Money and Finance
From the book Capital Account:
- Fade Rates And The Capital Cycle...
From Capital Returns (the excerpt below was from a Marathon letter in March 2014):Marathon looks to invest in two phases of an industry’s capital cycle. From what is misleadingly labelled the “growth” universe, we search for businesses...
- The Characteristics Of Easy And Difficult Turnarounds
In his 1979 letter to shareholders, Warren Buffett wrote: Both our operating and investment experience cause us to conclude that “turnarounds” seldom turn, and that the same energies and talent are much better employed in a good business purchased...
- The Truly Exceptional Business...
From The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks into Big Returns:The truly exceptional business can operate with little capital. When U.S. securities markets function normally, most healthy businesses have no trouble...
- Biotech And Mining Comparison...
From the book Cracking the Code: For every success in biopharma there are at least 10 failures. In a way, the biomedicine industry is a bit like the mining industry: it’s a capital intensive industry full of thousands of small companies trying to strike...
- Oak Value Fund Portfolio Managers Take Questions From Morningstar - January 22, 2010
1. What’s your take on Berkshire’s investment in Burlington Northern? When it comes to the long-distance transportation of goods in the U.S., the lowest cost, most energy efficient mode of transportation is rail. Though the capital-intensive nature...
Money and Finance
Improving returns with industry consolidation...
From the book Capital Account:
One of the primary cures for poor returns is consolidation, which is either driven by mergers and acquisition activity or by firms leaving the industry. By increasing the average size of firms within an industry, consolidation allows them to exploit economies of scale. This may improve the bargaining power of a business with suppliers and customers, while economies of scale in production reduce fixed costs as a percentage of sales. These forces have worked to great effect in the European paper industry over the last decade. The few firms that are left in the industry--with their vast plants and highly automated machinery--now spend a great deal of time in discussions with competition regulators, something which we regard from an investment perspective as a healthy development. 'Pricing discipline', the corporately correct euphemism for oligopolistic practices, is a term that always gives us a warm feeling whenever it crops up in our discussions with company managements...................
The above was written in June 2002, and was in regards to a discussion about the stocks of European technology and telecom companies. Today, a similar case may be made for consolidation among Australian mining and energy services companies. At Boyles, we are finally starting to see this among some of the micro-cap stocks we've been watching, and of which we have now begun to acquire a few shares (still too early for me to reveal names here). Among the bigger firms, Brookfield Asset Management and Bain Capital are among those that have recently begun to enter the space, with Brookfield specifically mentioning a strategic partnership to pursue industry consolidation.
- Fade Rates And The Capital Cycle...
From Capital Returns (the excerpt below was from a Marathon letter in March 2014):Marathon looks to invest in two phases of an industry’s capital cycle. From what is misleadingly labelled the “growth” universe, we search for businesses...
- The Characteristics Of Easy And Difficult Turnarounds
In his 1979 letter to shareholders, Warren Buffett wrote: Both our operating and investment experience cause us to conclude that “turnarounds” seldom turn, and that the same energies and talent are much better employed in a good business purchased...
- The Truly Exceptional Business...
From The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks into Big Returns:The truly exceptional business can operate with little capital. When U.S. securities markets function normally, most healthy businesses have no trouble...
- Biotech And Mining Comparison...
From the book Cracking the Code: For every success in biopharma there are at least 10 failures. In a way, the biomedicine industry is a bit like the mining industry: it’s a capital intensive industry full of thousands of small companies trying to strike...
- Oak Value Fund Portfolio Managers Take Questions From Morningstar - January 22, 2010
1. What’s your take on Berkshire’s investment in Burlington Northern? When it comes to the long-distance transportation of goods in the U.S., the lowest cost, most energy efficient mode of transportation is rail. Though the capital-intensive nature...