mrholty

I've been honest on here about my failures in the past. My circle of competence (after 20 years of investing) has finally been the ability to read and walk away. When I started I thought I knew it all and could figure it out. I remember hearing about Buffets 20 great investments and I thought I got it. After lots of losses and setbacks do I finally get it. I minimize losses and my holding period keeps expanding. My average holding period is almost 9 months and my biggest items in my portfolio are over 3 years. I don't do this for a living and I prefer spending time not doing this so an investment for me already has a high hurdle to keep me involved. I want an industry tailwind as I don't want good mgmt in bad industries. No more Cigar butts for me. I trust mgmt to do ok and I'll give them 2 bad quarters to turn it. One the third - I'm out 100%. I don't know how to size my positions so they all get the same size. At the end of the day - I used to invest in weird small cap situations. Once I realized that when I tell my wife about it - if she doesn't care I'm out. If she does - I'm in. This ability to distill the thesis into an elevator pitch has saved my ass countless times as usually I needed 3 things to go right. Now I want one and I'll take a double.

Packer - I agree with you. Do you believe the official inflation statistics? I really do not like the idea of substitution. Yes I get that personally I substitute chicken for beef when one gets too expensive but I think it screws with the metrics. Just like how we have changed which unemployment rate U2 or U-3 or what used to be in now u-6. I think we as a society understimate the real inflation # and it has lead to a distrust and disillusionment with gov't.

I think you will have time. No city will be able to negotiate without it leaking. From that I assume Amazon will negotiate with multiple cities at once.

The only negative thing in the entire report is the tepid growth estimates for Q4 based on rigs in their primary markets. I can't argue with it but I had a higher number built in. The refinancing that was announced really shows up when you put it in.

I generally hate antecdotal crap and maybe this should go in the Amazon thread. In addition to my day job (I work Corp Finance for a mfg company in middle America) I also sell on Amazon. I started selling books and then flipped stuff from Walmart/Target/Kohls to Amazon. My goal was always to make more than beer money - it was to cover my kids daycare expenses. I've done this in various amounts for just over 3 years now. Its absolutely not a full-time gig but it helps. I track my time spent on it and I make over $20/hour but its come down as more software has entered the market which reduces margins for sellers. To give you an idea I sold over $100k on Amazon and my profits were about $15k. I'm a small seller but I have gotten to know about 5 guys very well who are doing $1-$5M/year on Amazon by themselves or with small teams. While there has been some variance within the group and what they sell (we don't share exactly what we sell) Sales for all of us were up in 1H of this year. Most of us have rolled our profits into larger inventory each year. I'd say that most of us have inventory 25% larger than last year. Several saw a slowdown in the summer before back to school and generally our sales for October were below everyones expectations. This is in the face of Amazon continuing to take share. None of us are too worried and we're not pulling out but it seems that the consumer is being more cautious than 6 months or 12 months ago.

Cameron- Quick question. How does one play this short? Or is there not a way? Is there a Michael Burry going and asking someone to sell to him or more appropriately how are these guys hedging so that they are not in the next movie in 10 years.

My old CFO went to work for one of these Subprime dealerships with about 60 locations. He’s early 50s and wants to retire at 55 and could retire now but viewed this as one chance to make a bunch hopefully before it turned. Here is the economics of the deals: Buy car at $4,500. List it on a lot for $10k. Buyer comes in and they negotiate down to $9k. They bought the car with a loan at 5% and these guys hold the note and charge 13-17%. Terms are 4 years and 50% make it to the end. Even if the loans go bad in 3-6 months they usually get the car back and they either sell it at auction or move it to a different dealership in their network. (edit: my numbers are different than Cameron's above but mine are for a company that is holding the loans themselves (my understanding) Their dealership locations are profitable after 4 months. His goal as CFO is to push the CEO to get them to open 40 stores a year for 3 years and get to about 200 locations. Once they get to that size then they can securitize the loans. If they securitize the loans then they can take the company public = cash out. When you run the numbers and you realize how long people pay and even if they don’t retrieval rate its an amazing business. The bubble that I really think is going to burst is healthcare. If the Obamacare subsidies are really pulled its going to get ugly as guys fight for the remaining dollars. If they open up a website/phone # to turn in your neighbor for cash its going to get flooded. The whole discussion on DVA and the private insurance that covers peoples copays feels like the normal and not the exception. The market that I wonder about is the vet/pet care market. Its amazing to see how much $ is spent on their pets even in stupid decisions. My friend, a vet joined a clinic in a small town 10 years ago and the plan was to buy the owner out after 5 years at 4x earnings. Owner kept extending and then sold to an Australian company at over 10x earnings. A crazy multiple especially when you figure the barriers to entry are low. This is a town of 9k people and 10 years ago it was the only other vet, there are now 2 more in the city limits and 2 more in the next town of 7k people.

