Rivera Holdings First Acquisition And How You Can Invest

Rivera Holdings First Acquisition And How You Can Invest

You may have noticed I've gone silent in the last month plus.  I haven't posted much on Twitter of Facebook, and haven't released a new post on the blog since September 29th.  This silence is for a great reason though...

Behind the scenes I've worked on setting up the legal structure of Rivera Holdings, figured out who can and can't invest which I'll talk more about in the coming days, and found two companies to become its first acquisition.

I sent through snail mail and email an activist style letter to a public company stating I was looking to buy them for $20 million, or a 30% premium to its then market value.  I've still not heard from them at this point.  And they will remain a target down the road to acquire because for now I've switched gears and found another business to buy that's even better.

The second company I found by accident as I was readying a Letter of Intent to send to the first company above.

Ever since I found them I've done a ton of due diligence on the company and its industry, talked in person with the current owner five times so far, The Seller and Rivera Holdings have agreed to a Letter of Intent on an $8 million purchase for the business, and Rivera Holdings is prequalified for the full $8 million amount in a loan to cover the purchase price.

Below I detail the business target more, detail the loan, and tell how you can invest in Rivera Holdings to become part of this deal.

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Rivera Holdings is now officially and legally open for business.

Rivera Holdings has signed a letter of intent and agreed to an $8 million purchase price with a business owner looking to sell.

Rivera Holdings is prequalified for the full $8 million purchase price through debt financing – minus closing costs and what I have to bring to the table.

And Rivera Holdings is now seeking equity investors to finish closing the deal and begin building wealth for us all.

Below I’ll run these developments down one by one and explain how you can make money.

Rivera Holdings is now set up as a Delaware LLC and is ready for business.

Rivera Holdings has agreed to an $8 million acquisition and both us as buyers and the sellers have agreed to a Letter of Intent on terms.  This letter also gives us exclusive rights to work on acquiring the business for 60 days from when it was signed by both parties.

Both I and the Sellers agree the deal can be extended as long as we as buyers are showing movement towards getting the deal done.

The one problem with the Letter of Intent is it keeps me from stating exactly which business it is and which industry the company is in.  But below I still tell you some great things about the business Rivera Holdings is acquiring.

If you’re willing to sign the NDA further below the current owner of the business agrees I can then share what the business is, what industry it’s in, and our – Rivera Holdings – specific plans for the business upon closing of acquisition.

For now, let’s get to some things about this great business I can share.

  • It’s growing.

It’s on track to produce a little less than $1 million in revenue this year.  And since the current owner took over in 2014 it’s increased revenues from $500,000 per year to current level in less than three full years later.

  • It’s profitable.

On that almost $1 million in revenue it’s on track to produce an approximate $605,000 in net profit this year.  In other words, its net profit margin is on track for an incredible 60% this year.

  • There is huge room to cut expenses immediately

After meeting with the owner several times so far and doing my own due diligence I've found $115,000 worth of expenses that will get cut immediately without hurting sales or profitability.

This would drop to profitability margins and metrics and increase the net profit margin by 16%.  Or an increase from the $605,000 projected for full year 2016 to $720,000.  This is counting no further cuts we're likely to find after taking over operations.

  • It’s got valuable property and equipment on its balance sheet.

As I said above the purchase price for the entire business – land, equipment, operations, etc. – is $8 million.  The total value of just the land and equipment by recent appraisal and equipment purchases is $8 to $9 million.

In essence, this means we’re buying the land and equipment and getting a valuable 60% + net profit and excess cash producing business for free.

  • We’re buying the business at a huge discount to its true value.

As stated above, just the land and equipment is valued between $8 and $9 million.  I value current operations between $6 million and $7 million.

This means we’re buying a profitable business, operations, and valuable land and equipment that are worth $15 to $16 million for only $8 million.

  • There is massive room for sales/profit expansion at little cost to the business.

A part of current business operations are being expanded and will increase revenues by ~$100,000 to $200,000 per year once completed.  Expansion is slated to finish within the next 60 days, or around when I can take over the company depending on closing.

Further expansions to this line of business can and will be done within five years.  And prices can raise within the businesses main line of operations 26.7% in this time frame as well.  This is talked about more below.

Another part of business operations are being expanded as we speak, will begin generating revenue within next two weeks, and will increase this business sections revenue by 33% to 38%.  Or from $96,000 per year to $144,000 to $156,000 per year.

And on top of this, according to the most recent appraisal of the business and property done in August 2016

“The REMOVED has a FAR (Floor Area Ratio) of 25% indicating the area that could be improved/used for more sales opportunities is 38,600 sq feet.”

The above means ~25% of current business property - total property acreage is just under 3.5 acres - isn’t being properly used by the owner.

By utilizing this square footage better it means we could produce an extra $386,000 to $772,000 on $10 to $20 per square foot estimates on commercial lease rates.

Adding all the improvement numbers above together would add another $630,000 to $1,128,00 to revenues.  Most of which would drop to profitability – operating and net margins and cash flow – due to low costs to add these new sales opportunities.

Adding and expanding the above business lines would increase sales from ~$930,000 projected for full year 2016 to between $1,560,000 and $2,058,000 million.

Assuming the same net profit margin of 60% and the cost cut mentioned above we would earn $1,051,000 to $1,349,800 in net profit in 2017 and 2018.  Or increases in net profit of 42.4% and 55.1% respectively within two years of our take over.

At these levels I would value operations at $10.5 and $13.5 million by themselves.  Plus the ~$8 million in property and equipment would take us to $18.5 and $21.5 million for the entire business in one to two years time.

