What Happens When A Company I Own Gets Bought?

What Happens When A Company I Own Get Bought?

What if my valuation is even higher?

The quoted area below is the answer I wrote the the above question asked on Quora.

This actually happened twice to one company I owned stock in.

The first time was a complete low ball offer by the management/insiders of the company to go private.

I was so appalled by the low ball offer that I wrote about it on my blog saying all shareholders of this company should fight.

After this I got contacted by many other investors in the company and we banded together and rounded up as much support as we could to fight.

We did and we won because between all of us we controlled somewhere between 10 and 20% of the companies shares.

The low ball buyout offer was defeated and we won… At least in the short term.

Fast forward one and a half years later and the company proposes another buyout offer.  This time instead of the company itself going private it was going to merge with another private company.

I was going to write about it on my blog again and contact everyone we got together before to fight again until I read the offer…  The company learned from its mistakes of the previous time and upped their offer by 16% or $3 a share.  This wasn’t the big kicker though…

While the offer was upped it was still 10 to 20% below my conservative estimate of value.  So we planned to fight… Until I read the updated offer.

The company learned their lesson from last time…

Instead of trying to force shareholders to accept their “generous” offer like the first time, now they already worked with a significant “outside” investor who controlled ~40% of the companies shares who already agreed to the new buyout.

While this investor was never revealed it made fighting the upped – still lowball – offer pointless since they already had so much support.

Since our group would have wasted our time fighting we chose to accept the inevitable low ball buyout.

We were losing ownership of a great profitable company that had minor competitive advantages that should have continued to compound our investment well over time.

A perfect Buffett type of company to own for the long-term.  And we were getting bought out at an offer that was well below our conservative estimates of the companies value.

No we weren’t happy about it but this time there was nothing we could do.

I was proud that we fought the first time and helped shareholders earn ~16% more than the original ridiculous offer.

Long story short is that unless you’re a majority owner of a company you can’t do anything to stop a merger/buyout at a low ball price if the company enlists enough support.

If this does happen to a company you own you can do one of two things.  Fight or accept the buyout price.

If you want details on more of the specifics from the above example go to the following links where I wrote about extensively on my blog.

Hope this helped

Have you ever been through a similar situation?  If so how did you handle it?  Let me know in the comments 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.

 

10 Tips To Becoming A World Class Investment Analyst

10 Tips To Becoming A World Class Investment Analyst

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This post is written in conjunction with Quandl as part of a series on how to become great investment analysts.

Quandl provides access to data and information useful to us as investment analysts.  So if you’re looking for specific data to make your analysis pop make sure to check out their site linked above.

***

Are you sure you want to be great?

No one admits they’re fine being average.  But our actions show otherwise.

Most of us would rather watch TV or random YouTube cat videos instead of working on improving and learning the skills necessary to improve and reach our goals.

The ones who do work towards greatness are often labeled antisocial hermits for not hanging out with friends and partying more…  Especially when young.

This social stigma keeps many of us from doing what we really want to do…

If you want to achieve greatness you must do things different than everyone.

If you want to improve fast you must endure short-term pain.  And sometimes ridicule from peers when you’re not doing what they expect you do to.

If you’re willing to do the work necessary to become a world class investment analyst below are the top ten things you have to do every day.

  1. Be Patient

Are you fine searching through thousands of companies only to invest in a few of them?  Are you fine going months or years without buying a new investment?

If you answer no to either you won’t be a great analyst.

I invest in less than 1 out of every 500 companies I research.  You need to have extreme patience and enjoy the hunt of buried treasure as much as actually finding it.

  1. You need to be an autodidact

Do you rely only on your degrees and certifications to get you by? Do you seek out new and sometimes contradictory information to continue to learn and improve processes?

To be a world class investment analyst you have to love learning, reading, and gaining knowledge on your own.

Degrees and certifications have nothing to do with how great of an investment analyst you are or can become.

If you’re not willing to read and continue learning you won’t become a world class investment analyst.  Because people like me who constantly read, learn, and work to improve will always be ahead of you.

  1. You must have strict and disciplined processes

If you can’t make unemotional decisions based on how your analysis plays out you won’t be great.

You can’t rely on preconceived notions, hearsay, emotion, or what Mr. Market’s doing.  Let your analysis take you where it does.

If you spend 100+ hours researching a company only to find at the end it’s not one you want to invest in don’t invest in it.