This is pretty cool. I'm surprised to see the efficiency gains. I'm probably one of a few people on this board at least that can say they have climbed up one of these. I'm not afraid of heights and I was nervous. Previously I had told my wife that if the world goes haywire and we get a great recession I'll go get certified to be a tech on these (1 year program in Oklahoma) but after that I'm not so sure. My FIL was a farmer and due to cancer could not talk and therefore directed all the engineers etc to me when they wanted to build a few on his land. They ended up building 2 on his land (6 total) and he got a nice annual check until the farm was sold. From day 1 when they optioned the land to him - it took 7 years for it to get built and we thought it was dead 2-3 times.

I bought some when I saw the management buying in a PP. I thought it was a joke of a company with funny sounding name and I still have doubts about it. B I did a little research and found out that they actually have a product that was co developed with a government's division. Who knows it might be a pump-n-dump but if the PO materializes then this one will have a big upside. I wouldn't say the market is in a wait and see issue. The stock went up 5x on the news from $.05 to $.25. Even if it is real they really have no manufacturing as their only facility is 22k square feet.

Almost every Western country has investor immigration program. US does. Australia does. NZ does. Maybe Canadian one is easier to deal with, but my guess it's not the main draw for Chinese to Canada. My guess it would have been the other reasons mentioned, easy (?) entry after Hong Kong reverted to China, large communities to join. Not sure why US is less attractive. Perhaps a bit tougher entry/immigration. There's clearly a lot of Chinese immigration, education-based entry and RE purchases in US, but still seems way less than Canada. And way less (almost none) RE price bubble based on Chinese RE purchases. There's a bunch of Chinese RE purchases in US, but seems nothing as big as in Canada. Australia and NZ are facing similar issues as Canada re Chinese money. The US is less attractive for a number of reasons: unfriendly immigration policies, political issues, education is much more expensive, no healthcare, hard to get citizenship, etc. On top of that there's a fear that the US may just take your stuff if it so decides one day. No such fears with Canada, Oz and NZ. Despite all that the US is still getting a good chunk of Chinese money. It's not as obvious because the US economy is much larger. The effect is a lot different when $100 billion of Chinese money hits British Columbia (GDP $250 billion) than when $100 billion of Chinese money hits California (GDP 2.5 trillion). This is all correct. The main reason initially was the cost of buying into the Canadian program was 1/4 to 1/2 of the US program. Once Vancouver (and Toronto) became normal then the numbers just multiplied. I work with a bunch of small businesses in China where the owners are all in their late 50s and 60s and 10 of 15 have done exactly what is described and all to Vancouver. 2 did the same in SoCal.

I think it means that there is no real cushion or bank account at the federal level. I think it like Social Security. The money that is in the social security lockbox is $0. The gov't borrows from that each year so that they have to issue fewer bonds for that year's deficit. In something like 8-10 years outflows on Social security will be greater so we as a gov't will have to borrow more to cover that than the official deficit. I'd be glad to hear from others.

sounds like junior high school on steroids I had a good friend work there 15 years ago (god I am old) around 98-2002 IIRC. Much smaller firm back then and relatively unknown but it already had a rep for secrecy. Employees were supposed to be adversiarial but not assholes. Its a hard line to walk and the expectation was that every day was new and old fights were forgotten. It was described to me that if you were austitic and everything was black/white then you would love the place as success was measured on results. I wouldn't describe it like Middle school and cliques because if you did that you would get killed when your "friend" would stab you in the back. It was like 1 vs 100 at all times. Ideas and facts and the ability to explain them won. My friend quit after 4 years and went into Academia as he physically could not handle the stress. Went bald, uclers, etc. But it wasn't stress from getting fucked by others it was the stress that you couldn't expect and didn't know where it would come from. He made (and saved) a few million dollars to not have fuck you money but enough to walk and follow his passions. He keeps in contact with 1 guy from there and it has probably been that way since 6 months after he left.

