Jeff John Roberts on the role of Sam Bankman-Fried's parents in the FTX scandal

A question that has come up repeatedly in the FTX scandal has been the role of Sam Bankman-Fried's parents. Namely, how could such respectable people—Stanford law professors famous for their sense of ethics—have raised a sociopath who stole billions of dollars under the guise of altruism? As it turns out, they were Bankman-Fried's primary accomplices. 

As a scorching cover story in BusinessWeek reveals, Barbara Fried and Joseph Bankman didn't just raise a criminal, but actively took part in running FTX and enjoying the spoils of the fraud. They regularly turned up in the company's offices and were included on important emails, and, most critically, flexed their prestige to open doors in Silicon Valley and Democratic power circles for their son. Meanwhile, these two advocates for the poor helped themselves to a $16 million luxury villa in the Bahamas and $10 million in cash—paid for by FTX customers.

~ Jeff John Roberts, "How Sam Bankman-Fried's parents enabled his criminal empire," Yahoo Finance, September 15, 2023

September 14, 2023

Sam Walton on bureaucracy

A lot of bureaucracy is really the product of some empire builder's ego.

~ Sam Walton

Chris Mayer on avoiding effort justification

Q: How do you avoid doing too much work on an idea & losing objectivity? Is there a tradeoff between going wide & going deep? 

A: I’ve spent lots of time researching ideas that I never bought.  I’ve flown to foreign countries, met with CEOs and not bought the stock.  It’s just the way investing works.  You have to enjoy looking at businesses, just for the sake of learning.  It’s part of the adventure.  It’s fun.  And go into it with the idea that whatever knowledge you gain may not pay off for years - maybe never! 

But what about an idea I already own?  Can I lose objectivity?  Probably!  I think you have to keep testing it against your thesis.  It’s a tricky problem.  And yes, I think there is a tradeoff between going wide and going deep.  I’m a one-man band.  There are only so many hours in a day.  So, I have to pick and choose my projects.  I am more on the deep side of things than wide.  But it works for me, because I only need 10-12 names.  And I’m not turning over my portfolio much. (So far this year, turnover is zero).

~ Chris Mayer, "Q&A," Woodlock House Family Capital Blog, September 12, 2023

Chris Mayer on competitive advantage

Q: How do you know you have a business with a long term competitive advantage? 

A: You never know for sure.  Clues would include stubbornly high returns on capital over a number of years, which indicate the business has something that resists competition.  Market share gains are another clue.  I’d say these are two big ones.

~ Chris Mayer, "Q&A," Woodlock House Family Capital Blog, September 12, 2023

Chris Mayer on his perfect work day

Q: What is your perfect work day?

A: A perfect work day one where I have plenty of time to read and think, get outdoors, learn something new, eat a good meal, talk with a friend and laugh.  That's pretty much a perfect day, work or not.

~ Chris Mayer, "Q&A," Woodlock House Family Capital Blog, September 12, 2023

John Hempton on hotspots for fraudsters

Q: I hear you have a database of dodgy people, listing their actions and associations.  How helpful is this for a short seller?

A: Our database is enormously helpful.

There are also certain hotspots for bad people.  The biggest hotspot is Vancouver, then Toronto.  In the U.S., there's Salt Lake City and Boca Raton.  In Australia, there's Perth and the Gold Coast, in that order.  In the UK there's the AIM market and in Hong Kong there's all sorts.

They all have a reason.

~ John Hempton, "Crisis Talk: John Hempton, CIO of Bronte Capital: 'good things happen to bad people'," GlobalCapital, June 12, 2020

John Hempton on risk management and position sizing

The size of the position has to be determined by what you can lose because it's the fat ugly tails that kill you in this business.  It's not that I don't like to win.  It's that I hate losing.  "Hate losing" is necessary for survival.  I do like to win.  Believe me, I like to win.  The business is built around taking care of the losses.

~ John Hempton, interview, HedgeD, With A Capital "D", March 22, 2023