LC

Interesting, did your broker actually give you an explanation?

I've looked a bit in the micro & nano-cap space recently versus the small cap area where I find myself looking for cheap companies the most. The best I could find before being dragged back to contemplating Strayer and some companies in the R.V. space was a company called Federal Screw Works, but my valuation (20m) and the market cap (3m) were so far apart that I feared I must be missing something (probably how bad the pension liability is). At any rate... Nate, I would like to pose two questions to you: -Do you find it takes longer to find gems in the micro-cap area? As well, do you find it easier to quickly place a company in the "no" pile? -How concentrated with these companies do you get in your portfolio? Do you have self-impose limits, and if so, when would you break them? Best, Louis

DTEJD1997, I agree with the spirit of your argument but not the details. I don't think a few years has a bearing on the overall utility of a college degree. Strayer has been around since the 1890s. The idea that a college education is not the best investment in terms of a cost-benefit analysis is not a new one. Ten years ago I heard it from a high school teacher. At that time the numbers were less inflated, but the thesis was still the same. I don't think that will change for the majority of the public anytime soon. I think the problem is deeper. Forty, fifty years ago a college education was an important milestone. Not everyone had one. Nor did they need one. The world has changed since the 1970s. But one of the problems is today's graduates had parents who did not grow up in the 1990s or 2000s. They had parents who grew up in the 70s. So your parents think a college degree is a helluva good ticket! And 16 and 17 year old kids...it is a rare person of that age to go against their parent's wisdom. Which brings us to today...with tons of college educated "underemployed" people whose degree isn't doing them a bit of good. But I think it may be too easy to say this a function of "today's economy", and "there just aren't enough jobs". It's not like society has been always awash in jobs until the last five years. So is this problem cyclical? If so, Strayer has a history dating back to the 1890s. They have seen and survived cycles. They are the best in breed in terms of for-profit educators. The other argument is that there has been a permanent shift in the industry. What are the implications of that? The next generation being educated online via TED talks from their parent's basement? Or going straight to trade schools? Whatever the case, the next generation will have to be educated. What will they pay for that? How will they pay it? Or will today's "underemployed" be influencing their children not go to to college? My gut tells me education will, in fact, continue. And folks will still be paying to sit in a classroom, or go to office hours, or study in a peer group. Even if the education world does go completely online, I think whatever the case, Strayer will continue educating into the future.

To flip it, can a 99% shareholder instruct the firm to sell 99 bulldozers?

I'm still doing my homework on this...I'm not sure how I feel about a company with 100 facilities, especially if the trend is towards online learning. I also had an interesting discussion today regarding opportunity cost in terms of education. When the job market is strong and unemployment is low, there is a larger opportunity cost of going to school vs. working. When the economy is weak, the job market is weak, then the opportunity cost of working is much lower versus enrolling. So I'm not sure how this dynamic will play out in the coming years for Strayer and other for-profit educators, especially the ones more focused on job training and placement (versus a non-profit education where "learning" is seen as a main goal).

I believe they are all considered pari passu, so would the only differentiating factor be liquidity? FNMAS and FCKMJ are the most liquid I have found, and are priced as such.

Awesome, I love it. If a suggestion is possible...would it be feasible to add in a cell which notes the date & annualizes the results?

Inter Parfums is a branded perfume distributor. They are contracted by brands to handle their perfume business. These are not perfume-specific brands, rather household luxury names (Brooks Brothers, Jimmy Choo, etc.) that are looking to leverage their brand name into another revenue stream. (Partial list of brands is at www.interparfumsinc.com) In 2012, Burberry terminated their licensing agreement with Inter Parfums, resulting in a cash payout from Burberry to Inter Parfums. The business itself is very attractive (five-year history of margins here: http://financials.morningstar.com/ratios/r.html?t=IPAR&region=USA&culture=en-US ). Large gross and net margins are stable as brands rotate in and out. "Our business is not capital intensive, and it is important to note that we do not own manufacturing facilities. We act as a general contractor and source our needed components from our suppliers. These components are received at one of our distribution centers and then, based upon production needs, the components are sent to one of several third party fillers which manufacture the finished product for us and then deliver them to one of our distribution centers." Valuation still seems high at 800m. I put normalized earnings in the 30-40m/year range. However this is on my watch list if it falls in the 600m range.

I might move there just hoping to learn a bit from you via city-wide osmosis.

Didn't someone mention that when your customers hate your product SO MUCH, yet STILL USE IT, there is something quite powerful there...

