In part 1 I told you I was doing this case study to see if I made a mistake when analyzing Steiner Leisure (STNR) back in January of 2014 after seeing the company’s being bought out.
In early 2014 I liked STNR and thought it had some minor competitive advantages. But found it overvalued so I passed.
The reason I looked at STNR again was because I saw the company was getting bought out by private equity firm Catterton for $834 million. And at this I wanted to take a second look.
What I found and detail in the 15 minute video below is shocking.
It shows that not only is STNR more overvalued on a relative basis now then it was in early 2014. But also that its margins have deteriorated a lot. Even going negative in the TTM period. And that book value of the shares has halved.
This has all happened in less than two full years. And we’ll begin to figure out why when looking into the financials in the next part of this case study.
If you want to get the exclusive preliminary analysis notes talked about in the video make sure to subscribe to the Value Investing Journey mailing list for free here.
But this isn’t all you get with your free subscription either…
I haven’t updated this list in a while but today I’m adding another six books to the next prize pool. This brings the next prize pool up to 14 total books to giveaway so far when the blog reaches 500 subscribers. Or more than $250 worth of books already.
First, I’ll tell you which books added today. And then at the end of this I’ll list all the books in the next prize pool so far.
Even though I haven’t read this book yet I’ve heard nothing but great things about it. And I’ve already got a copy of this book so when I came across another like new hardcover copy of the book I had to get it to give away to subscribers.
Below is a description of the book from Amazon.
Based on more than forty interviews with Jobs conducted over two years—as well as interviews with more than a hundred family members, friends, adversaries, competitors, and colleagues—Walter Isaacson has written a riveting story of the roller-coaster life and searingly intense personality of a creative entrepreneur whose passion for perfection and ferocious drive revolutionized six industries: personal computers, animated movies, music, phones, tablet computing, and digital publishing.
At a time when America is seeking ways to sustain its innovative edge, and when societies around the world are trying to build digital-age economies, Jobs stands as the ultimate icon of inventiveness and applied imagination. He knew that the best way to create value in the twenty-first century was to connect creativity with technology. He built a company where leaps of the imagination were combined with remarkable feats of engineering.
Although Jobs cooperated with this book, he asked for no control over what was written nor even the right to read it before it was published. He put nothing off-limits. He encouraged the people he knew to speak honestly. And Jobs speaks candidly, sometimes brutally so, about the people he worked with and competed against. His friends, foes, and colleagues provide an unvarnished view of the passions, perfectionism, obsessions, artistry, devilry, and compulsion for control that shaped his approach to business and the innovative products that resulted.
Driven by demons, Jobs could drive those around him to fury and despair. But his personality and products were interrelated, just as Apple’s hardware and software tended to be, as if part of an integrated system. His tale is instructive and cautionary, filled with lessons about innovation, character, leadership, and values.
I saw the subtitle above for the House of Gucci and thought it was hyperbole. After all this isn’t a fiction book about the mafia. It’s a business book about how Gucci was started and built.
But the subtitle doesn’t go far enough.
The book starts off with the stunning assassination of Maurizio Gucci. The third generation of the Gucci family to run the company. And then falls back telling the story of how the company began.
From here for the rest of the book there are two stories within the book told at the same time. How Gucci was built and run. And the infighting within the Gucci family.
Including the assassination mentioned above. Family members sending each other to jail. Alliances and then backstabbing between family members. Nephews and sons fighting uncles and fathers for control of the company and almost destroying the company in the process.
If this sounds a bit like Game of Thrones that’s because it is.
I won’t ruin any of the twists for you. But this is a great business and family biography book.
I’ve not read this book yet either. But have heard great things about it too. And since I’ve already got a copy I had to get this for you when I came across another like new copy of the book.
Below is a description of the book from Amazon.
Deemed “the best history of oil ever written” by Business Week and with more than 300,000 copies in print, Daniel Yergin’s Pulitzer Prize–winning account of the global pursuit of oil, money, and power has been extensively updated to address the current energy crisis.
I read this book years ago but came across another copy to give away.
Honestly I don’t remember much about the book other than the underlying premise that in most cases the first thought coming to your mind when making a decision is the correct one.
Below are more detailed reviews and descriptions from Amazon.
