Sunday Investment Chronicles

Welcome to a new benefit of your subscription to Porter & Co… the Daily Journal Sunday Investment Chronicles: All the insight from the past week that you need to know, in one convenient place (see last week’s Sunday Investment Chronicles here)..

Every Sunday at 10 am ET we’ll be highlighting the most compelling insights from Porter & Co., in case you missed something during the week. And… we’ll also share the most interesting and valuable research from elsewhere in the worlds of investing, finance, and economics that we come across each week.

(Please note that the Sunday Investment Chronicles will replace our monthly Investment Chronicles publication… we’ll be delivering more insight to you, on a more timely basis.)

In other words… this is the Porter & Co. version of your Sunday paper that may have been part of your weekend routine in the past.

Questions or comments about our Sunday Investment Chronicles? Drop us an email at [email protected].

Good investing,

Porter Stansberry
Stevenson, MD

Last Week At Porter & Co.

For the second Monday in a row, the week started with a loud crashing sound, as markets took fright to President Donald Trump imposing tariffs of 25% on goods imported from Mexico and China. We previously wrote about the idiocy of tariffs… and in Thursday’s The Big Secret on Wall Street, Porter explained in detail how tariffs will destroy America – and how you can protect your portfolio. The big problem with tariffs, Porter wrote, is that they…

… wreck the whole system in part because they simply increase prices, and also because they are applied capriciously, which creates tremendous uncertainty – which completely stops investment.”

What to do about it? Part of our insight might sound familiar: Own gold… and buy Bitcoin… to hedge against inflation and the decline of the U.S. dollar. Another way to insulate your portfolio – against declining share prices, in part on the back of collapsing corporate earnings (one of the many problems caused by tariffs): Buy corporate bonds – and in particular, those of distressed companies that are recommended by Marty Fridson, who writes Porter & Co.’s Distressed Investing.

In Monday’s Daily Journal, Porter tackled a question we’ve been getting a lot: In light of global warming, expensive disasters like the California wildfires, and other events that cost insurance companies a lot of money… are insurance companies in trouble? Porter explained…

Most people think that insurance companies will do worse as risks grow – especially litigation risks, because America is incredibly litigious (see here for our thoughts on the impact of the California wildfires on P&C insurance companies). But, they’ve got it backwards.

Insurance companies price risk.

As risks increase, prices rise. And that means profits rise, too.”

One of Porter’s favorite property & casualty insurance companies, W.R. Berkley (NYSE: WRB), has returned a compounded 17% per year over the past 12 years.

In Wednesday’s Daily Journal, Porter spliced the recent earnings of Google, which is ostensibly one of the most profitable companies in capitalism. But after delving into the numbers – and the tricks that accountants are permitted to use – it turns out that Google isn’t so (real-world) profitable after all… and Porter wagers that one boring, old-school company that is startlingly capital efficient will be a better long-term investment.

On Thursday, Erez Kalir in Biotech Frontiers took a break from the biotech sector – where he’s served up a long list of incredible picks, with the portfolio up 41% in 2024 – to focus on what he calls a portfolio hedge. As Erez explained, it’s a…

… recommendation of a company that is now as little-known as MicroStrategy was back in 2020, with very real potential for similar upside.”

As context: Shares of MicroStrategy (MSTR) – recently renamed Strategy – rose 50x in the five years after the company started accumulating Bitcoin.

And, finally, in Friday’s Daily Journal, we wrote that it’s not inconceivable for both weight-loss- drug maker Novo Nordisk (NVO) and chocolate maker Hershey (HSY) to co-exist… and for both to succeed. Porter commented: “Well, just as in the airports and the shopping malls, there’s no sign of the fat shot reducing Hershey’s earnings. Fat people apparently still like to eat a lot of candy.” If you missed Friday’s Daily Journal, you can find it here.

What We Read Last Week

Out of the hundreds of sources of investment, finance, and economics news and insight we regularly review – our Bloomberg terminal, hedge-fund letters, annual reports, the financial news media, Securities and Exchange Commission (“SEC”) filings, investment newsletters, newspapers, X (Twitter) threads, conferences, podcasts, and more – here’s what we’ve read that we think you might find interesting.

(Note: Quotes, transcripts, and excerpts are generally reproduced as they appear in the original.)

Markets And Economics

The “January Barometer” is sending a bullish message.

Trade war basics: A big picture look at U.S. trade with China, Canada and Mexico.

The Federal Reserve’s Reverse Repo Facility has fallen to multi-year lows.

Inflation expectations are soaring… but Republicans and Democrats hold wildly different views.

Passive flows – price- and value-agnostic investment dollars flowing into index funds from retirement accounts – are eating the market.

The Legends Speak

The poem that changed late Berkshire Hathaway Vice Chairman Charlie Munger’s life.

What every investor should know about free cash flows.

Here’s a list of stocks that legendary fund manager Peter Lynch would love.

American Express (AXP) – one of Warren Buffett’s oldest and favorite investments – navigated the COVID crisis brilliantly.

Investment Ideas

Could this company be the next Texas Pacific Land (TPL)?

Why the investment case for GLP-1 stocks remains intact.

Is this little-known homebuilder the most undervalued stock in North America?

This misunderstood stock could be one of the best ways to invest in the AI boom.

Government Bonds And Credit

Why rising Treasury yields are a significant risk for stocks.

Forget the Fed… President Trump appears determined to keep long rates from rising too high…

But managing long-term rates won’t be easy: A mind-boggling amount of U.S. Treasury debt needs to be refinanced this year.

Special Situations: Activist Investing, Spinoffs, Arbitrage, Mergers and Acquisitions (M&A), And More

The short case for Nvidia (NVDA).

Here’s a list of new activist reports and notable executive departures disclosed this week.

This acquisition is offering investors an extremely low-risk opportunity to earn an 8% return (from Special Situation Investments)…

Paragon 28 (FNA) specializes in orthopedic solutions for feet and ankles. The company is getting acquired by Zimmer Biomet, a $22bn orthopedic giant. The deal terms are $13/share in cash + a non-transferable [contingent value rights (“CVR”)].

FNA stock is currently sitting at $13. The merger seems to be almost a done deal and is expected to close in H1 2025. There’s a pretty high chance this CVR pays out the full $1 after two years, and investors are currently not paying anything for this optionality.”

Precious Metals

Gold may be on the verge of an historic breakout.

Why gold miners could be one of the biggest beneficiaries of the coming bust.

Gold mining stocks are cheaper than they’ve been in decades… yet almost no one is interested.

Energy

Here’s an interesting deep dive into the technologies driving the emerging nuclear renaissance.

U.S. frackers and Saudi officials tell President Trump they won’t drill more (from The Wall Street Journal)…

President Trump wants to boost oil drilling. His allies in the U.S. shale industry and Saudi Arabia are pushing back.

Trump for months has encouraged the U.S. shale industry to “drill, baby drill,” but another American oil boom isn’t in the cards soon, no matter how many regulations are rolled back, according to oil executives. After many producers overdrilled themselves into bankruptcy during the shale boom’s heyday, the industry is now focused on keeping costs down and returning cash to investors.

The president’s advisers concede that U.S. frackers won’t pump much more, according to people familiar with the matter. The advisers say his best lever to bring down prices might be to persuade the Organization of the Petroleum Exporting Countries and Saudi Arabia, the group’s de facto leader, to add more barrels to the market.

But Saudi Arabia has told former U.S. officials that it also is unwilling to augment global oil supplies, say people familiar with the matter. Some of those former officials have shared the message with Trump’s team.”

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