A very good list of many useful mental models
Michael Maboussin on the 10 most important attributes of Great Investors
Some critical thoughts on Games Workshop from Richard Beddard
Larry Swedroe explains why investors should avoid “lottery tickets”
Regenerative agriculture – disrupting the traditional food & agricultural industry ?
Price/Book doesn’t seem to work well these days
“Shoe Dog” is the memoir of Phil Knight’s early years as founder and CEO of NIKE.
As a University track runner, he got the idea to import sport shoes from Japan. Without much preparation he flew to Japan and actually managed to get the importer contract for the Japanese Tiger brand.
The first shoes he sold on track & field competitions literally out of the trunk of his car. For the first years, he worked as a CPA at day and financed the shoe business with his salary. The creation of the NIKE brand was more or less a “forced coincidence” when the Japanese company tried to kick them out of their deal.
As the company was founded with very little equity, (only 1000 USD, with his former coach as 49% partner), the company was for many years always on the brink of bankruptcy and was saved once by the parents of an employee and another time by a Japanese trading company.
I was very surprised how well the book is written. I am not sure but I think most of the memoir is written by Phil Knight himself. The book reads much more like a Thriller than like a (somewhat boring) “How I did it” memoir. For the first 200 pages or so I couldn’t put the book down. Although the end of the story is well know it is nevertheless fascinating to read how the first 10 years or so they limped from one near death experience to the other.
What I also find interesting is that Phil Knight mostly describes the mistakes he made. If you read the book you get the impression “What the hell did he actually do ?” for NIKE to become so succesful. In his descriptions it is almost always his employees or his former partner who came up with the best ideas. His leadership style seemed to be very team oriented and “Hands off”, a nice contrast to the “maniac detail obsessed” guys like Bezos and Jobs. My interpretation is that he basically was responsible for the general direction and strategy and let his employees do whatever they thought was the right thing to do.
My learnings from the book:
Overall I can only recommend this book. I think it makes a perfect and surprisingly “thrilling” read especially for the summer holidays.
Must read: Deep thoughts on changing competitive advantages from Jan (TGV Truffle fund)
Competitive Advantages 2: How ARM did beat almighty Intel
Steve Balmers “Truth”: How Microsoft missed mobile
The guy from Punch Card Blog look into one of heir failed investments (CONN)
Chipotle and the next big thing: Burgers. Plus a look behind the Chipotle counter.
Stock picking is not dead, closet indexing most likely will be soon
Kuka:
This is something that ran over the ticker today with regard to the Kuka case:
CFIUS Likely to Challenge Midea-Kuka Deal, Height Says
By Kasia Klimasinska(Bloomberg) — CFIUS will likely challenge this deal “because Kuka has a direct relationship as a primary robotics supplier to Northrop Grumman,” Height analyst Nils Tracy says.
- “At a minimum, we expect the transaction will face an extended CFIUS review timeline and a number of divestures”
Wertart has a very good writeup on UK retailer SportsDirect
Punchcard likes used goods retailer Winmark
Forager likes Italian company El.En (I didn’t like El.En 5 years ago)
A few critical observations on Elon Musk and his “Master Plan II”
Some deep thoughts about the “Brexit Blues”
A very interesting reading list (investing & other)
The situation:
A few weeks ago, Kuka, the Robotics specialist and one of the typical German “Mittelstand” hidden champions came suddenly into the spotlight.
Chinese company Midea Group (listed, ~20 bn USD market cap) made a 115 EUR per share offer. Midea already owned a stake before but now wanted to have more.
Recommended: TGV Partners Fund 6 month report: “Don’t be a dividend monkey”
Recommended: RV Capital 6 month report: “Is it possible to be long-term and contrarian?”
Congratulations. John Hempton (Bronte) got a full Bloomberg profile
Matt Levine on the FTC ruling for Herbalife
Buying a diet shake from a Herbalife distributor will now be harder than buying a gun;
Why Active Asset Managers need to change their business model
A good checklist from Forager if an Acquisition makes sense (or not)
The current state of the Bordeaux WIne market (FT.com, search result)
The company:
Waddell & Reed is a Kansas based Asset Manager (mostly listed equity) & Financial Advisory firm. The company became somehow infamous during the 2010 “flash crash” when they were initially blamed that one of their order had caused the crash. Later, the SEC blamed a guy in London for it.
W&R looks like an interesting “High quality mean reversion” type of value stock.:
Market Cap: 1,4 bn
P/E (2015): 6,9
EV/EBIT: 4,5
Div. Yield: 10,3%
10 year avg. ROE: 33,4%
10 Year avg. NI margin: 14,1%
So we have a high ROE/ROCE, high margin business with significant net cash that trades at a ridiculously cheap level (based on 2015 earnings). There is a relatively recent SeekingAlpha “long” pitch with the following summary:
Executive Summary:
Dom Security is a small French company specializing in commercial lock systems. The business itself is attractive, the valuation relatively cheap, although the company is a small player. The “kicker” in my opinion is the fact that the largest subsidiary, DOM Sicherheitstechnik Germany, had significant R&D expenses over the last few years, which, if things normalize, could lead to a significant profit increase within the next 2-3 years to the extent of +40-45% which should translate into a similar upside for the stock price.
Additionally, the rebranding in 2015 could lead to better profitability in other units and in turn to potentially higher multiples, which at the moment are only a fraction of the listed larger competitors.
WARNING: This is not investment advice. Do your own research. The presented stock is very illiquid, so be extra careful.
Performance Q2 2016:
In the second quarter, the portfolio gained +0,6% against -3,5% for the Benchmark (25% EUR Stoxx 50, 25% EUR Stoxx small, 30% DAX, 20% MDAX). YTD the score is -1,4% for the portfolio against -9,5% for the Benchmark. On a rolling 1 year basis, its +1,0% for the portfolio and -8,4% for the bench.
Just for fun, here is the YTD/1 Year performance of some small funds that I follow and where I know the managers (I will track them in future reviews just to see how I am doing against the “Pros”, data from Bloomberg):
Partners Fund TGV: +1,71% / +7,20%
Profitlich/Schmidlin: -3,86% / -4,35%
Squad European Convictions -1,19% / +7,85%
value and opportunity 