Blink is about the first two seconds of looking–the decisive glance that knows in an instant. Gladwell, the best-selling author of The Tipping Point, campaigns for snap judgments and mind reading with a gift for translating research into splendid storytelling. Building his case with scenes from a marriage, heart attack triage, speed dating, choking on the golf course, selling cars, and military maneuvers, he persuades readers to think small and focus on the meaning of “thin slices” of behavior. The key is to rely on our “adaptive unconscious”–a 24/7 mental valet–that provides us with instant and sophisticated information to warn of danger, read a stranger, or react to a new idea.
Gladwell includes caveats about leaping to conclusions: marketers can manipulate our first impressions, high arousal moments make us “mind blind,” focusing on the wrong cue leaves us vulnerable to “the Warren Harding Effect” (i.e., voting for a handsome but hapless president). In a provocative chapter that exposes the “dark side of blink,” he illuminates the failure of rapid cognition in the tragic stakeout and murder of Amadou Diallo in the Bronx. He underlines studies about autism, facial reading and cardio uptick to urge training that enhances high-stakes decision-making. In this brilliant, cage-rattling book, one can only wish for a thicker slice of Gladwell’s ideas about what Blink Camp might look like. –Barbara Mackoff –This text refers to the Hardcover edition.
I’ve not read this book yet either. But have heard great things about it as well. And since I’ve already got a copy I had to get this for you when I came across another like new copy of the book.
Below are reviews and descriptions of the book from Amazon.
“One of the finest, most compelling accounts of what happened to corporate America and Wall Street in the 1980’s.”
—New York Times Book Review
A #1 New York Times bestseller and arguably the best business narrative ever written, Barbarians at the Gate is the classic account of the fall of RJR Nabisco. An enduring masterpiece of investigative journalism by Bryan Burrough and John Helyar, it includes a new afterword by the authors that brings this remarkable story of greed and double-dealings up to date twenty years after the famed deal. The Los Angeles Times calls Barbarians at the Gate, “Superlative.” TheChicago Tribune raves, “It’s hard to imagine a better story…and it’s hard to imagine a better account.” And in an era of spectacular business crashes and federal bailouts, it still stands as a valuable cautionary tale that must be heeded.
I’ve talked about neuroplasticity several times on this blog so far. But until reading this book most of the things I’ve read have been short articles. Not entire books including real life stories and examples.
This is a fantastic book. So great in fact that I’m working on a post specific about some of the stories and examples in this book of the amazing things we can do with our brains.
So far this makes 14 great books – worth more than $250 – in the next prize pool. The winner will get all books and future books added to this prize pool sent to them. Anywhere in the world at my cost.
All you have to do to get a chance to win all these great books is subscribe for free to the Value Investing Journey mailing list. Or be a Press On Researchsubscriber.
But this isn’t all you’ll get with your free subscription. You’ll also get three free gifts that will help you analyze companies faster. Some of my exclusive notes. And a 50% discount on a Press On Research subscription.
September Press On Research Issue Out Today – Back To Business
I got in bed last Tuesday night like any normal night. But all the sudden something popped into my head and I began to panic.
Two weeks leading up to this I told you I was taking some time off to recharge my mental batteries. And I did. But I didn’t stop doing everything.
I worked on finding the next Press On Research pick and did all the valuations for the pick. Worked on the case study talked about here. And read a lot. But one thing I didn’t do was write.
So when I got into bed last Tuesday night realizing that the next issue was due out next week – today – I began to panic because I hadn’t written anything yet. And the issues are longer now. Most of the time over 30 pages.
For some reason leading up to last Tuesday night I kept thinking I had plenty of time to write the issue because I had two weeks until its release. I don’t know why I thought this. So the next day I got to work and ended up writing 7300 words – 37 pages – in less than three days.
Yes I had a massive headache from staring at my luminous computer screen doing so much work in such a short amount of time. But it was worth it.
I’ve spent the rest of the time editing and cutting the issue down. And I think this is the best issue thus far. But I just need to go over it one more time to check for things like spelling and punctuation errors before its release later today.
But since I’m so happy excited about this pick I wanted to share an exerpt with you below.
Investing In “Sin” At A Huge Discount
By Jason Rivera
Press On Research Volume 1 Issue 6
There’s not much for teenagers and young adults to do in Western South Dakota where I’m from.
Rapid City is the biggest “city” in the area. And even including the surrounding areas it has a population of maybe 90,000. Tops.
