by Travis Johnson, Stock Gumshoe | May 6, 2022 4:31 pm
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Source URL: https://www.stockgumshoe.com/2022/05/friday-file-reflection-on-the-berkshire-markel-confabs-plus-a-few-buys-and-sells-in-a-wild-week/
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I agree on DIS and SHOP.
I believe DIS is a good way to play the COVID recovery; and I think/hope they have learned from their woke fiasco.
I’m embarrassed to admit that my avg SHOP investment is now approx $600/sh…
Great write-up as always , thanks. Berkshire and Markel have been on my watch list since at least 2004-2005 but I never had the courage to buy, always felt they were priced just a little itty bitty too high & I’d wait for a drop of a few more $’s which somehow never came. Two of my biggest financial regrets amongst many.
Hi Travis… as always your Friday File is a most interesting read… each time you’ve written about “SAND” I question what I’m missing … you see it as quality assets – reasonable royalties… I see it as a well-pumped / heavily debt bearing and underperforming especially when measuring ROA:Debt and even more so when compared to some of the better royalty companies… acquiring NOMAD is literally piling more and more debt on their books and higher jurisdiction risk… I prefer more stable jurisdictions with excellent resources
Which of the royalty companies do you prefer?
FNV; RGLD; OR; and one with high risk GROY (primarily because of its assets in Nevada and Quebec + David Garofola’s track record)
I do like re royalties and altius rebewable for the renewable business and the convertible debts financing structure from queensroad finance company as alternative for the royalty model
Since Shopify was brought up I’ll chime in as I oversee the ops for an e-commerce company that uses it. I don’t consider myself a good enough investor to talk about the numbers, so to speak, but I do intimately understand its platform. In short, it’s the best software for launching and growing a “personalized” e-commerce store.
I have hands on knowledge of a lot of its competitors too — Magento, Big Commerce, Lightspeed, and others. They all fall short. And we’ve never even considered selling on Amazon. Amazon is for commodity products — if personality is important to your brand but you don’t have a fully staffed dev. team on payroll, you go with Shopify. And while Amazon may directly be going after Shopify, guess what, Shopify is doing the same to Amazon with their Shop App which inter-connects Shopify stores, in a manner of speaking (so that they aren’t entire isolated, if you will).
Sure, we’ve got about 10 3rd party apps integrating with Shopify, and we directly write/read to it using GraphQL and its API to do things we can’t do natively inside it, but that’s the beauty of Shopify — it manages ALL of this seamlessly. I promise you every 3rd party app developer in the world working in e-com is prioritizing their Shopify projects.
Plus, they’re relentless in improving it. Always seems that they’re rolling out new features.
All that said, as has happened time and again, Shopify could lose their way. It all depends on management. What it really comes down to is do you trust leadership? Think of Amazon (or Apple, or any great company). It is NOT enough to have a great product. Great products only happen because of the people behind them and they only stay great because of the same. You think Amazon was the only company who thought selling something on the internet might be a good idea? But they had the right PERSON in there steering it toward success for two decades. Hopefully they still do? idk. I’d like to think that many of those who have put everything into BRK over the past 30 or 40 years did it primarily because they understood and trusted Warren, not so much insurance.
As it stands now, Tobias didn’t lead Shopify to its current level by luck. I believe he’s the right guy for the job. He owns about 7% of the company, which is a decent place to be (Bezos is at around 10% of Amazon). And he’s a John Carmack fan, my childhood hero as well ha! But as long as Tobias is in there, I feel fairly comfortable holding even though I’m in the red after the recent plunge.
Well put — I agree about Lutke, but it’s good to hear from someone who uses the platform.
Thanks for the insight – do think a lot of the beat down is analyst related… most analysts covering SHOP and the sector have not experienced markets like current – they were overly bullish on the way up and now overly bearish on the way down… possibly the bottom has nor been reached but do believe this is an excellent company that will prove to be an equally excellent investment
There seems to be no way to subscribe to the Friday file. Would love to do that. Thanks for all the good work Travis.
