Wednesday, May 28, 2014

Friday, May 23, 2014


Successful companies use the profits from businesses that made them successful to subsidize areas in which they should not be. So says Al Ries in his book, Focus, which uses countless examples to illustrate why companies need to focus on what they do best and drop the rest.

Thursday, May 15, 2014

The Power Of Many

I don't really know what to make of Meg Whitman. On the one hand, there is this perception of her as a highly competent manager thanks to the incredible growth at eBay where she was CEO for ten years starting in 1998. On the other hand, she is also a politician (she ran for governor of California in 2010 and lost), and people who play that game are good salesmen. So is she this extraordinary manager who flawlessly executed at eBay, taking it from millions to billions, or was she lucky enough to fall into a company with tremendous network advantages while being politically astute such that she sold herself as a competent manager? Her book, The Power of Many, may offer some clues.

IBI Group Management Tries To Put One Over On Debt Holders

IBI Group's (OTCPK:OTCPK:IBIBF) 2014 debentures are due on December 31st of this year. But rather than pay them off, the company is asking debt holders for a five-year extension. To ratify the extension, the company needs 2/3's of debt holders to agree to the company's offer.

One might think that in order to secure such an extension, the company might offer superior terms (e.g. a higher interest rate); but no, the other terms offered by the company remain exactly the same.

So what is the company offering these debt holders? A proposal right out of the prisoner's dilemma handbook: a "consent fee" payment of 7 cents per dollar of par only for those who vote "yes". This egregious manner of garnering votes is unfortunately somehow legal, and the company is using this method to try to extract a deal from debenture holders that is wholly unfair. Read more...

Monday, May 12, 2014

Lean In

Warren Buffett has always been optimistic on America, as it has been able to turn human potential into wealth like no other large country. He continues to be optimistic going forward, as he believes there is still a great deal of potential yet to be unleashed. One large potential source of future wealth that is currently not being properly tapped? Women.

Thursday, May 8, 2014

Torstar Even Cheaper After Sale of Harlequin

Eight months ago, I wrote about Torstar (TS.B) as a potential value investment. While the stock is up 30% since then, I believe the company is even cheaper now than it was then. The reason: the recently announced sale of the company's Harlequin business for $455 million.Read more...

Wednesday, May 7, 2014

The Master Switch

The internet age that's upon us actually has many parallels with the introduction of other information media of previous eras. For example, at the advent of the radio, there were thousands of home-based radio stations, as hobbyists would broadcast to whoever would listen, much like bloggers today. At the advent of the telephone, hobbyists would link up entire communities in order to communicate with their neighbours.

Radio, telephones and other information media like television and cinema have all gone through "open" periods, much like where the internet is today, where it was relatively easy for anyone to participate and contribute to the growth and innovation of the medium. But these media have gone in cycles that have tended to become closed over time. Monopolists, in concert with government agencies they captured, have managed to "close" these media, raising barriers to entry that have resulted in monopolies or oligopolies. (For example, it's now a felony to broadcast a radio station without a license; nobody could have guessed this would occur at the advent of radio.) Tim Wu describes these forces, and their implications for the future of the internet, in The Master Switch.

Friday, May 2, 2014

Tesco's Price Drop Offers Excellent Value

As market multiples have expanded over the past few years, it has become increasingly difficult to find companies with moats that trade at single-digit P/E multiples. But following bad short-term news, the occasional gem does fall to the floor. Tesco (TSCDF, TSCDY), which trades over-the-counter in the US and as TSCO in London, is a terrific example.Read more...

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