Liontree-2020-Year-End-Letter.Pdf
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Not every year will be 2020, but the lessons of 2020 should make us better every year of 2008 helped create the ripe ecosystem for Google, Uber, and Airbnb. Constraint calls forth theory is that commission-free trading has become a form of entertainment for some and a going forward. creativity. Scarcity is the new abundance. In this + universe, new geographies require fresh centers of gravity. We need to build replacement for live sports gambling for others during the pandemic. Whether amateur or DECEMBER 2020 infrastructure flexible enough to shift to the “plus.” That starts with ourselves. But it will professional investor, bears are nowhere to be found, as the median S&P 500 stock had These lessons clarified for me back in November, when for the first time in months, I looked out As this year unfolded, and during our weekly all hands video conference in the heart of the include networks reimagined, e-commerce reinvented, whole industries renovated and paths to outstanding short interest accounting for just 1.6% of market capitalization, the lowest level an airplane window and saw sun, sand and a sparkling metropolis built by strategic investments pandemic, I told my team - leave it all behind. Let us take not only what we can carry, but public markets rebuilt. I passionately believe in New York City+ and am loyal to its recovery and since at least 2004, based on October data compiled by Goldman Sachs. in the future. I was landing in the United Arab Emirates, a relatively new country putting aside what will carry us. If we focus on the essential, we will make ourselves essential. As we set future. We are staying put and investing in that reality. At the same time, as we have seen from old antipathies with a confident vision. Peace and profits have a way of unlocking politics and o for parts unknown, the indispensable things that we need to take with us are curiosity about adaptive companies such as Palantir who recently announcement moving their headquarters to Inflation and currency devaluation are two longer-term risks I am attuned to as well, which paradoxes, tilting possibility on its axis. I stopped by the beautiful new Louvre Abu Dhabi, a the world coming into being and trust in the people and communities that we travel alongside. Denver, no locale has a monopoly on creativity and connectivity. In a world where many people could result from continued aggressive monetary policy from the U.S. and other nations. In 30-year joint venture with France and saw their motto “see humanity in a new light” as We keep each other safe so that we can soar. can work from anywhere, there will be many new ‘somewheres,’ from mid-size American cities addition, the ways in which technology continues to transform the economy will result in better especially resonant. Masks on, eyes open, we are all adjusting our vision to this new light. to new global hubs in the Far East. Perhaps it’s the time for multiple “passports” operating outcomes for some industries than others - eciency and productivity have created both new Leaving It All Behind… To find a center, we need to journey to the farthest points. To build a network, we need to comfortably in a range of jurisdictions. wealth and fresh problems of unemployment and income inequality, dynamics which are sure to Even with the vaccine promising a fresh start, packing the habits and best practices we want to familiarize ourselves with its furthest points, where dissent lives and where the action is. define and complicate the future of work. LionTree CEO, Aryeh B. Bourko, shares 2020 reflections in his year-end letter. carry and leaving behind those we don’t will take real wisdom. It's not sustainable to live in a And to develop a culture, we must be at home at the “edge”: the ideas, trends, and perspectives We need to pursue life with the liberated energy of people who are ready to chase excellence state of crisis, a moment of societal upheaval or political unrest, or within markets where the that cut against the Establishment today and innovate their claim to be the Establishment of the with gusto. If we have been quarantined, we have also been unlocked and freed for the future. As we look ahead to the future, I would suggest that the framework of global cooperation are established players in each industry are locked. Moving forward in 2021 requires not only future. As the horizon moves, we must move with it and bring along as many people as we can. This is true on a personal level, on a business one, and for our society at large. Potential needs vastly strengthened on a structural level. Recent deals have been occurring at a seemingly knowing but internalizing the truth that digitization is the whirlwind that will remake The Latin phrase audi alteram partem, “listen to the other side,” means to hear voices dierent to be pursued, and if the path is not the right one, chart a new one. Every year is a mirror frenetic pace from the China Trade Deal (R.C.E.P.) to the United States-Mexico-Canada everything. From politics to financial systems, from live events and sports, to wellness and the from your own. To create transformation we will need to hear both the blue-collar workers and for what came before and a window for what’s next. As I wrote the last couple of years in this Agreement or USMCA (“NAFTA 2.0”), with trade deals between the UK and EU in the works. way we work, to food supply chains and education. Collective eort, built from a range of the billionaires, the markets and the small businesses, the coasts and the Sunbelt and Midwest letter, scale players remain in motion, and we certainly remain a work in progress. But my eyes We are also seeing historic regional peace deals, most notably, the Abraham Accords in the I. Introduction perspectives, from Wall Street to Main Street, from CEOs to protestors, will propel us into the constituents, of every race, color and gender. We are living during a time of change, but and heart and mind are firmly facing forward. Last December we thought we were headed into a Middle East/Gulf and Serbia and Kosovo’s economic normalization pact. As we enter a period future. change also takes time. new decade of opportunity, now let us take a deep breath and jump into the true start of a next of political normalization and global recovery, I think it is prudent to look not just at the West As I sit in my home oce putting the final touches on this letter, a 52-year-old critical care decade. but also Eastward (Middle East, Africa, and Asia) for investment opportunities. nurse in nearby Queens, New York received the very first COVID-19 vaccine in the United Beyond these binaries, we all need to rediscover the grey area, the challenging terrain where we The exodus from oces and public spaces to homes means that mass media is giving way States. This year was marked with unimaginable loss on a global scale and while virus cases and grow together. It means leaving behind the restrictions that limit us and the divisions that to “me-dia''. Each person is their own channel, with Zooming options beamed in the image of III. Market Outlook A. THE “BULL RECESSION” OF 2020 deaths are increasing at an alarming rate, a sense of optimism emerges as we start to turn the erupted this summer in ways that show our country is still fractured and that shamefully we still their preferences. Scale is no longer a virtue for its own sake, and companies that cannot make corner. Nothing will be as it once was and I hold my people and communities tighter than I did harbor biases that stain the fabric of our society. their footprint feel intimate and bespoke will fail to gain traction. I started my letter last year My fundamental thesis on the near-term capital markets is that we will enter 2021 with a At this time last year, the consensus outlook was that the U.S. was heading for a market before. A remarkable thing happened during this stretch of physical isolation and seeming with the mantra plus ultra, or “something beyond.” This year, we lived it. In a world of robust, almost unprecedented, market environment, buoyed by three primary catalysts: (1) slowdown and potentially a recession in 2020. Instead, this year, we have experienced a “bull stasis: connectivity grew, the pace of change accelerated, and our sense of possibility II. A Period of Realignment is Underway pandemic, the plus has become necessary. Media companies have been branding their continued positive impact of fiscal and monetary stimulus, (2) COVID-19 vaccine, which recession”- a continuation of last year’s bull run in the stock market, with the backdrop of a rejuvenated. streaming video services with a plus-sign at the end of their names (“+”), to signify to the should facilitate economic recovery, lower unemployment levels, and allow business and job powerful, even if short term economic recession. The image of our moment is not black and This year has reminded us that even though much is out of our control, we remain the consumer that they are getting something new, with more value ( Disney+, Hulu+, ESPN+, creation to rebound, and (3) SPAC impact on company capital raising strategies, which is white, but painted in complicated shades of grey. At these rare moments of transformation, we must realize that there is no going back to artists tasked with creating the image of our future.