I agree that meetings won't go anywhere...they are simply more effective than an app due to the accountability and social pressure. I think with all the apps floating around, it will take time for people to try apps, eventually give up on them, then come back to the "tried and true" solution which in this case would be WTW. Heck, for those who like an anecdotal story, when I asked my girlfriend she was very adamant about WTW's staying power. "I've downloaded like 5 of those ipad weightloss apps, use them maybe 2-3 times, then forget about them."

How do you reconcile your statement attributed to Buffett vs the claims that he has rarely (never?) used a DCF model...do you think (as I do) that it simple a mental framework in which to analyze an investment?

Thanks hellsten.

Doesn't Charlie also own Costco?

87.2 m is the present value but you must account for inflation and sovereign risk. Probably something around 75m. This example is in a sphere of unreality; so no inflation and no sovereign risk. I'm curious how you arrived at $87.2 million? Wasn't thinking straight. That number is simply the present value of 1bln discounted at 5% over 50 yrs.

87.2 m is the present value but you must account for inflation and sovereign risk. Probably something around 75m.

Why pay anything for it? If I have 1.3 billion, why would I spend it to play with 1 billion, when I can just keep it and play with 1.3 billion.

Sell Yahoo and Apple and RIm and Microsoft and Sears and and and . You're the investor who only sells, not buys :D apple is a hold not a sell. ::) Really??? Apple is losing market share, everyone is switching to Samsung, they have no new products, Tim Cook doesn't know what he's doing and you hold the stock? Is Facebook a sell or do you hold that too? How do you respond to the argument that Apple has managed to turn a constantly evolving and commodity-like product (computing) into one of the strongest consumer brands in the last fifty years? The long thesis in my opinion is that whatever the future holds in terms of consumer technology, Apple will manage to own the high-end of that market and will set the trend for others to follow. Maybe over the next two-three years they lose share to Samsung and margins are compressed, but over the Long Haul, do you really believe any other company can transform commodity technology into high margin consumer branded products?

It's funny, from what little I've browsed on SYW it seems that Eddie (or whoever is running the show on SYW) is trying every marketing trick in the book. Take the LED Bulb we're talking about: As Eric stated, they try to entice sales by offering an even lower price AFTER you click on the item. Essentially it's another "sale" after the markdown from $134 to $125. Additionally, my guess is they try to strategically "position" items on the website. You search LED Bulbs, see a $125 bulb next to a $25 bulb....and Sears hopes you will buy the $25 bulb. It seems like Eddie is systematically implementing all the old school department store sales tricks on the SYW website, and, I would guess, seeing what works. Perhaps the model is to use this time as a testing period of all these sales tricks to figure out how to replicate the old-school department store experience (walking the aisles, the elevator music, etc.) on a website. Then use selected parts of Sears real estate to implement a fulfilment strategy. People enjoy shopping. People enjoy walking the aisles, browsing, seeing what "feels" good and what they "feel" they should buy. You don't get that on Amazon. There's no elevator music. Maybe that is what Eddie is trying to do.

Many of the new, trendy online boutiques do it that way. Granted, their selection is very specific as they are not a "department store". I simply don't think it makes much of a difference as long as the store provides accurate results, which SYW does not seem to do, at least as far as LED bulbs are concerned. Edit: Just did another search on SYW for more traditional items ("down comforter"; "cordless drill"; "HDMI cable") and the results seemed much more...acceptable.

I will throw in a recommendation for anything written by Vonnegut. His take on humanity is both brilliant and entertaining, and his writing style is addictive.

I read of a fund which reimburses historical incentive fees for poor performance. Unfortunately I can't recall the fund off the top of my head.

Actually more and more websites are doing this. Folks on tablets and even laptops don't want to load "page 2". It's a waste of time to re-load all the page headers, etc. The point of "page 2" is to see more content. Simply scrolling down is much easier, and more websites are in fact doing this. That does not excuse the fact that SYW has a 100+ dollar LED bulb as the first result. That is atrocious.

Does Ward still control a large number of shares? He could be slowly liquidating.

hellsten, I agree! Strayer and WTW are very similar in mind-share. I think we discussed WTW prior, as well. Coincidence! Here you have two industries which consistent effort by the customer is required. Students must go to class regularly, dieters must constantly manage their food intake and exercise. Most people don't want to do this! We are biological creatures, and we gravitate to spending the least amount of effort for the same result as possible. I will add that when required to expend energy in such a manner, it better be worth it! This is where the moats come in. Both brands have quality reputations. Dieters know WTW works, and students know STRA provides a quality service. Therefore they can convince themselves that, if they are required to spend their energy to diet/study, these companies will provide the best results. IMHO Strayer is a more certain investment. I say that because there is no "low-cost" solution that provides the same quality. With WTW, we have seen the advent of app-based diet/exercise programs.