LC

I wonder where Tweeter falls along the Capital markets line

in that case, is JPM a screaming buy?

The only way to kill Starbucks is to make the mass consumer think coffee cafe's aren't cool.

Take Infosys. Higher margins, growing at a faster rate, and trading at 16x last year's earnings vs. 15.3x for Accenture. However it's less levered (hence the lower ROEs vs. Accenture)

Why do you think they need to be "distinguished" from other firms? I don't believe that is necessary among successful businesses. I don't think they need to. I'm just curious if one has the option to invest in any of the oligopoly players in the large scale consulting business, why choose Accenture?

I still don't quite know what distinguishes them from other consulting firms. If the investment hinges on the fact that the industry is an oligopoly that is fine...but in that case wouldn't an investment in ANY of the oligopoly firms prove a good one? So why Accenture and not IBM or another large player? Are they the only company that can offer the full suite of IT/systems, outsourcing, and management consulting to the largest global companies? Sorry... lest anyone be confused. This is a general thought, and it isn't meant towards anyone on this thread or boards. Generally, the Accenture discussion has been good, and COB&F is a great forum (mostly) with polite contributors. Don't worry! I know this wasn't directed at me...I am just trying to play the devils advocate here and kill the investment idea. At the end of the day I take comfort in the common ground that we're all trying to make a good return! ;D

I also thought it was very sensible. Underdogs rarely win. They win more often when the favorite errs, not from their own transformation. The favorite is the favorite for a reason! It either has better technology, more scale, etc. etc. David wasn't the underdog, in fact according to Mr. Gladwell's analsysis, an intelligent observer would place his bets on David given the advantage in weaponry and maneuverability! Apply this concept to both moats and challengers with superior technology/operations/value proposition.

Of course not, Apple is trying to eat their lunch and they aren't happy about it. In the cable co's perspective, it's all bandwidth to them. For internet bandwidth, they aren't entering licensing agreements with anyone. They simple provide the service for a price. For TV, they have to negotiate with content providers, then price that service to make a profit. So if Apple comes in, takes their margin from the TV business and just allows the customer to access the exact same content over the internet...the cable co's will lash out against that. Otherwise they're essentially giving Apple, Netflix, etc. their business. So, what will they do? They are the providers of bandwidth to the customer....it seems rational that, if this turns into a trend, they will raise their prices on internet service to compensate for the loss of cable subscribers and provide the additional bandwidth.

Let's imagine an Apple TV. What will the business model look like... iTunes? In that you buy shows? So you're cutting your 100/mo cable subscription and spend that on buying content instead?

That's my point...maybe the recent run-up is due to a long-investor accumulating whatever shares he can acquire versus shorts covering.

Thank you LC and wachtwoord. My only worry is what would happen if IB's real time margin algo went wrong and thought I would need real time liquidation, but I actually didn't even buy on margin? Or what would happen if I mistakenly put in one more zero for the number of shares to buy, and caused a big margin call? Perhaps I was just being too extreme and frightened myself. Yes these things could happen. To take it to the extreme, the entire SIPC could shut down, our brokers could raid our accounts, and we'd all be left penniless. Obviously an extreme example, but this is a question of where your limit of reasonableness is. As far as I know, they are a pretty reputable broker.

Exactly. Having a margin account and going on margin (i.e. a negative cash balance) are two different things! Just open a margin account but keep a positive (or zero) cash balance!