I'm not as bullish on Bri-Chem as Cardboard but I am long. I also like that there has been no discussion of the Q2 results which were out over a week ago. Overall, The general thesis of revenue growth which leads to profits is still intact. We expected Q2 to be its weakest Q historically and I expect it to be for 2017. Good: Revenue growth accelerated in Q2 vs PY as compared to Q1 vs PY. (Thesis intact) Salaries have kept in line with historical. (with new facility in the US was expecting to see this increase materially. Watch: I see no evidence of the price increase that management referenced in Q4 2016. Margins are flat over the past history. Was expecting to see more work on refinancing the debt. Note in Q2 states that we should see something shortly. Hopefully it will be material savings as that would greatly help the bottom line. Don't Like: SG&A have increased materially as both a % and in $ terms against Q2, Q3, and Q4 2016. Utilization of assets seem materially better in Canada vs US. Hopefully this will increase.

Can you tell my wife? We make our own soap and cleaning products at 2-3x what it would cost and for a lesser product but it makes my wife feel good. The % of people who actually do this are still tiny. Looking back the only thing that I worked out easy and saved money was cloth diapers and actually found that was way better than disposable. We spend a large amount upfront ($300 - 20 @ $12-15/diaper) and then a second batch a few months later when we needed more. So $600 all in. My understanding is the average family goes thru $1-1.5k in diapers per kid. For the first 2 months we did disposable and we did disposable at night so they would sleep thru the night. All day was cloth, every few days we would do a load of diapers and then we had a drying rack where we would hang up the covers to try overnight to the next night and normally dried the diaper inserts in the dryer. Then the next night take 20 minutes and stuff the inserts into the cover so that they were ready to be used. Best part was that all 3 kids were potty trained (daytime) by 2 -2.25 years. Disposables do such a good job of wicking water away it doesn't bother them. They hate this and wanted to be done at 2. Easy. Nights were different.

Actually the interest thing about DSC is that their razors are manufactured by a company called Dorco and sold directly through Amazon. I wonder if the future of CPG shifts away from Brands and back into the OEMs. I'm all for removing the middlemen. I switched directly from Gillette to Dorco years ago. I don't understand the appeal of DSC or the other one Hanks(? I think that's wrong). Why pay more for the same product from the same manufacturer? I've got over 3 years worth of Dorco cartridges at home so I won't have to even think of razor blades for a while (save both money and mental effort). I do the same re Dorco. I think you are talking about Harry's. What is interesting about them is they started the same as DSC but pivoted and bought the factory in Germany as a long term play. They are cutting out the middleman.

I don't think we get a sharp 25% drop. The S&P has been acting differently than the rest of the world for a while. My belief is that the inflows to Vanguard are pushing everything up together which is why we get everything correlated. At some point this has to stop no? Is this a 5%, 10% correction? My bigger concerns are that at some point the boomers withdrawls are going be a net ouflow of funds to fund their retirement both individually and their pensions. I've done some reading on that for 5-7 years now and the expected date keeps getting pushed out due to boomers working longer and higher returns are helping. When that happens it should be the opposite of the rising tide. Vanguard or whatever will just sell to fund withdrawls and the water will go out. Once the flow goes out I think then you will see some weird dislocations as people run from this passive strategy to whatever. I've been 100% invested my entire life and when I see funds turn negative for a few months I will go to 50% cash as a defensive move. I wouldn't be surprised to see a lost decade. That said, I am an idiot. I have been buying small cap value for the past several years so I would have been better off just giving my money to Vanguard.

I sell on Amazon as a 3P seller and mainly sell books. In an attempt to grow my business I get together via Web-Ex with a group of other sellers in a kind of mastermind group. However we are all too secretive to really share our secrets so its been less than useful. However, one person told me that his wife has replaced her salary (she worked at a daycare (minimum wage-ish) and 100% of what they buy is from Walmart, Target and Costco and sell on Amazon.

