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compoundvalue

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  1. ~ -5% (a bit hard to track as across a few accounts with inflows and outflows). Sold a few risky things in March and April that have tripled or quadrupled since and concentrated around 5-6 names that did well since but not as well (most significantly WFC). Should have probably sat on my hands in March and April
  2. I didn’t know these. There are a few more actually
  3. NWC should be calculated from the balance sheet. Generally speaking: Inventory + Accounts Receivable + Other Operating Assets - Accounts Payable - Other Operating Liabilities = NWC Please note that the Other Assets/Liabilities part varies between companies. Each asset/liability in the balance sheet should be examined in order to determine whether it's an operating asset/liability. The "Changes in WC" line in the cash flow statement represent the delta between balance sheet dates. For example: -NWC 12/31/2016 USD100m -NWC 12/31/2017 USD120m 2017 Changes in WC in the cash flow statement: ($20m) or negative cash flow of USD20m No good figure for NWC as a % of revenue, generally speaking the lower the better. Having said that, when liquidation value is concerned negative NWC is a bad thing. All of the above refers to a going (and growing) concern situation. For further reading I highly recommend the McKinsey valuation book
  4. Changes in operating assets and liabilities also relate to capital efficiency: - A business with low levels of net working capital (as a % of revenue) is more capital efficient compared with a business with higher levels of net WC. It would require less capital to grow - A business with negative working capital (e.g. retail) generates cash from WC when it grows. This is a huge plus at times of expansion The above reverses if the business contracts: the positive WC business generates cash flow while the negative WC business requires CF (paying to suppliers for past purchases higher sums than what's being collected from customers on a smaller revenue base). All told I think it's safe to say that a business with low levels of net WC is better than a business with high levels of net WC. A business with negative WC is even better, it uses WC as a source of capital to fund growth (a retailer charges customers in cash and gets credit from suppliers, the delta can be used to buy inventory, for Capex etc.) The above affects ROIC which should affect the multiple (businesses with higher ROICs should generally be assigned higher multiples)
  5. +42.1% USD pretax. Concentrated portfolio with 8-10 names, low turnover. CAI +192% and OTEL +105% did most of the heavy lifting. CLMT -22.2% was the worst performer
  6. Do you have a link to a thesis or anything like that ?! There's a write-up on VIC that sums up the thesis pretty well. It's a classic bad biz/good biz story with a bunch of noise in the numbers. It's mostly known as a retailer, but the new CEO is a wholesaler with extensive M&A experience, and the biz is increasingly becoming a pureplay wholesaler (thus setting itself up for multiple expansion). The major event was selling most of the retail biz last yeah to delever, but they still have some 200 company owned retail stores that I expect them to get rid of. They also own some 16 distribution centers (RE value in a retail play - where have we heard that before!) post their last acquisition where they'll have a bunch of sale-leaseback options. So basically, it seems like we have a quiet competent CEO in his best years where the market might not appreciate how the biz is transforming. There's always integration risks, but experience is a huge plus, and in wholesale distribution I think it's pretty straightforward. It's trading at around 4 times this years Ebitda guidance or around 6-7 times wholesale Ebitda, but wholesale should grow nicely with their latest acquisition and customers wins (grew some 12 pct. last quarter) and then you have a bunch of value unlocking options. Sometimes it can take ages for management to unlock value, but the CEO seems pretty intent on pulling the right levers. While retail isn't popular right now, privately negotiated asset prices seems priced to perfection most places, so I'd prefer if he acted swiftly before an eventual downturn. Couldn't find the VIC write up can anyone share a link maybe? After looking into it, I think the market totally misunderstands the company and the transformation strategy punishing SVU with a distressed retail operation multiple. Sale of Save-A-Lot and purchase of Unified Grocers ads a bit to the confusion which is why the opportunity probably exists. EBITDA run rate of ~$515m post Unified Grocers transaction, net debt should be less than $2bn post transaction including pension obligations capital leases and what not. EBITDA should be growing even without a turnaround/divestiture of the retail business, reasonable leverage. Potential catalysts: additional deleveraging (same TEV lower net debt), sale of the losing retail business, continued growth (and as a result multiple expansion) improved capital efficiency by a sale and leaseback of logistic centers and/or disposal of the retail business (and as a result multiple expansion). Downside on the other hand seems to be limited, even if they stop growing, debt levels are manageable and plenty of time to respond. The margin of safety seems adequate. Interesting situation, management seems competent and honest. all told the stock seems to be too cheap.... Thanks for the idea kab60!
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