jawn619

WOW thumbs up

Thanks for the feedback. If you couldn't see the difference, it's my fault for not explaining more clearly, no offense taken. Sapiens and Magic are very different businesses. Over 90% of Sapien's revenues are maintenance and support, which is highly recurring in nature and has extremely high gross margins. What does this mean? imagine a scenario where Sapiens grows revenues at around 15% for the next two years. This mean they'll have about $250M of revenue. This last year 30% of the revenue increase fell to EBIT, and i'm guessing as they grow even more than 30% of the incremental increase will drop to EBIT. Let's just say 35% falls into EBIT and the company will be $250M of revenue and $45M of EBIT. Now all of a sudden a 12x EBIT multiple doesn't seems so crazy for a company growing 20%, has a long runway, sticky recurring revenue and possibility of price increases. Looked at another way, since most of the revenue is recurring, an acquirer could come in and cut a lot of SG&A and still maintain a 30-40% EBIT Margin. Off currently $185M of revenue that's around $55-75M of EBIT. Acquirer could pay 10x that multiple and it would still be an attractive valuation. TLDR: because of the recurring nature of maintenance and service revenues, Sapiens is worth more and current market valuation is modest.

Thanks Glory! To address your concern, I did. I believe the valuations of the underlying businesses are reasonable, if not understates intrinsic value for all except maybe Matrix. For example, Take Magic, which trades at 1.2x EV/Revenue, has 40% gross margins and trades at 7.5 EV/EBITDA. Check the 3 statement model where all the subsidiaries are listed in different tabs.

http://raritancapital.com/ideas/ Uploaded first idea to share with the forum.

I have been in contact with the management of PDRX. They are not harming shareholders but I wouldn't expect big things from them. The CEO comes in at 3PM every day.

Many thanks to board members for their support! Special shoutout to Palantir and Packer16 http://raritancapital.com/wp-content/uploads/2016/06/Q2-2016.pdf Please subscribe at http://raritancapital.com/investors for updates of quarterly letters, case studies, and investment ideas. I look forward to sharing more with the board, especially those interested in the smaller cap space.

What are the practical advantages/disadvantages of the partnership structure over the SMA structure?

Why are most funds structured as GP/LP instead of RIA? What are the specific advantages? Lower regulation? Lower transparency? Everyone else is doing it?

I went through the process of setting up a RIA and I didn't use either of them. I did all the paperwork myself and am familiar with the details of the process. PM me, I'd be walk you through the complete process.

I have gone through the process. There are a few steps 1. Set up the LLC 2. Go through Finra Entitlement and file the ADV online through there 3. Register as RIA through your state. Doing all the paperwork is yourself is the cheapest option. Or you can pay someone $3K to do it for you. Whole process can take a few months. You can go through http://brokercheck.finra.org/ Look up some funds and then use their ADV part 2 as a template.

I have read in Phil Fisher's works that he says that having someone on the board of directors with specialized experience is a red flag. Anyone know why this is? Hard for me to understand the logic.

Booth has better brand name. Also I would do a real life MBA by investing a small amount of money and reading/doing valuations/investment writeups.

I suggest "Warren you have said that you look for people with intelligence, integrity, and energy. What is your advice for those with integrity and energy but lacking in intelligence?"

Wow, what a way to paint with a very broad brush. From this thread I'd argue just the opposite. There are quite a few who've discovered that a spouse (and kids) are worth more than dollar amounts or opportunity cost. You're right. I didn't read the previous posts. My apologies to the board

From Ross Perot's Biography. "I clearly remember the day that Margot and I shopped for her engagement ring. We bought it in Baltimore at Tyson's Jewelers. It cost eight hundred dollars. That almost cleaned out my bank account, but it was worth every penny." Members of this board probably don't have the ability to find a wonderful woman and see that a wife is a great investment. Who run the world, girls - Beyonce.

morningstar

Say a company's debt is trading at 50 cents on the dollar. The company has a extra cash and wants to buy $100M worth of bonds for $50M. How does this transaction effect the three statements? I am thinking CFI -$50M Income statement - Gain on purchase $50M Balance Sheet - decrease in long term debt of $100M

http://www8.gsb.columbia.edu/centennial/value-investing-live

http://fcic.law.stanford.edu/interviews/view/19 Buffett talks about Moody's in the beginning of the interview

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/tbph/

I think it's extremely difficult to foresee that regulatory risk. You have the benefit of hindsight, but I don't think it's possible or prudent to care about that risk if investing in 2000-2001. The case study was more about how to identify businesses that are capital light, have a competitive advantage, and using excess capital to buy back shares.

Buffett owned it. Greenblatt owned it. Here is a short case study of one of the great businesses/investments in past 20 years. http://raritancapital.com/casestudies/MCO

"When I entered, I was an innocent and sensitive child; when I graduated, just past twelve, I knew how to steel myself against fortune's slings and arrows, to earn a little money in a variety of ways, to concentrate hard on whatever I had to do and above all, to rely mainly upon myself for understanding, encouragement, and pretty nearly everything else"

I laughed. I cried. The way Benny Grossbaum describes his upbringing and his life is fire. The depth of emotion, of character, of detail is out of this world.

For those who haven't followed the Zinc saga I uploaded a short case study of the now bankrupt ZINC. Much can be learned despite the company's poor performance. http://raritancapital.com/casestudies/zinc