Shawn Burns is Solve the Riddle

  LESS EFFICIENT MARKET HYPOTHESIS—a review of the C Asness paper As some may have noted I spend a lot of time writing and thinking about investment theory and philosophies. The reasons for this are not that I like delving into esoteric subjects, but over my time in investing, I have yet to come across a multi-decade successful investor that doesn’t have a robust investment philosophy and process (IP&P). I am after repeatable alpha over long timeframes. A strong IP&P makes an average investor good and a good investor great, IMO. Evolving and improving my IP&P I think is an important part of a successful investment journey. Secondly, I have been meaning to write something about the efficiency of markets for some time and this paper forces my hand. I became irritated that old colleagues were complaining about how the markets were much more difficult and efficient now and that they couldn’t generate the returns they did previously, like in the 1980s and 1990s...

  STEADFAST—New holding Insurance broking is a well-established global model. Many years ago there existed an argument as to who controlled the client, the risk underwriters (eg insurers like QBE, IAG or SUN) or the brokers such as SDF or AUB. That argument has been well settled. The ability to aggregate and direct significant volumes allows the broker to arbitrage the difference between the wholesale and retail margins. These savings are shared between the client and the broker. Clients are usually SMEs and not so much retail or enterprise size and are very sticky. For small businesses, insurance coverage can be difficult to understand regarding pricing in the market and the liabilities their business may be exposed to. The broker acts to cover these important and time-consuming activities for clients. The bulk of the brokers' business is in the area described above. Another area is the agency business. These activities cover niche and unusual industries that may have...

  I don't know if this link works, but here it is. a bit of theory, a bit of practice and a bit of fun! note disclaimer DYOR. Shawn Burns_ASA Presentation_Sept2024_DRAFT.pptx

  REA move on Rightmove—PE arbitrage The numbers disclosed tell an interesting story. Current REA metrics at June 2024 NPAT $461m SOI 132m EPS $3.49 Last RGHTM metrics NPAT L200m SOI 789m EPS 25p The offer each RGHTM share gets 0.0381 REA shares plus 305p per share. Total cost A$11B split 43% cash $4.8B and 57% equity $6.2B. ie 30m shares at $205ps (rounding) COMBINED GROUP IF THE OFFER ACCEPTED—19% increase in SOI NPAT REA A$461m plus RGHT A$392m (1.96 fx) less cost of debt $202m assumed 6% or 4.2% a/t on the $4.8b. NPAT 462+392-202=652 divide SOI 132+30=162= $4.02 (accretive 15%) CHECK IF ALL equity offer (to assess if debt helps) $11b divided by $205 = 54m new shares NPAT $462m +A$392m (no debt)= $853m / 186m shares $4.58 (31% accretive) If my numbers are correct (there is always a chance I've stuffed up) (very) unusually, the debt funding gives a lower accretion. The numbers highlight that there is a large PE differential between REA and RGHTM th...

  EXAMINING THE TAIL—PXA DMP RMD IEL DDR SHL MIN Almost all of my top 10 holdings are clear of significant issues with maybe valuation being the main point of conjecture. These investments represent a large proportion of the funds deployed. There is also a tail these are small or middling positions as launching pads to potential further investment but with current issues that may preclude investors from becoming overly excited about them. Therefore, they have potential attractive upsides. The underlying business should be sound and the issues short term. These holdings can be upscaled if the issues are indeed ST, however, not all will turn out favourably. How are these going? This is not an in-depth analysis but an overview of the short-term issues, are these issues becoming better or worse? Pexa (PXA) My thesis here rests with the Australian business being a natural monopoly, that appears intact. Secondly, Australian success can be repeated in the UK. Success in the UK rem...