Insights

Howard Marks: "Worst-Case" Projections

  • Peter Lynch

We probably look at 175 – 200 investment opportunities annually (someone actually employs me…). Most of these are brought to us by investment banks, and some come with projections offering a range of outcomes. The best-case projection often looks like a hockey stick: historically flat or with a slight positive trend, but showing explosive growth for the projected period. In stark contrast, the worst-case projection hardly ever shows revenue declining. At worst (according to the materials provided) revenues will remain constant.

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Extremely Sloppy and Dubious Sell-Side Research

  • Peter Lynch

Kerrisdale Capital posted an eye-opening piece earlier this year detailing “extremely sloppy” work published by analysts at well-known banks. The focus is on “one of the most basic inputs of equity valuation: the number of fully diluted shares of common stock.”

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Theme Investing & Valuation

  • Peter Lynch

In a management presentation not too long ago I was made aware of an investment theme completely unknown to me previously: ballast water treatment. Ballast water is used by shipping vessels, such as bulk carriers or tankers, to maintain stability in transit. Larger ships can carry millions of gallons of water in their ballast tanks, which is brought on board and discharged between ports as needed. Coincidentally, a colleague of mine recently e-mailed me a copy of Janney Capital Markets Infrastructure Quarterly Newsletter, which had some data on the subject I thought was worth sharing:

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From Wall Street to the Largest Seller of Custom Shirts

  • Peter Lynch

I had an opportunity to meet with J. Hilburn co-founder Hil Davis in December of 2013. In my efforts to do a little research prior to the meeting I stumbled across an article in Inc. Magazine. I like stories that expose the catalyst for a new venture:

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The Cost of a Cure: $80,000

  • Peter Lynch

The Financial Page of the New Yorker recently featured a new Hepatitis-C drug developed by Gilead. The new drug can cure 90% of patients in three to six months.
“There’s just one catch: a single dose of the drug costs a thousand dollars, which means that a full, twelve-week course of treatment comes to more than eighty grand.”

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