Asset-Based Investing in an Earnings-Focused World

Our estimates of intrinsic value do not heavily weigh forecasts of cash flows years into the future, simply because the future is inherently difficult to predict. We are not willing to “pay up” for businesses.

What We Learned from Our Biggest Mistake in 2017

One of the biggest mistakes we made in 2017 was under-allocating to Shopify, Alibaba, and Arista. We knew they were bargains due to their growth prospects but were just not ready to pay high multiples.

Radisson Hospitality: Football, Swedish Laws, and Chinese Tourists

I was first introduced to Radisson Hospitality, formerly known as Rezidor, by Brad Hathaway of Farview Capital. In brief, the company is a Swedish-listed hotel group with more than 80,000 rooms.

Refining Our Investment Criteria

We are constantly refining our investment criteria, so we can more easily filter and process opportunities. Our criteria help us eliminate many ideas and prioritize the opportunities we should be researching.

Doubling Down on Appian

There is strong demand for software development, but relatively few people who can develop software. Appian’s platform can accelerate developers’ speed by up to 20x, producing custom software in far less time.

Aimia: A Low-Ball Bid, Cash and NOLs, and Capable Capital Allocators

Aimia is a collection of assets in the loyalty space, which I became familiar with last year when researching (PCOM). Aimia’s main asset is Air Canada’s frequent flyer program, known as Aeroplan.

Hill International: Activists, Forced Selling, and Low-Hanging Fruit

Hill International provides asset light construction management and consulting services, with 47% of 2017 revenue from the U.S., 35% from the Middle East, and the balance from EMEA, LatAm, APAC, and Africa.

EZCorp: Mr. Market Shortsighted in Convert Issuance-related Selloff

EZCorp continues to frustrate following the May 2018 issuance of convertible debt. To be clear there are other things not to like here, but as far as the sell off following the convert, the market is being shortsighted.

A Better Way of Doing Business

Sometimes the best questions are the hardest to answer. I was having lunch recently with a friend who works in the investment business. We started talking about one of my favorite topics…

What Is An Investment Process?

An investment process should allow the manager to stay the course in periods of underperformance. It is the process that gives managers a better chance of making good decisions consistently though a cycle.

NAFTA and Sustainable Competitive Advantage

A topic garnering lots of attention is the difficulty facing President Trump and the Canadian government in reaching a new trade agreement. A point of contention relates to supply management in the farming sector.

Portfolio Composition: Compounders and Special Situations

Our portfolio is comprised of two major investment archetypes: compounders and special situations. Compounders are businesses that can achieve supranormal returns on invested capital for long periods of time.

Why We Invest in Eastern Europe

Eastern Europe has for the last two decades featured daunting headlines that would keep most reasonable people away from its capital markets. The EE equity total return index is still 40+% below its 2008 peak.

Rimini Street: Special Situation with Compounder Potential

Rimini provides 3rd party maintenance for enterprise software. Their basic sales pitch to customers is, “we will save you 50% on your maintenance costs, while providing better service,” which is clearly attractive.

From A to B, the Italian Way

Whereas heightened uncertainty may depress market prices, the intrinsic value of our companies does not change. H1 results have been strong across the board and there is no reason to expect H2 to be any different.

Air Lease: Owner-Operated Aircraft Lessor with Compounder Potential

Air Lease Corp. (AL) is an aircraft leasing company that is based in Los Angeles, CA. The company’s business model is simple – AL uses its investment grade balance sheet (BBB) to buy new, energy efficient, in-demand aircraft from Airbus and Boeing and lease them out to airline operators around the world.

Buying Irreplicable Assets with Irreplaceable Capital

In thinking about our approach to managing our families’ capital over the past few months, we’ve come to appreciate a phrase that would be well-suited as a motto for us — “buying irreplicable assets with irreplaceable capital”.

How We Determine the Value of Our Stocks (and the Portfolio)

The only logical way to invest is to pay a price that is lower than the value that we get in return. This rule should be universal and should apply for all types of investments, not just equities.

Travelzoo: Attractive Unit Economics and Lifetime Subscriber Value

We believe in a sale to a strategic buyer, Travelzoo is worth $400-500 million ($32-40) based on 4-5x gross profit of $100 million (88% gross margin) of which a strategic buyer should be able to drop $40-60 million to the bottom line.

The U.S. versus the World

An interesting feature of the global investing landscape in 2018 is the nature to which the positive returns have been dominated by the U.S. while the rest of the world markets are struggling and in many cases are down substantially.

Nils Herzing Sums Up His Investment Philosophy

The aim of my investing is to generate long-term outperformance (over a time period of more than five years). I don’t aim or a low volatility or other fancy things; the sole goal is to maximize the performance in real money terms.

Rosetta Stone: Lexia Intrinsic Value Strong and Growing

RST is growing intrinsic value in Lexia by $4 per share per year, and Lexia alone is worth $12-13 in 2018. Our low-end, sum of the parts, distressed valuation is $24 — 1x sales for Consumer, Enterprise, and K-12 Language (75-80% discount to M&A multiples).

Update on Dundee: Steep Discount to Intrinsic Value, CEO We Trust

Multiple shots on goal: steep discount to conservative estimate of intrinsic value, a CEO we trust and potential catalysts within the next 6 to 12 months that we believe will unlock significant value; we are now one of Dundee’s top five shareholders and own over 5% of the stock.

Update on Marchex: Debt-Free, Even After Special Dividend and Buyback

MCHX remains exceptionally well-capitalized, and debt-free, even after this year’s special $0.50 per share dividend and the recent buy-back.

Good Companies Don’t Always Make Good Investments

This article by MOI Global instructor Dominic Fisher has been excerpted from a letter of Thistledown Investment Management. One of our investments, Kulicke…

Spark Networks: ~8% the Size and ~1% the Valuation of

Spark Networks provides online personal services in the U.S. and internationally. Its primary properties include and, which are communities for the singles of Jewish and Christian faiths.

Update on Medley Capital: 10+% Yield While Waiting for NAV Discount to Close

We believe the shares trade cheaply on a stand-alone basis and on the pro-forma combined basis. We also enjoy an approximate 11% yield while we wait for the discount to NAV to close.

Berkshire Hathaway: Don’t Try This at Home

Warren Buffett and Charlie Munger have managed Berkshire Hathaway for 53 years generating returns of over 20% per annum. Einstein’s eighth wonder of the world, compounding, has turned a $100 investment 53 years ago into over $2 million.

Leaf Group: Improving Fundamentals and Below-Peer Valuation

Leaf Group is an online digital media company composed of two offerings: Content & Media and Marketplaces. C&M publishes and distributes content, accumulating a library of content across properties such as and

Liquidity Services: GovDeals Alone Worth More Than Total EV

The ingredients are in place – positive secular trends favoring online versus auction site liquidations, a powerful technology platform coupled with the largest online buyer base in the industry, and a well-incentivized management team (CEO Bill Angrick owns 17% of LQDT).