Weekend Reading

6 January 2018 | by Paul Perrino, CFA

A summary of this week’s best articles. Follow us on Twitter (@INTRINSICINV) for similar ongoing posts and shares.

Tight Trucking Market Has Retailers, Manufacturers Paying Steep Prices (Jennifer Smith, @jensmithWSJ, WSJ)

Truck drivers were not prepared for the new Federal regulation that started December 2017. Most trucks are now required to “be equipped with electronic devices that monitor drivers’ hours behind the wheel.” This has caused a large imbalance between the number of trucks available and the number of trucks needed. “By the end of last week, just one truck was available for every 12 loads needing to be shipped, according to online freight marketplace DAT Solutions LLC” This caused less urgent cargo to not get delivered and others to pay a premium to move their goods.

California Bill Seeks Ban on Fossil-Fueled Vehicles by 2040 (Ryan Beene, @RyanBBeene, Bloomberg)

Back in September 2017, China announced a deadline for automakers to end sales of fossil-fuel vehicles. California is looking to do the same. Both deadlines focus on the incremental car added to the road. Existing fossil-fuel vehicles will be permitted to run. The hope is that it cuts down on carbon emissions immediately, then dramatically over the long-run. “If adopted, the measure would eliminate a huge chunk of carbon emissions as part of the state’s quest to slash greenhouse gas emissions by 80 percent from 1990 levels by 2050.”

Brooks Needs Runners Who Hate to Run (Claire Suddath, @clairesuddath, Bloomberg Businessweek)

Brooks went from a bankrupt company producing a variety of footwear to a running shoe specialist. They had more runners that wore Brooks at the 2016 Olympic marathon trails, than any other brand. Fruit of the Loom, a Berkshire Hathaway company, acquired them, but soon got the attention of Mr. Buffett when they were doubling in size every three years. Specialization and focusing on their brand was instrumental in that.

Cash Might Be King, but They Don’t Care (Andy Newman, @andylocal, NYT)

With the rise of credit card reward points/perks and convenience, shoppers are opting to use their credit card over paying with cash. This has allowed retail stores and restaurants to no longer accept cash, which can save management time “counting (and recounting) cash drawers that could have been spent coaching new employees and making sure customers have a great experience.”

Ten years in, nobody has come up with a use for blockchain (Kai Stinchcombe, @KaiStinchcombe, Hackernoon)

As crypto-mania reaches new highs, the underlying technology (blockchain) might not be as useful as some projected. Even the main use of blockchain, cryptocurrencies, isn’t working as smooth (users having issues converting back to dollars) or at the scale of existing systems (“ Visa can handle sixty thousand transactions per second, while Bitcoin historically taps out at seven”).

While we do not accept public comments on this blog for compliance reasons, we encourage readers to contact us with their thoughts.

The information contained in this post represents Ensemble Capital Management’s general opinions and should not be construed as personalized or individualized investment, financial, tax, legal, or other advice. No advisor/client relationship is created by your access of this site. Past performance is no guarantee of future results. All investments in securities carry risks, including the risk of losing one’s entire investment. If a security discussed in this blog entry is owned by clients invested in Ensemble Capital’s core equity strategy you will find a disclosure regarding the security held above. If reviewing this blog entry after its original post date, please refer to our current 13F filing or contact us for a current or past copy of such filing. Each quarter we file a 13F report of holdings, which discloses all of our reportable client holdings. Ensemble Capital is a discretionary investment manager and does not make “recommendations” of securities. Nothing contained within this post (including any content we link to or other 3rd party content) constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instrument. Ensemble Capital employees and related persons may hold positions or other interests in the securities mentioned herein. Employees and related persons trade for their own accounts on the basis of their personal investment goals and financial circumstances.