I am also a big fan of Tobias Lüdke and have been buying Shop again for the last month or so. As it turned out way to early. Trying to average down now. ;-(
Herbalix,
When U subscribe to Gumshoe, the Friday File is included.
Perhaps I did not make it clear. I would love to subscribe to the comments of th Friday file, but there is no subscribe to comments option available on this Friday file.
P.S. have been a subscriber to Stock Gumshoe since 2011 or thereabouts. Still one of my favorite places to visit. 😉
Hi Travis, I think you didn’t talk about last Roku Q earning, right? Nor in this Friday neither the past. ¿What do you think about its numbers? Thanks for all!
I did, it just got a little lost in all the updates last week. Here’s what I wrote:
Their revenue did come in slightly below expectations, at about $800 million versus the $830 million expected by analysts, and the ad slowdown and supply chain problems have hurt their margins at a time when they’ve also ramped up spending on content and people, but they continued to grow their customer base, and those customers remain engaged — the number of active accounts grew by 14%, as did streaming hours by Roku users.
The core number that matters most to me with ROKU is still average revenue per user (ARPU), which represents the leverage of all those users as advertising spending in streaming TV and among streaming competitors continues to rise, and that did not disappoint — ARPU hit $42.91 in the first quarter, another new record.
They are hurting on the bottom line, as gross margins drop on both the hardware and platform side, but platform gross margin is still near 60% (it has dropped from the mid-60s during the strongest quarters last year to 58.7% this quarter), and they have invested more in R&D and sales in recent quarters, which has led to reporting a loss this quarter and guiding for another loss next quarter, but I think they’re still doing the right thing as they build scale — and that ARPU number is immensely cheering, that means it’s still clearly worth it to invest in building scale and trying to maintain their leading market share against the onslaught from competitors around the world, including Amazon. I don’t know what might reignite ROKU’s shares in the future, that depends on market sentiment about growth stocks more than anything else, but I’m confident they’re still building on what is currently the strongest streaming platform. ROKU’s well below my $104 “preferred buy” price now.
Well done again, Travis. I really enjoy reading your Friday File Articles. Your knowledge, candor and wit set you apart from the others and is quite refreshing in today’s climate. Yes, I agree, please never give in to a buyout offer of Gumshoe. It simply wouldn’t be the same 🙂
Thanks Travis. Excellently done, as always. Thanks for your summary of Disney. I debated Disney, considering the latest news foray, and came to the same conclusion as you summarized it. I will not relinquish my holding in Disney, not yet.
Wondering if the news about the patent issue merits re-evaluation of the ILMN.
Hasn’t changed my mind yet, though I’m not an expert on the science or patent law. It is a big headline number, though remains in litigation and ILMN is so far downplaying the impact on their future operations.
On IIPR, seemed like the short timing somewhat coincided with the house vote on legalization. Had wondered about a connection. Perhaps full legalization would be bad for IIPR? Not only would growers no longer need local state warehousing, reducing quantity of building leases, but they could shop around with federal banks for best loan options as well.
Yes, full legalization would be a negative, on balance — though they do have long-term contracts, and legalization would make some of their tenants better credit risks.
Looking years down the road for the lockbox, Grow Generation and Beyond Meat crossed my mind (as it probably did for you maybe?) Current consumption and methods of farming will surely have to change some in the future.
GRWG might qualify, haven’t looked at that one in a while — BYND has some solid growth, but my impression is that the business has not been getting any more efficient as it scales up — haven’t looked in a while, though, thanks.
YOUR TAKE ON D-Wave Quantum Inc. The quantum computing system is expected to merge with a blank-check company called DPCM Capital, which trades on New York Stock Exchange (NYSE) under the stock symbol XPOA.
Travis, would you consider adding a company like Duolingo (DUOL) to the Lockbox portfolio? The app will be expanding from foreign languages into math (elementary to junior-high level, I think) later this year. They are led by a committed founder, and I enjoy reading his letters to shareholders. Still a pretty high P/S ratio, but the price is down from the IPO ($102).