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Six Books I’ve Read Recently

One topic Andrew and I don’t discuss much on the podcast are the books we’re reading. Despite that, some podcast listeners email me with requests for book recommendations. Since my interests are probably different than yours – I can’t really make recommendations.

But, I can tell you what I read when I read it.

So, here are the six most recent books I’ve read:

Limping on Water – I enjoyed this book a lot more than most people will. Capital Cities is the company I am most interested in that has been written about the least. I have read some books that touch on Capital Cities. These are basically “The Outsiders” which has a chapter on Tom Murphy, books about Warren Buffett that discuss Capital Cities, books about Disney (Disney War covers Eisner who bought Capital Cities; The Ride of a Lifetime covers Iger who came from Capital Cities), and books about ABC (which Capital Cities bought). Otherwise, I have not read much directly about Capital Cities. It’s one of the most successful public companies about which very little has been written. This is an insider’s account and covers only the jobs he had while there. It won’t give you a big picture take on Capital Cities. But, I’m definitely glad I read it.

Beating the Odds – I’m mentioning this one because Capital Cities eventually went on to buy ABC. It’s a corporate history of the ABC television network. This book basically ends at the point where Leonard Goldenson sells out to Tom Murphy (and Warren Buffett). The book runs from a period slightly before “the Paramount Decision” when U.S. movie studios (like Paramount) had vertically integrated control of U.S. movie theaters. From there, the rump of a split-up Paramount goes on to buy the fourth place U.S. TV network and expands it greatly. So, basically we’re talking about the U.S. TV business from like 1945-1985. This is an insider’s account. But, because Goldenson was at the top of the organization for decades it also might as well just be a corporate history of ABC. I liked this book a lot. However, it’s possible my background knowledge from other books about this industry during this time period is part of what makes books like “Beating the Odds” and “Limping on Water” more enjoyable for me than for others. By the way, the book starts with a short intro from Warren Buffett.

SKI Inc – A manager’s account of running different ski resorts in the U.S. Like “Limping on Water” this is basically just about the jobs he held and what he had to do. So, there is not always a ton of context about the overall industry. It is, however, a business book. It’s about the ski resort business as a business. It’s not some behind the scenes account of the resorts themselves. This isn’t an industry that gets written about much. So, it’s the kind of book I find most useful.

The Great Texas Banking Crash – Broadly, …

What To Read to Learn More About Disney (DIS)

In our most recent podcast, Andrew and I talked about Bob Iger’s return as CEO of Disney (DIS). If you’d like to know more about Disney – the company and the stock – as it currently exists, I recommend subscribing to The Science of Hitting Substack (by Alex Morris). He often writes about the company in detail.

To learn about the past history of Disney, I recommend three books.

They are:

• The Ride of a Lifetime by Robert Iger (covers Iger’s time at Disney)
• Disney War by James Stewart (covers Eisner’s time at Disney)
• Walt Disney by Neal Gabler (covers Walt’s life)

ALICO (ALCO) Fails to Report Results on Time — Blames Deferred Tax Liability Accounting Issue

Alico (ALCO) failed to file its financial results on time. The company was scheduled to report its full-year results on December 6^th. Instead, it put out this explanation:

“…the Company and its independent public accounting firm determined they need additional time to complete the audit of…financial results. The key item that is requiring such additional time involves evaluation of the proper amount of the Company’s Deferred Tax Liability, particularly certain portions of that Deferred Tax Liability arising in prior fiscal years, including those going back to fiscal year 2019 or possibly several years before fiscal year 2019. Potential adjustments related to this portion of the Deferred Tax Liability, if required, would be a decrease in the Deferred Tax Liability and an increase in Retained Earnings for the prior period or an out of period adjustment increasing Net Income for fiscal year 2022.”

Alico has a new Chief Financial Officer. The new CFO was hired in September. The company’s previous CFO quit in May:

“On May 17, 2022, Richard Rallo notified the Company of his decision to resign from his role as the Company’s Senior Vice President and Chief Financial Officer…Mr. Rallo’s decision to resign is for personal reasons to eliminate extensive travel and/or avoid relocation to Florida and is not related to any disagreement with the Company or its independent registered public accountants on any matter relating to the Company’s financial or accounting operations, policies or practices.”

Alico’s stock price dropped when it reported its failure to report financial results as scheduled. It hit a new low for the year. The stock has since risen a bit from that low.

Alico stock looks cheap compared to the company’s best guess of the fair market value of its land holdings. It’s possible the company is trading for as little as half of the value of the ranch and citrus land combined.

However, this calculation is a bit difficult to make right now because of three factors. One, land prices may have fallen due to increased interest rates in the economy generally causing the company’s estimates to be a little stale. Two, some of Alico’s citrus groves were hit by a hurricane and there was damage – though Alico does not expect this to result in much in the way of permanent losses (as opposed to losses that will affect this growing season alone). And three, the delay in reporting financial results means we won’t have an updated balance sheet for some time. For these reasons, it’s not possible to have a lot of confidence in any precise calculation of estimated land values versus the company’s enterprise value.

However, it is safe to say the stock is trading well below previous estimates of the value of the land. So, on a liquidation basis, the stock appears cheap.

On an operating basis, this was a bad year for Florida orange growers.

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