Travis Wiedower

I'm surprised to see only one person mention autonomous in this thread. If autonomous driving comes to fruition, I suspect most auto manufacturers will look like Blackberry and Palm Pilot twenty years from now. GM is taking it seriously and Fiat Chrysler / Jaguar were smart to lock up partnerships with Waymo, but autonomy will benefit from network effects. And network effects means only a few winners, and only a few winners means a lot of bankruptcy / consolidation among the auto makers. None of the traditional auto makers are tech companies - it's not in their DNA. A few may be able to make the transition, but if autonomous driving is possible then this industry is on the verge of getting massively disrupted. And if so, a lot of these auto makers will be classic value traps even at these levels because their terminal value in 10-15 years is zero.

My only clarification / quibble (and maybe I simply misinterpreted): I don't think learning a lot from mentors and being impressed by them is mutually exclusive. Speaking anecdotally, but I learned a ton from Buffett when I was starting out (one of the first things I did when I got into investing was print out the entire buffettfaq.com website and read it all) - not so much anymore. I was pretty underwhelmed by the Berkshire meeting this year, but only because I know how he's going to answer the vast majority of questions since I've read so much of his stuff in the past. None of that takes away from how impressed I am and how much respect I have for him though - probably even more so actually. The longer I invest the more I appreciate how difficult it is and the more humbled I am by his long-term track record (which is blown up and hanging next to my desk as a reminder).

I've met a few analysts who got their roles directly from non-traditional backgrounds, so it's definitely possible. Probably the most important traits for an analyst are passion, brains, and investment skills. Degrees, Wall Street experience, CFAs, and MBAs can be decent proxies for those traits, but you'll have to prove you have those traits despite them (having your CFA is a big plus though). Those few analysts I've met that have succeeded all reached out directly to money managers and included one or two of their own investment write-ups. There's hardly a better way to get others to understand how you look at investments than to get them to read write-ups you've done. Good luck!

My account is still at 45 days.

Everything Schwab brought up is legitimate and I don't like the auditor situation either. Maybe my definition of fraud is different than others, but Armanino is a legitimate business selling legitimate products. There's always a chance there's financial engineering or shady stuff going on behind close doors, but they are a real business (you can go buy their pesto on Amazon if you don't believe me). I do think Armanino is a better business than it appears from the outside. Below is a copied post I made in the MicroCapClub thread last year that explains my logic: First, just over half of their sales are through Dot Foods which is by far the largest redistributor in the foodservice industry. Dot sells to all the broadline distributors (Sysco, US Foods, etc) and directly to food manufacturers and large chains. There are really only five companies selling pesto through Dot. And only two of those sell in bulk (Armanino and Carla's Pasta). Thus, for the many companies in the industry that buy their products through Dot, if they're big and buying in bulk they really only have two options. The reason more pesto manufacturers aren't selling through Dot is they have monthly minimums for sales. If you join Dot as a supplier and don't sell enough each month, they kick you off the platform. So yes, there are a ton of mom and pop pesto manufacturers selling locally around the country, but only a few have scale. I think that's a big reason Armanino has been able to generate such great returns in an industry that appears from the outside to be a commodity. Also, once they get a major customer (Sysco private label, large restaurant chain, food manufacturer, etc), those customers are very sticky. I've talked to several people in the industry (owners of restaurant chains, owners of food manufacturers, co-packers, etc) and they all say the same thing: once you're happy with a supplier relationship like that, you rarely change it. Rough quote from a CEO of a restaurant chain when I asked him if he'd change co-packers for a 5% savings: "Absolutely not. Once you find a manufacturer that does a good job and sign a contract with them, you want to stay with them. Switching is a long process, there's no guarantee a new company gets it perfect, and switching can introduce new problems you didn't even think of. All manufacturers use different sources of ingredients, all have different equipment, different freezing techniques, etc." This is something I didn't originally appreciate. One pesto manufacturer can't simply reverse-engineer Armanino's pesto, it's not that simple. And pestos from different manufacturers have minor differences. If you're a food manufacturer using Armanino pesto to produce a product that sells well it's very risky to switch to one of Armanino's competitors. One of Armanino's largest single clients is Sysco (they do private labeling for them, in addition to selling Armanino branded products). I've been told that it takes Sysco a year or more to change a private label supplier (same reasons as I discussed in the last paragraph). "You really have to piss them off" was the exact quote I got. It's very difficult to get a Sysco private label, but once you do it's very difficult to lose the business. Management won't say how big the Sysco private label is, so I'm guesstimating it's their largest end client (Armanino only reports concentration at the redistributor/broker level). If you're like me and wonder "why is pesto demand growing so consistently over the years?" the answer is their fastest growing segments are Mexican and burger joints. Pesto is healthy (and yummy) so it's a nice fit for gourmet burger places (or mid/high-end restaurants that have a couple nice burgers on the menu). Anecdotally, I looked at the menus for a bunch of restaurants around Austin that serve burgers and quite a few did serve burgers with pesto on them, so it is "a thing."

