kab60
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Posts posted by kab60
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Because they are extrapolating Fastenal's model (and prior compounded growth) to other industrial distributors, and taking advantage of low expectations to load up....
Instead of blindly copying the big boys, you can play their game better than they can. Buy similar companies w/less active volume traded.
I picked up USLM (sub for MSM), MRC (sub for DNOW) and HWCC
I think scale is pretty important in this space. MSM has around 1m SKU's, a vending program (and it seems) pretty good IT-systems. I think the pressure are on the smaller players who can't afford and leverage these scalable systems. Only took a brief look but MRC is almost the same mcap as Dnow but without a pristine BS. HWCCs BS looks interesting but I don't know the business. Will read up, thanks.
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For solar nerds this report has some interesting data on cost reductions (it's from february 2015): http://www.agora-energiewende.org/fileadmin/downloads/publikationen/Studien/PV_Cost_2050/AgoraEnergiewende_Current_and_Future_Cost_of_PV_Feb2015_web.pdf
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Except Denmark and Germany have highest electricity prices in the world. Several times higher then the US. This hurts the poor.
So it is much more expensive, while not being that much greener.
Just imagine a very sunny and windy day. 80% of germany gets their power from solar, isnt that great!
But then all of a sudden it becomes very cloudy, and now only 40% gets their power from solar. So where do they get the missing 40%? You cannot insta turn on and off a gas or coal plant. I think a gas plant takes about an hour at the very least? and a coal plant several hours.
So you need constant coal and gas plants running in the back grounds while everyone is getting their power from solar while feeling pounding themselves on the chest sniffing their own farts and feeling all green.
So even on good days when germany gets almost all their power from green sources, there is still a lot of non green power running in the back ground, wasting a lot of energy, polluting the enviroment.
So is that worth it? Jack up prices a lot, the poor are more hurt by this, while not reducing carbon emission by all that much. It seems only worth it if solar panels are dirt and dirt cheap, or if batteries come in the picture. That will happen soon enough anyway, without governments forcing expensive solar on everyone.
Again, Denmark has some of the (if not THE) cheapest wholesale electricity prices in Europe but slap 400 percent taxes on top and it's not the case anymore. That doesn't say anything about the real cost of electricity though.
Generally, it's extremely difficult to compare electricity prices because each country does it differently which is why the European Union are working towards an internal market for energy so subsidies are harmonized (that's not gonna be easy). Countries like Germany aren't isolated energy islands, they - along with the rest of Northern Europe and the UK - are building interconnectors across the borders. For an example, there's usually a six hour time difference between when the wind peaks in UK and Denmark, so an interconnector makes it possible to supplement it each. Danmark is connected to Sweden, Norway, (UK and Holland is on the way) as well as two different parts of Germany. There are alot of knobs to turn, including large scale storage (Siemens are working on storing electricity in thermal form in the earth, Tesla are working on batteries etc) and flexible consumption. Germany, as another example, are working on interconnectors from the windy areas near the North Sea to the industrial clusters in the South as well as interconnectors to Norway where hydro power works as natural storage.
While everyone is talking about solar, don't forget onshore wind turbines. They're the cheapest new source of energy in Denmark and in some states in the US onshore turbines actually beat gas. Solar isn't quiet there yet but prices have gone down 80 percent in five years so things are moving extremely fast on that front - and alot faster than anyone thought possible just a couple of years ago.
Back in the 80'ties, critics said that wind turbines would never be able to supply a substantial amount of energy cheaply. Today is supplies more than 100 percent of the electricity to Denmark today on windy days (the rest it exported). Storage is an issue, but there are ways and I believe gas - biogas as well - is gonna play a big role at least as a transition fuel.
When looking at cost of energy, which is the only way to compare different sources of energy, you don't factor in all of the external costs associated with fossil fuels. Coal, for one thing, is the main source of mercury polution in most Western countries and according to studies (that I haven't studied in detail) are responsible for +20k premature deaths in the EU every year. But right now, due to high cash prices, low coal prices and almost non-existing taxes on CO2 in the US atm, Germany are closing modern gasfired powerplants and firing up old depreciated lignite plants (the worst source of energy). It's not gonna be easy but it will be possible to transition to a lot more renewables - the question is what role utilities are gonna play.
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These guys may be biased, but pre friends who live there, it is certainly true that German retail electricity prices are multiples elsewhere.
You can't really use retail electricity for anything. Denmark has some of the lowest wholesale electricity in Europe but the highest retail prices due to 400 percent taxes slapped on top - which is actually a good thing because it makes people save on electricity. I think Germany is alike.
