Shawn Burns is Solve the Riddle

 PERNOD RICARD Recently I have bought a position in PER, this note is a defence of that action! PER is not a world leader in spirits although it is quite large, perhaps number 2 behind Diageo. Both these companies hold the premium spirits brands in the world, and both have very long histories of running profitable businesses. Both are very unloved at the current time. The markets lack of interest appears to stem from a few avenues. Firstly, that GLP-1 will dent demand for alcohol and given the concentration in drinker volumes, that is, a relatively few drink a lot, there is the risk that volumes will stagnate. Secondly. C19 brought about volatile demand patterns that are still normalising, making normal demand patterns a bit hard to identify. A part of this it appears that the liquor companies have taken price rises over this period so maybe a time of flat or modest price rises are upon us.   The business model has for many years been one of little or no volume gro...

  The Case for a Customised Benchmark (b/m) for retail investors . Sometimes when you start to write something, you have the conclusion already planned out well before finishing. The conclusion is set the rest is filler to get there and explain the reasoning. The following note was not like that, it evolved. When considering a benchmark from a why perspective, I would say to measure your investing performance. Many would agree that is important, but maybe some don’t. fair enough. Then we consider what to measure ourselves against, that is where the reasoning becomes more complex. Most of the academic literature focuses on accountability, measurability, investible and relevant etc. which is important but means don’t construct an irrelevant benchmark, or a benchmark you can fiddle with it. Fair enough. When I think about the millions of investors and their individual choices to sit along the risk/reward spectrum, the thought of just one suitable index for everyone starts to b...

  SUMMARY 100 BAGGERS C MAYER Phelps, look for new methods, new materials and new products- things that improve life, solve problems and allow us to do things better, faster and cheaper. This was written by a guy who passed away in 1992. Not 2012. Some things don’t change. Average asset life by sector as of 2013. IT 6.6 years, Healthcare 11.4, Consumer Disc 12.4, Consumer Staples 15.1, Industrials 15.4, Telecommunications 16.1, Energy 17.6, Materials 18.6 and Utilities 29.4. I thought this was interesting that the sectors most favoured today have the lowest life expectancy. Our analysis of the 100x stocks suggests that their essence lies in the alchemy of five elements forming the acronym SQGLP…..S-size is small, Q -quality is high for both mgt and biz, G-growth in earnings is high, L- longevity in both Q and G, P- price is favourable for good returns. I would think that this is widely understood. The median sales figure for the 365 names (100 baggers) at the start wa...

 RESMED FH24 As part of a discipline to write a note on each of my top 10 holdings when they report plus new holdings, maybe that will reduce turnover, lol RMD reported strong revenue growth 145 about 10% without acquisitions. GM looks to have stabilised and maybe bottomed which has been a focus of the market for some time. Management is positive about the GM going forward. ND/EBITDA is estimated at 0.7X so RMD is rapidly de-gearing which has been a hallmark of the company due to strong cash flows. ASP was positive and given the reluctance of RMD to increase prices I can assume they are happy with the position versus the competition, Philips still making slow progress. RMD believe they are maintaining or gaining share across the board. Cost cutting led to a restructuring charge. The big news was that RMD disclosed that on a sample of 529k customers they were seeing a positive correlation between weight loss drugs and continued + use and + take-up of cpap. If this thesis...

  Having a Plan and following it is Critical---My Epiphany Over the years I have written this story a few times but have lost the old copies, so here we go again. The moral of the story here is that having a plan is critical and that following a well-thought-out plan is more important than what the actual plan comprises. The correct plan depends on the individuals' skills and biases.  Towards the end of 1993, I had a big decision. Although I had been investing in the stock market since 1985, the amounts were not huge, although meaningful in the scheme of things at that time. My mortgage which I had taken out a few years before was about to be paid out. Side note for Millennials—this is not the main point of this note. The reasons I was able to pay off the house so quickly, were threefold. Firstly, it was a modest house, I have never invested heavily in property even a principal residence, I didn’t spend that much on other things, and property prices were lower back the...

 TSMC—WORLD LEADER IN FOUNDRIES—fy23 To repeat, my international strategy is to put together companies that are world leaders and acquire them at reasonable prices. These purchases will initially be founded from the International etf. Of course, every plan will be open to opportunism and flexibility. The results were 6% better than my company-guided estimates, note quarterly reporting here. This means the management is conservative and has limited visibility or both. The results could also mean a much stronger finish, backed by strong guidance into 2024. The numbers for TSMC continue to be quite outstanding in terms of roe and growth. The semiconductor industry is unusual in being a growth industry but with a significant degree of cyclicality. 2023 was a rare down year, after a very strong 2022. For long-term investors, this offers an opportunity to gauge the cycles. One very attractive feature is that although the company is capital intensive it remains a high roe business...