Watched a couple movies over the weekend thanks to this thread: The Wizard of Lies - really good. The film makes the wife and sons out to be totally innocent, which is really sad if true. Fuck Madoff. Too Big to Fail - barely good enough to finish. Poorly made/written and there are other higher quality documentaries and docudramas out there that do a better job covering the financial collapse. Speaking of, The Big Short remains my favorite investing movie - I've watched it ~5 times. Margin Call is really good as well.

Why do you think Amazon is a bubble? Seems like it's in the ballpark of fairly valued to me.

2. These are almost always judgment calls. If the company has made one acquisition in the past fifteen years, I generally ignore it. If they've made six acquisitions in the past ten years, I'll probably assume acquisitions are a normal part of their business so I average those costs of acquisitions over a period of time (as a percent of revenue) and assume that percent going forward. It's similar with restructuring. If they've had one or two restructuring charges in the past decade that seem legit, I probably ignore those expenses. If they have "one-time" expenses every year or every other year, I assume those are a normal part of the business. It's all about trying to figure out what the normal operating business generates in terms of FCF. 3. Like KJP (and similar to my answer above), I deduct D&A and then add back in a normalized capex number. If it's a more mature business, I look at capex margin over the past 5-10 years and use that going forward. If the business is growing quickly (thus their capex margin is probably decreasing over time) then I'll probably assume that capex margin slowly comes down over time. Every company and situation is different and judgment calls are required. That's what makes investing fun :)

+1. Qualitative factors are huge, but the books that helped me the most on valuation are McKinsey's two books Valuation (aptly named) and Creative Cash Flow Reporting. I've read the second one twice and have a combined 28 pages of notes I've taken from both books that I still refer to on a semi-regular basis. They're more textbooks than anything (i.e. dry, slow reads), but I can't recommend them enough.

That Google Maps moat write-up really is amazing. I've only used Apple Maps a couple times because the UX sucks, but I never realized how far ahead of the competition Google Maps was. Hard to beat the lead they have in data.

Why are those the four options?

Woah that is frightening. Hadn't seen that before :o

You can get most of this through Gurufocus on the Interactive Chart tab. If you're cheap like me you can use the free version, click out of the annoying pop-ups asking you to sign up, and when it restricts access you can open up an Incognito tab and keep using it. Not the most efficient method if you're pulling data for tons of stocks, but I use the above method to occasionally use their charts (which are pretty damn good for being "free") and it's fine.

Not sure if this completely applies here, but I know I've read that you can't reimburse fees in a way that acts like a performance fee for non-qualified investors. So if you have three good years and charge a 2% management fee each year and then you have a down year and don't charge the 2% fee (or reimburse it), regulators may look at that as equivalent to charging a performance fee to non-qualified investors, which isn't allowed.

Probably should have clarified we play dealer's choice with some made up, high action games mixed in. The best is a double board, split pot PLO game we invented. No 15% VPIPs allowed :) Once I started playing more poker games I couldn't go back to hold em. In terms of other games, I've really come to like Backgammon. Unfortunately I don't have any friends who play, but I probably average ~20 games per week playing against a computer. It's a healthy mix of short-term luck and long-term skill just like poker and investing.