Just because you spend a lot of time evaluating a company doesn’t mean you need to invest in it.

If you have strict processes and have the discipline to stick to these processes you’ll invest in a fraction of the companies you research as mentioned above.

Don’t be average be great.  Again, this requires you do things different than everyone else.  Be selective in your investments to produce greater returns.

  1. Practice everything you learn as you learn it

When I started investing I would read everything but not practice anything I learned.  This led to years of wasted time as I had to go back and relearn things as I came across them and needed to know what they meant.

Don’t do this.

And when I say practice I don’t mean the normal practice most people do.  I mean deliberate practice.

  1. You need the fundamentals down pat

If you can’t explain what free cash flow, operating margin, and return on invested capital mean in terms a 6th grader can understand you don’t understand it well enough yourself.

You need to understand the basics better than other analysts to have an advantage over them.

  1. Be selfish with your time

If you’re friends are doing something you don’t want to do don’t do it.

This sounds easy but it’s not…  Remember the social stigma I talked about above?

If you want to improve fast be selfish with your time and find any spaces of time you have to learn.

As an example if your significant other’s taking forever getting ready to go out, instead of getting mad and anxious about them wasting your time read something.  Even if it’s only for five minutes.

The more you learn the faster you’ll improve.  Knowledge like money compounds over time.

Note on above quote: Most people – including me – can’t reach the 500 pages every day goal because of kids, significant others, family, work, relaxing so you don’t burn out, and life.  But it’s a goal to reach towards.

Read as much as you can every day.

  1. Don’t get complacent

There’s always more to learn.  Always an investment or thought process you can improve.  There are always more companies to look through.  Etc.

“The thing that amazes me about him {Nick Saban} is that he doesn’t let up,” says retired Florida State coach Bobby Bowden. “People start winning, they slack off. But he just keeps jumping on ‘complacency, complacency, complacency.’ Most coaches don’t think like that.”

To learn more about what it takes to be great read my post: Greatness According to Nick Saban.

  1. You need confidence in your abilities

“You need to balance arrogance and humility…when you buy anything, it’s an arrogant act. You are saying the markets are gyrating and somebody wants to sell this to me and I know more than everybody else so I am going to stand here and buy it. I am going to pay an 1/8th more than the next guy wants to pay and buy it. That’s arrogant. And you need the humility to say ‘but I might be wrong.’ And you have to do that on everything.” Seth Klarman

This doesn’t mean being overconfident.

You need to be humble enough to spot and fix any mistakes you make in your analysis that may only come out after you invest in or recommend something.

But if you’re not confident in yourself and judgments you make why should anyone else be?

  1. You can’t be afraid of mistakes.

No matter how great of an investment analyst you are you’re still going to make mistakes.  Investing isn’t something anyone can perfect.  Even Buffett, Munger, Klarman, and the other greats in our business make mistakes.

As investment analysts were doing great things if we’re right four to six times out of 10.  No one is right 10 out of 10 times in this business.  Leave your perfectionism at the door.

You need to be comfortable making mistakes.  And be humble enough to learn from them so you don’t repeat them going forward…  Hopefully.

If you’re stubborn like I am this may be a hard learned long-term lesson you need to work correcting every day.

  1. Be obsessive.

No one starts life as a great investor or thinker.  You need to train yourself to become great.  And the faster you learn the faster you’ll become great.

If you’re obsessive about learning the craft of becoming a world class investment analyst nothing can stop you.

High IQ isn’t necessary in this field.  It will be a hindrance if high IQ comes with overconfidence and not being humble.  So the only thing stopping you from becoming a great analyst is the amount of time you’re willing to put in.

Note the reading of 500 pages quote from Buffett above.

Are you obsessive enough about investing and analyzing businesses to work towards that goal?

Do you love learning, reading, and constant improvement enough in this field to continue to work even on days you don’t want to?

Bonus – Write your analysis down and let others critique your work.

Most of us hate being critiqued.  When we put dozen, hundreds, or thousands of hours into something over days, weeks, or years it’s natural that we don’t want people to point out the flaws in what we’re doing.

Fight this urge…

If you want to become great write your investment analysis down and have others critique it.  A great way to do this is to start a blog.

When I started my blog Value Investing Journey and began getting feedback my improvement as an analyst jumped into hyper speed.

