2013-06-16

• Menu swnyc2 commented on batbeer2's article 06-16 22:44

  Autopsy of Gigaset AG
  The stock of Gigaset AG has been cut in half since I wrote about the company last year. That in itself doesn’t mean much to me. Since I operate...
  View all 8 comments

  swnyc2 06-16 23:43
  

  • Batbeer2,
    
    I really enjoy reading your articles and think it's great that you critically revisit your prior posts. I wish other authors would do this more. A lot could be learned.
    
    My knowledge of accounting is weak, so it's not so easy for me to understand how you could have prospectively predicted the fact that Gigaset would do so poorly over the past year. However, I wonder if there is possibly another lesson to be learned?
    
    I've noticed that many of the companies you analyze have very negative market sentiment. Some examples could include COCO, AHC, PNLYY, QUAD, and KWK.
    
    I understand, you are looking for exceptional value, so it's not surprising that you analyze companies with low valuations, and many of these will have negative market sentiment.
    
    But, I can't help but think about something I believe Warren Buffet said. Paraphrasing from memory, he said that he would prefer to purchase stock in a wonderful company at a fair price, rather than purchase stock in a fair company at a wonderful price. I believe the reasoning behind this is that over the long term, the share price of a wonderful company often appreciates by much more than the share price of a fair company, even if shares in the fair company were originally purchased at a greater discount. This may also have to do with the margin of safety being higher in a wonderful company due to its invariably larger moat.
    
    Looking at Gigaset,I wonder if it is worth considering whether in your original post, would you have considered it a "wonderful" company?
    
    Finding wonderful companies selling incredibly cheaply is almost impossible. It certainly is a lot harder than finding fair companies that are selling incredibly cheaply.
    
    However, there may be some wonderful companies that are not recognized by the market as such and which are selling closer to fair value. The margin of safety for buying stock in these companies could still meet your threshold, and may be less likely to lead to negative returns.
    
    Just a thought.....

  Comment

2013-06-13

• Menu swnyc2 commented on batbeer2's article 06-13 20:01

  Money for Nothing and an Old Newspaper for Free – A. H. Belo
  The investment thesis for A. H. Belo is simple. The company has no debt, $70 million of excess real estate and $40 million of cash in the bank....
  View all 12 comments

  swnyc2 06-13 21:01
  

  • Batbeer2,
    
    Good call on AHC. The stock is up substantially (up 28%) since you first published your article.
    FYI, the other spin off, BLC, has done even better (up 55%)
    It just got bought out today.
    There's probably a bit of a lesson here: to look closely at both companies when there is a spin off....
    
    That reminds me. You had published a very nice article on PostNL and said you were going to look more closely at TNTE. Any thoughts on that one?
    
    

  Comment

2013-06-11

• Menu swnyc2 commented on batbeer2's article 06-11 22:38

  Corinthian Colleges - The Case for Growth
  Here’s an established, geographically diverse business with high margins, low cyclicality and a defensible market position in a rapidly growing...
  View all 40 comments

  swnyc2 06-11 23:38
  

  • I hope you're right.
    The SEC can seek monetary penalties and return of illegal profits.
    It's hard to know what this will amount to, but it will likely be less than the $20+ million market cap loss today.
    

  Comment