Simple Investor

Agree. Be great to hear his thoughts.

I am paraphrasing and going off memory. But according Benjamin Graham if you have a stable business why should shareholders finance the entire business? Another words a certain portion of the capital structure of a very good business should be debt and not 100% shareholder financed. Wouldn’t using debt remove some of the risk for the shareholders and place it on the bond holders. And as mentioned above increase the returns for the shareholders. Lastly, Graham believed it imperative companies issue bonds for investors. Almost like their duty. Some investors need the safe return bonds offer (Pre 1.75% 10-year US treasury). If we started a biz using only equity and got it going to a fantastic going concern. At some point it would be smart to take on debt and remove some equity off the table. For companies like PG they should and will carry debt forever; and hopefully increasing amounts. At PG the Net Income is 10-14 times interest payment. Significantly safer than Grahams leverage recommendations. If I knew I was going to live forever and always make money I would probably always carry a mortgage (maybe 50% Debt to equity).

I have been doing some work on Wabtec. They have done about 34 acquisitions since 2005. This has added around 800mm in goodwill. The interesting thing is parts of the goodwill are allocated to “deductible goodwill”. Not sure what number question we are on so I will use letters. A. Has anyone seen or heard of deductible goodwill? I have not seen this amortized or deducted on the WAB 10-k. So far investor relations says “some goodwill is amortized’. Not sure if that is true. B. How about adjusting goodwill for currency fluctuations. Is this normal? The past two years they have lowered goodwill value by $80mm due to currency fluctuations. from 10-k On February 4, 2015, the Company acquired Railroad Controls L.P. (“RCL”), a U.S. based provider of railway signal construction services for a purchase price of approximately $78.0 million, net of cash acquired, resulting in preliminary goodwill of $14.9 million, all of which will be deductible for tax purposes. and Goodwill Freight Transit Total Goodwill previous year (2014) 515,067 347,217 862,284 Adjustment to purchase (1,210) (4,056) (5,266) Acquisitions Goodwill 28,964 12,140 41,104 Impairment - foreign currency impact (10,856) (28,788) (39,644) year end (2015) 531,965 326,513 858,478

Buy KO, PEP, WMT, WFC, PG, MCD, CSCO, and a few others. LIve off the dividends that should grow at 5-10% annually.

Value Investing Podcast by John Mihaljevic is great. Just started jamming to that last week. Also Tim Ferris. Multiple topics but a lot of investing guys.

FMBL - probably 80% owned by family. thinly traded bank - 0 shares traded today at 1pm. CPB - I believe is 30% owned by family members

- Raising money. - going back and forth between investing and sales (money raising). - meeting the client expectations - being a good investor? haha I manage SMA's at this point with just under $40mm in AUM. I'd consider starting a partnership at some point to focus more on growth through investments as opposed to managing clients money to their goals. You can be the best investor in the world but if you manage $100 then not much is going to happen. If you have done sales in the past then at least you have that going for you.

I wrote something up on Chemed Corporation CHE. They have compounded at 28% since 2003 in some very basic businesses. Kevin McNamara is the CEO and should be in consideration for this list. Trades at a PE of 25. write up http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/che-chemed-corp/msg229878/#msg229878

It looks like Monarch has a $26 million dollar equity portfolio as well. Would you subtract the equity portfolio to get a lower EV? They also stopped filing with the SEC in dec 14. The did a Reverse/Forward Stock Split to reduce the company record holders of stock below 300 persons. http://www.monarchcement.com/Assets/PDFs/SEC%20Filings/2015/Qtr%201/2014%20Annual%20Report.pdf