A look at developments in the financial markets over the last week or so.

If horses had controlled investment decisions, there would have been no auto industry.
– Warren Buffett

Featured Article

Berkshire Hathaway’s 2014 Shareholder Letter
A must-read for all investors.


Everything is awesome: Lego Movie boosts annual results for Legoland owner Merlin Entertainments
Merlin announced its 2014 prelim results on Thursday.

Visitors:        +4.9% YoY to 62.8 million for the year.
Revenue:     +4.8% YoY to £1.25 billion at actual FX. +9.6% at constant FX.
Net income: +11.1% YoY to £179 million.

The company experienced like-for-like (LFL) growth across all its operating groups. LEGOLAND performance was especially strong, with LFL growth of 13.2% on the back of the LEGO Movie. Merlin has benefitted from increased consumer spending, and should continue to benefit from the low oil price and inflation numbers across its markets. The company is relatively capital-intensive, as it needs to constantly build and upgrade physical attractions to grow footfall. However, there are a few potential catalysts for growth, some of which will lower its capital intensity and/or allow it to earn additional revenue without the usual significant investments:

  1. The building of 3 new LEGOLANDS under “management contract” (Dubai, 2016) and “operated and leased” (Japan & Korea, 2017) models. Under these models, investors pay to build the parks and Merlin either manages for a fee, or leases and runs the parks.
  2. The positioning of their theme parks as “resorts” through the building of on-site accommodation. The idea is to widen park catchment areas and leverage existing attractions by offering multi-day passes. Existing accommodation has proved this model successful, and the company continues to roll out accommodation across their portfolio.
  3. The securing of new finance facilities which provide additional flexibility and lower Merlin’s cost of debt.

Overall, the company seems to be moving forward nicely and is well-positioned to take advantage of improved consumer sentiment. It continues to deliver on its stated strategy and is diversifying its revenue streams, which should put it in a better position to withstand future oil price and interest rate rises that might affect consumer spending in the years to come.

See how much more expensive Disney World prices have gotten
A look the steady rise of Disney World’s ticket prices. Despite the price breaching $100 for the first time, “There is strong demand for our attractions and entertainment,” a Disney spokesperson said in a statement.“We continually add new offerings and experiences, and many of our guests select multi-day tickets or annual passes, which provide a great value and additional savings.

Weight Watchers Shares Post Biggest Decline Since 2001 IPO
The company’s share price fell 35% on Friday as it announced earnings well below what the market was expecting. Free apps and wearable tracking devices continue to take their toll on Weight Watchers’ business model. The company took too long to evolve. Does it have time to recover?


The Solar Business Now Employs More Americans Than Coal Mining
A look at employment in the solar power industry and how it has or soon will, depending on which numbers you believe, provide more employment than coal mining. While sustainability of these jobs is a separate question, the number show that solar is bigger than a lot of people think, and growing. A big part of this growth is thanks to these guys.

Trading the IPO sweet spot
A technical but an interesting look at the price movements of IPOs and how its often best to wait a while before buying, as the price settles after the initial hype.

Small Businesses Are Going on a Hiring Binge
More good news on the back of recent wage increase announcements by large retailers like Walmart. Small business is the engine of any economy.
In general, small businesses were hurt more by the credit crunch than big firms and that headwind for the recovery has become a tailwind as the banking sector has strengthened and eased lending standards.

10 reasons the housing market could go ballistic this spring
The U.S. housing market could get a major boost this year, specifically for single-family homes—especially among first-time buyers. Here’s why.

Saving vs. investing: Is there a difference?
Saving. Investing. It’s all the same, right? Not necessarily.


This week, all things Berkshire.

Berkshire Hathaway’s 2014 Shareholder Letter
A must-read for all investors.


18 Observations from Berkshire’s 2014 Annual Report

A Dozen Things Taught by Warren Buffett in his 50th Anniversary Letter that will Benefit Ordinary Investors

Buffett and Munger on How to be a Hack

Long Reads

Meet the man who could own Aviva France
The incredible story of an insurer offering hindsight investment contracts, and how some foresight by one of those investors could cost them big. “But this contract was not typical: prices for the funds were published each Friday, and clients were allowed to switch funds at those prices anytime before the next price was published, even if markets moved in the meantime.

This guy used an insane get-rich-quick scheme to become a start-up millionaire in three weeks
The story of a guy that gamed referral competitions to win a multi-million dollar competition.

Graph of the Week

Net Job Gains / Losses by US Metropolitan Statistical Area


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