voyager
-
Posts
49 -
Joined
-
Last visited
Content Type
Profiles
Forums
Events
Posts posted by voyager
-
-
Aren't the OTA broadcasters sitting on valuable spectrum that the FCC might be willing to allow them to lease out? I'll admit I'm not up on the latest in UHF/VHF FCC plans though.
Spectrum is kind of a catch 22. For broadcasters, you really need that spectrum to have good quality on your channels, so is more of a terminal value item rather than additional value. If you want to do the math, you look up each broadcaster's license and then apply the going rate of gigahertz per thousand people from the most recent auction. I used to work in the industry, so I have a decent understanding of it.
The more important thing is OTT subscriber growth and OTT subscriber rates (currently less than half of what cable companies pay). If that continues to grow, broadcasters will be in fine shape even with cord cutting.
-
If you could no longer invest and you had to pick 3 fund managers to invest all of your money with for the rest of your life, who would you pick?
-
In the franchised car dealership business, so I can answer most specific questions.
Here are the popular ones:
1) Is the business model at risk?
No - it's not at risk. Just changing. Dealers used to make $ off of selling cars, now they make it from servicing. Selling direct won't scale because of 1) capital outlays for service facilities 2) laws that are ingrained 3) relationships in rural markets. Industry headwinds are overblow. EVs are good for dealers, because they'll get higher servicing market share. Level 5 autonomous driving is still very far off (20+ years) - Waymo's CEO said it not me.
2) How to analyze?
What's unique about dealers is that every single store is the same. A big part of performance is running a store better than someone else. Look at the unit economics for new, used, f&i, and service. Look at costs as a % of revenue. Other key things are fixed absorption and real estate ownership. Being in good, growing, local markets is also very important. From a valuation perspective, I like to think about it from a private market value standpoint.
3) Advantages of scale?
There's definitely an advantage to a point - probably 5 stores is enough scale for overhead, brand, and interest rates to be attractive. The industry will consolidate slowly. Because of franchise rules, acquisitions are slower to occur then other industries and more restrictive. It's hard to buy more than a few rooftops in a local geography, so not a lot of big m&a deals.
4) Pricing and gross margins on new cars.
Consumers have benefited. The internet has brought prices down. Gross margins are close to the bottom.
5) Which public dealers are well run?
None - most are average, with Asbury leading the pack. Berkshire owns the best dealer of scale.
Thanks
I repeatedly hear that OEMs will be beneficiary of EVs as servicing can be done directly with them via software updates.
I wonder how the average gross profit per vehicle breaks down into a) front margin, b) warranty, c) OEM incentives etc on an absolute dollar basis - do you know more?
Also, I see that some dealers open independent used dealerships with low avg prices offset by F&I, warranty etc. - What is your view on a) the sustainable economics of that model and b) the potential to scale as to me it seems any dealer could follow the same strategy?
Look up the NADA report for specifics.... here's the high level.
Selling new cars is ~50% of total gross profit.
For new non-luxury, the average selling price is $30k with ~2% gross margins. F&I ~$1k. Incentives/fees are ~$1k.
For new luxury, the average selling price is $45k with ~8% gross margins. F&I ~$1k. Incentives/fees are ~$1k.
In total, each portion makes up around ~15% of total profits and 1/3rd of gross margin off of new vehicles.
On the latter, I don't know the used market as well as the new market.
-
EVs are good for dealers, because they'll get higher servicing market share. Level 5 autonomous driving is still very far off (20+ years) - Waymo's CEO said it not me.
Where was this said? Thanks!
I don't think any research firms have done the math actually. For current info, use Cox Automotive data. I'll do the illustrative math here though: current franchised dealer service share is 30% of ~$500B. EVs cost ~2/3rds what combustion costs to service.... 100% EV market share would lead to ~$350B market size. Dealers will get, IMO, ~50% share of that because 1) more OEM parts will be required 2) less independent repair shops b/c of increasing software needs, skills, and fixed costs 3) customers will prefer dealers more b/c of technology component 4) auto repair market consolidation and scale requirements. Happy to go into detail on each.
-
In the franchised car dealership business, so I can answer most specific questions.
Here are the popular ones:
1) Is the business model at risk?
No - it's not at risk. Just changing. Dealers used to make $ off of selling cars, now they make it from servicing. Selling direct won't scale because of 1) capital outlays for service facilities 2) laws that are ingrained 3) relationships in rural markets. Industry headwinds are overblow. EVs are good for dealers, because they'll get higher servicing market share. Level 5 autonomous driving is still very far off (20+ years) - Waymo's CEO said it not me.
2) How to analyze?
What's unique about dealers is that every single store is the same. A big part of performance is running a store better than someone else. Look at the unit economics for new, used, f&i, and service. Look at costs as a % of revenue. Other key things are fixed absorption and real estate ownership. Being in good, growing, local markets is also very important. From a valuation perspective, I like to think about it from a private market value standpoint.
3) Advantages of scale?
There's definitely an advantage to a point - probably 5 stores is enough scale for overhead, brand, and interest rates to be attractive. The industry will consolidate slowly. Because of franchise rules, acquisitions are slower to occur then other industries and more restrictive. It's hard to buy more than a few rooftops in a local geography, so not a lot of big m&a deals.
