Investing notes. Business, technology, and strategy. In search of long-term business compounders.
As always, this is not investment advice! Please do your own due diligence and take your own financial situation into account. Everyone has a different financial situation, which means different tolerances for risk and ability to take risk. What is appropriate for me may not be appropriate for you.
During March, the Paper Portfolio returned 9.76% vs 3.66% for the SPY.… Read the rest “Paper Portfolio – April 2023 Update”
Over the past month, the collapse of Silicon Valley Bank (SVB), Signature Bank, Silvergate, and Credit Suisse have shaken the foundations of the global financial system.
Despite significant changes in the regulatory landscape since 2008 and the many talking heads that have promised that financial crises are a thing of the past, the sudden collapse of several major institutions over a few short days certainly makes a loud statement.… Read the rest “(Silicon Valley) Banks, Berkshire, and the Right Way to Do Leverage”
The global outbreak of COVID-19 began more than 3 months ago, yet 3 months in, the world is still uncertain about what exactly humanity is up against.
How infectious is this disease? How widespread is it? How deadly is it? What do you and I need to do to survive?
The lack of answers has taken a toll on the markets, and despite having fallen ~15% already, it is still very hard to say whether the markets will be up or down tomorrow, next week, next month…
Can the market continue to fall another 10% from here?… Read the rest “Markets in the Time of Coronavirus”
As detailed in my recent post, Amazon has built up quite a formidable competitive advantage through Fulfillment by Amazon (FBA). Not just on the demand side, which every happy Prime subscriber is already familiar with, but also on the supply side.
In that post I concluded the following:
… Read the rest “The Other Supply Chain Gorilla That May One Day Challenge Amazon”Fulfillment is clearly beneficial on the demand side, but has a lot of supply side advantages as well.
What would you pay for a well-regarded, branded business that is expected to grow revenues and net income around 10% CAGR for the next 3-5 years with industry leading margins, high returns on capital, and low capital intensity?
And better yet, given that this business has low capital intensity, the company generates and distributes high free cash flows back to shareholders in the form of dividends and share buybacks, bringing total shareholder returns to 15%+ per year?… Read the rest “Pandora – Fast Fashion or Fad Fashion?”
The last post, How Airlines Generate Float, compared the similarities between airline mile programs and insurance companies. I argued that airlines are now essentially generating float through their miles programs. Turns out it’s not that original of an idea (as much as I wish it was!) as there are at least two publicly-traded mile program managers in Brazil.
One of these mile program managers is Smiles (SMLE3 BZ).… Read the rest “A Publicly-Traded Airline “Float” Company”
Judging from market multiples, it’s clear the market is skeptical of Apple’s ability to continue to succeed and has been for many years (currently, 1-yr forward P/E of ~15x despite recent re-rating), while holding limited concern for Google and Facebook (both 1-yr forward at ~26x).
This concern is understandable given the ever-changing tech environment and the long list of tech companies that have been buried over time (e.g.… Read the rest “What Apple, Google, and Facebook’s Business Models Tell Us About Their Ability to Adapt to the Coming AI-Future”
… Read the rest “Simple Investment Theses”“A further related lesson: Easy does it. After 25 years of buying and supervising a great variety of businesses, Charlie and I have not learned how to solve difficult business problems. What we have learned is to avoid them. To the extent we have been successful, it is because we concentrated on identifying one-foot hurdles that we could step over rather than because we acquired any ability to clear seven-footers.”
“Investment is most intelligent when it is most businesslike.” – Benjamin Graham
“I am a better investor because I am a businessman and a better businessman because I am an investor.” – Warren Buffett
Most investors define themselves along a couple of axes: Technical vs fundamental, value vs growth, long vs (and/or) short, contrarian vs momentum, large cap vs small cap, etc. … Read the rest “The Importance of Focusing on Business Models”
Over the last half century, Buffett has achieved a marvelous long-term performance record. Many have studied and written about his investments to try to learn how to replicate what he did.
I’ve read a lot of those, and you probably have, too. But I’ve always felt that something was missing.
Consensus has generally coalesced around a couple of observations on how he’s done it:
He also appears to have a preference, either by choice or happenstance, for stocks that generally exhibit lower beta.… Read the rest “Berkshire’s Performance Edge that No One Talks About”