As an investor, I don’t want to be on the wrong end of fraud. But I thought it would be interesting to look at things from a different perspective: what is the best way to commit fraud? What is the best way to fleece investors?
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general investing
Due diligence
Here are places I look for information when researching a stock. There is a lot of useful information online that you won’t find in the 10-Ks and other documents filed with regulators.
My investing mistakes and lessons that I’ve learned
This is a list of the most important things that I’ve discovered. Sometimes I have learned these things the hard way. Continue reading
MTY Food Group (MTY.TO): Fast food, faster growth
MTY Food Group is a collection of fast food franchises. A large part of its growth has come from buying second-rate and third-rate food franchises. MTY is a very good operator as purchased concepts have generally become much more profitable and have grown into much larger franchises since being bought. The company’s CEO and founder, Stanley Ma, has been referred to as “the king of the food courts”.
Return on equity: around 22.75%. (The company has virtually no debt.)
Growth in book value from 1996 to 2012: 21.5%/year.
Growth in share price from 2003 to today: Over 100X. (Yes, over one hundred times!)
*Disclosure: Long 1 share as a tracking position.
Chesapeake (CHK): Is this really a long?
Chesapeake is an oil & gas stock that has been owned by many notable value investors (Mason Hawkins, Lou Simpson) and has often been written up as a long on VIC more than once. In my cynical opinion, Chesapeake is an example of a stock where supposedly sophisticated investors have been continually fooled by management. Since its IPO in 1983, Chesapeake has done a very poor job at value creation and generating GAAP earnings. However, book value per share has gone up dramatically since Chesapeake has been continually selling shares at higher and higher prices.
Perhaps shareholders will realize that they aren’t going to make money and should stop buying stock through secondary offerings (and convertible debt). However, I don’t think that Chesapeake is a compelling short as the company is not the worst company in the E&P space.
Shorting VIC (ValueInvestorsClub.com), PRXI, PVG
Occasionally, I find myself shorting long ideas that are written up on VIC (ValueInvestorsClub.com). VIC is an exclusive website where a mix of professional money managers and non-Wall Streeters post investment ideas. Non-members like myself can sign up for a guest account and see ideas with a 45-day delay.
Here are situations where I have taken the opposite side of their trades.
Quality businesses on my radar
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:
- A unique competitive advantage.
- Excellent management.
Here are businesses on my watch list.
