In one sentence: Danielle, solo, finishes the 13F thread by showing how to find a fund's real assets under management on the SEC's adviser site, then pays tribute to Zappos founder Tony Hsieh and draws a lesson from her own mistake of omission. (The show notes describe a different talk about the SEC and management. This note follows the audio.)
Key ideas
- Why it matters. A 13F covers only long US stocks, so "percent of portfolio" figures are guesses unless you know total assets. Danielle's order: Google first, then the filings. A Google answer may be old or wrong. [00:00–03:00]
- Use the adviser site, not EDGAR. The SEC's Investment Adviser Public Disclosure site lets you search by firm name and shows Form ADV. Part 2 (the "brochure") is a long written filing with fees, methods and risks, and gives assets under management near the start. [03:00–07:00]
- Worked example. Scion Asset Management reported about $387 million of discretionary assets at 31 Dec 2019 versus about $154 million in its Q3 2020 13F, and Google said about $315 million. The gap is most likely cash, shorts and foreign holdings, though that is an inference. [07:00–10:00]
- Often it doesn't matter. Nine times in ten you only need the incomplete 13F picture. Know the method for the tenth. [02:30–03:30, 09:30–10:30]
- Hsieh and culture. Danielle says Tony Hsieh built Zappos on employee happiness and empowerment, which produced the service and free returns customers loved. She calls it a virtuous cycle. [10:00–15:00]
- The Amazon sale. He sold in 2009, when an IPO was impossible and investors needed an exit, and took Amazon stock rather than cash so employees stayed aligned. Danielle's retelling is her own summary of his Inc. essay "Why I Sold Zappos". [15:00–19:00]
- A mistake of omission. She dropped Zappos from her first watch list because Amazon owned it. Her lesson: when you admire a business and its leader, look at the parent too, even if it seems big and expensive. [19:00–21:30]
How it maps to RuleOne
- Fund size and 13F weights belong with any Radar feed of guru buys: show the filing value and flag that it is partial. See 292.
- The Zappos lesson is Radar for subsidiaries: if you love a brand owned by a larger company, put the parent on the watch list.
Buffett, Munger and Graham links
- Buffett's 1996 Berkshire letter and his later writing stress management that is able and honest. Zappos is a culture example, not a Buffett pick.
- Buffett often prefers to buy businesses from owners who stay on. The deal for stock rather than cash echoes this, but treat it as an analogy.
Words to know
- Assets under management (AUM): total money a manager runs for clients.
- Form ADV Part 2: a registered adviser's plain-language brochure on strategy, fees and risks.
- Mistake of omission: a good idea you saw and passed on.
Try this
Choose a brand you use whose parent is a public company. Open that parent on /stocks/ and note one thing about its management or culture you could check in the latest 10-K.
Check yourself
- Where does a fund report its total assets under management?
Answer
In Form ADV Part 2 (the brochure) on the SEC's adviser site, near the start. - Why might a 13F total differ from the fund's assets?
Answer
13Fs leave out cash, shorts and non-US holdings. - What lesson did Danielle take from Zappos?
Answer
When you love a company run by a visionary, look at its owner too instead of dismissing it.
Short quotes
"It's interesting to know how you make the sauce." (Danielle, ~10:00, auto-transcribed)