Farnam Street Investments letter to clients for April 2015.
“I think you have to learn that there’s a company behind every stock, and that there’s only one real reason why stocks go up. Companies go from doing poorly to doing well, or small companies grow to large companies.” – Peter Lynch
Farnam Street Investments Client Letter
- We’ve been busy lately! With April trips to New York, Toronto, and Omaha, we’ve been checking on current investments and searching for new opportunities.
- Despite this severely overvalued market, we’re excited about some new investments we’ve uncovered that fit Lynch’s mold from the quote above. Several smaller stocks have recently shrunk in price, piquing our interest after going on sale by 60-80% off. NAME AND DETAILS CERTAIN REDACTED REDACTED
- One in particular is XXXX which stock price has already increased We think it can still double if management executes on their strategy. We’ll be cheering them on!
- The company is debt free with more than $XXXXm in cash built by its high profit margins and returns on capital, despite large recent investments in a new hotel booking platform.
- The XXXXXXXXXXXXXXXXX model is being replaced with a more profitable XXXXXXXXXXXXXXXXX model. Wall Street hates the kind of uncertainty around a business model change, hence the opportunity for us.
- Highly regarded activist investor, XXXXXXX Capital, owns more than 5% of the company at prices far greater than our clients have paid.
- XXXXXX is just one of several new investments we’re excited about. We’ll have more to share in coming letters.
- Speaking of sharing investments, if anyone asks what we have you invested in, please don’t give any specifics. Good ideas are hard to come by and are for the sole benefit of our clients. It’s in everyone’s best interest to treat our ideas as proprietary. If someone is curious, please send them our way.
- Save the date of October 3rd, 2015 for Farnam Street Investments’ Annual Bash!
As always, we’re thankful to have such great partners in this wealth creation journey.
Gates Capital Management's Excess Cash Flow (ECF) Value Funds have returned 14.5% net over the past 25 years, and in 2021, the fund manager continued to outperform. Due to an "absence of large mistakes" during the year, coupled with an "attractive environment for corporate events," the group's flagship ECF Value Fund, L.P returned 32.7% last Read More
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