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  • softdude2000 2017-06-16 05:51
    batbeer2: Hi Softdude,

    Yes and no. This is a pretty simple business with a lot of revenue. They are not generating enough cash now but that IMHO is a choice. T
    SHOS management is investing(in IT infra and rebranding) as if there is no doubt as a going concern for this business. Market is treating as if they are going to close doors.
  • softdude2000 2017-06-15 18:34
    Other than balance sheet, do you see any safety in cash flow statement/income of SHOS.
  • softdude2000 2017-06-03 17:18
    batbeer2: Hi Softdude,

    Bricks and mortar are expensive but so is IT infrastructure.

    I don't think the IT expenses are on the downstream side (webshop). I thi
    Thanks for the reply.

    Is this IT system worth anything if they close down their business?
    I am trying to understand if there is any resale value from IT system in addition to NCAV discount we see.
  • softdude2000 2017-06-03 05:13
    I was reading latest 10-Q for SHOS. what caught my attention is that they spent 10M, 15M in 2015 and 2016 for IT related stuff. They are planning another $20M in 2017 and ~0 in 2018. 1. I dont get this. A company with 70M marketcap spending $45M on IT expenses. Did I understand this right? Did they forget we are in cloud computing era? Is there any referral fee for AWS :) I can charge them. 2. Does this mean huge upside waiting in 2018 that frees up $15M average annual expense? 3 ...
  • batbeer2 2016-06-23 10:24
    Hi brinsley, thanks for the heads-up on Kone. Hadn't really looked at that one for a while and the P/E is not as high as it used to be last time I checked. I don't mnd the currency they report in. If Schindler moves its head office to Luxemburg then they start reporting in euros but the company remains otherwise unchanged. What matters is their costs. I would have to check out the Swiss headcount as compared to the total to determine if I'm worried about currency fluctuations. best, ...

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All batbeer2's Activities

  • batbeer2 commented on Rupert Hargreaves's article 19 hr ago
    Some Thoughts on Building a Research Process
    I've often stressed how vital rigorous, detailed research is in the investment process, particularly if you are managing an extremely concentrated...
    View all 1 comment
    batbeer2 09-20 13:38
    • As mentioned above, every investor will have a different approach.

      Yes.

      As it happens I don't initially look for red flags. In fact, I do the exact opposite. I go looking for "blue flags". That is to say, I ask myself "ïf this company were superior to Amazon, how would I know".

      One thing I have found is that companies like DJCO, Psychemedics, Berkshire, Amazon and Costco pay their CEOs much less than you'd expect. Also they have very low CEO turnover.

      Of course there are all sorts of reasons for this. Correlation is not causation but if superior long-term returns and low ceo pay coupled with low CEO turnover have a common cause (the cause being that it is a fantastic business) then screening for low CEO pay is a good place to start.

      Of course I also screen for red flags before I buy but if a company doesn't have any blue flags to begin with, I don't care about screening for all the red flags that it might or might not be there. At the end of the day I am not looking for companies without skeletons in the closet. I am looking for companies that have gold in the closet. The practical advantage is that 99 out of 100 fail the initial screen so there is more time to do the work on the ones that are left.

      Just some thoughts.

      Thanks for another interesting read.

       
  • batbeer2 commented on Rupert Hargreaves's article 09-18 13:02
    Seth Klarman on How to Diversify a Portfolio
    An interesting topic of debate about investing is diversification and how much diversification every investor should include in their...
    View all 5 comments
    batbeer2 09-18 14:01
    • @Rupert

      Thanks for your thoughtful reply.

      I'll grant you that there are differences between picking stocks and owning a business but one can choose to view them as the same thing. That choice leads to some interesting and in my view positive consequences. It certainly makes ones approach to the market both different and IMHO more rational.

      In short, I conceed that there is a difference between picking stocks and owning a business but i believe (in fact I know) stock pickers do vastly better if they condition themselves to think and behave as though they were in fact owners.

      Best,

      B
  • batbeer2 commented on Rupert Hargreaves's article 09-17 12:52
    Seth Klarman on How to Diversify a Portfolio
    An interesting topic of debate about investing is diversification and how much diversification every investor should include in their...
    View all 3 comments
    batbeer2 09-17 13:52
    • Thanks for shering your thoughts.

      You say:

      >> When looking at the performance figures of the world's best investors and how they got there, it is important to remember that these figures are dominated by survivorship bias. Yes, the billionaires in the list today might have made most of their money from just one investment or company, but this does not include the hundreds and thousands of other investors who tried to adopt the same approach but lost everything very quickly.

      That's true. I would add that there are exactly 0 billionairs on the list who spread their bets accross more than 10 stocks/companies. Perhaps there are billionairs who own dozens of stocks (like Buffett/Berkshire) but he didn't become rich that way.

      In other words, concentrating your bets won't guarantee you make that list but not concentrating your bets guarantees you won't. So the logical conclusion is that you must concentrate your bets on the right stocks to become a billionaire. Of course that is not easy. Well.... why should it be easy?

      Just some thoughts.
  • batbeer2 commented on Rupert Hargreaves's article 09-17 12:45
    Seth Klarman on How to Diversify a Portfolio
    An interesting topic of debate about investing is diversification and how much diversification every investor should include in their...
    View all 2 comments
    batbeer2 09-17 13:45
    • FWIW here's my approach.

      If/when I buy a stock I make a point of buying the best in the industry. If I can't figure out which company is the best then I conclude that the industry is out of my circle of competence and I shouldn't be investing there in the first place.

      That's it. 

      The effect of this simple rule is that no two stocks in my portfolio are in competition and/or are likely to be affected by some common external risk.Somewhat axiomatically it means that my strategy for diversification is anchored in a desire to concentrated my bets. 

      Just for fun, I'll share some companies I don't currently own (not cheap enough) that I've been tracking for years hoping for a decent entry point (meaning >15% yield on owner earnings). They are:

      Costco

      Michelin

      Kone

      SBA communications

       

      As it stands, I own Admiral group, GCi liberty, BYD and DJCO which (in my view) are the best in their respective businesses and at some point became cheap enough for my taste. Hopefully, 1 stock on my "wishlist" becomes cheap enough in each of the next 3 years and I end up owning a very solid and well-diversified portfolio of less than 10 stocks. Meanwhile I have cigar butts like Aimia, Valeant/Bausch to keep me occupied while I wait for a perfect pitch.

      So that's my plan. What's yours?

       
  • batbeer2 uploaded a new picture 04-22 11:42
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