There are certainly times when it goes out of favor, and that’s always been the case… and that’s why it works. If it were always easy, that’s what everyone would do. Part of being a value investor is being willing to lean against the wind and to do things that are unpopular.” 
– Tom Gayner

Featured article

One Fifty One? No, It’s Worth Far More…
Wexboy’s analysis of an Irish grey market share with what appears to be a nice margin of safety and a few catalysts for gains.


Cost Savings Help Royal Mail Profit Rise
Royal Mail reported better than expected numbers this week. the market was initially unhappy but the stock has since climbed to new recent highs. The company is at a turning point – its painful transformation efforts are finally paying off, just as the market seems to be rationalising. Margins are improving, the company is unlocking it land bank, competitors are falling away and its pension seems under control (for now). There are still risks – the market is still saturated, the regulator is still investigating its pricing and the lock-up date for employee share sales is approaching. However, the company is focused and is producing strong cash flows, and is still in arguably the best position to come out on top of the UK postal market in the long-term.
The company’s profits are up 6% as a squeeze on costs helped offset a lower than expected performance from its parcel business.

The curse of the first-day pop, and why Shopify deserves better
The company is finding its way to success in a difficult market, but the early surge its stock saw last week will haunt it in coming months. It sets a high bar of expectations that will be hard to meet in coming months. Like so many IPOs this year, Shopify is now priced for perfection. And what tech IPO these days is perfect?

Who’s eating Walmart’s lunch? Lots of companies
I wouldn’t count them out just yet though.
“…the big e-commerce investments, along with the pay hikes and expenses to improve to supply chain management, show there is a price to pay for years of under-investment, both in terms of profits and lagging strong rivals.

One Fifty One? No, It’s Worth Far More…
Wexboy’s analysis of an Irish grey market share with what appears to be a nice margin of safety and a few catalysts for gains.

Shake Shack reportedly wants to start a Chicken Shack—and investors are already salivating Investors seem to like the sound of it. Reminder 1) many of its current locations are based in high-income areas – can it replicate its model in other parts of the US? 2) “Shake Shack has 63 locations in the US and globally, and a stock market value of $3.3 billion. Each Shake Shack franchise location is reportedly worth over $50 million—about five times as much as the average Chipotle franchise.


Three and a half years since the last 10% correction
More interestingly, Bianco includes an acknowledgement that it has now been 916 days since the last 10% correction for the index, or 3.6 years (last October’s Ebola /ISIS sell-off was 9-and-change percent intra-day). We’ve not had even a 5% correction so far in 2015 despite a spate of elevated volatility earlier in the year.

Fuel strike that shut down Nigerian economy to end, official says
The companies that import fuel say they haven’t been paid by the Nigerian government, so they held back their massive supplies, which sit warehoused and untapped at Lagos’ expansive seaport.


Dark Days for Contrarians
Let’s say one holds two stocks. Stock A has had a rising share price as a result of which it has become expensive relative to its underlying intrinsic value (i.e. any stock from the table above). Stock B has had a declining share price and as a result has become cheap. Most investors feel more comfortable selling the poorly performing stock, and buying more of the one which has done well. Assuming the intrinsic values of both companies are still intact, by selling the cheap one the investor is locking in their loss and making it permanent. In the fullness of time, the market would have realised that the stock was undervalued and re-priced it upwards. The only requirement to extract this uplift – and recover from the temporary loss – is a good dose of patience and an ability to suppress one’s natural jealousy of your neighbour who might have owned more of the popular stock with a rising share price!”

Like Buffett, Another Folksy Investor Turns Patience Into Profit
Several of Mr. Gayner’s peers describe him as a good investor who has become great by knowing he is just good. He is no Warren Buffett, and he is keenly aware of his limitations. “I tell investors, ’You’re smarter than I am, but I’m managing your money,’” Mr. Gayner says. “‘If you see me doing something I shouldn’t be, tell me.’

Long reads

Meat of the People
Boar’s Head is everywhere. But what do we really know about it?

Cocoa: Food of the Gods faces 21st Century Challenges
…with the prediction cocoa demand will outstrip supply within five years, the industry is in dire need of better management and more sophisticated trading tools to help farmers and consumers cope. Not everyone is optimistic.

Graph of the week



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