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Archive for the ‘Strategy’ Category

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A Rare Business Model

Since 2008 this company has converted 58 cents of every dollar of EBIT into free cash flow. This is like a company with a 35% tax rate converting 90% of reported after-tax earnings into free cash flow. All the while it was paying interest and growing sales at rates above nominal GDP growth.

If you’re looking for a stock to buy and hold forever, this is your stock. This is a perfect buy and hold forever stock.

Click here to learn more

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micro-cap-conference

I’ll be speaking about my books and research in Philadelphia at The MicroCap Conference on October 24th and 25th. Should be a lot of fun.

The focus of The MicroCap Conference is to highlight the most attractive companies across various sectors. We will be bringing up to 75 companies in addition to expert speakers to present to the audience. October 24th and 25th will be jam-packed with company sessions, presentations, industry panels, good food, and of course plenty of time to network with other investors over drinks.

For tickets and more information, click here–>Philadelphia 2016 – The MicroCap Conference

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It’s one of the cheapest stocks we’ve written about in Singular Diligence. Right now, it trades at a huge discount to comparable companies and historical prices paid in the past for acquisitions of companies.

Cheaper than many peers while also having better growth prospects than those peers, it’s a growth stock that trades at an unusual discount for a company that isn’t seriously troubled.

Click here to learn more

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This is fun. Deep Value has now been translated into Simplified Chinese.

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If you were looking for a good reason to read the English version, this is it.

Buy my bookDeep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations (hardcover or Kindle, 240 pages, Wiley Finance) from Wiley Finance, Amazon, or Barnes and Noble.

Here’s your book for the fall if you’re on global Wall Street. Tobias Carlisle has hit a home run deep over left field. It’s an incredibly smart, dense, 213 pages on how to not lose money in the market. It’s your Autumn smart read. –Tom Keene, Bloomberg’s Editor-At-Large, Bloomberg Surveillance, September 9, 2014.

Click here if you’d like to read more on Deep Value, or connect with me on Twitter, LinkedIn or Facebook. Check out the best deep value stocks in the largest 1000 names for free on The Acquirer’s Multiple.

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Huge Margins At Capacity

A stock that can trace its roots to Sidney Jacobson’s Sid Tool Company founded in 1941 in Manhattan. To diversify its sales, in 1961 Jacobson started a catalog business offering discounted prices on imported cutting tools. Since it was a catalog instead of a store, the book was able to offer a wide range of products. By 1964, it had over 150 pages. Today, its catalog–known as the “Big Book”–has over 4,000 pages, with customers in all 50 states, through a network of five customer fulfillment centers (four in the United States and one in the United Kingdom) and 106 branch offices (104 in the United States, one is located in the United Kingdom and one in Mexico).
Over the next 5 years, the company can increase sales, and margins, and pay out free cash flow without additional investment in infrastructure. It is cheap today compared to what it will be earning in 2021.

Click here to learn more

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The Acquirer’s Multiple® is the value ratio “acquirers”—buyout firms, activists, deep value investors—use to find undervalued stocks.

As Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations shows undervalued companies trading on a low acquirer’s multiple tend to be good targets for investment.

We Need Your Help

We’d like to offer a hedge fund-like deep value strategy in a liquid, low fee, tax-efficient way. The strategy will target deeply undervalued activist and buyout targets and hedge to protect against major stock market crashes.

To help us learn more about your interest in The Acquirer’s Multiple® strategy, please complete the survey here.

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If you are as perplexed by the Kardashians as I am, you will love this analysis from The Private Investment Brief:

[T]he Kardashians are at or near the top of a very large heap. And they climbed there from quite a low base not nine years ago, without any conventional celebrity merit to speak of beyond a cable TV reality show of modest ratings success. Information about these things is notoriously unreliable, but it’s not crazy to speculate that the family collectively takes in something approaching $100 million per year in gross income. A typical industrial company might have to gross over $1 billion to earn that much in operating income, and a typical hedge fund might need more than $2 billion in assets under management. If like me you like to study business success, then perhaps you should study and even admire the Kardashians, despite the fact that—or is it because?—their pre-eminence is in a much different field than your own.

…Whether we like it or not, in other words, we’re all Kardashians now, so perhaps we shouldn’t be so dismissive. Back in old Europe, young women from good families would sometimes pay discreet visits to their counterparts in the demimonde, seeking some insight into the duties of a new wife. So too should we acknowledge that true expertise doesn’t always with status and credentials. Kim Kardashian may well be a better marketing professor than the ones you find at Kellogg.

…When people my age get on the subway in the morning and find themselves surrounded by 50 millenial heads buried silently in 50 iPhones, they tend to think the world is ending. But the basic business model of the modern mobile celebrity is no different than Milton Berle’s nearly 70 years ago: the celebrity commands the attention of the public, and then that attention is transformed into money via some type of advertising or endorsement….

While conceptually the modern mobile celebrity is the same as the celebrity of yesteryear, there is a huge difference in the execution. In the 1940s, a movie star would have to appear in public maybe twice a year to promote a new movie, and that was considered an annoying but necessary burden of fame. Today, the mobile celebrity entertainer must appear in virtual public twice a day at a minimum, or else risk falling to the bottom of a smartphone user’s feed. That is to say, in the new world of mobile entertainment the required velocity of fame is much higher than it used to be. And with the need for more velocity comes the need for more ephemerality: Each appearance by the celebrity on the smartphone screen must manage to be both instantly attention-grabbing and instantly forgettable, so as not to overtax the brain of the viewer while at the same time building up the “mental availability that is crucial to selling brands, especially in highly fragmented, mass-market product categories like fragrances, mobile apps, and clothing where the Kardashians do especially well. The goal is not to get 40 million people to love you, it’s to get 40 million people to at least think of you when they are buying perfume.

I doubt she’s ever used this term explicitly, but what Kris was describing is the concept of risk bearing economies of scale, one of the oldest and simplest strategic competitive advantages a company can enjoy—and the third success secret of the Kardashians. Risk bearing economies of scale are the reason movie studios and record labels and insurance underwriters like to be big, because they diversify the risk of individually risky investments and decisions. And they’re crucial in the world of mobile entertainment, where the name of the game is to generate tweets and photographs and stories that become “hits” for that day or hour….

Read more: Success Secrets of the Kardashians | The Private Investment Brief

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