Michael Burry loads up on bank stocks / Worst sale of all time / Investing Book That Flopped 32 Years Ago Now Sells for Thousands / Robin Hood gala / Is Pickleball a sport?

1) I was glad to see that my old friend Michael Burry of The Big Short fame shares my view that there's value in beaten-down regional bank stocks: Michael Burry Didn't Sell, Instead He Loaded Up On Regional Banks: Here Are All The "Big Short's" Latest Stock Holdings. Excerpt:

We found out just why Burry was "wrong to say sell": according to his latest SEC filing, his Scion Capital was busy buying stocks in Q1. In fact, at $106 million in notional value of his disclosed positions, this was Burry's biggest buying spree in years.

Looking at Scion's latest 13F reveals that once again Burry liquidated the rest of his legacy 2022 holdings, dumping his entire stake in companies like Black Knight, Wolverine World Wide, MGM Resorts and Qurate; he also trimmed his formerly largest holding, private prison operator GEO group, and reallocated the proceeds in three ways

Adding to his Chinese exposure, making JD.com and Alibaba his top stocks (a move which appears to have been driven by the Q4 momentum and which has since fizzled, leading to substantial losses in Chinese names).

Launching a handful of new positions in energy names such as Coterra, NOV, and Devon.

Most notably, a third – or seven of the fund's total 21 positions – were financial names and, with the exception of Wells, they were mostly distressed, regional, small banks, and/or credit card companies, such as CapitalOne, Western Alliance, Pacwest, First Republic, and Huntington Bancshares.

We've highlighted our six favorite mid-, small-, and micro-cap bank stocks in the last two issues of Empire Investment Report. Click here to subscribe.

2) In yesterday's e-mail, I wrote that my two greatest investment mistakes were selling Apple (AAPL) in 2000 and Amazon (AMZN) in 1999. But those mistakes pale in comparison to this one:

I'd never heard of Apple's third co-founder, so I did some digging. It's not surprising that nobody's heard of him, as he sold his stake only 12 days after the company was formed.

Wayne is still alive at age 88, though he "was compelled to sell his house and retire to a mobile home park in Pahrump, Nevada" after he was robbed of his life's savings in 2004. Here's the Wikipedia page about him, and here are two articles about him and the founding of Apple: Ron Wayne – The third Apple founder and Today in Apple history: Apple co-founder quits and cashes in his stake for $800.

3) Seth Klarman of Baupost Group is a legendary investor, great guy, and incredible philanthropist.

So I read this story on the front page of today's Wall Street Journal about the book he wrote in 1991, Margin of Safety, with great interest: Investing Book That Flopped 32 Years Ago Now Sells for Thousands. Excerpt:

Fund manager Seth Klarman, now 65 years old, didn't have especially high expectations when "Margin of Safety" was published back in 1991. Its first two editors left the publisher before the book even went to the printer, and it was a dud commercially. Only about 5,000 copies were printed.

Then his hedge fund, Baupost Group, racked up one of the greatest investment performances in the industry. Although the fund doesn't publicly disclose its returns, it has been reported to have averaged about 20% annually since the 1980s.

"You'd be hard pressed to find an investor who has done as well," says veteran financial journalist James Grant, a longtime friend of Mr. Klarman's whose blurb graces the book's front cover.

Despite huge demand for pearls of wisdom from the publicity-shy investor, he has never reissued it. That has made the book both a cult classic and a collectors' item. An estimated 100 or so signed copies can fetch several thousand dollars apiece. Even unsigned ones, which were priced at $25 when published, go for around $2,000.

I've gotten to know Seth a bit over the years. Both he and his book were very impactful in my formative years as an investor in the 1990s, and I had a copy of it at one time. Sure enough, when I went to look it up on Amazon, it says: "You purchased this item on September 13, 1996" and shows how much I paid for it:

Given that it's now listed on the site for $5,043.99, it would be one of my greatest investments ever – a 120-bagger, or 19.4% compounded annually over the last 27 years – except for one little problem: I can't find it! ARRRRHHHHH!!!!

I vaguely recall lending it to someone years ago and never got it back. GRRRRRRR!

If you want to read it – which I highly recommend, as its wisdom is timeless – you may be able to find a PDF of it on the Internet with some clever searching, not that I would condone such a thing...

4) Speaking of philanthropic billionaires, dozens of them were in attendance last night – I chatted with seven of them – at the annual gala of the Robin Hood Foundation, a wonderful organization that's New York's leading poverty-fighting charity.

The event featured comedian Jim Gaffigan, actor and professional wrestler John Cena, singer Brandi Carlile, and rapper Kendrick Lamar – and, most important, raised $61 million!

Raising such a sum is only possible in New York City, which has the highest concentration of extreme wealth in the world (so much so that I suspect my daughters, growing up, thought we were poor because we didn't have a private jet or a mansion in the Hamptons).

According to this study, World's Wealthiest Cities Report 2023, NYC has the greatest number of high-net-worth individuals who are worth $1 million (340,000, equal to 4% of the city's entire population), $100 million (724), and the second greatest number of billionaires (58, trailing only the Bay Area's 63).

5) I figured I'd catch some flak for saying in yesterday's e-mail (somewhat tongue in cheek) that pickleball, while I enjoyed playing it last Friday, isn't a sport. Sure enough, one of my old friends wrote:

Two comments on pickle...

1. It is a sport! You can get as good a workout in a competitive pickle game as in tennis. Can't believe your opinion on it. I'm thinking the Whitney Tilson in Galileo's time published a painstaking refutation of the heliocentric solar system, too. 😃

2. If you still want to stand your ground, learn how to play skinny singles in pickle. It's a blast and can be exhausting. My son lives in NY and plays all the time. He's 29. I can send him to play you in skinny singles. You will be gasping for breath after 20-30 minutes.

I of course plan to take him up on his offer and look forward to playing with his son!