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MSC Industrial Direct
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In 2013 AR management says high teen ebit-margin should be possible. It seems like margins are depressed due to growth investments and the big acquisition in 2013. Management seems very aligned with shareholders. They mentioned 4b revenue target in 2016 before but not sure that is possible. With 12,5 ebit-margin (low end) that would be 500m ebit on 4,5b marketcap or around 5b EV with a long runway ahead.
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I don't have access to that either. Anyway, just finished AR and some transcripts. They did an approx 500m acquisition in 2013 which might have been more difficult to integrate than anticipated. Direct O&G sector is only 3 percent but obviously indirect is bigger. That being said low oil and gas prices should be a tailwind mid to longterm because it will boost manufacturing. Perhaps they could be better at keeping cost down but they seem like disciplined capital allocators. Did a pretty big special divy end 2014 and balance sheet looks flexible. Dnow is my 2nd biggest position (used to be biggest but Ntelos popped) and I think the game plan is a lot alike.
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Did anyone take a look at MSM? Anything Arlington picks piques my interest. They've been growing revenues around 14 pct cagr but ebit-margins have dropped so that net income over four years is pretty much unchanged. They seem to be like Fastenal and pushing vending machines but with a lot worse margins. I guess buying MSM is hoping margins will improve but I'm not sure why they should. I like the type of business because the industry is very fragmented and thus there is a long runway of growth ahead but it is not exactly a bargain unless margins improve. There are some articles on SA but I dont have access.
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Joyou AG.
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Bought Outerwall last week and SMA Solar today.
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Added to my position in SXP:TSX
Supremex?
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Bought Goodwin PLC and Logistec B last week.
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I don't know, seems like he missed out on all the good that his hard work and smarts created by dying before he did anything good with the money. Hope I don't end up like him.
“The man who dies rich, dies disgraced.”
I think it's quiet impressive what he has done (and not something I could do myself). Instead of getting a lot of recognition for his donations while alive, he has kept compounding until his death and thus left a bigger pile of money that will do good. Isn't that about as unselfish as it gets?
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Wilh. Wilhelmsen Holding ASA
Interesting - do you have time to open a thread on this?
There's one already (though not very active): http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/oslo-exchange-wwi-wwasa-wilh-wilhelmsen-companies/msg214656/#msg214656
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Wilh. Wilhelmsen Holding ASA
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There are plenty of US securities and positions I'd like to add to.
There are?! Please do tell!
BAC, Y, DNOW, HOS, AIQ, NTELOS
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the euro is going down very quick. i bought a lot of Long term us stocks at euro usd 1,40 so this is a nice boost to all my us Holdings, and i think a lot of european Investors here in the Forum also enjoy this Thing.
but now my question, what do you do now? i believe that the euro will fall further and maybe dip under 1. the us is much stronger than the euro These days. do you hold your us Holdings without forex hedge now, or with forex hedge? or what do you do in this Situation?
would be interesting to hear thoughts. i maybe trim some us Holdings and expand more in the europeans.
I'm an European investor as well, and 75 percent of my investments are in USD, so I've been giving this some thought as well. With ECB starting QE and potentially rate hikes in the US, I expect the USD to move upwards, but I'm not going to base my investment decisions on that as nobody really knows how things will play out. I'd like to say that I didn't give currency movements any thought, but it has a substantial impact on my portfolio, so for now I'm done investing in US securities and just hold on to what I have while I look for investments in Europe, Korea and Canada instead. Still, I feel my logic might be flawed, because when I invested I only looked at the business fundamentals and not currency developments, whereas future currency movements affect my investment decisions today. There are plenty of US securities and positions I'd like to add to but I'm trying to find value elsewhere now.
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Does anyone have a good estimate of BV following the recent transactions and equity offering? I didn't go into the details yet, and I'm not sure what a fair price is, but end of Q4 BV was just around $400 which implies af PB of +1,5. I'm looking at parking some cash in either Fairfax, Markel or Alleghany, but my exposure to USD is already very high and I like Fairfax' recent acquisitions. I just don't like paying a big premium to BV.
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I started investing 1st of august and have added cash to my account monthly, with the biggest chunk in the beginning of december, so it doesn't make much sense to look at my "results", but I'm up 3-5 percent - most of it due to currency effects. It's very apparent, however, that I've done too much trading in and out of positions and initiated too small positions (way too high frictional costs), so I'll need to have more discipline and patience (swing harder but less loften). It's very helpful to read about the experience of you guys, thanks a lot for sharing.
