2017: a value year?

Great interview by Estrategias de Inversión. If you understand Spanish you must watch this interview to María Dolores Solana, Fund Manager at Santander Asset Management. She has been managing the fund Santander Small Caps for more than 10 years. See below the performance (source).

A few comments and quotes:

“I am starting to change the sectoral weight of the portfolio.”.

She is looking for value companies and not growth, most of them in Spain because the economy is right now at the bottom of the recovery that started two years ago. One example she says is the Banking sector. Most of the value investors in Spain have been out of these companies for too long. After last summer, for example, Bestinver started to invest in banks (Bankinter, Bankia and ING). Inflation is rising, economic improvement and banks will be back to his operational business soon.

I’m looking for cheap banks, below 1 book value, more with domestic exposure and potential for recovery or M&A.

Also, she is long on average in Media, why? In her opinion, companies need to gain market share and investing in advertising is a good way to do it.

“Investing in their own brand through advertising”.


“Another sector that has lagged but I see value and is in an initial phase of recovery is that of energy. The oil went from 80 to 50, it will not reach 80, but it can recover something. Therefore, I am increasing exposure to values linked to energy and oil.” (underline mine).

To sum up, she is looking for re-rating, companies that have been in the bottom of the recovery and now are going up in terms of profitability and operating incomes.

16 Questions About Self Driving Cars + links

Every day I need to drive my car around 30 minutes. I do not have a good public transport commute to go to work, so, drive my own car is the best way. But it is quite boring and unproductive. Maybe in 2023 or before I will have the opportunity to read or watch Youtube videos during my commute.

In this fantastic video, Frank Chen, partner, at Andreessen Horowitz explain us the main questions about self-driving cars. It is not a 101 guide, but I provide a few more links to really understand the current situation of this amazing industry.

16 Questions about Self Driving Cars from Andreessen Horowitz on Vimeo.

Everything that moves, says a16z partner Frank Chen, will go autonomous. But what does that really mean? In this presentation from our a16z Summit, Chen goes over the 16 most commonly asked questions about autonomous cars, and what their answers might be: Will we progress level by level, or go straight to Level 5, i.e. full automation? Will they use LIDAR or not? What blend of software techniques will be used? What rules of the road (traffic lights!) will become a thing of the past, and how will insurance be affected? You can’t understand autonomous vehicles without understanding these 16 basic and essential questions — and the issues at stake tied to them — in this concise overview that covers everything you’re wondering about autonomous vehicles in a nutshell.

Slide 1. Frank Chen.


Slide 2.


Slide 3.


Talking about cars only, this is Goldman Sachs‘s opinion:

In the next ten years, the auto industry will undergo a profound transformation: the cars it builds, the companies that build them and the consumers who buy them will look significantly different. Technology will be leading this change, but it will be shaped by four key themes.

Slide 4. Cars market is a huge one, as we can see in the following graph. Big industry around the globe.


Questions about technology, business and social implications in the self-driving industry.


Question 1: automated driving. There are 6 levels, from zero to five,


Level one: assisted.


Level two: complex drive assistance.


Level three: semi-autonomous driving.


Level four: fully autonomous car.


Nowadays different companies are doing opposite things. More of them are going level by level. Mercedes, VW, BMW or GM are learning the curve step by step. On the opposite side is Google, with fully autonomous driving car prototype. So, the key question here is: level by level or straight to level five? I am sure car manufactured companies will go level by level. Google, instead, will reach level five as soon as possible and when achieve enough test hours and all the Government paperwork done will try to monetize all this.

Question 2: LIDAR or not? First of all, what is LIDAR? Below you can find good examples of what is LIDAR (in general) and a great car visualization of LIDAR technology.

LIDAR – a surveying technology that measures distance by illuminating a target with a laser light. LIDAR is an acronym of Light Detection And Ranging, (sometimes Light Imaging, Detection, And Ranging) and was originally created as a portmanteau of “light” and “radar.”

Not all car companies are using/investing in LIDAR technology. Tesla, instead is equiping cars with 8 cameras, 360 ultrasonics, GPS and radar.



Question 3: pre-computed “HD Maps”, or built on the fly?


Beyond GPS and Google Maps is for people. So, we need a different type of maps for cars or we need a car with the technology to calculate everything on the fly, just by driving by. This a good post by NVIDIA, “Beyond GPS: How HD Maps Will Show Self-Driving Cars the Way”.

Question 4: What blend of software techniques? Deep learning, path planning, cloud or data. Deep learning is winning all surveys. More about this topic.

A few good introductions to deep learning/machine learning.


Question 5: how much real world vs machine world?


Question 6: Will V2X radios play an important role? V2X, X is a variable, vehicle-to-vehicle conversation. Mercedes will use it in 2019. How does it work?slide11

Question 7: Can we get rid of traffic lights and four-way stops? Will autonomous cars need traffic lights? MIT visualization, who wanna be the first driver?

Question 8: How will automakers “localize” their cars?


2.- Business:

slide14Question 12: Who will win? Silicon Valley vs China vs Incumbents?


Traditional car makers, service providers, technology companies…a lot of competition.

Question 13: will we buy cars or transportation as a service? Service (UBER, Hailo or Lyft) or Buy ( Toyota, VW). Fly industry, Airbus vs Boing. Loyalty to the carrier, not the manufacturer.

IMHO I believe big cities like London, NYC, Ciudad de Mexico or Paris, service providers will win the battle. Fewer people will buy a car and they will use public and private transport more often. slide16

Question 11: How will insurance change? All new questions will come up. Repair costs up or down?


The motor insurance market may shrink by 60% by 2040, according to KPMG. The insurance aspects of this gradual transformation are at present unclear. More about this topic, “Self-driving and insurance”.



Question 9: How will accident rates trend? Rapid decline in the number of fatalities over time. Self-driving cars? What will happen? Human error related, driver error. Learning curve: better in a 16 boy or a machine? That the question! I truly believe more in machines than in myself ith 18 years driving my first car. Follow before chart:


Question 14: How will commute change?

In my opinion, the gap between renters and owners will decrease heavily in the next 5 years.


Question 15: How will cities change?


Question 16: When ill this start, and then ho quickly will we switch to autonomous cars?


The future will be better for customers, still, a lot of questions to solve and asked.

Source | a16z

Brexit: a few links.

Brexit is coming. Yesterday, Theresa May took place in Downing Street. One of the first movement she took was to point out Boris Johson as foreign secretary. Mr. Johson has been a very active Brexit leader.

In relation to the Brexit situation, the mother of all questions is: How Europe will be affected by the Brexit? This is good picture that I found, the heat map summarized European sovereigns’ external vulnerability:


Captura de pantalla 2016-07-14 a las 17.58.50.png

For the macro perspective this chart is awesome. Among the biggest countries in Europe, Germany and France, are those that do not have an elevated vulnerability with the UK. On the other hand, Spain, Italy and Ireland have a few or more red boxes. With this heat map in mind, you will imagine how tough the negotiations will be between the UK and the UE.

To the other side, a micro outlook, is great. The Brexit Value Effect.


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Boris Johnson – The Irresistible Rise.