Lessons from the Fall of SunEdison

Posted on 9 CommentsPosted in Case Studies

“The boom is drawn out and accelerates gradually; the bust is sudden and often catastrophic.” – George Soros, Alchemy of Finance There was a very interesting article in the Wall Street Journal a few days ago on the story of “the swift rise and calamitous fall” of SunEdison (SUNE). Like a number of other promotional, Wall Street-fueled rise and falls, SunEdison became a victim of its own financial engineering, among other things. SUNE saw rapid growth thanks in large part […]

A Safe Bargain for 70 Cents on the Dollar

Posted on 9 CommentsPosted in Investment Ideas & Company Research

I talk a lot about compounders–businesses that produce lots of cash flow and have opportunities to reinvest that cash flow at high rates of return. Such businesses that produce high returns on capital can compound their intrinsic value at above average rates over time, and the stock price follows intrinsic value over the long haul. But while I spend time reading and researching great businesses, occasionally I come across an opportunity to buy a bargain–a stock trading for less than the […]

Base Hits vs. Swinging for the Fences

Posted on 18 CommentsPosted in Case Studies, Shareholder Letters & Reports, Think Differently

I just got done reading Jeff Bezos’ annual letter to shareholders, which is outstanding as it always it. As I finished it, I spent a few minutes thinking about it. He references Amazon’s style of “portfolio management”. He doesn’t call it that of course, but this passage got me thinking about it. Since I wrote a post earlier in the week about portfolio management, I thought using Bezos’ letter would allow me to expand on a few other random thoughts. […]

General Thoughts on Portfolio Management and Diversification

Posted on 13 CommentsPosted in General Thoughts, Investment Philosophy, Investment Quotes, Walter Schloss

“Ship your grain across the sea; after many days you may receive a return. Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.” –Ecclesiastes 11:1-2 Investors have always discussed and debated the merits of diversification—apparently even as far back as the days of King Solomon (although his definition of diversification—7 or 8 “ventures”—might not sit well with modern day portfolio theory and mutual fund managers who often hold 30, 50, or 100 […]