Scuttlebutt Investor

“The goal is not to earn a high profit margin; the goal is to earn the most profit dollars per unit of capital (the latter creates value)” Capital allocation gold. Every CFO of every public company needs to internalize this statement. HT @JohnHuber72 basehitinvesting.substack.co…

I love how all these companies talking about AI and agents and Costco ($COST) out here talking about adding cookie and cake ordering to their mobile app so you don’t have to fill out a paper form!

The evolution of China from communists to capitalists in communists' clothing has been one of the greatest stories of wealth creation that the world has seen. This has been a boon for luxury goods companies. The pendulum may be swinging the other way but I am doubtful that this is truly a secular change. Demonstrating status to other humans is as old as time and isn’t going out of fashion anytime soon, especially in China.

Also if you haven’t picked up ‘Buffett and Munger Unscripted’ yet- do it now. Exactly what I’ve been looking for- I’ve spent countless hours trying to parse out the nuggets from years of Berkshire meetings. This does the work for me. Really enjoying it. Thanks @TSOH_Investing

Ferrari ($RACE) is to cars what Hermes is to handbags.

Why Hermès is the GOAT of luxury brands…

Love this! $COST

Welcome to the Republic of Gilead

Imprecise but likely directionally accurate. Netflix avg customer lifetime = 45 months. Apple TV+ avg customer lifetime = 10 months.

Its the culture. $NFLX

This is incredible brand loyalty. $TSLA. The number of companies where a call on customers for free help would work has to be extremely limited. I love Costco but no way I’m going to go work a store if they asked. $RACE maybe?

Valuation discount on $GOOGL A shares, you may commence shrinking!

This is quite incredible re Dollar Tree. Smart merchandising and “shrinkflation” has no doubt played a role in the solution as well. $DLTR

Sitting at ~25%, still a lot of cash and check to displace. But that last mile gets harder and harder given the nature of the flows. Likely requires doing something fundamentally different and potentially different economics. $V $MA $PYPL $SQ

Interesting to see the company whose entire existence is based on digital media invest significantly in legacy print media while many other companies tout that they’ve gone all digital. Follow the money. $GOOGL

There's potential arbitrage in them thar hills. Continues to vex me that $GOOGL Class A shares w/ same economic value but w/ voting rights trade at an increasingly larger discount to the $GOOG Class C shares w/ NO voting rights. GOOGL is currently at ~3% or ~$78 discount to GOOG

Yandex Taxi is the other one they have a large stake in.

Elegant analogy to describe the utility of APIs. API companies are to other software companies what parts suppliers are to large automakers. Sure automakers could manufacture a steering wheel on their own but better return by focusing on their competencies @jeffiel $TWLO

Lest you forget how powerful and long duration secular shifts can be. The triopoly grew despite the total ad pie shrinking (e.g. they took share). But the icing on the cake is that they are taking share from other non-media pies ⬇️