I went from this “analysis” when I started the blog less than four years ago to being told a version of the following on a regular basis:

“If I were to go to anyone else in the entire company to get a second opinion valuing and analyzing an investment… I would go to you first.”

The above quote is what a former colleague told me upon leaving my job.

The company had around 50 employees.  And every other analyst had an MBA.  Decades of experience investing.  And ran or helped run billions of dollars at various hedge funds and firms before joining the investment newsletter we worked for.

I get told a version of the above on a regular basis but I’m not telling you this to brag.

I’m telling you this because if I can achieve this without any formal education and severe health issues while beginning my investment journey imagine what you can achieve with your formal training, degrees, mentors, and certifications.

If you don’t already have a or want to start a blog post articles on places like Seeking Alpha and Guru Focus to get feedback.

If you take this route beware of haters making personal attacks though.  Ignore these people and pay attention to the constructive feedback.

Conclusion

If you paid attention above you’ll notice many of the above tips go together.  And a lot of it revolves around how you choose to spend your time.

The choice is now yours… Are you willing to put in the time to become great?  Or are you fine being average and producing average returns and recommendations?

Time is the only thing keeping you from becoming a world class investment analyst.

So what are you going to do next?

 

Iconix Brand Group (ICON) Investment Case Study Part 1 – Preliminary Analysis

Iconix Brand Group (ICON) Investment Case Study Part 1 – Preliminary Analysis

Researching and analyzing as many companies as you can is the best way to learn how to evaluate businesses for investment.  And evaluating companies from different industries case study style not only allows us to learn.  But also allows us to learn what our circles of competence are.

The more case studies we do the faster we learn.  And the closer we get to our goals of becoming excellent investors.

This is why I’m trying to do as many case studies as possible here.  And why I’ve asked Value Investing Journey or Press On Research subscribers to send me their recommendations for companies to analyze.

Today’s company and investment case study was recommended by Professor Andrew.

Thanks so much for subscribing and writing in with this suggestion.

Iconix Brand Groups (ICON) is a brand management company focused on owning, licensing, selling, marketing, and extending clothing stores and brands in the women’s, teen girl, sports, and entertainment segments.

Below is a list of the brands it owns and or manages.

All these brands focus on the medium to lower end of the clothing brand and cost spectrum.  And I know this arena well from my experience running an EBay store focused on selling these things.

But we’ll get back to evaluating this when we dig into the financials in the next part of this case study.

For now let’s get to the preliminary analysis of the company.

The following analysis is the preliminary analysis I do on all companies.

Subscribers to Value Investing Journey and Press On Research have exclusive access to numbers calculated and notes taken for ICON and all other case studies.  But below is a video highlighting everything I found important while doing my preliminary analysis.

If you want further explanation on anything in this video please go to the following pages.  Aramanino Foods (AMNF) Case Study Part 1 – Preliminary Analysis.  Why the P/E Ratio Is Useless and How to Calculate EV.  And Earnings Yield Explanation Video.

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’ll also get other exclusive content.  Get entered to win prizes.  Get three free gifts.  And get 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.

If you have any questions about the case study or have a company you’d like me to do a case study on let me know in the comments below.

February 2016 Press On Research Issue

February 2016 Press On Research Issue

Press On Research High Def

Below is an unfinished 11 page excerpt from this month’s 43 page Press On Research issue to release tomorrow.  If you’d like to subscribe to Press On Research you can do so at the previous link.  And if you’re already a free Value Investing Journey subscriber you can subscribe to Press On Research for a 50% discount of only $49 for one year.

When doing this you’ll also receive all back issues – which are exclusive to subscribers – sent to your email as well.  And my stock picks have crushed the market over the last four years.

Huge Margin Of Safety And Potential Competitive Advantages Mean As Much As 341% Gains For Us

February 2016 Press On Research Issue

By Jason Rivera

Press On Research Volume 1 Issue 9

When you think of investing in microcaps the last thing you think about is finding a company with gigantic competitive advantages.

Of course we search for companies that have them.  But we rarely find these companies.

After all small companies are small for a reason…

Most of the time they’re newer businesses that haven’t refined their business models.  Are struggling to find niches to thrive in while fending off giant competition.  And are just trying to stay afloat as they grow sales and profitability.

These are a few of the reasons why here at Press On Research I haven’t talked much about competitive advantages at this point.

Almost 100% of companies with huge long-term competitive advantages are the biggest companies in the world.

I can only think of a handful of microcaps I’ve evaluated over the years that have had even small short-term competitive advantages.

And only a few that if they got bigger, could have massive advantages over competition.  And none that already had them.

So why am I talking about competitive advantages here on Press On Research?  Because I’ve found a $263 million company that’s building a massive competitive advantage now.

But this isn’t even the best thing about the company…

Even if it takes them decades to build their competitive advantages to the scale of a world dominator, or it doesn’t build its competitive advantages at all.  It’s so undervalued now that it doesn’t matter.  We still should make a ton of money owning this company over time.

It’s selling between 20.9% and 341% below its true value.  And its priced now as if the market expects the company to go out of business as its selling at a 25.9% discount to just its net asset valuation.

This is one of the most conservative valuations investment analysts do.

But this company is far from terrible…  It’s profitable on an operating margin basis in eight of the last ten years.  And on an return on invested capital (ROIC) basis has been profitable every year of the last ten.

It’s grown revenues 3.67 times in the last ten years.  It’s got a strong balance sheet that’s in a net cash position.  And its operations are becoming more efficient over time.

Best of all this company operates in an industry that’s necessary to governments around the world.  And will remain so for decades to come.

This all means that not only will the company not go out of business, but that it’s already a good to great business priced far below its true value.

By buying this company we get to combine the ideas of two value investing giants Benjamin Graham and Warren Buffett.

But most important for you is this means we should expect great returns over time… Even if the company isn’t able to build its advantages.  If it does this company could become a multi bagger in the long-term.

But before we get to all this I need to explain what competitive advantages are.

What Is A Competitive Advantage?  And What Kind Of Advantages Are There?

A competitive advantage is simply something that gives you advantages over competitors.  They’re simple to understand as outside investors.  But difficult – impossible in some industries – to cultivate over the long-term.

Why? Because in most cases competition works to erase any competitive advantages over time.

Let’s start by talking about the kinds of competitive advantages companies can have.

In general there are five different advantages companies can build.  And often if you have one kind of advantage over competition you may have others as well.

Patents, Brand Names, Trademarks, Etc

These advantages are things like patents, trademarks, copy rights, customer lists, or brand names that protect valuable assets the company owns or have the rights to use.

Think Altria and Philip Morris, Louis Vuitton, Coach, Michael Kors, Ralph Lauren, etc.

These can be indefinite assets in the case of trademarks, copy rights, and brands.  Or short to long-term – one to 30+ years – in the case of patents.

If a company has a lot of these assets make sure to check how long they’re supposed to last, especially when it comes to patents.  This information is in the company’s annual reports in the footnotes.

These assets are listed on balance sheets under terms like indefinite lived assets, intangible assets, or the other names above.

Unless you have an ultra-powerful brand like Marlboro, these are the weakest competitive advantages to keep over the long-term.  Why? Because even immensely profitable drugs like Viagra come off patent in time.

These are also the only kinds of advantages you’ll find listed on a balance sheet.  The rest of the bunch you can only find doing thorough analysis on a company and knowing what to look for.

Network Effects

Network effects come from having a large network of customers using your service.

When networks reach a tipping point it makes it difficult for similar companies to compete because the more people you have.  The fewer – generally –will use competitor sites that are similar.

This competitive advantage is a gigantic barrier to entry for smaller competition.  But the network effect can also tip backwards if you don’t continue to do things well.

Current companies that have gigantic network effects are ones like Facebook, EBay, and LinkedIn.

Yes, there are similar – much smaller – companies out there but unless you search for them they’re hard to find.  And they only operate in niches.

Many times once a company gains this advantage over competitors it becomes almost impossible to compete if you offer similar products.

The only time these advantages don’t work is if you’re doing something a lot better and your competition is getting worse.  Think MySpace before Facebook came around.

If you’re trying to cultivate this competitive advantage you either need to be different or a lot better than competition to gain any share.

Even then you’re still hoping to gain enough subscribers and customers to reach the tipping point so this effect will swing in your favor.

The next two competitive advantages many times go together so I’m combining them.

Economies of Scale And Low Cost Operator Advantages

The economy of scales advantage comes when you’re so big you can lower your costs below competitors.  This gives you a huge advantage with customers because you can have lower prices for goods you sell.

The keyword within this advantage is efficiency.

The more efficient you are as a company the lower costs you’ll have.  The lower costs you have to charge to customers.  The more profitable you’ll become at the expense of non efficient competition.  Even if they’re bigger when you start.

