Rule of 10: Shake Shack’s IPO by Matt Brice, The SOVA Group
If there were ever an IPO where I had some special insight, it would be Shake Shack. After Shake Shack opened a location about 10 blocks from our apartment in NYC, I probably ate there once a week. If you saw me before the location opened and after, you might question the truthfulness of that last statement–perhaps I am slightly lowballing that figure.
Alas, I have no special insight, just a basic rule that I never use, but it makes for a good headline intro. If you can name 10 competitors without the assistance of Google or any SEC filings, that’s probably not going to make the best investment. Competition is great for the consumer, but bad for the capitalist.
Another rule of thumb, if your neighbor has thought about opening a certain kind of business, that’s probably not going to be a good investment (not your neighbor’s business, but that sector in general–But it probably also applies to your neighbor’s business as well). How many people do you know that have thought about opening a restaurant or salon? How many people do you know that have expressed their life-long interest in starting an industrial nuts and bolts distributor?
For much of the past decade, Crispin Odey has been waiting for inflation to rear its ugly head. The fund manager has been positioned to take advantage of rising prices in his flagship hedge fund, the Odey European Fund, and has been trying to warn his investors about the risks of inflation through his annual Read More
Retail is an especially tough business. The former owner of Diapers.com, which Amazon bought, has recently left and is now starting another web-based retail business, Jet.com, to compete with, you guessed it, Amazon. See story here.
Some people will make a lot of money in these industries (more will lose a lot of money), but those fortunate people will have succeeded in jumping over 7-foot hurdles, an amazing feet that should be well-respected. But who has time to train for those hurdles when Shake Shack is calling my name…
Picture below with my kids at the beloved 86th Street Shake Shack in Manhattan. Judging by the picture, the location had just barely opened…