For this week’s post, I decided to talk to the camera. Be sure to watch if you haven’t here.…Read more
9 states, 5 days, 2,092 miles, 32 hours of driving, 3 different companies, a ton of fast-food, 1 tornado scare, and a helllllllllllllllllluva lot coffee later, Geoff and I have finally finished our research trip and are back in good ole’ Dallas, Texas. It was a productive trip, and I thought I’d spend this week’s post talking a bit about the trip without revealing the companies we visited, for obvious reasons. (I know, I know – super annoying).
First, and most importantly – my biggest takeaway is that I think as investors WE ALL often forget that every stock we analyze and form extreme opinions on from public filings 100+ miles away are, in fact, real businesses. Everyone says they know this, but then you read or listen to their thoughts and it conveys the opposite. Real businesses are run by real managers. Real businesses have real employees. Real businesses have real assets. Real businesses have real customers. These real businesses are most likely very important in their real communities. And, the real people of these real businesses most likely have good intentions and are just trying to do the best that they can.
I truly think every serious investor should implement company visits and in-person scuttlebutt in their routine as much as possible. I think doing this helps take stock-price-gyrations out of the real business, and should help keep the big picture in mind – which is finding great companies that can compound their net worth for years to come.
One thing I often talk about on the podcast is being the customer in the companies you’re analyzing — experience what the real customers experience. If you’re thinking of investing in Disney, watch some content on Disney+. Plan a trip at Disney World. Eat at the park. If you have children, observe their reactions and mood. Basically, try to connect with why individuals use the product/business from an experience perspective. Have a journalistic mindset. This is all stuff that you can’t learn from a 10K.
Investing has a level playing field. Other people can read the same information that you can. I think putting in the additional work to go the extra mile (or 2,092 miles) in your research is what can separate the good from the great. Warren Buffett, in his early days, did this all the time – and it’s something that I think investors overlook due to information overload via the internet. Someone once asked Warren about Phil Fisher’s Scuttlebutt method at an annual meeting. Below was his response.
WARREN BUFFETT: Area 5?
AUDIENCE MEMBER: My name is Travis Heath (PH). I’m from Dallas, Texas. And my question regards what Phil Fisher referred to as “scuttlebutt.” When you’ve identified a business that you consider to warrant further investigation — more intense investigation — how much time do you spend commonly, both in terms of total hours and in terms of the span in weeks or months that you perform that investigation over?
WARREN …Read more
To Focused Compounding Members,
I hope everyone had a great holiday! Let me start by saying I am not one for New Year’s resolutions. I genuinely believe you should start today instead of tomorrow – and that an arbitrary date should not dictate when you should work to become the better version of yourself.
That said, one of the things I wanted Geoff and myself to do before the new year was to write down 5 goals that we would be proud of if we accomplish by this time next year. We had professional and personal goals. I decided on 5 because this was right out of Warren Buffett’s 5/25 strategy for focus. You can learn about that below from James Clear’s blog post below. (Hopefully James won’t mind me stealing his story if I link to his great book, Atomic Habits: https://www.amazon.com/Atomic-Habits-Proven-Build-Break/dp/0735211299/ref=tmm_hrd_swatch_0?_encoding=UTF8&qid=1578004386&sr=8-1
“The Story of Mike Flint
Mike Flint was Buffett’s personal airplane pilot for 10 years. (Flint has also flown four US Presidents, so I think we can safely say he is good at his job.) According to Flint, he was talking about his career priorities with Buffett when his boss asked the pilot to go through a 3-step exercise.
Here’s how it works…
STEP 1: Buffett started by asking Flint to write down his top 25 career goals. So, Flint took some time and wrote them down. (Note: you could also complete this exercise with goals for a shorter timeline. For example, write down the top 25 things you want to accomplish this week.)
STEP 2: Then, Buffett asked Flint to review his list and circle his top 5 goals. Again, Flint took some time, made his way through the list, and eventually decided on his 5 most important goals.
Note: If you’re following along at home, pause right now and do these first two steps before moving on to Step 3.
STEP 3: At this point, Flint had two lists. The 5 items he had circled were List A and the 20 items he had not circled were List B.
Flint confirmed that he would start working on his top 5 goals right away. And that’s when Buffett asked him about the second list, “And what about the ones you didn’t circle?”
Flint replied, “Well, the top 5 are my primary focus, but the other 20 come in a close second. They are still important so I’ll work on those intermittently as I see fit. They are not as urgent, but I still plan to give them a dedicated effort.”
To which Buffett replied, “No. You’ve got it wrong, Mike. Everything you didn’t circle just became your Avoid-At-All-Cost list. No matter what, these things get no attention from you until you’ve succeeded with your top 5.”
One of my goals for 2020 is to write a lot more. To quantify this, I’m committing to one post a …Read more
Parks! America (PRKA): A Gem Trading at a 15% FCF Yield That Should Have 50%+ of Its Current Market Cap in Cash Within 5 Years
by ANDREW KUHN Parks! America Price: $0.14 Shares: 74.8m MC: $10.4m Cash: $3.2m Debt: $2.4m EV: $9.6m Geoff and I use a checklist that we go through before investing in any company. Let’s go over it here before jumping into the actual business. Boxes that need to be checked for us to invest: Overlooked: Parks! America is an illiquid microcap. The stock currently has a market cap of only $10.4m, of which only about 4% of the shares turn over...… Read more
“Your premium brand had better be delivering something special, or it’s not going to get the business” -Warren Buffett For the past few weeks I have been studying and doing research on Hostess Brands, the maker of the classic chocolate cupcake with the squiggly white frosting line and of course the iconic, golden, cream-filled Twinkie. At first glance, the company passed almost all my filters on my investment checklist for a company I would want to be involved with. They claim to have a 90%...… Read more