When it started Wal-Mart was smaller than K-Mart.  Now K-Kart is almost nonexistent due to Wal-Mart’s competitive advantages and efficiency.

Companies gain these advantages because they do more business and sales than similar companies.  So their costs spread out over a wider range of products and suppliers.

Some giants like Wal-Mart have so much power over suppliers they can negotiate lower prices when they buy products as well.  Furthering their advantage.

This can be a double edged sword though if not cultivated right.

If not done well this can also lead to a chase to the bottom to ever lower profitability.  The container shipping industry is one example.  It’s efficient and cost effective but has always struggled to stay profitable.

If done well this can lead to crushing of competition and a huge barrier to entry which keeps smaller companies out of the industry.  Or crushes non efficient competitors already on the market.

Other companies not mentioned above that have a combination of these two advantages are GEICO, Coca-Cola, Pepsi Co., Altria, and Philip Morris.

Regulatory/Government Aided

At first you’d be surprised to see a government/regulatory aided competitive advantage right?

After all governments around the world do everything they can to end monopolies.  And try not to help certain companies at the expense of others in an industry.  But this backfires when the law of unintended consequences comes in to play.

This can be the most powerful competitive advantage of all.  Why?  Because if an industry is highly regulated by government it keeps competition out.  And whoever is already “in” gains all the business.

This explains why Altria, Philip Morris, British American Tobacco, Lorillard, and the other tobacco giants have dominated their industry for decades.

It also explains why they have generated such huge profits for so long.  And why newer, smaller, and more innovative companies haven’t disrupted the industry.

If you’re going to get regulated and taxed to death what’s the incentive for smaller more innovative companies to come into the industry?

There isn’t one.

Take a look at the taxes on cigarettes below as an example of why small companies can’t get into the tobacco business.

 

The dollar numbers above are the average per state tax rate per pack.  These are on top of the federal per pack tax rate of $1.0066 as of July 2014.

These taxes combined with the other regulations at cigarette companies are why cigarettes cost so much.

This is also why when this advantage combines with something like a powerful brand name – Marlboro –companies can continue to raise prices.  And still get customers to buy.

This means higher margins, greater profitability, and higher returns for shareholders.  At least until governments raise taxes again and the process of raising prices starts again.

All tobacco related companies enjoy this competitive advantage.  And today’s recommendation does as well… But I’ll get back to this later.

For more information on competitive advantages go to the following links.

Having a combination of the above advantages over the long-term enables higher margins than the competition.

If the company grows in a healthy way with these competitive advantages – and higher margins – value within the company grows and compounds

As will shareholder returns… Whether it’s stock gains, dividends, buybacks, or some combination.

Today’s company is building the government/regulatory competitive advantage over the last several years…

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Press On Research High Def

I go on from here to describe everything about the company.  Its competitive advantages.  Some giants it works with.  Its valuation and margins.  And everything else great about the company.

I also detail its risks to make sure subscribers are comfortable owning it for the long-term before recommending subscribers buy it.

If you’d like to subscribe to Press On Research to get this issue and all past issues you can do so at the previous link.  And if you’re already a free Value Investing Journey subscriber you can subscribe to Press On Research for a 50% discount of only $49 for one year.

Greatness According To Nick Saban

Greatness According To Nick Saban

If you’re a sports fan you know with the dawn of free agency and rise of player movement in the last two decades it’s become almost impossible to win championships on a consistent basis.

Before the 1980’s in the US sports dynasties were normal.  They could do this because player movement was restricted.

This kept player salaries down and meant that the best teams had huge competitive advantages over poor teams.  If you’re all getting paid about the same doesn’t it make sense to stay with a great team instead of going to a bad one?

This changed in the US in the 1980’s though…

Free agency, drafts, and salary caps became the norm.  Poor teams could now pay huge amounts to star players to lure them away from championship teams.  Drafting players became more important as they’re generally cheaper than star players.  And salary caps in professional football and basketball meant talent was spread around the league instead of concentrated on a handful of teams.

This all led to higher salaries for great – and sometimes even average – players.  More player movement.  And fewer super teams and dynasties forming as talent spread around.

Now most teams in all sports around the world go through periods of relative success followed by failure until the cycle repeats and the team goes on an up – or down – swing again.

