/two words come up to their mind when they hear the name George W. Bush I guess most answers will be: stupid, ignorant, violent, mismanagement of the Katrina crisis, failure in Iraq and so on. You get the drift.
“Don’t judge a man until you walked a mile in his shoes.” This idiom applies well to George W. Bush. In this book, you will Bush’s side of the story and you will learn many new things that you didn’t know such as how decisions were made given the information that was available at the point in time and the readers will be exposed to a variety of considerations that the media and other critics find comfortable to ignore.
Bush Jr. ended his book writing:
It’s too early to say how most of my decisions will turn out…Persident Ford’s pardon of Richard Nixon, once regarded as one of the worst mistakes in presidential history, is now viewed as a selfless act of leadership. And it was quite something to hear the commentators who once denounced President Reagan as a dunce and a warmonger talk about how the Great Communicator had won the Cold War.
Whatever the verdict of my presidency, I’m comfortable with the fact that I won’t be around to hear it. That’s a decision point only history will reach.
About six years after he left office we see that people’s opinion of his became way more favorable. Sometimes it takes time to see the genius.
To me, this really reminds of value investing because it has the same dynamic of a long feedback cycle: some decisions you make today will probably make you look stupid in the short-term but will eventually turn out to be the right thing to have been done once its all said and done. However, most people’s seek immediate feedback and if certain actions do not bring about a fast positive result they deem the action as wrong and that is what hurt Bush’s image–he thought and played for the long-term.
Boomerang: Travels in the New Third World (4/5)
Another Michael Lewis book, very well written and engaging. In this book Michael Lewis takes the reader to a journey through Europe and exposes some inconvenient truths. I particularly liked the chapter about Greece, sometimes reality can beat imagination. This book is fun and easy to read so go ahead and get it!
Setting the table (2/5)
Maybe it’s just me not being so interesting in the F&B sector but the book didn’t hit it off well with me. I don’t have much to add beyond what the reviews on Amazon. I guess that those of you who want to open an F&B business can learn a lot from Danny Meyer, I was just impressed by his attention to detail and focus on delivering hospitality and not just good food. Here are a few takeaways from the book:
- The 51% rule: in his company employees are being measured on 49% technical skills (cooking, serving etc.) and 51% emotional skills such as energy, integrity, good spirit, willingness to learn and improve and so on. The 49% can be easily taught in a training course, the 51% can hardly be taught and has to be ingrained in the person.
- Things take more time than it may seem at first: at the barbecue joint, Blue Smoke, it took the restaurant’s team about eight months to get the meat the be properly smoked because of the smokestack’s structure. And we are talking about a team of top-tier chefs and cooks with vast experience. My experience in life also taught me that doing new things for the first time always take much longer than it initially seems.
Netflixed: The Epic Battle for America’s Eyeballs (3/5)
This book is as much about the demise of Blockbuster as it is about Netflix. But if you want to learn more about this disruptive company that caused the cable moguls a serious headache then go ahead and read it. The book is well written and is very fun to read. I never used Netflix but I always knew that it delivers mostly old content and as such, does not pose a serious threat to prime time content. Netflix is trying to change that by producing its own content and it will be interesting to see how that battle evolves. I will try to write a post in the future about OTT and share my view point on whether it is or it isn’t a serious threat to the cable companies.
That’s it for now, I will try to do better in the second half. Happy reading everybody!