Mohawk Group and Amazon FBA Roll-ups

In his book Life 3.0, Max Tegmark opens with a chilling scenario. Scientists, having mastered the art of creating a “SuperIntelligent” AI, are in the process of making the system go-live. I’m not using SuperIntelligent as a mere superlative. It is a well-established concept in computer science circles regarding the potential of AI. Essentially, an AI program can be …

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The Wastebasket of Insurance

An insurance book/company is considered to be in run-off when it ceases writing policies. These companies may be standalone entities who exist solely to manage the orderly winddown of existing liabilities or, more likely, segments within a larger active insurance firm. For example, many asbestos claims written before 1986 still represent liabilities of some of the largest insurance companies in the …

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Game Publishers, Distributors and the Console Wars

Democratization and the Console Cycle  PlayStations and Xboxes are ubiquitous in homes today, but this wasn’t always the case. In the early 90’s, the space was dominated by Sega, creator of the “Genesis”, and Nintendo, creator of the famous Nintendo 64. Sega has all but vanished from the hardware space, but Nintendo had a recent vitalization with the successful Nintendo Switch debut, …

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Garmin: An Anagram of Margin [GRMN]

PNDs to Smartwatches  When I ask anyone in their 30s or 40s about Garmin, they invariably respond with, “Didn’t they sell those windshield GPSs back in the day?” Garmin was founded in 1989 but didn’t rise to prominence until 1998 when it unveiled its handheld GPS system. Over the next decade, Garmin completely dominated the …

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Mid-Year Review [December 2020]

The second half of the year gave me the opportunity to analyze some very high-quality companies, including Arista Networks, United Health Group, Netflix and, most recently, Disney. As I said in my first mid-year write-up, you will find a swath of different types of opportunities here. I talk about deep value companies [Rolls Royce, Simon …

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Disney and Unamortizing Assets

Disney’s Unamortizing Asset Most assets amortize. Buildings depreciate, customers churn, patents expire, and wells deplete. A business must continually replenish these assets in order to remain competitive. Absent maintenance reinvestment, every business is a melting ice cube of assets – both tangible and intangible assets. For example, an oil well producing 100 barrels a day …

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Vertical Integration in Media: Netflix

The Queen’s Gambit A month ago, Netflix’s new limited series “The Queen’s Gambit” took the world by storm. For chess enthusiasts like myself, the allure was the central role chess played in the film [Beth Harmon’s games were allusions to famous World Chess Championship matches, openings like the Sicilian were featured prominently, etc.] Although, I …

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Intro to Defense Contracting and Lockheed Martin

The Making of Lockheed Martin When I read the book “Prophets of War” [which is a must-read for anyone invested in NOC, LMT, RTX, etc.], the following sentence stood out to me: “It [Lockheed Martin] is the nation’s stop government contractor, with $36bn in federal contracts in 2008 alone. That comes out to roughly $260 …

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Interview with Air Products IR [APD]

[Mun Sheih requested not to be recorded, so a transcript is not available. Interview Date: July 9th, 2020] Mun Sheih is the head of IR at Air Products. The biggest takeaways of the call were (1) you can utilize “piggybanking” and “density strategies” to drive incremental margins in regions where there is an on-site presence; …

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