Few teams win championships.  And even fewer win them on a consistent basis.  The ones that do should be studied.

Unlike most people in America who root for the underdogs in big games and playoffs, if my favorite team isn’t involved I always root for greatness to beat the underdog.

I want to watch the best of the best play for and win championships.  I don’t like watching inferior teams beat better ones with a “lucky bounce” or fortunate call by referees.

I love when skill, hard work, perseverance, drive, and passion trumps luck.  So when I see greatness I try to study it.  And I thought this would be a great topic to post about since all of us here are trying to reach greatness.

This post is the first in a planned three post arc focusing on great teams from the world of sports.  In these posts I’ll focus on the head coaches, star players, and team structures over the long-term.  The hope is we all can learn something about what it takes to become – and stay – great at what we do.

If these posts are popular I’ll turn it into a regular series.

Today’s Part 1 is about head coach five time football champion head coach Nick Saban now of the University of Alabama Crimson Tide.

Saban’s led the Crimson Tide to championships in four out of the last seven years.  Only the second team since 1936 to do this.  Saban’s other title was when he coached at LSU.

Below is a profile of this championship coach with linked articles detailing his processes.

Nick Saban

Excerpts below are from linked articles.  Bolded emphasis is mine.  My notes are the non quoted lines.

The following is from: The Lesson From Nick Saban’s Championship Reign is to stop trying to copy Nick Saban.

Success breeds imitation in every industry. In football, when a coach figures out something, hoards of administrators notice.  Offenses come up with something new, defenses adjust, offenses adjust to the adjustment, etc.

With Saban, however, teams have attempted to copy without figuring out what they should be copying. They hire his assistants, hoping his influence rubs off. Sometimes it does. Former Alabama DBs coach Jeremy Pruitt became Florida State’s defensive coordinator in 2013 and helped to boost the Seminoles to the national title under head coach and fellow former Saban assistant Jimbo Fisher. Often, it doesn’t. Former defensive coordinator Will Muschamp took the Florida head coaching job three years after a Gator national title and won more than seven games just once.

To imitators, Saban’s Process™ seems to consist of strong defense and occasional offense. Because he is a former defensive coordinator himself, that is the product. But that isn’t the Process. The Process is the path, not the style.

Love this saying.

To truly imitate Saban, you look first for someone who runs the most organized, effective recruiting operation on the planet

The following list is from the article talking about how Saban approaches everything.

You must develop.

Saban pushes a lot of kids out the door. If you do not fill a depth chart spot or fill a niche, odds are pretty good that you will be transferring. But many are willing to wait a couple of years for serious playing time because they know they’ll develop.

What is your niche?  What is your competitive advantage?  Are you willing to put in the time to improve?

You must deploy your talented, well-developed players appropriately.

You don’t have to take many strategic risks when you’ve got a talent advantage in every game, but you need to make sure that these players belong to a system is built to defeat the opponents you will play on a yearly basis. And if your offense or defense gets a little staid, you must be willing to make changes.

If you’re in a leadership position are you putting your “players” into the proper positions to succeed?  If so are they the right people for your system?

You must be impossibly organized.

A place for everything, everything in its place.

Love this saying as well.

If, despite all that, you find yourself in a dogfight for the national title, you must have the guts to call for a surprise onside kick by Griffith with 10 minutes left in a tied game.

If you read the article you’ll know this play wasn’t a fluke.  Saban and the coaching staff knew from watching film to look for this tendency during the game.  And since they saw Clemson doing the same thing over and over on kick returns they knew this onside kick would work if executed properly.

The teams that find a way past Alabama do it by following a path that isn’t Alabama’s.

Strive for greatness but don’t emulate something that doesn’t adhere to your philosophy and principles.  Create your own path for greatness.

This sport requires you to learn the right lessons when you fail, lest you be doomed to fail even more. Those who attempt to imitate Saban have already failed. There is only one Nick Saban.

There’s also only one Warren Buffett, Charlie Munger, Seth Klarman, etc in our business.  Strive for greatness by taking knowledge from the greats.  But don’t try to emulate them exactly.  Create your own path for greatness.

The following is from Nick Saban: Sympathy For The Devil.  This is an older article… He’s now won five total national titles.  And four of the last seven.