All for an original purchase price of $8 million for the entire business.

  • Plus there’s hidden pricing power within the business.

Local and regional businesses selling similar products and services have 26.7% higher prices than current business.  And we as new owners will be able to raise prices slowly over several years to reach competitive levels.

One price rise of 8.3% on the company’s major product in the first year will increase monthly revenue by ~$6,000 per month, or $~$72,000 per year.  Again, almost all this will drop to profitability.

In the second year, we’d look to raise prices another 4% and in the third year by another 4%.  Doing this would further increase revenue on the company’s major product another ~$ 6,000 per month or $72,000 over the two-year period in revenue and profitability.

Using the amounts talked about in the previous section this would increase revenue to $1,632,000 to $2,130,000 million and produce net profits of $1,091,200 to $1,393,000 million in the first year.

In the second year revenues would rise to $1,668,000 to $2,166,000 million and produce net profits of $1,115,800 to $1,414,600.

And in the third year revenues would rise to $1,704,000 to $2,202,000 million and produce net profits of $1,163,200 to $1,465,000 million.

This is with no further cost reductions, further price increases, further marketing – all of which are planned – or adding any other sales opportunities than the ones mentioned above.

At the end of 2019, the end of the above projections, I would value the company’s operations between $11.6 and $14.7 million.

After three years the property and equipment should be worth $10 to $15 million after better utilizing the property and equipment and through land appreciation value.

Adding this value to the value of operations would make the company worth between $21.6 and $29.7 million.  In other words, our original $8 million investment will earn us conservative returns between 39.3% and 54.8% each year for three years. Or a cumulative – non-compounded – return after three years of between 117.9% and 164.4%.

At the end of three years we should own a business worth between $21.6 and $29.7 million all for an original $8 million purchase price, with few added costs over the three-year period, little in the way of major new expenses, and still opportunities to grow the company’s operations and profitability further.

And these are ultra conservative estimates because I hate projecting numbers forward like this but have to for business planning purposes.

Barring a major hurricane in the area that would hamper growth, there is no reason the business and land shouldn’t be worth at least $30 million within five years and at least $50 million within 10 years.

All the while producing a ton of excess cash we can use to further enhance this business and buy other businesses.  And of course, compound the value of the business and Rivera Holdings private shares for the long-term.

But this isn’t all…  The next six things protect our investment even further.

  • The revenue model for the business is long-term renewing contracts.

Customers are only allowed to sign yearlong recurring contracts for the company’s main operations.  And commercial leasing opportunities are also on long-term – year plus – contracts.

  • There’s huge demand for this business in my area.

This business is a 15-minute drive from my house and there’s massive demand for this company’s products in this area.  Demand is only growing too as more people move to the Tampa area and more people in the area buy houses.

  • The business has a government/regulatory moat protecting us from competition.

There is little competition for this business within a 30-minute drive of where the business is.  And due to heavy government/regulatory issues within this companies industry, local and federal governments are likely to never let another type of this business be built or started in this area.

  • Even in the event of a major hurricane destroying the entire business current insurance coverage covers everything…

And when I say everything I mean everything; the full value of all property, improvements, equipment, and even revenue protection for a 12 to 24 month period as we rebuild.

  • The business requires regular expensive maintenance/upkeep/upgrades.

But all major equipment, maintenance, and necessary expenses and upgrades were completed within the last two years.  And most of this equipment has 20 to 40 year expected life cycles.

While the business requires regular upkeep and maintenance, the current owner states there are no major planned expenses or upgrades for the next 10 years.  While the two businesses that do compete with us in the area - the only competitors within a 30-minute drive in any direction - both have major multimillion projects planned within the next two years.

  • We have a huge margin of safety not only in valuation we are buying at but also in a worst case scenario analysis.

In a worst case scenario analysis assuming a drop in sales of 30% - which is what sales dropped in the last recession – combined with an increase in expenses of 25% - which there’s no precedent for – and the company still produces net income of $197,000 for the full year 2016.

While this huge cut in sales and increase in expenses combine to drop net profits by 65% the company is still profitable in this dire situation.

This worst case scenario analysis also assumes not adding or doing any of the positive things mentioned above: no new ancillary sales opportunities, no upgrading of companies main sales operations, no cost cuts, no price rises, etc.

With this gigantic margin of safety there is almost no way to lose money owning this business over the long-term.

The Short and Medium Term Plan

I’ve already found the $8 million to buy the business – more on this below – so why am I reaching out to you?

  1. Because I want you involved in building the company by becoming an early equity holder with super voting rights at a heavily discounted rate while we grow and build Rivera Holdings into a billion dollar plus company.
  2. I’m accomplishing this by raising equity in the parent company of target acquisition Rivera Holdings.

At this point, Rivera Holdings is prequalified for the full $8 million purchase price. The loan will be for $6.8 million and I have to bring $1.5 million to the table including fees, closing costs, and me as the owner having “20% skin in the game on the transaction.”

Having said this I'm selling a 50% equity stake in Rivera Holdings at a $24 million valuation to raise another $12 million as part of this transaction for several reasons.

