Jurgis

I think restaurants are kind of like sports team. The New England Patriots just finds a way to win and the Cleveland Browns just can't get their act together. McDonald's for whatever reason is kind of like the NE Patriots. Culture is a real thing. My interns are sick and tired of me talking about how my HS wrestling team went undefeated my senior year. Yes, I am living in my glory days. But what I am trying to get at is that there was a change in regime. We had a new coach who came in and got us to buy into the system. We had 7-8 coaches where half of them were grown men volunteering when they could be working overtime. It is telling you a ton about the people involve and frankly the sacrifices that they made. They bought us hundreds of dollars of free dinners on Thursday nights so that we can build team chemistry. We use to eat like 30 boxes of pizza for dinner. A successful restaurant is likely a place where everyone knows their role and there is pride in what they do. They is a common core value. This is likely the case for every business. Not having power hungry assh@les are really important in businesses like this. If you want to run a successful restaurant, whether it is physical or cloud kitchen, you likely have to be a good coach who is dealing with employees who aren't the most motivated. It's hard to convince 16-17 years to run full speed at someone and hit them with all their might. This is probably the equivalent of asking a high school drop out to show up on time, not smoke too much weed, and get the orders right. I'm not trying to be condescending, I am trying to be realistic. Def! 8)

Honestly, wrong forum. People doing scale up businesses don't hang out here (with very few exceptions). I beg to differ. I think things have changed. I know of a few people who are both value investors and heavily utilize Instagram and Social Media to grow and promote their businesses whether it is selling products or selling subscription. I think most CoB guys are a bit too "old school" to realize that social media has lowered the barrier to entry in a very meaningful way. I know of ice cream people who use Instagram to heavily promote all natural ingredients and they have done very well. I misread what you asked. :) I thought you were asking if someone was building product similar to Instagram or in that space. :)

Honestly, wrong forum. People doing scale up businesses don't hang out here (with very few exceptions).

I believe the $15bn is FCF so after debt service. It's $15bn on equity value of $190bn which is pretty appealing given the growth opportunities and stability of those cash flows. FCF by definition is not after debt service. Normally FCF is Cash Flow from Operations (from the Cash Flow Statement) less Capex. That's after debt service, after taxes and after working capital. I haven't gone back in here to confirm that the $15bn number aligns to that definition but this isn't OCF, it's FCF. You are right. I was thinking about something else, my bad.

Yeah, we moved to Teams fully and removed Skype for Business. People are mostly happy with Teams. Or at least happier than they were with SfB.

I believe the $15bn is FCF so after debt service. It's $15bn on equity value of $190bn which is pretty appealing given the growth opportunities and stability of those cash flows. FCF by definition is not after debt service.

15B on 300B EV is ~5% yield. Not attractive for me.

W or RH - place your bets! 8)

Mr. Big should have apprenticed to these guys.

Removing most of the politics from article and Liberty's post, it is quite possible IMO that CC fees might be capped the same way debit card fees were. V/MA did not exit debit card business when fees were capped and they won't exit CC business if governments cap CC fees. V/MA and banks will definitely lobby like crazy against the cap. I just did money transfer to Lithuania using Western Union. Using debit card the transfer costs 0.23%. Using credit card it costs ~3.7%. Yeah, (big) part of that is bank fees, so maybe that's what might be capped first. (And I am aware of all the benefits of V/MA rails ;) )

It's this pretty much with any other alpha coming from deep DD on particular companies and/or their situations.

I think not. But I might be wrong, so let's see what others think. 8) I guess it depends a bit on how you define OK. Both OXY and EOG give some numbers on $50 crude. EOG claims a >10% ROIC and OXY claims they are FCF neutral and able to pay the dividend at this level. RDS claims a $28/ brl Break even point, but they also have substantial other business, so they should be profitable even at that level assuming break even pertains to crude upstream. Virtually any energy company will go through great lengths to explain the cost savings they have achieved since 2014, which is one reason why those low energy prices can persist in my opinion, as these companies can continue to operate. The low prices are not the cure for low prices any more, it’s a deflationary sector. As long as this persists, I think it is hard to make a lot of money investing there. vinod1 said "average" company. If you pick (super)majors, especially ones with non-E&P business, yeah, they will not go BK. They likely will be profitable as you say. That's not average or weak companies IMO, especially if you look at equal-weighted indexes. OTOH, I might be biased towards small cap E&Ps that are likely to suffer most. So if the "average" is (a bit) weighted towards (super)majors, then the "average" might do "OK". ::)