Saban’s pathological drive helps explain why he’s both one of the most successful coaches in American sports and, simultaneously, one of the most polarizing. He has now won four national championships—one at LSU and three over the past four years at Alabama, a coaching run unmatched in college football in more than half a century—

“The thing that amazes me about him is that he doesn’t let up,” says retired Florida State coach Bobby Bowden. “People start winning, they slack off. But he just keeps jumping on ‘complacency, complacency, complacency.’ Most coaches don’t think like that.”

Are you grounded enough to continue to work towards greatness after success?

Most big-time head coaches leave camp duty to assistants—the daylong photo session with every last camper is considered enough—but in Saban’s mind that wouldn’t be right. He has a saying: Right is never wrong. It means, in essence, there is only one way to do things: the correct way. A Nick Saban Football Camp without a great deal of Nick Saban would be something short of entirely right and is therefore, to Saban, unthinkable.

Love this saying and mindset.

Saban’s guiding vision is something he calls “the process,” a philosophy that emphasizes preparation and hard work over consideration of outcomes or results. Barrett Jones, an offensive lineman on all three of Saban’s national championship teams at Alabama and now a rookie with the St. Louis Rams, explains the process this way: “It’s not what you do, it’s how you do it.”

Taken to an extreme—which is where Saban takes it—the process has evolved into an exhausting quest to improve, to attain the ideal of “right is never wrong.” At Alabama, Saban obsesses over every aspect of preparation, from how the players dress at practice—no hats, earrings, or tank tops are allowed in the football facility—to how they hold their upper bodies when they run sprints. “When you’re running and you’re exhausted you really want to bend over,” Jones says. “They won’t let you. ‘You must resist the human need to bend over!'”

“He pretty much tells everybody what our philosophy is, but not everyone has the discipline to actually live out that philosophy,” Jones says. “The secret of Nick Saban is, there is no secret.”

What is your philosophy?  What are your processes? And do you have the discipline to live by them?  Every day?

If you poke around Alabama for a few weeks, you’ll run into a lot of people who’ve had similarly awkward interactions with Saban—on the golf course, perhaps, or at booster banquets, where Saban often looks like a man held captive. Those close to him make excuses for the behavior. His wife, Terry, says he’s shy and introverted. His golf buddy Rumsey says Saban has a kind of tunnel vision that short-circuits social niceties.

“He’ll walk by people and they’ll think he’s rude,” Rumsey says. “He’s not an asshole—he never saw ’em!”

Reminds me of stories I’ve read of Munger in places like the book Damn Right.

Even among his adversaries, Saban is regarded as a master of X’s and O’s.

“I don’t want people to think I’m not happy when we win—I am,” Saban says. “But there’s a difference between being happy for the feeling of accomplishing something and being overjoyed and feeling ‘This is it—we conquered the world.’ We didn’t. We just won a game.”

The following is from: Do You Really Want To Know What It Takes To Beat Alabama?

If you want to know how to beat Alabama, the answer is simple. You need five turnovers and need to make none yourself. You need a lottery ticket, a lightning strike, or both. You need a whole bureaucratic apparatus devoted to reducing any possible loss to a gross accumulation of statistical anomalies.

Even then, you don’t get the two things that make this all work.

The first is Saban. He is not a renewable resource, as far as I know, but his transformation of Alabama into a ratings-killing certainty so oppressive it might have blacked out the sun for an entire generation of rickets-stricken coaches and players is complete. There is no adjustment against him. He will outwork you or hire people to outwork you and the people you hire. No one is more committed to building Football Walmart and bankrupting your mom-and-pop programs. No one.

How committed are you?

Give up on this idea of doing his thing better. Hire a bandito with a spread passing attack and zero fear of death. Hope for five turnovers or the NFL to poach him away*. Life is about being brave in the face of inevitable doom. Until someone does, Saban will charge you all unfair rates for sunlight.

The following is from Nick Saban Is Ready For Everything.

“He understands every element of human performance,” Moawad wrote in the email. “And there is no contingency that he doesn’t prepare for.”

Are you prepared enough?

It’s true. There are no accidents. There are onside kicks that will almost certainly work. There is an army of assistants and former assistants versed in the Process and ready to serve at a moment’s notice. And there is a head coach who has no idea when he’ll finally be ready to stop kicking everyone else’s butt.

So… Are you really ready to strive for greatness?  Are you willing to outwork the titans of the investment and business worlds to achieve that greatness?  Let me know in the comments below.

Also let me know in the comments below how I can improve this series going forward as I already have two other articles planned.

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