Rapid City is a small beautiful city where most people are nice and polite. Is a great place to visit in the spring and summer. But there’s not much to do here.
Combine this with the long winters where you can’t do much outside unless you like skiing, snowboarding, or ice fishing. And younger people complain of severe boredom here.
But there’s one thing young people can look forward to here once hitting the age of 21. And this is one thing we have that most in the country don’t. Gambling.
Welcome To Deadwood
About 30 minutes from where I live is the town Deadwood South Dakota. Yes, that Deadwood if you’ve seen the HBO TV series.
While Deadwood’s no longer a wild west frontier and gold mining town. People from all over the world come to the town now to find gold in the towns many casinos.
Because of Mt. Rushmore and the Sturgis Motorcycle Rally. Both held within 45 minutes from where I live. Western South Dakota sees between three and four million tourists from all over the world every year.
Here’s a picture of Deadwood during the rally.
And because gambling is outlawed most places in the developed world many of these people also go to Deadwood trying to win fortunes.
Most people don’t win though. And this is what makes casinos great businesses to own.
Which Casinos Are Best?
The first two times I gambled in Deadwood me and my girlfriend (now wife) went up by ourselves for the day to eat some good food. Have fun. And try to win a little money.
And we did all three.
The first two times we went up there we won more than $800 and thought to ourselves man this is great.
But this is how casinos keep you coming back. With the promise of fun, great food, and easy money.
We’ve gone back dozens of times since and while we still have fun and eat great food. Every time we’ve gone since we lose money.
I don’t go much anymore because I’ve studied casinos a lot from a psychology and investment perspective. And I now know the odds are always stacked against the gambler.
But this change of perspective has also given me insights on owning casinos instead of gambling in them
While I don’t own any of the casinos in Deadwood. I’ve been up there enough to know which do best and why.
If you’ve ever been to a casino you’ve likely felt overwhelmed or lost inside.
Between the buzzers and sirens going off announcing people winning big. Those same people cheering. Free alcohol when you’re at a card table or slot machine. Nonstop talking and lights everywhere. And the odd layout of the insides of casinos it’s easy to get overwhelmed and lost.
But this assault on our senses is purposeful. It’s all done to play on our psychology to get us to gamble more. Even the design of casinos is deliberate.
The maze design of casinos is meant to get you lost so you have to walk around more. Which makes it more likely you’ll see something you want to play or do.
Have you ever noticed there aren’t any clocks in casinos as well? This is on purpose too so you don’t know how much time you’ve spent in them.
Do I hold these “tricks” against them? No because every business uses knowledge of psychology to get us to guy things. And casinos are businesses just trying to make money like the others.
But which kinds of casinos do best?
The biggest ones with the most amenities. Best restaurants/eateries. Most tables and slot machines. Having the most hotel rooms. That cluster close to other big casinos do best.
Because the more stuff a casino has for you to do. The longer you’ll stay in the casino to spending money on food and games.
And the more casinos clustered near each other means the more people can drink without having to walk or drive around while drunk. Again, the more people drink the more people gamble and spend money.
The most expensive casino in the world – The Venetian Macau – cost $2.4 billion to build. And it’s the seventh biggest building in the world in terms of square footage. Like in many aspects of life bigger is better when it comes to casinos.
I could go on and on but this issue isn’t about the psychology of casinos. It’s about an investment. But if this stuff interests you go to the following articles for more information.
Because today’s recommendation is a company that owns casinos and hotels.
Not only is this company undervalued by as much as 182%. But it’s got above average margins. Is a sub $50 million company with hidden assets on its balance sheet. And offers us a huge margin of safety.
But before we get to what the company is. You need to know where it does business…
If you’d like to see what this company is. And the other five great picks in Press On Research so far. Make sure to subscribe here for access. Remember that Value Investing Journey subscribers get a 50% discount on their Press On Researchsubscription.
Life isn’t all about improvement. Learning. Achieving goals. And working. Sometimes you need a little friendly competition to stoke the imagination. And one of my favorite things outside of investing and my family is playing fantasy football.
With the new NFL season about to start my favorite sport is coming back. And one of my favorite things along with watching professional football is playing fantasy football with family and friends.
I’ve set up three leagues below for anyone who wants to join. To do so click on a link below and enter your Yahoo email address.