Not much to add on a mattress but I have a few friends that I got to know that make their living as 3rd party sellers on Amazon. They sell mostly Nikes, Apple, Lego's etc and do a good job of it. 2 of the 3 that I know are independently opening a mattress store that they bought as a franchise. Low Overhead, like others mentioned high commissions, etc, limited inventory. While many of you want to buy a mattress online (disruption) the vast majority of people still want to go and check it out in person. just like eyewear. One guy has had his open for 6 months and they sell on average 2 mattresses/day in a month and he makes something like $150/mattress as his profit.

I've capitulated. I always look for the what is going to get the market to reprice the stock. I've had attractive small caps for a while that are doing what they are supposed to but yet nothing unlocks and causes the rerate. Yes, the stock moves for some screens and small and microcaps are out of favor. I'm 75% passive in ETFs (various) including some international ones that have not rode the wave. Patrick O'Shaugnessey's podcast has had some decent conversation on this and where does passive end. He has stated that 2 years ago passive was 15% and now he estimates its 40%. Where does it end? Can I think we have another 2 years of this. I've never watched flows very much but this is the one I do. What happens when the total flows go negative as boomers get fully out and really start spending their retirement funds. i don't know when exactly it happens but in theory everybody will have to sell (in various amounts) and that will create opportunity.

This is exactly it. Except my quibble about states being more business friendly and better run than Michigan. I think the South has a longer runway due to the shift being newer, Michigan is just early. The entire economic model of how cities and states are funded primarily via Property Taxes is bad. We built these sprawling cities that were funded by growing (selling new houses) build more suburbs etc. Then when the growth stops how do you maintain the infrastructure that needs to be replaced in 30 years. The reason that I don't think the South is better run and just early is that Dallas and Kentucky having huge pension issues.

This is exactly correct. I was a kid during the farming crisis in the mid 80s. My Dad was not a farmer but selling to farmers was his primary business and he had done well. 1 down year was fine and he doubled down and bought competitors, year 2 bad - scraping by, year 3 Dad did illegal things to keep the business afloat. Got caught. House seized by IRS. Taught me the value of saving for rainy day. FIL was a farmer. Very conservative. His old man (wifes Grandfather and Great Grandfather) were the banker in the area where he lived during the depression and the main local bank went bust. Families were still paying back debt into the late 70s. All cash and payments weekly. The original farm was 36 acres in 1912 when purchased. In 1945 they family owned about 425 acres in the area mostly in 40 acre lots. Families know these stories and are generally more conservative. In the upper midwest prices are down for almost all crops and the young farmers have not been through a down cycle and are levered up. At the local bars its not fights between John Deere vs CaseIH but how much debt as the old guys are telling the young ones to be cautious. Look at the last few years of of John Deere comps. The old farmers who have cash have been waiting for 30 years and are getting anxious for the banks to start foreclosing.