  1. To allow you and a few others who have helped me along the way to buy equity in Rivera Holdings at a heavily discounted rate to pay you back for your kindness, wisdom, and friendship. Early investors will also have super voting rights.  This means nothing until the company goes public, but early investors in Rivera Holdings private shares will have super voting powers shares upon the company going public.  Depending on how this is structured down the road – likely five to ten years down the road – Rivera Holdings private shares will have 2 to 10 times the voting power of Rivera Holdings public shares after IPO.  Super-voting shares are always more valuable than regular shares so this is another way early investors in Rivera Holdings will have an advantage over later investors.
  2. To help you earn safe returns on your investment capital to compound value well into the future. The end goal being building Rivera Holdings into a billion dollar plus company in time.
  3. Unless a great business falls into our laps at a cheap price I plan to never do another equity sale until we IPO Rivera Holdings.  This means you won’t be diluted except in an extremely rare circumstance that’s favorable for us all.
  4. To ensure a huge margin of safety. As a long-term oriented value investor I hate debt in most cases and I plan to use some of the proceeds of the equity sale to pay off in full, or most of, the $6.8 million loan immediately.
  5. Under current plans paying off debt in full or partly would leave $3.7 to $6 million left in cash on Rivera Holdings balance sheet compared to $0 to $2.3 million in debt. And Rivera Holdings would own a subsidiary worth $15 to $16 million immediately upon acquisition.  Even though it would show up as $8 million in book value on the balance sheet.
    1. Rivera Holdings balance sheet after acquisition would look something like this: Assets - cash, subsidiary value, etc - worth between $11.7 and $14 million at book value.  Again, remember accounting rules don’t care that we value the business a lot higher than the IRS does.  With $0 to $2.3 million in liabilities meaning shareholders equity would be between $9.4 and $14 million.
  6. At this point, I would look to get a $5 to $10 million line of credit at the acquired business - subsidiary - in case of emergencies or necessary upgrades to further increase our margin of safety.
  7. With the remaining $3.7 to $6 million at Rivera Holdings I plan to send $1 to $2 million to the bank underneath this acquisition to take advantage of business opportunities as they arise, enter into new sales opportunities mentioned above, for advertising and marketing, and for emergencies/repairs of property and equipment as they arise. With current level of expenditures this money should last more than five years.  And this doesn’t include any profits or cash produced by the acquisition in those five years.
  8. The remaining $2 to $4 million will be left at Rivera Holdings and I’m going to invest this money in safe, undervalued, profitable public company stocks as I’ve done over the past five years producing returns of 31.1% on average – not compounded – each year over the last five. Better returns than Buffett produced in the first five years of his career.
  9. I’d continue working this process to compound our value for the long-term.

Over a one to five-year period the plan is to continue to grow the acquisition and build as much value as possible, pay off debt, invest the stock market funds at Rivera Holdings, continue to produce a ton of excess cash flow at the subsidiary acquisition, and compound value of all investments and assets owned.

I wouldn’t look to do another full acquisition within the first two years after the first acquisition closes unless something ultra cheap and attractive falls into our laps.

The plan within the next five to ten years is to either take Rivera Holdings public through an IPO or to buy enough of a public company to do a reverse merger onto the stock market.

There are two ways you can make money owning shares in Rivera Holdings over the long-term:

  1. The first is holding Rivera Holdings private shares while they compound value over the next five to ten years until the company goes public and your shares become worth a lot more.
  2. The second is holding your Rivera Holdings private shares for a few years and then reselling them to Rivera Holdings after they’ve appreciated in value and/or you’ve earned your initial investment back plus a return you’re comfortable with.

Conclusion

This is a fantastic opportunity for us all to buy a massively undervalued business for half of its true worth.

This is a fantastic opportunity to buy into a 60%+ net profit margin business that already produces a ton of excess cash we can use to buy other valuable assets that also has huge room for growth in sales and profitability.

This is a fantastic opportunity to buy into a business that has a gigantic government/regulatory moat built around it.

This is a fantastic opportunity to buy into a business with a huge margin of safety and huge protections around it that give us an even bigger margin of safety.

This is a fantastic opportunity to buy into a business that will grow in value between 39.3% and 54.8% each year for the next three years.  Or produce a cumulative – non-compounded – return after three years of between 117.9% and 164.4% over three years.

This is a fantastic opportunity to get in at the early stages towards building a billion dollar plus company.

Below is a chart illustrating this.  At a 20% rate of return - far below the 31.1% I've produced each year for the last five years not compounded - and with no new capital contributions, it will take us only 22 years to compound a capital base of $20 million into more than $1 billion.

cagr-calculation

And I want you to become part of this fantastic opportunity for long-term wealth creation and appreciation as we build something great.

If you’re interested in learning more about the great business we’re acquiring please sign and return to the below email address the short two page NDA to receive more information about the target acquisition.

Or if you already want to invest in Rivera Holdings please contact me at either 605-390-3157 or JasonRivera@valueinvestingjourney.com

Sincerely yours,

Jason M. Rivera

Chairman, CEO, and Founder of Rivera Holdings

dsc_1182_lzn

NDA below here.

By signing the below agreement The Seller of acquisition target has agreed to let me tell potential Rivera Holdings investors more information about the target acquisition.  This includes what the business is, what industry it operates in, more specifics about its operations, and our – Rivera Holdings – plans after acquisition of target business closes.

For convenience the NDA can also be downloaded and printed off by clicking the following link.

rivera-holdings-nda

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THIS AGREEMENT is made and entered into as Nov 7, 2016 (“Effective Date”), remains effective until the close of acquisition and/or Rivera Holdings and The Sellers agree to not do sale, by and between Rivera Holdings, (“the Disclosing Party”) and _____________________________ Your Name In Space, (“the Recipient”) (collectively, “the Parties”).

Purpose for Disclosure (“Business Purpose”):  The purpose of this agreement is to protect both The Seller, Rivera Holdings, and yourself (potential investor) from breaching any legal, competitive, or fiduciary agreements made between the parties prior to acquisition of target company.

