Great companies which fail to create shareholder value

[Spekulatius]

12 hours ago, Cod Liver Oil said:

Charts are telling. The Disney chart is damning. If you can get in front of positive changes at a dominant company that has luffed, you have a tailwind of years. Tencent has been running a great business for years but the macro has sucked; I can't blame Ma for it. Disney has a management problem which could conceivably improve. Is the IP flywheel really broken? ABNB invented a category which was genius but is kind of tired at this point. Taking out the garbage on vacation has lost its charm. Chesky's diddling won't help. Nintendo has sick IP but thinks shareholders are the great unwashed.  As the great autistic triillionaire monk has said, consider the most ironic outcome, for it is the most likely.

I actually  like  Disney and bought some shares. I think it’s one example where the fundamentals have stalled and now they improving  but Mr Market is sceptical and hence the stock has not reacted yet. At least that’s the story the chart is telling me. I could be wrong  and it’s a false start but I think there is a good chance that the future is a whole lot better than the past.

Edited 14 hours ago by Spekulatius

[John Hjorth]

14 hours ago, Loss Horizon said:

Luxury vehicles do contain fair share of value in form of materials and labor. So do boats and private jets.

 

Luxury fashion items on the other hand contain very little besides the label. That is obviously enough for many, but I don't trust this model for the future.

 

@Loss Horizon,

 

Luxury companies in reality have the ability to tax human vanity!  - Fragile business model 

[Spekulatius]

Even if you buy a “great company”, the timing is extremely important as value does not necessarily to accrue proportional to intrinsic value. A great company can be a bad investment when bought at a too high valuation at the worn time. this has always been true but we went through a period from 2010 to 2021 where in general multiples were generally expanding for quality company across the board , so it seemed like this self evident law was not valid any more.  However, it should be obvious to anyone that you can just as well overpay for a quality stock than any one stock.

[villainx]

13 hours ago, Spekulatius said:

the future is a whole lot better than the past.

 

At certain point, possibly this very moment, how can it not, still loaded with good assets.

 

 

[Dalal.Holdings]

We should also think about those “great” SaaS companies that have yet to earn a decent GAAP profit. Just machines that feed on common stock investors in order to churn out employee stock based comp. Many investors, including “value investors” were willing to pay huge multiples for these (valuing them off Price/Sales, of course) and got totally hosed.

 

Stock based comp is, unfortunately, a real expense. And reality eventually always reasserts itself.

 

Then there are software companies like Adobe, Intuit, even MSFT in some cases that have grown accustomed to abusing their customers with insane pricing and price rises year after year. Intuit lobbies regularly to keep the U.S. tax code complex so they stay in business. It’s actually great to see AI deliver a little karma…