As others have posted on its happening in a lot of back office jobs. In the corporate IT World I have been on both sides and done this analysis for companies. I'm based in Flyover Country right next to Michigan so our costs are relatively low but we are higher cost in the state. Working for a mid-sized Insurance company we were losing premium dollars to the online businesses annually. All of our metrics are great but how does a company not kill its sales staff and create a web presence, etc. A difficult topic so we were constantly focused on cost cutting. Here are some real world examples of what we did and why: We eliminated 60% of our internal legal team in early 2000s to a domestic outfit and we felt our cycles were not efficient with inhouse staff. We outsourced that work to a company in Minneapolis. When the law profession has become oversaturated and costs have come down we have renegotiated our agreements (we actually switched) to a similar provider. Any outsouring agreement we try to split the work to 2 - 60%/40% but in reality its ends up being 80%/20% and what happens is that one of the 2 generally fails in quality or they need a price increase and we give the work to the other and then find a new 2nd partner. We outsourced a good chunk of IT to India but brought back 40% to the Midwest after repeated issues. Time is important and the time zone issues , local customs are just too hard for small and mid-size companies to overcome without having lots of boots on the ground in India for compliance. We started without any local staff in India but after repeated quality issues and switching to a different India company we then realized the issue was us. We then hired an Indian local to be our rep but without any real relationship to us the agreement didn't help. It only got better when we hired some local US guys to own the agreement in India and we pay to have them over there regularly. Lots of companies fail and lots of companies go to India to spend 1/3 and spend the same as they double staff and then ignore their time to market. Our biggest savings was outsourcing the hardware side of IT to a local shop that put it on the cloud. I assume they just put it on AWS or something but Amazon is hard to deal with. They are easy. I could save more by going direct but hassle factor is worth something. We outsourced part of our call centers to the Dallas area specifically for the tax savings. Like others the agreements usually go to what city and state is offering the best deal. This is a real inefficient marketplace where I've thought someone could be a broker. Everyone woos the large business but there is savings in mid-size cities. The broker could get paid by the city/state (similar to a buyer's agent for a realtor) and could manage an exchange of what cities states have the best deals. Lastly-the coolest oursourcing gig was a guy we had found when we were negotiating our wire and wireless phone agreements with US Cellular & their landline business, Sprint, Verizon and AT&T. Our sourcing guys had gotten 10-20% off what we were spending our on wireless business and we were set to lock in to no rate increase for our wires (we were moving to VOIP) from a standard phone service. We somehow got a consultant who was a former AT&T VP (I assume they are like banks and hand out titles like candy) who had a database that he shared with something like 30 other guys like him around the country of the rates they were getting on deals. (They all agreed to share all the terms). With this we were able to knock 40% off our wire bills, a considerable savings and the negotiation could not have been easier - he came in and pulled up 3 recent agreements for companies our size/spend and went to work. He took 50% of the year 1 savings which we estimated at $600k so he got $300k for a months amount of work spread over 3 months. We got the savings for 3 years. His entire business was built on information asymetry in which the average consumer has no idea to find out what similar deals are going off at. I've often wanted to buy that guys business.

Can I ask why you include car repairs in this list? As you talking about damages say being in a car wreck vs going to your local shop for an oil change, air filter etc. People absolutely shop in this market, especially the lower end. The problem in many of these markets is a typical chicken/egg dilemna. Does insurance play a role because of the information asymetry so consumers reach out to a middleman which in theory should do a better job of protecting their interests in teh long term. It interesting that you bring up the Iphone. Does the average consumer have any idea of what in Iphone really costs? In the US its bundled into the service. Groups like T-Mobile and others have attempted to break that up but I've seen scant evidence it works.

Its an interesting thread but like others its all in how the game is played. I’ve read articles in the past few years about how law schools suck and hide crappy student employment rates. The most often they “hire” the student to do work at the school. University gets to report higher rates, etc, etc. Hell 20+ years ago when I was applying to undergrad there were schools that sent out application letters fully filled out. Their application fee was something like $20-25 vs the $50 for my local state school. Only in college did I learn thru a friend that the school I was thinking of as the worst offender did this to get extra admission dollars to help the university, making a profit against the mailing cost but instead of accepting lower students they kept their high standards and reported a very high selective acceptance rate. This looked good in the eyes of the USNews report, which was fairly new moving them up in the rankings and that became a cycle of success as the higher rankings got them better students and it fed on itself. 10 years ago I worked for a mid-sized Insurance company who wanted to get a younger client base and so a group spent a lot of time seeing if we could play in the Private Student Lending Space. We choose not to but it was really easy to see the defaults. By the end of the pilot project and some data the actuaries we learned that we could identify if a kid was going to pay the loan back based on 4 things: 1. Major 2. University 3. Parent’s income 4. Parent’s co-sign There were a few other kickers that helped but these were the big 4. We really wanted to go to market with a loan that was co-signed by the parent and we wanted to segment the rate schedule based on your major and/or university. Frankly if you were a civil engineer we knew you had a job and if you were in women’s studies good luck. In a real market that would be normal and allowed and that is what the student should rely on. If a kid sees that a dance major is at 22% interest than that is a signal. Instead our lawyers (yours may differ) stated that segmenting by university could very well be likely a form of discrimination. There is some truth to that as we saw that students that came from higher household incomes in general were more likely to graduate which helped their earning potential which we hypothesized was based on the fact that the higher income provided the family with more of a cushion is something happened which could draw the kid out of school. I left the group when the decision was made to not go forward but they started to look at private student lending to trade programs as many of those are absolute cesspools that make the public for profit schools look saintly.