4 Great Blog Posts

by Geoff Gannon


In this post, I’m going to combine ideas from two recent posts – “The Chains of Habit” and “My 4 Favorite Blogs” – to show how the four blogs I like best do the kind of work you should be doing as an investor.

 

Richard Beddard: Howden Joinery

First up, Richard Beddard’s piece on Howden Joinery. He summarizes the company’s business model beautifully right here:

You can almost parse that description phrase by phrase to come up with the bullet points you need to research Howden Joinery:

·         How much capital does Howdens tie up in inventory to “keep everything…in stock”?

·         What are credit losses like at Howdens?

·         What if the public learns about the mark-up tradesmen are adding on the stuff they buy from Howdens?

·         What if Howdens depots had a different incentive pay system?

I’ve researched Howden Joinery myself and those are 4 of the maybe 6 or so questions I wrote down on my yellow notepad.

 

Value and Opportunity: Topdanmark

Next up, Value and Opportunity wrote a terrifically simple post about Topdanmark. Reading this post felt like reading a case study out of Joel Greenblatt’s “You Can Be a Stock Market Genius.” The idea here is that a company had been buying back stock for almost 18 straight years – there was a little blip during the financial crisis – and now it was going to switch to paying a dividend instead. The market would have to go from valuing Topdanmark as a “cannibal” that eats up its own shares to a dividend yield stock. What would happen?

My favorite part of this post was that such a simple idea was backed up with so much historical evidence:

Clark Street Value: NACCO Industries (NC)

This is a great example of “doing the work”. A lot of the stock write-ups I read don’t show much evidence that the author has actually read the SEC filings (a primary source) rather than relying solely on secondary sources (media reports, other blogs, etc.).

On the surface, what I’m about to quote from Clark Street Value looks like it’s just a business description. But, in reality, you had to read NACCO’s notes on how it prepares its financial statements to be able to lay things out as accurately as Clark Street Value did here:

Now that Hamilton Beach (HBB) has been split off from NACCO (NC), this will be obvious to everyone. NACCO has already released pro-forma numbers for the first 6 months of 2017. But, before the spin off, you had to do some close reading of the 10-K to be able to prepare a write-up like this one.

 

Kenkyo Investing: Weathernews

Here’s an example of the kind of company I wouldn’t have even known existed unless I read blogs like Kenkyo Investing: