Valuing Uber

I really, really enjoyed this piece on valuing Uber. I’ve written before about how I think value investors underestimate or mock growth optionality like the ones discussed in that article. Now, would I pay for it in an investment? No… but if you give me an investment where I can get that growth optionality for free (like, say, IDT, albeit on no where near the same level), then I will happily gobble it up.

Disclosure- Long IDT

A master lesson on leverage and complicated corporate structures

There are plenty of famous Warren Buffett stories. Two that stand out in my mind are his early year investment and article on Geico (discussed here w/ link to the article, the investment was covered extensively in the snowball)  and his quip that when he ran his partnership he went through the whole Moody’s manual of stocks and found company’s that were trading for one times earnings, which lead to his great returns. Continue reading

$PFHO – still cheap after a 10x run?

There’s nothing like having a big winner. Not a stock that doubles or triples, but a classic Peter Lynch ten bagger. However, as funny as it sounds, having a ten bagger carries with it it’s own set of issues. The biggest of these issues is, assuming you’re investing in an individual, taxable account, selling pretty much becomes impossible unless the shares become ridiculously overvalued because the tax hit completely overwhelms the opportunity cost of holding even moderately overvalued shares. It’s also becomes difficult to objectively assess value; there’s a huge anchoring bias that comes to seeing shares with a cost basis of $5 selling for $50 and waiting for some form of pull back.

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