The Parties hereby agree as follows:

  1. For purposes of this Agreement, "Confidential Information" shall mean any and all non-public information, including, without limitation, technical, developmental, marketing, sales, operating, performance, cost, know-how, business plans, business methods, and process information, disclosed to the Recipient.  For convenience, the Disclosing Party may, but is not required to, mark written Confidential Information with the legend "Confidential" or an equivalent designation.
  2. All Confidential Information disclosed to the Recipient will be used solely for the Business Purpose and for no other purpose whatsoever. The Recipient agrees to keep the Disclosing Party’s Confidential Information confidential and to protect the confidentiality of such Confidential Information with the same degree of care with which it protects the confidentiality of its own confidential information, but in no event with less than a reasonable degree of care. Recipient may disclose Confidential Information only to its employees, agents, consultants and contractors on a need-to-know basis, and only if such employees, agents, consultants and contractors have executed appropriate written agreements with Recipient sufficient to enable Recipient to enforce all the provisions of this Agreement. Recipient shall not make any copies of Disclosing Party’s Confidential Information except as needed for the Business Purpose. At the request of Disclosing Party, Recipient shall return to Disclosing Party all Confidential Information of Disclosing Party (including any copies thereof) or certify the destruction thereof.
  3. All right title and interest in and to the Confidential Information shall remain with Disclosing Party or its licensors. Nothing in this Agreement is intended to grant any rights to Recipient under any patents, copyrights, trademarks, or trade secrets of Disclosing Party. ALL CONFIDENTIAL INFORMATION IS PROVIDED "AS IS". THE DISCLOSING PARTY MAKES NO WARRANTIES, EXPRESS, IMPLIED OR OTHERWISE, REGARDING NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR ITS ACCURACY, COMPLETENESS OR PERFORMANCE.
  4. The obligations and limitations set forth herein regarding Confidential Information shall not apply to information which is: (a) at any time in the public domain, other than by a breach on the part of the Recipient; or (b) at any time rightfully received from a third party which had the right to and transmits it to the Recipient without any obligation of confidentiality.
  5. In the event that the Recipient shall breach this Agreement, or in the event that a breach appears to be imminent, the Disclosing Party shall be entitled to all legal and equitable remedies afforded it by law, and in addition may recover all reasonable costs and attorneys' fees incurred in seeking such remedies.  If the Confidential Information is sought by any third party, including by way of subpoena or other court process, the Recipient shall inform the Disclosing Party of the request in sufficient time to permit the Disclosing Party to object to and, if necessary, seek court intervention to prevent the disclosure.
  6. The validity, construction and enforceability of this Agreement shall be governed in all respects by the law of the Delaware. This Agreement may not be amended except in writing signed by a duly authorized representative of the respective Parties. This Agreement shall control in the event of a conflict with any other agreement between the Parties with respect to the subject matter hereof.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

___________________________________________________

Your Signature

___________________________________________________

Your Printed Name

***

Remember to sign and return the above NDA to JasonRivera@valueinvestingjourney.com to receive more information about the target acquisition.

Book Giveaway – Giving Away Another $100 Of Books For Free

Book Giveaway - Giving Away Another $100 Of Books For Free

When I started learning about value investing I had no one to turn to for help or guidance except the infinite internet.  I sifted through thousands of articles, websites, books, videos, and other etc. information to get to where I am today.

Now that I have a solid knowledge base built I'm helping other value investors so they don't have to struggle as much as I did when starting.

One of the ways I help is by giving away valuable books free to subscribers.  And I detail these book worth more than $100 below.

I'm a huge believe in Charlie Munger's Mental Models and Worldy Wisdom philosophies that the more we read the more we can know.  And the more we know the closer we are to reaching our goals, making a ton of money, and changing the world.

These books represent knowledge, power, goal and wealth attainment, and much more.  True knowledge is one of the most powerful forces in the world.  But few hold this power...

My goal is to help spread this power to as many as possible.  And next week a lucky subscriber is getting a step closer to their goals by winning the following 10 books valued at more than $100.

Benjamin Franklin by Walter Isaacson

Now on the Recommended Reading and Viewing Page in the Financial History/Regular History section.  I'd give it a 4/5.

This book offered some new things - especially when it came to some of the back room diplomacy Franklin was involved in - that were interesting but not enough to make it a great read.  If I hadn't studied this time period and Franklin so much this would have gotten a higher rating from me.

Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon

I've not read this book yet.  It's been in my ever-growing to read pile for a while now though as I've heard nothing but great things about the book.

When I came across a cheap copy of the hardcover I had to buy it to give away.

Below is the description of the book from Amazon.

The New York Times's Pulitzer Prize-winning columnist reveals how the financial meltdown emerged from the toxic interplay of Washington, Wall Street, and corrupt mortgage lenders.

In Reckless Endangerment, Gretchen Morgenson, the star business columnist of The New York Times, exposes how the watchdogs who were supposed to protect the country from financial harm were actually complicit in the actions that finally blew up the American economy.

Drawing on previously untapped sources and building on original research from coauthor Joshua Rosner—who himself raised early warnings with the public and investors, and kept detailed records—Morgenson connects the dots that led to this fiasco.

Morgenson and Rosner draw back the curtain on Fannie Mae, the mortgage-finance giant that grew, with the support of the Clinton administration, through the 1990s, becoming a major opponent of government oversight even as it was benefiting from public subsidies. They expose the role played not only by Fannie Mae executives but also by enablers at Countrywide Financial, Goldman Sachs, the Federal Reserve, HUD, Congress, the FDIC, and the biggest players on Wall Street, to show how greed, aggression, and fear led countless officials to ignore warning signs of an imminent disaster.

