Welcome to our “Thoughts”

to receive exclusive commentary, Strategy Letters and CSC news straight to your email inbox

Inadvertent Cryptocurrency Adventures

Plenty has been said to date about the general psychosis gripping the general public and equity markets as it concerns “cryptocurrencies.” We have noted these developments and have previously registered ourselves as “dubious,” but dubious just showed up at our […]

Warren Buffett (on CNBC) on the Tax-Code Changes, January 2018

“We’re in Omaha, let’s say you had bought the Union Pacific Railroad yourself, like we bought the BNSF, and you had bought it a year or two ago, you could have bought 100% of the stock, but the U.S. government […]

As Clear As Day

The Untenable Case For Perpetual Dual-Class Stock

More Thoughts That Didn’t Make It in the Strategy Letter (Because We Couldn’t Stretch Far Enough to Make a Coherent Narrative) but Nonetheless Interest Us and Are Relevant

We do have a number of client partners for whom we manage assets in a “socially responsible” fashion. That means a lot of things to a lot of different people and while a laundry list of restrictions will sacrifice performance, […]

CSC Strategy Letter | Number 31 | Another Lap Around The Sun

Download Cove Street Capital’s January 2018 Strategy Letter Number 31, “Another Lap Around The Sun”

We Concur — the CAPE (Cyclically Adjusted PE) Ratio Is Not a Useful Timing Signal for Market Turning Points, but Is a Powerful Predictor of Long-Term Market Returns

From Research Affiliates: “What is often lost in the conversation of the right level of CAPE is an appreciation for expectations of return in the absence of any mean reversion. Real EPS trend growth since 1871 has been 1.5%. From […]

Simplicity by Todd Coombs, Berkshire Hathaway

What’s the most important consideration for investing? Howard Marks wrote a book titled “The Most Important Thing,” and I think it had 20 lessons. So it’s hard to distill into one – but it’s really a judgment business at the […]

The Crypto Nonsense of the Week

(Bloomberg) – Companies rebranding themselves as cryptocurrency firms aren’t the only ones benefiting from bitcoin mania. Crypto Co. today disclosed a private stock sale to accredited investors at $7 per share, a 97 percent discount to yesterday’s closing price of […]

“The High Price of Free Dumb”

As we close out the year, I would like to “note” one Steve Duneier, who is frankly difficult to describe, as one can imagine after reading his Wiki. (https://en.wikipedia.org/wiki/Stephen_Duneier) I am not sure exactly how I ran into Steve, but […]

Is a Balanced Account 60% stock, 40% stock?

From FT.com: “People have taken their fixed income allocations and turned them into credit allocations because they are scared of rising rates,” says Ashish Shah, head of fixed income at AllianceBernstein. But the creditworthiness of a company behaves similarly to […]

Cove Street Capital: Team Update

— Download this post as a PDF — “Until one is committed, there is hesitancy, the chance to draw back. Concerning all acts of initiative (and creation), there is one elementary truth, the ignorance of which kills countless ideas and […]

Five signs of a really *functional* market?

From FT Alphaville, December 7, 2017: 1) The spread between the top three exchanges offering your product is no less than… $4,000. 2) The utility function of your “currency” product is compromised by a traffic jam of 193,211 transactions… 3) […]

Highlights From A Conversation with David Swenson

From a November 2017 Counsel on Foreign Relations interview by Co-Chairman Ermeritus Robert Rubin of David Swensen, CIO of Yale University. So for most of the 32 years that I’ve been at Yale, the standard assumption for endowment returns for […]

A Time-Tested Way to Lose Money

(Business Wire) — NEW YORK — November 17, 2017 Real Industry, Inc. (NASDAQ: RELY) (“Real Industry” or the “Company”) today announced that it has initiated restructuring efforts through the filing of a petition for voluntary Chapter 11 reorganization in the […]

Other Things on Our Mind That Didn’t Manage to Work Their Way Into a Coherent Pattern for Our October Strategy Letter

BITCOIN: J.P. Morgan boss Jamie Dimon: “It’s a fraud. It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed.” In the other Corner: Murray Stahl. And the following is just purely stupid: Usually when a […]

CSC Strategy Letter | Number 30 | Can You Walk Past the Doughnuts?

Download Cove Street Capital’s October 2017 Strategy Letter Number 30, “Can You Walk Past the Doughnuts?”

This Time is Really Not Different

— Download this post as a PDF — by Dean Pagonis | Research Analyst Intelligent investors can always come up with a slew of reasons for why the market is under/overvalued. We are always at the precipice of disaster or […]

At the Risk of Spending All Day Talking to Ourselves

Picking Stocks Is Hard. It’s Even Harder With Growth: Gadfly (Bloomberg Gadfly) — By Nir Kaissar Picking stocks is famously difficult. But just how difficult is one of the oldest arguments in finance. New York Times columnist Jeff Sommer reopened […]

Identifying the Next Bubble with Foresight—Not in Hindsight

by Ben Claremon | Principal and Research Analyst In recent letters we have pretty thoroughly discussed the ongoing industrywide move toward passive investment management strategies—and away from active management. But when we saw this thoughtful piece from Charles Brandes (a […]

Rinse, Lather, Repeat: Trian and P&G

Some universal ideas that are entirely relevant here.

Bullish or Bearish?

“Klarman’s Baupost Plans to Return Some Investor Money”– Bloomberg

Amazon 1998

Being gluttons for punishment, this is the entire Bezos collection. At least we haven’t been short. Reprinted from the 1998 Amazon Annual Report Work Hard, Have Fun, Make History It would be impossible to produce results in an environment as […]

Jeff Bezos’ 2016 Letter

While he is reigning terror on the rest of portfolio, these are thoughts we share from Jeff Bezos. First, never use a one-size-fits-all decision-making process. Many decisions are reversible, two-way doors. Those decisions can use a light-weight process. For those, […]

Satellite Potshots

— Download this post as a PDF — “Is there not A tongue in every star that talks with man, And wooes him to be wise? nor wooes in vain; This dead of midnight is the noon of thought, And […]

Other Recent CSC Thoughts and Ruminations That Did Not Fall Into a Coherent Narrative for Our June Strategy Letter

Risk—the extent of loss that a person or an organization can withstand without having to significantly change spending habits. THIS drives a lot more market activity than a Sharpe Ratio. The new Edward Thorp biography, “A Man for All Markets” […]

CSC Strategy Letter | Number 29 | Not Going Gently into the Night: Active Management and Electric Guitars

Download Cove Street Capital’s June 2017 Strategy Letter Number 29, “Not Going Gently into the Night: Active Management and Electric Guitars”

The Board of Extravagance

by Eugene Robin | Principal, Research Analyst Here at Cove Street, we often wonder: what would it be like to sit on a public company board? What do people actually do? How do board members defend the rights of the […]

The opinions expressed herein are those of Cove Street Capital and are subject to change without notice. Past performance is not a guarantee or indicator of future results. You should not consider the information in this blog a recommendation to buy or sell any particular security. These securities may not be in your account by the time you receive this report, or may have been repurchased for your account. You should not assume that any of the securities discussed in this report are or will be profitable, or that recommendations we make in the future will be profitable or equal the performance of the securities listed in this report. Recommendations made for the last twelve months are available upon request. Cove Street Capital is an investment advisor registered with the Securities and Exchange Commission. Consider the investment objectives, risks, and expenses before investing.