tag:blogger.com,1999:blog-50277311612857314902024-03-13T16:56:20.508+08:00Venture OutlookInvestment Commentary | Working Papers | Investment ThesesUnknownnoreply@blogger.comBlogger35125tag:blogger.com,1999:blog-5027731161285731490.post-59813244254812659142012-12-18T22:39:00.002+08:002012-12-18T22:39:27.108+08:00Bank Profits and Inflation
An opinion written in 1980, by Henry C. Wallich:
http://www.richmondfed.org/publications/research/economic_review/1980/pdf/er660304.pdf
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-60468958863259244952012-01-09T22:11:00.021+08:002012-02-07T22:45:22.537+08:00ZINC (Horsehead) Investment ThesisHorsehead Holding Corp (ZINC) is a company that recently came to my attention. ZINC is a metal waste recycler with a turbulent recent past, and it appears to be one of the few zinc pure plays for an investor looking to bet on zinc prices.
Horsehead's 3 primary lines of business are:
Collecting EAF dust - it carts off EAF dust (a zinc-rich waste byproduct) from steel mini mlls for a feeUnknownnoreply@blogger.com1tag:blogger.com,1999:blog-5027731161285731490.post-7668586590818773022011-05-29T21:26:00.015+08:002012-01-29T16:52:35.387+08:00Betting on a Housing Recovery - Title InsuranceTransaction volume in the American housing market has been in a downward trend since 2007, likely driven by 2 factors:massive over-pricing caused by speculative demand prior to 2007 - prices are gradually dropping to more affordable price-to-income ratios.
a generally sour employment situation and a weak income growth, caused by a slow economy since 2008.
At some point in the future,the number Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-66962244924643053772011-04-24T01:14:00.016+08:002011-04-27T16:35:27.170+08:00Dominant firms and Wide moats : How moats are breachedIncumbent dominant firms typically have a strong competitive position. These companies are dominant because they have out-executed the competition, and have found the most successful playbook for their ecosystem. If the firm's dominance came after years of open competition, then chances are that the winning playbook has been battle tested against almost every other type of competitive strategy. Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-61845116106771332412011-03-06T13:16:00.009+08:002011-03-06T18:11:14.142+08:00Microsoft (MSFT) Investment Thesis / Stock AnalysisMicrosoft is one of the blue-chip companies that are trading today at extremely attractive prices. By any measure, Microsoft is an impressive business machine; the economics of its business allow it to achieve ROAs in excess of 20%, ROE's in excess of 40%, and net margins in excess of 20%. To top if off, Microsoft has managed to grow its revenue and earnings per share at a CAGR > 10% over the Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-5027731161285731490.post-16839758178290146962011-02-13T22:47:00.005+08:002011-02-21T21:30:34.045+08:00Western Union (WU) Investment Thesis / Stock AnalysisWestern Union is one of the world's largest C2C cash-to-cash money transfer companies. While it also offers C2B, B2B and account-based and debit-card based transactions, the C2C cash-to-cash transfer business is still its largest line of business and its core.Economics of the core business are excellentWestern Union has the world's largest network of agents signed up to its money transfer networkUnknownnoreply@blogger.com2tag:blogger.com,1999:blog-5027731161285731490.post-21386016604515638862011-01-23T10:13:00.007+08:002011-02-21T21:28:21.009+08:00Betting on Interest rate movementsInterest rates are now at historical lows across the board (here) , driven largely by the Federal Reserve's quantitative easing initiative. Yields on all forms of debt have been pushed down as the Fed continues to add Treasuries and other Securities to its balance sheet. At some point this will reverse and yields will start to rise, though it is anyone's guess when this will happen. Given the Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-14748558128330064412010-12-26T17:40:00.009+08:002011-02-21T21:28:56.412+08:00Investment Outlook 20112010 in reviewThe US stock market spent the better part of 2010 in mildly overvalued territory. As of December 2010, the S&P is hovering around 1200, and the overall market capitalization is around USD 14.2 trillion. The market capitalization ratio is around 100%. As we've seen in our post in October 2008, the fair value of the US market is around 70-80% of GDP, which in todays terms Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-15742892225946758402010-10-24T14:29:00.016+08:002010-10-27T22:39:22.803+08:00Consumer food companies: profitability, debt burden, revenue diversityHere's a cheat sheet for the profitability, revenue diversity, and debt burden metrics for several of the world's leading consumer foods companies:Blend of reported numbers and estimates for