I’m interested in emulating Warren Buffett in finding “first-class businesses with first-class management”. These are generally businesses with one or both of:
Here are businesses on my watch list.
Visa is basically a technology company in the payments processing industry. Network effects and economies of scale contribute to the duopoly enjoyed by Visa and Mastercard. Both companies should grow earnings as they are toll bridges on the secular trend towards electronic payments.
Unfortunately, the valuation remains a little high so this is not one of my best ideas.
Adjusted TTM P/E: 23.47 (source: Yahoo Finance / Capital IQ)
Forecasted earnings growth: “Mid to high teens” (source: Q3 investor presentation)
*Disclosure: Long Visa.
Strathcona has was hired to oversee Pretium’s bulk sample program. The purpose of these programs is to get a better idea of the amount of gold contained in a deposit since the gold distribution may be erratic and drilling samples very little of a deposit.
Strathcona has inexplicably resigned from the project. This is a massive red flag for me. In my opinion, Strathcona has a very good reputation as Graham Farquharson’s work is famous for uncovering the Bre-X fraud. He has also continued to attack John Felderhof over his involvement in the fraud. (Felderhof remains a free man, his children are reported to be millionaires, and has never been convicted. I agree with Farquharson’s assessment.) His company strikes me as having high integrity. I was surprised that Strathcona would work with Pretium in the first place since Pretium’s quality control checks were consistent with fraud (see my previous post). It wouldn’t make sense for Pretium to hire Strathcona if fraud was occurring because Strathcona’s engineers are smart and have integrity. Now I’m less confused and strongly believe that the red flags are too big to ignore.
Here is Pretium’s press release:
Strathcona Mineral Services Ltd. (“Strathcona”), which had been engaged as the independent Qualified Person to oversee and report on the 10,000-tonne bulk sample for the Program, has resigned from the Project.
