One of the World’s Widest Moats

Posted on 20 CommentsPosted in Investment Ideas & Company Research, Saber Capital Management

A year ago today, I wrote a short post on a company called Tencent Holdings (TCEHY), a dominant internet company in China and its ubiquitous crown jewel of an app platform called WeChat. I began studying that company for a few months, and last fall I bought some shares for the first time, adding some more shares in December. The stock has risen this year, but still offers significant value in my opinion, and I plan to hold my shares […]

Returns on Capital and an Investment Idea

Posted on 7 CommentsPosted in Investment Ideas & Company Research, Investment Philosophy, Investor Letters

A couple years back, I wrote a series on the topic of returns on capital (ROIC) and how significant its impact is on the long-term value of a business. As a long-term shareholder of a business, your ultimate investment result will be determined by the quality of that business over time. One way to measure quality is to figure out the rate of return that the company achieves on its own internal investments (as well as what that company does […]

Notes on Credit Acceptance Corp (CACC)

Posted on 21 CommentsPosted in Case Studies, Investment Ideas & Company Research, Scratch Notes, Shareholder Letters & Reports

I recently made a list of a few shareholder letters I want to read, and one that I completed a few days ago was Credit Acceptance Corp (CACC). This post is not a comprehensive review of the business, as I just started reading about the company. But I thought some readers might be interested in some initial notes. (I am thinking about putting more of these “scratch notes” up as posts. If this is interesting to readers, please let me […]

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 […]

Berkshire Hathaway is Safe and Cheap

Posted on 25 CommentsPosted in Investment Ideas & Company Research, Warren Buffett

I own Berkshire Hathaway stock. In fact, it’s a stock I bought recently for the first time ever, despite following it for years. I think earlier this year it became (and to a large extent still is) far too cheap. It’s not a stock that I think has huge upside, but it is a stock that I think has no downside. (That said, I do think there is enough upside to get plenty excited). In proper investment parlance, the risk/reward […]

Some Notes on Fastenal’s Results

Posted on 12 CommentsPosted in Case Studies, Investment Ideas & Company Research

I wrote a post a few months ago on Fastenal’s quarterly results. As I mentioned then, it’s one of the few companies that puts out an earnings press release that is more like a quarterly investor letter than a typical corporate press release. As I did last quarter, I thought I’d basically share some of the notes I wrote down in my FAST file as I read through the press release. This isn’t comprehensive, but I’ll probably get into the […]

Wells Fargo and the Incredible Predictability of Deposit Growth

Posted on 36 CommentsPosted in Industry-Banks, Investment Ideas & Company Research

“In the end, banking is a very good business unless you do dumb things.” – Warren Buffett Buffett has been investing in bank stocks since the 1950’s, and I think one of the things he probably likes most about banking is the predictability of deposit growth. As he says, if you don’t do dumb things—if you stick to taking in deposits and lending them out, you’ll mint money. All the money center banks reported earnings a couple weeks ago. In […]

Thoughts on Fastenal

Posted on 18 CommentsPosted in Investment Ideas & Company Research

Fastenal (FAST) reported earnings yesterday. I love reading Fastenal’s press releases. They are more like investor letters than they are press releases. I didn’t even see one “Adjusted EBITDA” reference in the entire release—which is written in layman’s terms more than corporate jargon. Management’s candidness and depth of discussion regarding the company’s operating results is a breath of fresh air. So I thought I’d jot down a few notes and put it into a post. This is not really an […]

Some Thoughts on Coal Companies and Railroads

Posted on 11 CommentsPosted in Industry-Railroads, Investment Ideas & Company Research

Stock prices have finally entered the much anticipated correction, and so I’ve spent more time lately looking at my watchlist of great businesses that I’d like to own at some point. My portfolio has been largely made up of special situation investments for some time, and although I don’t really have a preference when it comes to value (I’m just looking for the most mispriced investments relative to risk), I’ve always liked the compounders. These types of businesses do a […]

Some Thoughts on Markel’s Intrinsic Value

Posted on 9 CommentsPosted in Industry-Insurance, Investment Ideas & Company Research

I thought I’d write a post with some quick thoughts on Markel’s value. I recently had a few conversations with a friend regarding how to think about the return on equity that Markel produces relative to the investment return that you will receive as a shareholder. For example, I’ve had a couple questions from clients similar to this: “It’s great that Markel can produce 15% ROE over time, but will we receive 15% if we’re paying above book value?” The current price […]