Character-rich and definitive in its analysis, this is the one account of the financial crisis you must read.

Profit from the Core: A Return to Growth in Turbulent Times

A great book that talks about competitive advantages.  How to gain them, how to cultivate them, and how not to lose focus on growing them.  This book is on the Recommended Reading and Viewing page in the Competitive Advantage/Competitive Strategy section.  I'd give the book a 5/5.

Messi

This is a great book even if you're not a soccer or Lionel Messi fan.  The lessons I took from this book were what it takes to become great.  What it takes to stay great.  And the trials you'll face on your way to greatness.

Now on the Recommended Reading and Viewing page designated as a MUST READ!!! in the Learning/Self-Improvement/Productivity section.  I'd give the book a 5/5.

The Black Swan

I've not read this book yet either like some mentioned here.  But I came across a copy of the paperback and had to get it to give away.  Heard nothing but great things about this book as well.

Below is the description of the book from Amazon.

A black swan is an event, positive or negative, that is deemed improbable yet causes massive consequences.

In this groundbreaking and prophetic book, Taleb shows in a playful way that Black Swan events explain almost everything about our world, and yet we—especially the experts—are blind to them. In this second edition, Taleb has added a new essay, On Robustness and Fragility, which offers tools to navigate and exploit a Black Swan world.

Good Strategy Bad Strategy: The Difference and Why It Matters

Another great book talking about competitive strategy and competitive advantages.  This book is in the Recommended Reading and Viewing page marked as a MUST READ!!! in the Competitive Advantage/Competitive Strategy section.

The first 1/4 of this book is bland generalities and theory about strategy.  But the last 3/4 of the book are great once it gets to the real world and business case studies.

I give the book a 5/5.

Team of Rivals: The Political Genius of Abraham Lincoln

I've not read this book yet either like some mentioned here.  But I came across a copy of the paperback and had to get it to give away.  Heard nothing but great things about this book as well.

Below is the description of the book from Amazon.

Winner of the Lincoln Prize

Acclaimed historian Doris Kearns Goodwin illuminates Lincoln's political genius in this highly original work, as the one-term congressman and prairie lawyer rises from obscurity to prevail over three gifted rivals of national reputation to become president.

On May 18, 1860, William H. Seward, Salmon P. Chase, Edward Bates, and Abraham Lincoln waited in their hometowns for the results from the Republican National Convention in Chicago. When Lincoln emerged as the victor, his rivals were dismayed and angry.

Throughout the turbulent 1850s, each had energetically sought the presidency as the conflict over slavery was leading inexorably to secession and civil war. That Lincoln succeeded, Goodwin demonstrates, was the result of a character that had been forged by experiences that raised him above his more privileged and accomplished rivals. He won because he possessed an extraordinary ability to put himself in the place of other men, to experience what they were feeling, to understand their motives and desires.

It was this capacity that enabled Lincoln as president to bring his disgruntled opponents together, create the most unusual cabinet in history, and marshal their talents to the task of preserving the Union and winning the war.

We view the long, horrifying struggle from the vantage of the White House as Lincoln copes with incompetent generals, hostile congressmen, and his raucous cabinet. He overcomes these obstacles by winning the respect of his former competitors, and in the case of Seward, finds a loyal and crucial friend to see him through.

This brilliant multiple biography is centered on Lincoln's mastery of men and how it shaped the most significant presidency in the nation's history.

Only The Paranoid Survive

This book is on the Recommended Reading and Viewing page in the Competitive Advantage/Competitive Strategy section.  I give the book a 4/5.

Below is a mini review I wrote of this book in January 2014.

I read Only The Paranoid Survive after it was recommended by Charlie Munger in Poor Charlie's Almanack and I am glad that I did.

This book is mainly about the decisions Mr. Grove (Former COO, CEO, and chairman of Intel) made, and helped make, to completely reform Intel from a memory company that was suffering a slow death against Japanese competitors to helping it become the worlds biggest semiconductor company.

He walks you step by step on how and why the decisions were made within Intel which in and of itself is fascinating to me.  He also goes through some case studies on decisions that other companies made (and still make) that lead to companies losing market share or possibly even dying altogether.

The case studies and examples specifically from Intel do a great job of showing you examples of how you can spot these trends or potential trends in companies that you are managing or looking to invest in.

Is it as good as Competition Demystified?  In my opinion no, but it is not specifically a book about strategy like CD is.  It is one mans advice, stories, and case studies about decisions he made and helped make that helped start to turn Intel into the powerhouse it is today.  Along with Mr. Munger, I also highly recommend reading this book.

Traffic: Why We Drive the Way We Do (and What It Says About Us)

I've not read this book yet either like some mentioned here.  But I came across a copy of the paperback and had to get it to give away.  Heard nothing but great things about this book as well.

Below is the description of the book from Amazon.

Would you be surprised that road rage can be good for society? Or that most crashes happen on sunny, dry days? That our minds can trick us into thinking the next lane is moving faster? Or that you can gauge a nation’s driving behavior by its levels of corruption? These are only a few of the remarkable dynamics that Tom Vanderbilt explores in this fascinating tour through the mysteries of the road.

