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2016-08-24

  • The Science of Hitting commented on The Science of Hitting's article 08-24 08:55
    Updating My Thoughts on Walmart
    It’s been a bumpy ride in the 2½ years since I first wrote about Walmart (WMT) on GuruFocus. From a starting price of ~$75 per share in January...
    View all 7 comments
    The Science of Hitting 08-24 09:55
    • Benice,

      First off, as always, thanks for the kind words. You are too kind!

      Let's start with some numbers: at the end of the second quarter, Berkshire owned ~40 million shares of Walmart common stock. A year ago, this was more than 60 million shares. Clearly Warren Buffett (Trades, Portfolio) is less interested in owning WMT than he used to be. That's not what I like to hear. 

      Walmart has competed in a cut-throat industry for a long, long time. From my perspective, Amazon has taken this to a whole new level. The company does such a good job at consistently exceeding customer expectations; I think they've "won" tens of millions of loyal consumers that will almost certainly turn to Amazon as their default retailer for years to come. To date, I'd argue Walmart has done a poor job of meeting and exceeding customer expectations in e-commerce, as well as trying to leverage legacy assets in those efforts (for example, faulty ideas like in store pick-up that requires walking to the back of a 180,000 square foot box). Simply put, this has to change if the company wants to compete and win long-term. 

      This definitely will not be easy. After a tough experience with Tesco, and less than stellar results on his Walmart investment, Warren may have decided to look for greener pastures elsewhere. 

      Personally, I couldn't see myself owning any brick and mortar retailer besides Walmart (even with a single digit P/E). I think e-commerce is just getting started. I believe very few retailers will be able to effectively compete in this new world. For the reasons I've outlined in other articles, I think Walmart has a chance to succeed long-term. Time will tell whether I'm right or wrong.

      As always, thanks for the comment Benice!
  • The Science of Hitting commented on The Science of Hitting's article 08-24 07:10
    Why I'm Buying Twenty-First Century Fox
    I recently added shares of Twenty-First Century Fox (FOXA), a global media and entertainment company, to my portfolio. I’ve been following...
    View all 5 comments
    The Science of Hitting 08-24 08:10
    • Dougals,

      Agreed, seems reasonable to me at ~$25 per share. Thanks for the comment!
  • The Science of Hitting commented on The Science of Hitting's article 08-24 07:07
    Updating My Thoughts on Walmart
    It’s been a bumpy ride in the 2½ years since I first wrote about Walmart (WMT) on GuruFocus. From a starting price of ~$75 per share in January...
    View all 5 comments
    The Science of Hitting 08-24 08:07
    • Varunfriend,

      Agree with your thinking. Thanks for sharing the thoughtful comment!
  • The Science of Hitting commented on The Science of Hitting's article 08-24 07:04
    Updating My Thoughts on Walmart
    It’s been a bumpy ride in the 2½ years since I first wrote about Walmart (WMT) on GuruFocus. From a starting price of ~$75 per share in January...
    View all 4 comments
    The Science of Hitting 08-24 08:04
    • Praveen,

      Thanks for the kind words; like yourself, kicking myself for not buying (much) more!

2016-08-22

  • The Science of Hitting commented on The Science of Hitting's article 08-22 14:31
    Why I'm Buying Twenty-First Century Fox
    I recently added shares of Twenty-First Century Fox (FOXA), a global media and entertainment company, to my portfolio. I’ve been following...
    View all 2 comments
    The Science of Hitting 08-22 15:31
    • DLV,

      I'm not sure that a la carte pricing - if it's even offered - makes a ton of sense for most people. Consider that the average households watches ~300 hours of TV each month across ~17 different channels (Nielsen and Media Redef data). Now look at the cost for OTT offerings - either packages (Sling, Vue, etc) or single channels (HBO, CBS, etc). Even if you really only care about ~5 of the ~17 channels watched in your household, it's difficult to save money relative to the average Comcast "Double Play" bundle, at least based on what I've seen (I'm happy to look at the math if you have an example that suggests otherwise). This assumes people care about and are willing to pay for the channels that consistently have strong ratings - Fox News, ESPN, etc. 

      I'd encourage you to read the three-part series referenced below, which I think does a good job addressing the cord shaving argument:

      https://stratechery.com/2013/the-cord-cutting-fantasy/

      Cord cutting, on the other hand, is a problem: if you cut TV all together, you'll save a lot of money (hundreds of dollars per year). As noted above, I question how many people are truly willing / able to completely cut the cord. If I'm incorrect on this assumption, it would not be good for FOXA.

      Thanks for the comment! 

2016-08-18

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