I'm feeling feisty this afternoon, so here is an attempt to question the long thesis: -Who is shorting this? Why are they continuously paying absurd borrow fees? How long as the short interest been so high comparable to the "true/freely traded float"? Was the "squeeze" really a squeeze and not just Eddie/Bruce buying more and more of a falling share count? -Speaking of Eddie/Bruce, is this their big mistake? People seem to think they are the next calling of Buffett, but maybe not. Buffett was acquiring other businesses under Berkshire. Eddie has had 7? years now. Where are the other businesses? -Is the RE really worth all that it is? The RE market is good now, will it be that way forever? How much can they REALLY liquidate? -What about the pension? What if the market falls, QE continues, and the pension liability does not shrink or maybe grows? -What if their IP is not worth what you think it is? Can they really realize the value of their IP if they don't have Sears outlets to sell it? -Shopyourway is a test. What if it fails? Can they really compete with Amazon? -Data centers? Sounds like a half baked attempt to monetize the RE that Sears can't do anything with. Is installing datacenters really the first choice? Why doesn't Eddie just sell the property? He can, can't he...? -What if the retail footprint keeps eating up capital. Eddie could plow money into a bunch of test ideas and they fail, burning more and more cash. He is a hedge fund manager, not a nationwide retail & real estate operator.

Honestly....aside from mistakes of omission, my largest mistake has been entering limit orders on my leveraged positions. Take Sears of example. I had 50 strike calls that were underwater. I was sick of holding them, it was a huge percentage loss. So I just threw in a limit order at a 25% gain or so and let it sit. Then of course I forgot about it, wound up buying more calls as the topic became more popular here on the boards, and then when the runup recently happened, 25% of my options hit that forgotten limit order in the first day. It was a case of short term emotions crowding out rational decision making!

My question with most services firms regarding their moat is...what is their differentiation factor? What does Accenture do that much differently from IBM/Infosys/McKinsey etc.? What comparative advantage do they have? Does scale really matter on a structural level once you reach a certain size? Are there projects that ONLY Accenture can handle, which Infosys or IBM cannot? Does their scale really give them some cost advantage, that they can spread over more projects? I mean, how many projects can an employee really handle all at once? Is it that they offer a more comprehensive suite of services? If so, why are they the only one who does this? It seems like any other large consultant with the financial resources can integrate more services to challenge Accenture.

Great post, thanks for sharing your notes & experience of following the firm.

Unfortunately not! It was a quick back of the envelope calc for a friend just to see what the I/S would look like after Sardar's proposed dividend.

Here are the 2012 coverage ratios for a few others: Wendy's coverage is about 1x Jack in the Box is 7x Burger king's is 2x Mcdonalds is 16x Denny's is about 3x Sonic is about 3x CBRL is presently about 5.5x...a $20 dividend (if they can get the debt @ 4%) would drop the coverage ratio to just under 4x 2012's EBIT, or about 3x if we take a more normalized 5 years of history.

Sold a bit today...IMHO it is a lot closer to FV at 32 than 23.

you can probably remove WBMD, as far as I know the interest in that was due to the odd-lot tender, which has been completed.

Packer, Eric, Uccmal, SD, Plan, Sanjeev...I mean the list goes on and on. Thank you guys :)

I thought I would start a small discussion on unique/eccentric places to source investment ideas and discover interesting companies. I'll start by contributing this sub-reddit on reddit.com: http://www.reddit.com/r/BuyItForLife/ This "BIFL" community posts products and brands which have stood the test of time...essentially companies which have built up a strong level of brand value and customer goodwill over decades. Then the community votes and comments on these products...essentially doing much of the "filtering" for free. I would love to own some of the companies posted there! What other obscure sources for ideas are there?

Wow, I was (or more accurately, my ego was) secretly hoping it was fiat. I will have to take care not to allow confirmation bias to get the best of me now!

But what if instead of depositing $10k into the Roth and paying $2.5K in taxes, you deposited $12.5K into a traditional IRA and earned 38000%. You'd have almost $1M more in your IRA to grow for another 19 years. And if you get out of CA before starting to withdraw it you would avoid the crazy state taxes altogether. I always thought the only differential factor in making a decision of Roth vs. Traditional IRA was whether you expect to pay taxes at a lower rate when you deposit the money versus when you withdraw.

hellsten, thanks for bringing this to my attention...this is the type of company that immediately perks my interest.