I think not. But I might be wrong, so let's see what others think. 8)

I might agree with samwise regarding "Look elsewhere" <--- targetted even more to myself than to others. I took a look at SU (positive article in this week's Barron's) and OXY. Both have pretty much zero sales growth in 10 years. Assuming no sales growth from here, what FCF would investor want? Something north of 10%? Well, they are trading somewhere close to 10% FCF / market cap. OXY is complicated by Anadarko deal - I should look at EV and incorporate Anadarko. I eyeballed CAD conversion for SU ;). EDIT: Never mind, I was drunk, E&Ps are valued on reserves not on CF, forget-about-it. 8)

I don't short. Shorting VMW would be risky, since DELL could acquire the whole co.

Happy post-Thanksgiving! 8)

Because the high market share Is the moat. I know it’s sort of a circular answer. VMW might be toast longer term (let's discuss on VMW thread though). It did have a huge first-mover advantage, great (way better than others) tech, real switching costs, and a real moat through now though. I think ILMN also has a large first mover advantage and possibly better tech than competition and likely switching costs. But I know that area way less than VMW. Like others said, "narrow moat" is still moat. And large market share may lead to some moat (of network effect, switching costs, low cost provider, etc.). And getting capital for head-on competition is very tough. Getting capital for something that is different and may displace the incumbent by a side swipe is possible and easier though. So no guarantees for long term.

I'm wondering if VMW is on the cusp of extended business loss. I'd think that moves to public cloud and containerization will hit their business. If company moves all their compute to Azure, GCP, or AWS, how much business does VMWare get? Similarly if business starts using containers, does that significantly decrease the number of VMW licenses needed? VMW seems to be trying to counteract that with Pivotal acquisition, but I'm not sure that's gonna work out well. Anyway, I've been thinking that a while. There's also Barron's article about this two weeks ago - can't find online link. Disclosure: I sold most of my VMW position. But hey BRK should just buy VMW.

This reminded me that BRK ROE was also always quite low. Was that because unrealized cap gains were not reflected in earnings? Might be similar situation for BAM.

Like Spekulatius says, it depends on whether we are in 2009 or if we are in 2015 ( https://www.macrotrends.net/assets/images/large/brent-crude-oil-prices-10-year-daily-chart.png ). One of the areas of huge gains for me in 2009-2010 were crappy O&Gs. Part of the reason for very high returns in 2009. Then I tried the same in 2014-2015. Got couple BKs and even the gains on others did not cover the losses. But if oil had gone to $100+ like it did in 2009, I would have had another outstanding result. I no longer invest in O&G since then. 8) Spekulatius' approach might be good though. I do agree that it depends on whether it resembles 2009 or 2015. What I trying to get at is the more likely scenario where oil stays in the $50 range, even if it jumps up and down periodically, can the average company do reasonably ok? Just trying to figure out if market is discounting an even more bleak scenario. It's a good question, but it's a different question from what you asked above. ;) You asked: Now you are asking: The answers to these two questions are diametrically opposite: If there is a recovery - and price runup - then weakest and average will likely do much better than stalwarts. If price stays and fluctuates in $50 range, then the weakest and some average will do badly and may continue going out of business. So in the first scenario, you'll do better with weak and average. In the second scenario, you'll do better with stalwarts. With in depth knowledge of the sector, it might be possible to find companies that will do very well in first scenario and not die in second. But that requires in depth DD. Just MO. 8)

Like Spekulatius says, it depends on whether we are in 2009 or if we are in 2015 ( https://www.macrotrends.net/assets/images/large/brent-crude-oil-prices-10-year-daily-chart.png ). One of the areas of huge gains for me in 2009-2010 were crappy O&Gs. Part of the reason for very high returns in 2009. Then I tried the same in 2014-2015. Got couple BKs and even the gains on others did not cover the losses. But if oil had gone to $100+ like it did in 2009, I would have had another outstanding result. I no longer invest in O&G since then. 8) Spekulatius' approach might be good though.

