Month: June 2020

On CROs, Script Data, Merger-of-Equals and Statistics [IQVIA, ICON, PRAH, LH]

Behind every pill you take is a buzzing ecosystem of manufacturers, government regulators, R&D and marketing departments and data aggregators working in concert to bring a drug from formulation to regular use. As an investor, I’ve always had a behavioral bias AGAINST the biopharma industry, but as I’m looking under the hood, I’m seeing a …

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Northern Technologies Corporation: A Play on Plastic?

I recently came across a 1984 letter by John Templeton in which he gave a prescription to investors at a time when the market was seemingly very expensive. (Courtesy of MOI Global on LinkedIn) What really stood out to me was this. “A greater ultimate reward may be achieved by searching now for those stocks …

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HEICO: The Berkshire of Aerospace

In my last article, I talked about a false dichotomy between TDG and HEI. If anyone is pitching this dichotomy when discussing investing in aerospace, stop getting investment advice from them. They don’t know what they’re talking about. TDG and HEI barely compete. There’s about a 2% overlap between their products. Their management teams are …

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The Razor-Razorblade Model: TransDigm Group

Lots of people are asking nowadays: do I invest in TDG or HEI? I think that’s the wrong question to ask. Anyone who poses the question like this probably doesn’t know much about the aerospace industry, and you’re better off not asking them for investing advice in the future. So, what’s the difference? TDG is …

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The Razor-Razorblade Model: Rolls Royce

Introduction The Razor-Razorblade Model refers to the sale of long-lived products (razors) and subsequently the maintenance and replacement of parts (razorblades). We see this everywhere from pools to airplane engines and many very successful companies employ a form of this business model. It’s a good business model because (1) the company has high visibility of …

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A Primer on Trucking: Part 2 (on Brokerage, LSTR and XPO)

Introduction Before I begin, I forgot to mention a funny incident that occurred in the asset-based industry in my previous post. I mentioned how union-based carriers are tethering on the brink of bankruptcy. Just an illustrative example to solidify the point: this past year, an asset-based company, Roadrunner Transportation, de-listed from the U.S. stock exchange …

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A Primer on Trucking: Part 1 (on Unions, MEPPs and ODFL)

Introduction Rex Tillerson, former CEO of Exxon Mobil and Energy Secretary of the United States, once said, “Real men find oil.” He loved Exxon’s upstream business and didn’t think the “downstream guys” had the capabilities to run an oil magnate after he would eventually retire. I’m sure the freight industry has its own corollary: “Real …

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The Death-care Industry: Part 3 (on REITs, MLPs and Other Corporate Structures)

Introduction This last installation in my short primer on death-care will probably read more like an activist pitch. I can’t help it given my background working at an activist hedge fund. For individual investors, if nothing else I hope this will serve as a great intellectual exercise. But don’t misconstrue my purposes as purely scholastic. …

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The Death-care Industry: Part 2 (on Trends)

Introduction This is Part 2 of my three-part “series” on the death-care industry (you can find part 1 here). Given the title of this piece, it probably should’ve been part 1, but that just goes to show I don’t really have a “plan” writing these; I like to think of these posts as a hodgepodge …

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The Death-care Industry: Part 1 (on Float and Trusts)

Introduction The concept of float has been widely popularized by Warren Buffett- I suggest you check out his annual letter where he describes the favorable economics of insurance float better than I ever could. The general premise is this: in the insurance business, you receive premiums today for policies that don’t need to be paid …

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