kab60

Cast SA recently. Microcap, french software Company transitioning from perpetual licences to SAAS and recurring revenue. 55m market cap, 23m receivables that should be turned into cash in Q1. Spent some 150m on R&D over the years. Seems to be at an inflection that market has not caught up with (or fatique/lack of confidence in management). They've disappointed for years, seems like they're about to turn the corner with SAAS booking growing almost 200 pct in Q4 albeit from a low base and guiding for overall profitable growth of 20 pct in 2020. Low float, interesting shareholder composition. Think it's gonna go big or go private. :)

Really can't say I'm an expert on AMA, but if anyone is intrigued there's a decent write-up on VIC. Reading the latest conference call is also a really good introduction (https://finance.yahoo.com/news/edited-transcript-ama-ax-earnings-144232794.html). They're basically the biggest player in an extremely fragmented and very resilent industry which they're rolling up by buying smaller mom and pops businesses at 3-4xebitda. It also sheds some light on as to why they paid up for their latest and biggest acquisition (structured sales proces with PE involved. They basically denied PE access to the industry by taking over the other big platform thus multiples on their bread and butter shouldn't increase due to competition). Bull case this is the Australian version of Boyd Income Fund in its infancy trading at some 6,3x 2021 ebitda versus 15-16x for Boyd due to temporary issues.

ECB figured they'll turn dividends negative? Like, where'd you get that idea (not to say how would that work...). I think Lagardes point is there is only so much Central bankers can do to stimulate inflation and growth. Monetary politics is out of ammo. Whereas fiscal policy is still in the quiver but that's up to politicians.

AMA Group looks interesting. Auto repair rollup in Australia with maybe a long growth runway? https://amagroupltd.com/wp-content/uploads/2019/08/FY19-Results-Presentation.pdf I always enjoy learning about your ideas. Linamars results are very weak in their acquired industrial business, but their balance sheet is improving. It is interesting to learn about their effects on electric vehicles in their latest investor presentations. Yep, something along those lines. There's a decent VIC writeup. They did a big and expensive acquisition, somewhat funded by equity, and then lowered guidance in December which tanked the stock. Management is an experienced operator with skin in the game, but capital allocation humhum (pays a divy but issues equity...). Acquisitions are cheap, but the big one in the fall was expensive (perhaps done somewhat to block a PE firm entering and getting a platform to go after AMAs bread and butter - Blackstone was close to buying AMA before). Linamars industrial results suck somewhat atm, their timing was definately poor with MacDon, but I think it will be a winner longer term and either way it seems like somewhat of a free option here. Auto is going through a rough patch, but that should mean they take share and come out stronger on the other side. Lowered guidance recently, and afterwards pretty heavy insider buying again. They also did a small investment a medtech company in December. Anyway, one is paying something like 6xdepressed earnings. Way below book value, and these Guys have been pretty good at capital allocation historically. They're branching out from auto, which I like, but it means there'll probably always be a conglomerate discount which is fine with me. I hope to put it away for plus 10 years and let them do their thing while I defer my taxes.

Bought more Linamar, new position in AMA Group.

BERY should be interesting with the next couple quarters of earnings. Down 6% volume wise last year may easily convert into up 2-4% this year which still means down 2-4%, but market will likely like it given the current P/FCF. Refinancing at 1% and 1.5% means an extra $30-40mm of interest savings. Yep. If they can grow volumes narrative should change, and debt paydown plus further refi down the line should add nicely to FCF. What nags me a bit is whether their size will start to constrain them down the line in that there are not enough acquisitions that move the needle, but that's some years away and market is still very fragmented. In a 2 pct rate environment I don't see why this should trade at a double digit yield either way.

Added to BERY and SAVE the other day below 45 and 40 and took at small position in GUD

Think you can use marketscreener for that

Merger Masters - really cool because the journo, through Gabelli, gets direct access to some hotshots that goes into pretty great detail on their proces Spider Network and Black Edge also pretty good

2019: 23 pct. 2018: -6,5 pct. 2017: 18,5 pct. 2016: 45 pct 2015: 12,5 pct. My biggest positions by far going into the year, Alliance Data Systems and Linamar, really hurt compared relative to the indices. But I doubled my position in Linamar around the bottom and got a nice rebound year end, and I also had some decent trading around Spectrum Brands, GTN and ETM as well as some very welltimed picks in the UK in the autumn (Motorpoint, Clipper Logistics, Cambria Automobiles, Vertu Motors, St. James Place). Dropped some losers like Walgreens and Molson Coors for Altria which also helped. Overall quiet satisfied, but I'm still trying to find my feet as an investor, and it's very humbling to underperform the indices.

Keyworks Studios is a decent way to bet on gaming. Works for all major studios, outsourcing provider. Sells shovels instead of digging for gold. Great numbers, high valuation, other might copy their playbook.

I have positions in Cambria Automobiles, Vertu, Motorpoint, St. James Place and Clipper Logistics. All 20-35 pct above my basis. St. James Place and Clipper Logistics are the highest quality, and unfortunately Clipper might be taken private. If not it might crash and thus be a good opportunity. Cambria and Motorpoint are both quiet good companies, overall I prefer Cambria here due to valuation. Vertu is the lowest quality of my bunch but also cheap, again I would probably go with Cambria here. St. James Place is a quiet terrific business I think but takes a bit more to understand. Headline valuation looks expensive, digging a bit further I think it is cheap for a high ROIC, asset light and steady grower.