Thank you. Yes I have never thought about nursing homes and have no clue how this operates in Canada. Has anyone actually looked at this perhaps for their parents or grandparents? What do you mean by this: "you are likely to be part of the group who will be deemed to be self-sufficient" Are you suggesting something like this: I need $X per yer 40 years from now for nursing home fees and adult diapers. So I will need 25X in assets to pay for it in 40 years. So I need 25X discounted to now in addition to my current expenses. Did I understand you correctly? Jurgis may be the specialist for these questions but here are some additional comments. I live in Canada too and am familiar with the process in my province (rules, public and private options etc). The comments had to do with the safety net aspect. In the US, the safety net for long-term care is very sketchy with Social security and Medicaid offering incomplete or nil coverage. Long-term care insurance also has not really caught on. In Canada, the safety net in retirement is different but more complete for long-term care. The public option works OK but there are significant drawbacks. So, if you want a premium and private option, the costs can be very real. For a reasonably nice place, the monthly rent comes to about 2500-3000$ per month (for a couple) and if you need more active care, the monthly rent can easily rise to 4000$ or more. Also, if you like to think like a financial planner, your expectations for pensions (OAP, CPP) should be dampened IMO (lower amounts and starting later). In my own planning, I put zero for these. Why? I think the demographics are not favorable, the long-term planning of our central planners is deficient and the public safety net is not free; somebody will need to pay for it and it may be you, the one who set aside funds for that purpose. :) So, you may want to adjust the absolute amount necessary to fund long-term care and make abstraction of expected public funding for your own benefit. If you have questions, don't hesitate as I went through the process with my parents recently and am going through the process now with my in-laws. An interesting feature in my area is that American private equity funds have been acquiring private nursing homes and homes dedicated for retired people with a premium and, unsurprisingly, these homes are no longer managed the same way and this is starting to show up in rents. Additional comment: The use of FireCALC or similar is interesting and it just takes a few seconds to get a picture. It can show the odds of your portfolio surviving in any market conditions that have occurred over time. Even if you instill a value flavor to your portfolio and plan to outperform, even in downturns, it may help to feel better if you find out that, with reasonable assumptions, your portfolio would survive any market conditions (at least from a retrospective perspective). Also (sorry this is a sad part but you asked for it), I suggest you put in place some kind of an automatic system where your autonomy about financial decisions (including investments) will be curtailed and eventually transferred. :( These planning steps are a pain but thinking about it beforehand (such as the way you're doing it, I assume you are quite young) makes it easy to then forget about it and enjoy life to the fullest. Yesterday, I took some money out from funds set aside for higher education purposes (for three children) and now realize even more that the move made 20 years ago was a wise one. Good luck! I'm definitely not a specialist, especially not on Canadian side of things. Cigarbutt is clearly much more of an expert there. The numbers in US are possibly similar (just in US$ vs CAD$). It would depend a lot on location and needs. Like I said in another post, being over-conservative and building an outsized nest egg is the way I plan it. We still work and earn positive CF, so likely we'll have what we need when we stop working. 8)

That's pretty much how I plan. 8)

No values left for Black Friday 2019? 8) I bought a bunch of Kindle books that are on $1.99-3.99 sale (possibly not just today, I did not check): Leonardo da Vinci Walter Isaacson Pebbles of Perception: How a Few Good Choices Make All The Difference Laurence Endersen Stick with It: A Scientifically Proven Process for Changing Your Life-for Good Sean D. Young Trillion Dollar Coach: The Leadership Playbook of Silicon Valley's Bill Campbell Eric Schmidt, Jonathan Rosenberg, Alan Eagle This one is on sale too, but I decided to skip it: Dollars and Sense: How We Misthink Money and How to Spend Smarter Kindle Edition by Dan Ariely, Jeff Kreisler Some of the above may have book threads at CoBF. I did not check.

Definitely this. I've mentioned this issue multiple times in the past and people (on CoBF) mostly pooh-pooh my concerns. :-\