Based on exhaustive research and interviews with driving experts and traffic officials around the globe,Traffic gets under the hood of the everyday activity of driving to uncover the surprisingly complex web of physical, psychological, and technical factors that explain how traffic works, why we drive the way we do, and what our driving says about us.  Vanderbilt examines the perceptual limits and cognitive underpinnings that make us worse drivers than we think we are. He demonstrates why plans to protect pedestrians from cars often lead to more accidents. He shows how roundabouts, which can feel dangerous and chaotic, actually make roads safer—and reduce traffic in the bargain. He uncovers who is more likely to honk at whom, and why. He explains why traffic jams form, outlines the unintended consequences of our quest for safety, and even identifies the most common mistake drivers make in parking lots.

The car has long been a central part of American life; whether we see it as a symbol of freedom or a symptom of sprawl, we define ourselves by what and how we drive. As Vanderbilt shows, driving is a provocatively revealing prism for examining how our minds work and the ways in which we interact with one another. Ultimately, Traffic is about more than driving: it’s about human nature. This book will change the way we see ourselves and the world around us. And who knows? It may even make us better drivers.

The Long Tail: Why the Future of Business is Selling Less of More

This book is on the Recommended Reading and Viewing page in the Competitive Advantage/Competitive Strategy section.  I give the book a 4.5/5.

I read this book so long ago that I don't remember a lot of the specifics about it.  But the lessons I do remember - the powerful economics of the long tail as one example - stick with me to this day years later.  It's a powerful book that I recommend.

Since its been so long since I read the book I'll let the Amazon description tell you more about it.

What happens when the bottlenecks that stand between supply and demand in our culture go away and everything becomes available to everyone?

"The Long Tail" is a powerful new force in our economy: the rise of the niche. As the cost of reaching consumers drops dramatically, our markets are shifting from a one-size-fits-all model of mass appeal to one of unlimited variety for unique tastes. From supermarket shelves to advertising agencies, the ability to offer vast choice is changing everything, and causing us to rethink where our markets lie and how to get to them. Unlimited selection is revealing truths about what consumers want and how they want to get it, from DVDs at Netflix to songs on iTunes to advertising on Google.

However, this is not just a virtue of online marketplaces; it is an example of an entirely new economic model for business, one that is just beginning to show its power. After a century of obsessing over the few products at the head of the demand curve, the new economics of distribution allow us to turn our focus to the many more products in the tail, which collectively can create a new market as big as the one we already know.

The Long Tail is really about the economics of abundance. New efficiencies in distribution, manufacturing, and marketing are essentially resetting the definition of what's commercially viable across the board. If the 20th century was about hits, the 21st will be equally about niches.

A lucky subscriber will win these 10 books - valued at more than $100 - free next week.  And I will even ship the books at my cost to anyone anywhere in the world.

All you have to do to have a chance to win is subscribe to Value Investing Journey for free.  Or be a Press On Research paid subscriber.  And this isn't all you'll get when you subscribe either.

You also gain access to three gifts.  And a 50% discount on a year-long Press On Research subscription.  Where my exclusive stock picks are evaluated and have crushed the market over the last four years.

And you can subscribe to Press On Research for only $49 if you're a free Value Investing Journey subscriber.

If you have further questions about Press On Research go to its FAQ linked in this sentence or email me at jasonrivera@valueinvestingjourney.com

***

My new investment holding company Rivera Holdings is now open to investors.  There is no minimum required investment.  And you DO NOT have to be an accredited investor to invest.

For more information please go to the Rivera Holdings link above or email me at JasonRivera@valueinvestingjourney.com.

Rivera Holdings Is Now Open To Investors

Rivera Holdings Is Now Open To Investors

More than one year ago I remember sitting at a restaurant eating breakfast with my wife and two daughters nervous to tell them something I'd been thinking about for years.  And seriously building in my mind for years.

I had to tell someone else at that point to make it real.  Because until I told someone else it was all still a far away dream with no plans, no direction, and no chance of happening.

I finally got the courage up that day to tell her.

I felt like a teenager going in for their first kiss and looked into my wife's eyes, butterflies in my stomach feeling like I was going to throw up.  I hoped when I spoke the words my voice wouldn't crack or vomit wouldn't come out.

The following words came out of my mouth sounding surprisingly confident...

"I'm going to start a company and raise $10 million."

My wife looked at me in shock and almost choked on her breakfast potatoes.

She stared at me for a few seconds before responding something like "Okay... what?"

I don't remember her exact response because of the nerves.  And because of the immense relief and excitement I felt after finally telling someone what I'd been planning in my head for years.

I felt relief and then immediate terror because I knew the amount of work I'd have to now put in to make this happen.  And since I've never done anything like this before I didn't even know where to start.

So that's what I did...  I began working and researching about what I needed to do to make this happen.

Since I began learning about value investing almost 10 years ago now I've planned to open a company of my own.

I've thought all these years about how I'd run and structure the company.  But there's a gigantic difference between an idea of how to do something.  And what you actually need to do to execute.  I found this out the hard way when I wrote How To Value Invest.

What I thought would be a few month project turned into 10 months of work on the book.

Having gone through that process this time I didn't put a time frame on when I wanted to open the company until I got a lot closer to finalizing things.

Fast forward almost a year where I'm still grinding to start things and the only people I'd told about what I was doing were my close family members.  And when I told them they had a similar reaction to my wife.  I saw a lot of shock and heard things like "Okay... what?" when telling anyone.

Don't take anyone's reaction mentioned here as a negative response though.

I'm lucky to have a close-knit family who believe in me.  But we're a typical middle class family who looks forward to taking vacations once or twice a year.  Upgrading TV's and computers when necessary.  And spending time together barbecuing and watching football on Sunday's.  Talk of starting multimillion dollar companies isn't normal in our family.

