Business-like Investing

Finding investment ideas by example

2011-10-06T21:45:00.000-07:00

John Hempton from Bronte Capital is sleuth type.
I was reading his blog post link about fragrance ingredient supplier and I thought this is a good case study for
"finding investment ideas" topic.

What points can we carry out from it?

Curiosity leads to unusual places. Paying big buck for a small bottle, asks what's it made of, finds ingredients looks up what do they cost and who suppliers are, looks into supplier financials, runs into another fragrance supplier compare financials, leads to discovery of fraud (numbers to good to be true for Hung Kong-listed company, lack of information about products etc.)

Lazy habit of thinking

2011-10-05T10:48:00.000-07:00

There were no posts for almost three years and there are many reasons for that. But the most troubling is not the lack of time, but what I suspect is lack of deep thinking and as a result the deficit of ideas worth posting.

Having ability to subscribe to the blog posts, i.e. thought product of others, stimulates lazy habit of thinking . It MUCH, MUCH easier to consume other people thought that to produce one.

The question is how to brake bad habit and train a good one?

Breaking bad habit.

Make enough time to think, spend less time on reading "shallow" or irrelevant material.

Training good habit.

Reading investment-related blogs have education value. To increase positive effect either reply to the post with opinion or write summary of lessons learned or detail what valuable thoughts gained.
Try to figure out how and why author reached expressed conclusion
Make posts more frequently. It's better than nothing. It's a learning process.

Our Investment Philosophy

2009-02-03T22:23:00.000-08:00

There are so many ways to make (and to loose) money in the stock-market.

Our way is to adhere to value approach. We’ve chosen not to focus on the “cigar-butt” style, but rather to concentrate on finding and understanding a quality business.

We believe that knowledge gained in the process could be reused in the process of making a new investment decision.

The margin of safety we’ll seek must be “qualitative” instead of “quantitative”.

The “quality” we after, should provided reasonable degree of certainty that the business will be around and thriving 10-20 years from now. We hope that compounding effect will play in our favor over that time. We understand that during that long time we can expect business to go through one or more business cycles. We can’t predict precisely any financial metric of that business 10 years from now and we don’t try to.

Somebody said that: “When a fat man walks down the street we don’t know exactly his weight, but we know he is fat.”

There are gobbles of money chasing “undervalued” investments that hope to quickly realize that value and dump it on yet a greater fool. Also, “Evident quality” is usually not cheap.

All said above, perhaps, is good in theory. What missing in our view is the precise specifics and concrete examples.

We learn here too, and we’ll share our views and ideas as soon as anything worthwhile emerges.

Thanks for your time and interest!