  Private Equity IPO’s – Pigs with Lipstick?   Many years ago I was a senior analyst with a major institution in Sydney. Part of its extensive equity portfolio was an unlisted investment. How an unlisted investment came to be in the portfolio in the first place is another story but at that time I was responsible for this investment, so I closely examined its prospects.   As a shareholder in the venture, we had access to the board papers and budgets. The firm was basically an ice cream factory. Examining the past papers I quickly concluded that the firm was struggling and we would be lucky to avoid writing down the investment. The accounts told the tale, of continual operating issues, losses, and negative cash flow. Troubles with manufacture, distribution, market positioning. The situation looked dire. I thought we had done our dough.   The broad strategy appeared to be if the firm could string a couple of good results together it would be promptly floated...

  A CRITIQUE OF BERKSHIRE Note this was written before C Munger passing. Well that's it, finally. Since coming out of the hospital I have not been able to run, swim, go to the gym, just walk. A lot of walking and a lot of listening. Part of that listening has been the total audio recordings of Berkshire AGM commentary 1994-2023. That is a lot of Warren and Charlie. The first time I can recall reading Berkshire AGM notes was back in the 1980’s. Back then Buffet was known, but not that well, Munger was not really known at all, especially outside of investing. From the start, it was clear that the investment strategy was clear and the disclosure was unlike anything I had seen before. Maybe not replicable but it is certainly understandable, which differentiated it from many other commentaries. The accolades for these investing tyros are many, and deservedly so. What I thought I would do was construct a critique, as much as that is possible. Firstly, some points stood out to me ...

 P22 Remember you are playing with probabilities, employ sensible strategies to limit risk, and get aggressive only when conditions warrant   P52 Fed Indicator Discount rate, fed reserve requirements and fed funds rate. Negative moves remain for six months then they go stale. And are discarded. P53 moves by the Fed toward easing have a greater positive impact on stock prices than the negative effect created by tightening moves. The initial fed cut is significant. +2, every other cut adds 1, six-month fade.   Extremely bullish= 2 or more Neutral 0 or 1 Moderately bearish -1 or -2 Extremely bearish =-3   P59 the returns in the extremely bullish is so good that it would pay for a patient and risk-averse investor to stay completely out of the stock market at any time the fed indicator rated anything less.   Installment debt Reported once a month, Fed stat release G 19 Expansion in debt is negative, debt plunges its bullish Above 9...

 LVMH—The only high fashion I will (ever) own This note is a record for me to check what I thought at the time of purchase. So to keep me honest. The basic stats I am using here are as follows. At 660e the stock trades at a historic PE or 22X and has had a 5 year EPS cagr of 26% to 2022. The forward assumptions I am making are 9% eps growth for the next 5 years and an exit PE of 20X. The historic 5y average pe has been 32X with one standard deviation of 12, giving me the conservative 20x, which I have not adjusted. The 5 year return on these assumptions is 7% pa. not great but reasonable for a company of LVMH standings. The shares are being funded from lower-returning investments. The balance sheet is 1.1X, not fully clean but not bad. (ND/ebitda) The stability of earnings is 60%, while I like 75%, if we adjust for C19, it is 75%, so ok. (earnings regression around the trend). The obvious issue, to me anyway, is the over-earning by LVMH. The company has been a big benef...

  Lazily, this is an exact copy of a piece I have downloaded, I have added a comment at the end. In her presentation at the April 5, 2007 meeting of the Business and Organizational Ethics Partnership, entitled “Seven Signs of Ethical Collapse: How to Spot Moral Meltdowns Before it’s Too Late” (based on her book by the same title), Jennings noted common characteristics of the misguided companies. Had they heeded the warning signs, she said, they could have employed potent antidotes (which she also presented) to prevent the moral meltdowns. These were not close calls, she emphasized. “These are companies that really crossed very bright lines.” The common threads that she’s found that make good people at great companies do really dumb, unethical things include: Pressure to maintain numbers Fear and silence Young ‘uns and a bigger-than-life CEO Weak board of directors Conflicts of interest overlooked or unaddressed Innovation like no ot...