I continued to grind closer to this goal and then a few months ago as I told more people my plans I began telling them: "by the end of the year 2016 Rivera Holdings will be open."

Fast forward another few months of work, research, and writing and we're here today.  And I can finally tell everyone that my investment holding company Rivera Holdings is now open to investors.

I will be posting more information on the blog in the coming weeks about the company.  But if you'd like more information about becoming an investor now please fill out the form below.

And if you know you'd like to invest you need to contact me as soon as possible.  This is because due to law Rivera Holdings is only allowed to accept a set number of non-accredited investors.

Yes you read that right...

You DO NOT have to be an accredited investor to invest in Rivera Holdings.

If you'd like more information about becoming an investor in the company please fill out the form below.  Once doing this you'll get all the details about the company and my contact information.

I will continue to post on this blog but I wanted to say thank you to everyone who has ever read, commented on, emailed, or talked with me about investing.  You've had a gigantic positive influence on me and helping this happen.

I look forward to talking with many of you soon about becoming investors in Rivera Holdings.

Sincerely Yours,

Jason M. Rivera

Chairman, CEO, and Founder of Rivera Holdings

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15 Questions With Jason Rivera – An interview I did with P.j. Pahygiannis of GuruFocus

15 Questions With Jason Rivera - An interview I did with P.j. Pahygiannis of GuruFocus

Below is a brief excerpt to the 15 question interview I did with P.J. Pahygiannis of GuruFocus.  The questions range from how I began as a value investor, to books I recommend, my investment focus and style, my investment icons, and more.

To view the full transcript please go here or also to the link further below.

Today, I had the pleasure of having a conversation with Jason Rivera. Jason tells us his favorite books, the investors he looks up to, the books he recommends, as well as his findings in the OTC market.

How did you get started investing? What is your background?

I started learning about investing out of necessity. About 10 years ago I was dealing with severe dizziness issues, so I could not do much. But when my wife told me she was pregnant with our first daughter, I knew I had to do something that would allow me to provide for my family at some point when I got healthy.

At the time I thought about going into three different lines of work.

One was to become a politician but I figured the world didn’t need any more scum bag politicians.

The second was becoming a writer but I remember being told in high school by one teacher, “I hope you never want to become a writer because this paper is terrible.” And it was the truth then.

And third was that I remembered learning some basics about investing my senior year in high school and I remember being interested in it.

So almost by default I chose the path of learning about investing because it was the only path I was even a bit interested in.

To view the full 15 question interview go to the following link.

Link to Full Interview Here.

Thanks a lot for the opportunity P.J.

On Float The 60 Page Book Released

On Float The 60 Page Book Released

Over the last seven months I've detailed investment float a lot here.  All the nuances, and both the positives and negatives of float.

The hope being we'll have a huge advantage over other investors by knowing the immense power float holds.  How to evaluate it.  And how it affects a company's value among many other things.

Over the last seven months, seven parts, 12,000 words, and 60 pages of content I explain all the following in detail.

  • What float is.
  • Why it's important.
  • How companies can use float as positive leverage.
  • How Buffett got so rich using float.
  • How to find float on a balance sheet.
  • How to evaluate float.
  • How float affects a company and its margins.
  • Maybe the most important thing why float affects a company and its margins.
  • How float affects a company's value.
  • And answered the question is float ever bad?

I released the last part of the On Float series on the blog last week so why am I writing this post?

Because I've compiled all the information above and put the content into a 60 page PDF book that's releasing free today.

And by free I mean free.

You don't have to pay me a cent.  Don't have to pass this along on Twitter or Facebook.  And don't even have to give me your email address to gain access to this book.

All you have to do to download this book is click on the link below.  That's it.

On Float The 60 Page Book

Feel free to share this with anyone you'd like and as many people as you'd like.  No restrictions and no hassles.

The only things changed from the blog posts to the transition into book were I deleted some redundancy from the blog posts and changed/fixed some formatting issues that popped up in the transition.

All other content to my knowledge is the same.

I hope you enjoy and learn as much from this information as I have.

Conclusion and Further Recommended Reading – On Float Part 7

Conclusion and Further Recommended Reading - On Float Part 7

This post is the last one in the On Float series started way back on February 2nd 2016.  Yes that date is correct.  I posted the first article in this series Charlie Munger On Deferred Tax Liabilities and Intrinsic Value - On Float Part 1 seven months ago.

If I've done my job well in the seven parts, more than 12,000 words, and 60 pages of content including this post we all should know the following now.

  • What float is.
  • Why it's important.
  • How companies can use float as positive leverage.
  • How Buffett got so rich using float.
  • How to find float on a balance sheet.
  • How to evaluate float.
  • How float affects a company and its margins.
  • Maybe the most important thing why float affects a company and its margins.
  • How float affects a company's value.
  • And answered the question is float ever bad?

But as with any great thing in life and investing there's always more to learn and improve on.  Knowing this I've included the things I've learned the bulk about investment float from below.

Also make sure to read the comments sections of any of the following as well as there is usually great commentary there on the specifics of float.

All the following are in no particular order.  Have been added to the Recommended Reading and Viewing page.  And are designated as MUST READS!!! on the Recommended Reading and Viewing page.

My posts about float.

I specifically want to thank Warren Buffett, Charlie Munger, Professor Sanjay Bakshi, and The Brooklyn Investor for sharing their knowledge on float.  Without their knowledge none of my posts would have happened.