10% on $100M invested capital is only better than 1% on $1B in invested capital if you can reinvest the earnings and increase the invested capital at hopefully the same return. If you can’t grow your invested capital, I would argue that 1% on $1B in invested capital is equal or better than 10% on 100MBIT, because there is a chance that you can liquidate $1B for face value or even a bit less and come out way ahead. On the last part, I get what you say. But even a no growth business needs to invest to maintain status quo usually, so high returns on "maintenance" capex usually means more FCF can be returned to owners. Lots of bad businesses where net income is a far cry from FCF.

Margins and return on invested capital is not the same. A grocer can earn high returns (plus 20 pct) with low margins, high volume.

Some more Ulta yesterday (sold 25 pct. of ADS), St. James Place (LSE) and some more Cambria Automobiles the other day (this one is hard to accumulate...)

I definately understand the frustration and impatience, but I recently took a 20 pct. position - first time since January 2016. The time is ticking, and if cash pushes towards 150B I'd expect a massive tender offer or an introduction of a dividend. The company is cheap, so if nothing happens, an investment should compound although at a lower rate than I'd prefer. But there's also an opportunity in a one-time gain/revaluation if Buffetts keeps his words. And I think he has a pretty good track record in that regard, so despite not blowing the lights out I think it's a crazy good risk/reward. I really don't see how one loses money longer term, and a large crash would actually be quiet favorable.

Ulta isn't at all cheap like the others, but here you might be getting a GREAT business at a very good price if what they experience is temporary. I took my bet, but I'd say the range of outcomes is bigger, because it will get slaughtered if problems are secular rather than cyclical. I'm finally in the green on Linamar today. Bought at 52, doubled at 37 and bought more on the recent dip to 35 (30 pct. position at one time). I hate anchor bias and it effects me all the time, but like with Berkshire you've got BV compounding, so you get $8 of BV a year. So arguably not a lot more expensive even though the price has gone up. Won't post anymore about the positions here, sorry about the offtopic.

I keep what is (for me) a large amount of cash because the earnings from my labor are very lumpy, infrequent and uncertain, so a large amount of cash prevents me from ever having to sell for liquidity, rather than fundamental reasons. For similar reasons, if I have X assets today, having .25X in assets next year would have a much greater effect on my life than having 1.75X in assets next year. I also have a limited amount of time to devote to investing, so I'm not particularly nimble with buying and selling and do not expect to sell before any large market decline. I'm also not aware of many great businesses currently selling at greater than 10% FCF yields that aren't levered up to their eyeballs, but I also look almost exclusively at US companies. Can you name 5 or 10? I don't wanna sidetrack this, but you recently had a bunch of UK car dealers - Vertu and Motorpoint - which I'd rate at decent/great respectively - trading at some very solid FCF yield despite a tough environment. After the current runup I prefer Cambria which I'd also argue is good+ and VERY cheap. Last month you had MO around 10 pct. yield. ULTA is only 5 pct, but then analysts expect 10 pct. EPS growth. My favorite is Linamar though. 2/3 endmarkets are in the gutter, so you get to buy a good/great industrial busines below book value led by management with a crazy good track record AND around a 18 pct. FCF yield despite a tough backdrop. Or if you don't mind leverage and serial M&A there's Berry at some +15 pct. FCF yield. One can definately argue some of these have warts, but I've never found as many compelling setups than during 2019. I've only invested since 2015, so I might definately be the bagholder here, but even Berkshire looks cheap. And has looked cheap all year. With a multiyear horizon I really don't see how one loses when we get around 1,3xbook.

My spouse took out equity in her flat to match my investments, so a couple of weeks ago I was around 40 pct. cash after being around -20 pct. Now I'm (we're) at 0% cash after adding to most positions and taking a 20 pct. position in Berkshire friday. I last bought it in January 2016 (and sold for a quick gain). I'm 33, we save a lot, so I'm not gonna waste time trying to time this or that. I still don't understand why so many smart people (if their time horizon is long) prefer cash earning 0 when one can buy decent/good/great businesses at +10 pct. FCF yields, but obviously there's a lot of variables involved (if one can live the sweet life off the existing portfolio, there might be no reason to risk something you need for something that woudn't improve quality of life). Portfolio is around 10-12 years of savings, but it wouldn't change anything whatsoever in our daily life if there was a big drawdow. Having only invested in a bull market (since early 2015) I'm somewhat aware that I haven't really been tested yet, so while I think the above sounds rational, I hope I can stick to that framework instead of choking and selling at the bottom to buy gold and canned food when the next bear market hits. We'll see. :o

Mind sharing a bit of your thesis? Thx

Ouch! Another guide down. I don’t own this crappola spin-off any more. Pre market trades around $9.5: https://finance.yahoo.com/news/resideo-announces-selected-preliminary-third-212500494.html I am not as familiar with REZI, but my conclusion on GTX was that it is a solid, if somewhat cyclical, business weighed down by excessive debt and asbestos liabilities. GTX is interesting due to high margins, a flexible cost structure as well as high leverage (and capped asbestos liability that can be deferred in crisis ), but diesel is a major headwind and not sure they can make up for that with gas. Anyway, whenever I get tempted, I look at Linamar and figure it's cheaper, better in the long run and with a lot more optionality.

Some Ulta, ECL

CLG:LN, VTU:LN

Some Altria the other day, more Linamar yesterday (around 30 pct. position).

What are your thoughts on exiting WBA? Other opportunities I find more attractive, plus the thesis has stifted since I invested. I was attracted to a 10 pct FCF yield plus growth, but it has turned somewhat into a restructuring. They call it The Transformational Cost Management Program which gives me goosebumps. I think it'll work out okay, and that long term scripts growth will give them plenty to do, but I like the risk/reward better elsewhere.