Shawn Burns is Solve the Riddle

 NIBE—replacing fossil fuels The Swedish manufacturer with a range of energy-efficient appliances, the most important being heat pumps but also exposed to semiconductor elements and stoves. The company is partly dependent on the Euro regulations of moving to clean heating and not fossil fuel dependent. Gas is widely used for boilers. The drive has political and environmental backing but is constrained by the enormous cost. Almost every European country has a system of subsidies which typically subsidise the cost of a heat pump 15ke with 7ke. Over hundreds of thousands of units, this is a large amount. The biggest countries are France Uk and Germany but almost all participate. Interestingly Germany recently stopped or reduced the subsidies due to budgetary concerns. The outlook for governments to continue to support subsidies is critical to the business case. The financials of the business show a well-run company. ROE’s have averaged 14.5% and revenue growth 14% over the last ...

  An Interesting Little Test When I was an analyst/PM at times I worked for weaker investing institutions. The consequence of this was that there would be a steady turnover in investing people. Working with new people constitutes a large risk in investing because you are unaware of their strengths, weaknesses and biases and probably will not know those for a couple of years or even until there is a market crisis and see how they react. That can be a costly exercise I found. To help speed up that process of analyzing the analysts I devised a little test. The test has no right answers. The test was to help me characterize the people I was working with. Of course, there is no substitute for years of watching and talking to people through different market environments to assess their mental processes, how they believed markets worked and what were their processes or philosophies. The test starts with a story, it’s a real story but I didn’t want to get into a stock-specific rabbit...

 Everything seems to go quite well for me until I need to rely on others. To my then 4-year-old daughter, "Bella don't run on the wet, slippery surface,....Bella don't run on the wet slippery surface....dont run....slip, bang. wahhhh. then Bella stops running on the wet slippery surface. Very few people heed good advice (so why waste your breath), and few learn vicariously through others' mistakes.  Almost no one wants to be told lies, but many do not want to hear the whole truth as well. what people really desire is an affirmation, "I agree with you" has to be among the most comforting words in our language. Very few investors are good at every aspect of investing. in fact, my observations are that almost all investors, even the great ones, are very good at a narrow set of skills. The value added comes from exploiting that skill and not being distracted into putting capital and time into something they are no better than average (or worse). that is why I fin...

 FRANCO NEVADA—a new position in the leading streamer The business model is for FNV to pay a mining or energy company a sum for the right to a perpetual stream or royalty over an existing asset. That royalty can come in various ways, per cent of production, a per cent of revenues or other calculations. The seller is looking for funding and usually can't obtain bank debt and equity is too dilutive or can't be raised. FNV has also specialised in acquiring royalties of gold and silver by-products from copper mines. In this case, the sellers look to help finance a usually large mine by selling off the by-product and focusing on the core metal.  FNV has a portfolio that now includes energy assets and other bulk and base metals outside precious metals. Precious metals have ranged at 66-88% of revenues over the last several years. The competition for royalty rights is active and value added for the acquirer depends on accurately assessing the long-term ability of the asset to exp...

 A few interesting results and situations I thought worth discussing, held but not large positions. DMP FH24 One common outcome of poor results and pressure on the share price is that management is much more forthcoming with information about their businesses. And so it was for DMP. Some interesting perspectives were delivered. The model requires growth to succeed, DMP plans to have a network 1.9X larger by 2030. If that happens then the stock price will be higher. For that to happen franchisee stores (3x larger than the corporate store network) need to grow and that occurs when franchisees are making an adequate return that they then have confidence to invest in new stores. DMP management has intimate knowledge of this equation and what is required to spark growth. The QSR industry is a dogfight. The battle is fought out amongst various fast-food chain offerings and what can be to outsiders’ small differences can impact results in a big way. One theory that I think we ca...