4) Pricing and gross margins on new cars.
Consumers have benefited. The internet has brought prices down. Gross margins are close to the bottom.
5) Which public dealers are well run?
None - most are average, with Asbury leading the pack. Berkshire owns the best dealer of scale.
-
If you're a retail investor, Morningstar does a nice daily updated.
If you're professional, Capital IQ, FactSet, Bloomberg, all have daily alerts that you can create.
-
I listened to these a while back.... The part of the Buffett interview where he talks about Moody's is fascinating.
-
Ted probably knows the guy who runs it, given that its not far from where he lives.
-
I have a couple of pets, one of which recently joined the family.
Looking at this from a bottom up point of view, I suspect that a lot of smart people are going to wrong about the industry. It's just going to be a lot smaller than people think because the TAM isn't the entire pet market - it's only really the people who are concerned about managing expenses, since pet insurance isn't required by law. Predictability is important for that segment. For the rest of us, the economics of pet insurance are pretty terrible.
-
I suggest that you get your hands on an investment banking confidential information memorandum. There's a pretty standard way of presenting an investment case that your friend could use as a framework.
-
-
If you have professional software (Capital IQ, Factset) you can screen for management changes.
-
I own a little Berkshire and have obviously learned a bit from him, but to the extent Morningstar is correct...It seems like he has underperformed the market on 3, 5, and 10 year period. Over a 15 year period he has outperformed by 36 bps. Does this just seem subpar to anyone other than me? I get he's a great investor, but the fact that he HAS made billions and billions doesn't necessitate that he'll beat the market moving forward.
Am I missing something here folks?
I suspect that what we might be missing here is that Warren has other priorities than beating the market.
In order to deploy large amounts of capital in private businesses, Berkshire has to continue to have its pristine reputation. Warren has stated many times that the likes of Coke, Amex, and Wells Fargo are permanent holdings. If he were to sell them, that may impact his reputation. Kraft Heinz hasn't done too well, and Warren won't sell that because of the potential damage it could do to his relationship with 3G. That's almost half of Berkshire's portfolio that is off the table to be sold.
-
I’m enjoying the video of the meetings from the 90’s. Audience questions are from people like Bill Ackman, Christopher Davis and a bunch of Omaha locals (at least in 94). Steve Burke did us all a huge service lobbying Warren to get those videos online!
Would you be able to share where you found those videos? I'd love to have the chance to watch them too.
-
If anyone is still looking for a place to stay, I can offer an extra non-refundable room we booked for a negotiable price.
It's this one: Homewood Suites by Hilton, Omaha Downtown, 1314 Cuming Street, Omaha, NE 68102
-
Bloomberg is run off of Dunn & Broadstreet data - surprising right?
I believe that Yahoo runs off of Thomson Reuters.
CapIQ does their own.
Not sure about Factset.
-
Didn't know this thread existed...
We got CapIQ for $65k for 8 people. Factset quoted us 3 for $33k and 7 for 65k....
CapIQ was a no brainer.
-
Well let's think this through... The big earners are: BNSF (Texas), Energy (Iowa), Precision Castparts (OR), Lubrizol (OH), Clayton Homes(TN), Marmon (IL), Shaw (GA), Fruit of the Loom(KY), Forest River (IN)
Iowa has the worst state tax rate in the country at 12% (note that you don't actually pay the full 12, more like 10) and the rest are pretty decent - between 6% and 8%.
So, if we were to estimated and not do the exact math since that would take a good amount of time, they'll probably pay 28%.
With that being said, there are lots of other tax effects on Berkshire, such as the interest rate cap, capex expensing, amortization, ect.
It's hard to know what their after-tax returns would be since there is so much going on. It's likely that investors will be pleasantly surprised by the new deductions though.
-
Here are a few private companies that he might like Weber-Stephens, Gore Associates, Quicken Loans, or Penske.
On the public side, how about HOG, LUV, DLTR, or DIS.
-
If you had the opportunity to pitch Buffett an acquisition idea, which company would you pitch to him?
-
PE definitely isn't overrated. You can make a ton of money and it's pretty fun.
In my opinion, what's really underrated is being an operator.
-
Gardner, Russo & Gardner's Q4 13-F is out and they are reporting over 100 new positions(!). ...
Quite weird to observe indeed. - Especially if one look at those particular trackers. Incoming capital/accounts to be reallocated?
I think Tom runs a bunch of individual accounts as well, so some of those positions may be inherited.
Yes - it's a bunch of individual accounts.
-
Tax changes - there is an interest rate cap (30% of EBITDA is delectable) that REITs are able to use for a tax shield..... The rule changes their business model quite a bit since they have to return income to shareholders and typically use debt to grow.
I don't really invest in REITs, so there may be other factors.... This is likely one though.
-
What are some of your favorite questions to ask management when you have the chance to meet with them?
A few of my favorites include:
1) What are the chances that your business will lose money next year? What factors would drive the losses?
2) If you had to put your entire net worth in one competitor, which would it be?
3) If you got to start your tenure as CEO over, would you do anything differently?
Limping on Water by Phil Beuth book
in Books
Posted
I think this is a super fascinating read. I didn't learn a ton, however I loved the storytelling and found it to be very enjoyable.