Reading the above things and taking notes where necessary will help you further understand the nuances of float.

But if you really want to continue learning about float make sure to read company filings, take notes, analyze the company fully, analyze its float, and value the company.

Doing this over and over - like with almost everything in value investing - not only ingrains these concepts in your thought processes.  But the more you do it the more nuances you'll spot.  And the more intimate knowledge you'll have of investment float and its immense power.

If I've done my job well over the last 60 pages we should now have a huge advantage over other investors who either don't know what investment float is.  Don't know how to value and evaluate it.  Or won't take the time to learn how to do these things.

But as always there's always more to learn and improve on so on to the next one...

Please leave any comments, questions, or concerns you have about float in the comments section below.

***

Remember if you want access to my exclusive notes and preliminary analysis you need to subscribe for free to Value Investing Journey.  And this isn't all you'll get when you subscribe either.

You also gain access to three gifts.  And a 50% discount on a year-long Press On Research subscription.  Where my exclusive stock picks are evaluated and have crushed the market over the last four years.

Is Float Ever Bad? On Float Part 6

Is Float Ever Bad? On Float Part 6

The goal of this blog is to help us all improve as investors and thinkers so we're a little wiser every day.  The hope being that our knowledge will compound over time so we'll have huge advantages over other investors in the future.

The aim of today's post is to continue this process by talking about a topic few investors know about.  And even fewer understand.

Most people overlook float when evaluating companies because they either don't know what it is.  Don't know the power it can have within a business.  Or don't know how to evaluate it.

This won't be an issue here.

Press On Research subscribers already know this as I talk a lot about float in many of the issues I've written.  But I want to begin talking about it more here because float is one of the most powerful and least understood concepts of business analysis.

Today's post is a continuation of the earlier posts:

Today we're going to answer the question "Is Float Ever Bad?

Is Float Ever Bad?

I'm a guy who likes to live by the above quote.  If I can make things simpler I always do.  Not only does this make things easier to understand but it also can save a ton of time.

When analyzing investments and dealing with complex topics like investment float this isn't always possible.

Understanding the good things about investment float is definitely one of those things you can make only so simple.  The concept is simple to understand but the there are a ton of different nuances to understand which leads to complexity.  You can likely tell since it's taken me 51 pages thus far in the five earlier posts to explain the good things about investment float.

Luckily the answer to the titled question is a simple one.  And also involves simple and easy to understand concepts as well.

Yes, certain investment float is bad.  And no, not all float is equal.

The heuristic or mental model I use when evaluating float is that if the company isn't profitable - or near profitability - its float is useless.  And can even be a negative burden for a company.

Why?

Remember, float are liabilities that can become positive leverage if used well by management and the company is profitable.  But always remember leverage can go both ways as well.

If a company isn't profitable and hasn't produced profits in several years float turns into negative leverage.  This is because in the long run float are liabilities the company will have to pay at some point.

The longer a company goes without earning profits the longer it will take a company to pay its liabilities because it's not earning enough money.  This also makes it harder to fund operations and grow in a healthy way without taking on a ton of debt or even more liabilities.

Let's go through a quick example to show this.

Let's say we have two insurance companies.  Company A has an average combined ratio of 90% over the last five years and Company B has an average combined ratio of 110% over the last five years.

Not only does this mean Company A's profits are 20 percentage points better on average than Company B.  But it also likely means that Company B has continued racking up liabilities it can't afford to pay when due or when a catastrophe strikes.

This is because Company B hasn't earned a profit on average over the last five years.  And of course all else remaining equal a company earning 20 percentage points better profit's on average is the higher quality company.

The same general rule goes for non insurance companies as well.  If they aren't, haven't been, and show no signs of becoming profitable float should be viewed as negative leverage for a company.

I use the following rules when evaluating all companies float...

  • To view float as a giant positive for any company I like to see consistent profitability in the last five years.  And/or seven of the last 10 years.
  • If a company has off and on profitability I view float as neutral.
  • And if the company is consistently unprofitable I view float as a huge negative for the company.

I consider profitability of operating margin, ROIC, ROCE, and FCF/Sales.  The company doesn't have to produce huge excess profitability in each category.  I look for consistency and trend of profits more than anything when evaluating float.

This idea is a lot simpler to understand than the concept of what float is and makes it potentially great for companies and investors.

One last thing to remember when evaluating float is that whether the company has positive or negative acting float doesn't matter if the company doesn't allocate capital well.  And the management doesn't know what float is or how to use it.

To evaluate these potentials see the previous five posts on this topic.

Summary

If I've explained everything well enough in the series so far we should understand -

  • What float is.
  • Why it's important.
  • How companies can use float as positive leverage.
  • How Buffett got so rich using float.
  • How to find float on a balance sheet.
  • How to evaluate float.
  • How float affects a company and its margins.
  • Maybe the most important thing why float affects a company and its margins.
  • How float affects a company's value.
  • And answered the question is float ever bad?

In the next and final seventh chapter of this series I'll share the best resources I've learned from about float with you.

Knowing what we know now we should have a gigantic advantage over other investors who either don't know about float.  Or aren't willing to put in the time to learn what it is and what it can do for a company and investment.

If you have any questions, concerns, or comments on float up to this point please let me know in the comments section below.

***

Remember if you want access to my exclusive notes and preliminary analysis you need to subscribe for free to Value Investing Journey.  And this isn't all you'll get when you subscribe either.

You also gain access to three gifts.  And a 50% discount on a year-long Press On Research subscription.  Where my exclusive stock picks are evaluated and have crushed the market over the last four years.