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QIWI incredible FCF/ROI and a growth stock that pays dividend?!?!
What do you think about the devaluation of the ruble and the risk of default? I really like QIWI's numbers, just haven't digged into how exposed they are (do they lend out?) to the current situation. Obviously earnings will be affected, but apart from that?
EDIT: I bought Medallion Financial and Horsehead Holding myself
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Is anyone taking a look at these? While not exactly value stocks, most casinos on Macua have dropped almost 50 pct. this year.
The main driver is president Xi Jinping and his crackdown on corruption. Basically, Macau is the only place in China where Casinos are allowed (and only 6 operators have licenses, I believe). In a couple of years there'll be a highspeed train that will connect it to the mainland.
A company like Galaxy Entertainment Group Ltd has showed crazy growth (like most on Macau), even though it has slowed down this year due to a number of factors; Jinping, world championsship of soccer in the summer, a smoking ban, new visa and credit card rule, demonstrators (rightfully, I'm sure) demanding higher wages etc. Basically, pretty much everything has gone the wrong way for Macau casinos this year which is why I find the valuation interesting at the moment.
A company like Galaxy funds a couple of huge news hotels solely with the cashflow from the existing business on Macau, so they know how to generate money.
From my understanding, Chinese love to gamble, and corruption or not - I'm pretty sure it'll continue to stay that way. And I like the numbers even though competition will pick up with more hotels underway: 50 pct. revenue growh (3 year) and 122,4 pct. income growth (3 year) for Galaxy.
Xi Jinping is visiting Macua these days, and the stocks just took another big hit today. I was just wondering if anyone else was having a look at these stocks at the moment (or have some general input as to why casinos might/might not be intestering to invest in).
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I'd keep your current job.
It sounds like the only reason you'd move is prestige of working in a better facility with more renowned doctors. Moving to satisfy 'success' or ego is going to leave you unsatisfied, there will always be something else to chase.
You have family close by, a great child care situation, your wife is satisfied, and you have satisfaction from serving those who are otherwise left unserved. Your co-workers are not perfect, but don't delude yourself into thinking that smarter people who are experts will somehow be better co-workers. I've found 'experts' are often terrible to work with, something to keep in mind.
Maybe the job will be more satisfying, but life outside of work might not be.
My advice is probably strange for a message board full of people madly pursuing money and success. But there is more to life than money and prestige. For me personally those close to me (wife, kids, family, friends) don't care how much I make or how well known I am, that's not what matters. Friends who only care about status and money are not the types of people I enjoy hanging out with, you can never measure up around them.
Much of this thread discusses regret. You will always have regrets, regrets of things you did and regrets of things you didn't do. Don't get caught in the pursue of perfect, you'll never obtain it.
I'm not reading his post as if it has anything to do about prestige - if that's the case, then I agree. I think it's more a feeling about not really using your full potentiel, and that's a different story, I'd say. He also writes that he actually has a great deal of experience with the colleagues he might get at the new place, so I don't think it sounds like trying to reach perfection or that the expectations are unrealistic. Yes, perfection will never happen, but there are places to work that makes you a lot happier than others.
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I think you need to go.
While you say the current job is rewarding, because you're helping a very poor population, don't underestimate the toll it takes to work with incompetent people or people without drive and motivation (not saying that's the case, but bluntly speaking). You need brilliant people around you to reach your full potential yourself and figure out how far you're able to take it. It sounds like not going would risk haunting you for the rest of your life - unless you have a chance to materially change things where you're at. And it is quiet challenging to change structures and system; espescially something as big and complex as a hospital, I'd think. Kids adapt, and if everything turns to shit at the new place, I'm sure you'd be able to come back to where you're at now - even though I don't think that's likely to happen?
To keep it a bit investor'ish, Buffett says something about a baseball bat and not necessarily having to hit every home run. But you do need to grab things when they go your way, and it sounds like the job you've been offered would be great. I'm sure your family will feel the joy it gives you as well. And in regards to your wife; if she's liked by her current colleagues, I'm sure she'll be liked by her new ones as well. Likeable characters have a way of being liked everywhere. :)
Industrial distributors
in General Discussion
Posted
Also, MSM is owner-operated. Not sure management is as good as at Fastenal but they seem like competent capital allocators and revenues are growing nicely. New distribution center in Ohio has suppressed cashflows but that should change. If they can get operating margins back to 17 percent, which they indicated should be possible in a better environment, it looks good when revenues grow 10-15 percent annually. And this in a very very fragmented industry.