FY 2009 / 2010 (USD millions) CPB HSY NSRGY KFT HNZ GIS K Revenue 7,676 5,298 107,618 49,000 10,500 14,796 12,575 % from US 81% 86%Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-82503767879846690972010-09-11T23:34:00.029+08:002011-02-21T21:30:06.938+08:00ADP Investment Thesis / Stock AnalysisADP is in the business of handling human resource and payroll processing operations for its customers. It is part of the data processing or back room operations outsourcing industry. This industry has been around for some time, and cuts across many industries and business functions. For example: Public listed companies outsource their shareholder and investor relations services to companies like Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-5027731161285731490.post-41002832970969801962010-06-28T09:21:00.017+08:002010-07-28T14:46:00.358+08:00Is a rights issue good for shareholders / Should I participate in a rights issue?One way that companies raise capital is by issuing shares through a rights offering. Some shareholders see rights issues as a "gift" from the company, because the exercise price is usually below the market price of the shares in the market. They view a rights issue as the company giving them a special "by invitation only" opportunity to buy shares a discount to its market price. Others see a Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-2819798579979427262010-05-01T17:02:00.008+08:002010-09-27T20:23:59.263+08:00Analysis of First Ship Lease Trust (Singapore)At it's current price (SGD0.60), FSLT's attractiveness as an investment boils down to 2 questions:Is a price of SGD 362m (the market cap) a good price to pay for (a) ownership of the 23 ships that the trust owns, and (b) assuming responsibility for SGD 650m of bank debt.Will the trust management be able to manage well (ride the cyclical shipping demand / manage capital) to the benefit of unit Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-40332964245856071342010-04-04T10:46:00.007+08:002010-04-10T21:29:22.389+08:00How Demographics affects Equity Investors (and people saving/investing for retirement)Some investment theses rely in part, on making a broad bet on the economic prospects of a country. (For example: buying an equity index fund) The economic prospects of a country are determined by two key factors: its resources and scheme of organization (its legal, cultural, financial and political framework), and its demographics. The former is understood and often acknowledged; the rule of law,Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-49788879985372533202009-12-26T15:45:00.051+08:002010-05-12T22:57:21.406+08:00Investment Outlook 2010 - Inflation Resistant Stocks2009 was an eventful year as the financial crisis played itself out, and the stock market plunged in March as panic set in. Investors who bought during panic are now enjoying a nice lift as the S&P 500 looks set to close the year at about 1100, a large rebound from its March lows of around 700.However what is remarkable is that even during the lows in March, stocks were never truly cheap byUnknownnoreply@blogger.com1tag:blogger.com,1999:blog-5027731161285731490.post-87216527341546657152009-11-01T19:18:00.010+08:002012-03-25T10:32:56.675+08:00The Nature of Money (How money works) in the EconomyThe role of money and its impact on the economy is often misunderstood. Many ideas about money today are based on a pre-1960s world-view where money was gold-based. They treat money as a secondary variable to underlying economic forces, equating it to the motor oil that lubricates the economic engine. This view is no longer accurate in today's fiat-money capitalist economies where free flowing Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-57749314263687873792009-09-19T16:16:00.008+08:002010-09-27T19:57:02.298+08:00Update on bank investment thesis: WFC, USB, Lloyds TSBThe banking sector is undergoing a tremendous amount of stress and change, with parameters that fall beyond our earlier investment thesis for banks WFC and USB and Lloyds TSB (UK). It is necessary to reconsider the investment thesis for banks, and incorporate these latest data points.Broadly the following macro changes have to be factored into the investment thesis: The macro environment is Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-12138497212470299512009-08-23T11:48:00.018+08:002009-09-02T10:04:38.848+08:00Consumer Staples Stocks - Long term outlook for the FMCG industry, and what it means for investorsFMCG businesses like P&G, Unilever, and Colgate-Palmolive are often seen as reliable long term investments, because their products are seen as daily necessities and are perceived to have strong brands with economic moats. The major FMCG companies' decades long track record of steady earnings growth reinforces this image.However the last century's structural factors that allowed FMCG companiesUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-73054421891988505422009-07-19T00:25:00.026+08:002011-03-13T21:59:45.721+08:00Analyzing Retail Stocks - Economics of the business, and what it means for investorsIn this post, I describe the nature of retailing and the key factors that affect a retailer's health. It broadly forms the base of the investment thought process for investments in retailers.The nature of the retail businessand the fundamental drivers of successThe retail business is a tough one, and very few retailers succeed in building enduring businesses. The retail landscape has changed Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-78883145314828129412009-06-07T11:25:00.006+08:002009-08-30T08:03:37.203+08:00Analyzing oil companies - The economics of the energy, commodity and materials business, and valuation trapsOne school of thought is that investing in commodity-processing/resource-owning companies, such as oil majors like XOM, RDS, BP and CVX, and pulp and paper companies like Votorantim Celulose e Papel (NYSE ADR: VCP), is a good way to preserve wealth during periods of elevated inflation. The underlying hypothesis is that the price of commodities will rise in line with the general price level, Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-51410023113611239002009-05-17T21:25:00.006+08:002009-05-17T21:41:46.504+08:00The mechanics of buying stocksMost of us receive regular statements from our stockbrokers telling us what stocks we own. But what happens if your broker goes bankrupt; will you lose all your shares? For legal and practical reasons, few people have physical stock certificates today. So how do you prove that you own your stocks if your broker goes bust, or makes a mistake?Here's what actually happens when a stock trades, and Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-36311094049568279022009-03-15T11:32:00.011+08:002009-08-30T10:38:37.416+08:00Nationalization risks for Investors (in Utilities, Banking, Insurance, Communications etc)Industries like utilities, banking, insurance, telecommunications, and public transportation are crucial to the functioning of modern society. Because they are so critical, many countries nationalize these industries explicitly or impose private ownership restrictions, to ensure that these essential services won't be held hostage to private interests. Services that are monopolistic in nature, Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-56035748855901272182009-02-15T20:01:00.011+08:002009-06-04T21:04:03.157+08:00Analyzing a Bank - business quality, credit discipline and resilience to lossesIf you intend to invest in banks, you'll need to get a feel for how good a bank will be as in investment. I'm going to describe one way you can get a feel for a bank's business strength and its credit quality, and by proxy, whether the bank's management is making good lending decisions. This is especially important in light of the recent reckless lending behavior of some banks, which has already Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-5027731161285731490.post-39449630918017421402009-01-18T15:45:00.010+08:002009-08-30T10:28:57.451+08:00Earnings managment and Creative accounting - How pension accounting can be used to boost short-term profits (Investors beware!)If you are planning to invest in a company with a defined benefit retirement plan, then you'll want to have a close look at the company's pension accounting. Why? Because (1) companies can use pension accounting to smooth out earnings, or even report headline profits when the underlying operations are running at a loss, and (2) companies can report short-term profits even if they have vastly Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-51040573270490514372008-12-22T20:44:00.019+08:002009-08-30T10:31:03.941+08:00Singapore's sovereign wealth funds - GIC and Temasek HoldingsSovereign Wealth Funds being in the news lately, I've gotten a few questions about the difference between Singapore's two SWFs: Temasek Holdings and GIC (the Government of Singapore Investment Corporation).Here's the summary:1. They are 2 separate and distinct companies, and from legal structure standpoint, they are incorporated as Pte Ltd companies, under the Singapore Companies Act.2. Both Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5027731161285731490.post-5088350468811217512008-12-18T00:36:00.015+08:002009-03-09T23:34:24.527+08:00Preserving the International Purchasing Power of your SavingsThere are 3 levels of investment success that investors can achieve:1 - Preserving the real value of their savings (2-3% pa growth)2 - Grow the value of their savings in real terms (4-7% pa growth)3 - Become rich through investing (achieving 8+% pa growth)Many investors are fixated on becoming Level 3 investors, but the reality is that a large number of investors fail to even achieve Level 1 Unknownnoreply@blogger.com0