Throwback Thursday – Dole Investment Analysis Case Study Part 5 Dole Shareholders Win – Sort Of

Throwback Thursday – Dole Investment Analysis Case Study Part 5 Dole Shareholders Win – Sort of

***

This is the tenth post in our new Throwback Thursday’s Series, where we share with you posts from the past blogs to bring you as much value as possible.

Today, we’re continuing the case study on Dole from articles in 2012 and 2013.

In Part 1, I valued Dole and compared it to its competition.

In Part 2, I shared with you the results I had in only 104 days after my initial analysis of Dole led to great things.

In Part 3, you learned about some valuable hidden assets Dole owned including the value of its land and ships.

In Part 4, we talked about the rough part of this situation. The Dole Chairman was apparently working to manipulate Dole’s share price to bring the company private at an extremely low price.

Today, we are learning the final ruling on this case and how Dole shareholders, its Chairman and majority shareholder, David Murdock, offered to take Dole private at a ridiculously low ball price and screws shareholders.

We are now to the far more important learning aspects of these articles.

I researched and wrote extensively about Dole when I began doing ‘real’ investment research in 2012.

I’m going to be reposting a series of my past research and investment articles on Dole beginning today.

They are a great case study in doing deep work. Here are some of the things we’ll be looking at in this series…

  • HOW to find the value of potentially hundreds of millions or billions of dollars worth of hidden assets
  • The signs of a company potentially having hidden value
  • Doing deep work to find the value of these and other things people won’t look for
  • Valuations and how and why I’ve done these valuations
  • And more…

I hope you enjoy this series and know we can all learn a lot from doing this.

Oh and please excuse the poor writing style and huge paragraphs. I wrote this in 2012 before I learned how to write.

As always, nothing is changed below from the past article in 2012.

Jason

***

Yes I said I was taking some time off, and I am. But this is too good not to talk about.Dole shareholders fighting back and winning $148 million.

One of the first companies I analyzed in a real way was Dole Food Inc. (DOLE), which is now a private company.

In 2012I found the company undervalued by a substantial margin. It had up to $585 million dollars worth of land and property it could sell to pay off debt, and that it should undergo a special situation to unlock some of the value within the company.

I’d even done my first comparison analysis where I put Dole up against its public competition Chiquita and Fresh Del Monte.

After seeing this; comparing the companies and deciding I had enough margin of safety, I bought the company for myself and the portfolios I manage.

I only held a full position in Dole for 104 days, before selling with a 70% gain, after Dole announced it was selling its worldwide operations to Japanese company Itochu for $1.2 billion.

I continued to hold a half position in Dole because even after a 70% rise, Dole was still undervalued. But by selling out, I was protecting my gains and only risking some of the money I’d already earned.

About a year after this, I sold the rest of my Dole position in all the portfolios I manage because the company announced it was taking the company private at a low ball price, and then started making some crazy decisions.

Below is an unedited excerpt from my book talking about these things.

“As I have been writing, editing, and revising this book, Dole’s Chairman Mr. Murdock has put in an offer to take the company private once again like I thought that he may do, so I wanted to write my thoughts on the ridiculous offer being given to Dole shareholders. I did think that Mr. Murdock may have wanted to take the company private again but what I didn’t expect was the manipulation of the company’s stock price, in my opinion, before that happened.  Shortly after Dole sold its worldwide operations to Itochu, Dole management began to do some very strange things. The value of its land holdings, that Dole management themselves estimated to be worth around $500 million, when they were getting ready to sell their worldwide operations to Itochu, suddenly stated that they thought their land now was worth only around $250 million only a few months later.

This was shocking to me and led me to sell the stock I owned in Dole in my personal portfolio and the portfolios that I manage, because I figured that Dole was doing something untoward to try to get the value of its shares down, so the company could be taken private again at a cheaper valuation. One of my followers on Seeking Alpha and I actually talked about this and both came to the same conclusion that something fishy was going on.

After selling my shares in Dole due to the above situation, I stopped paying attention to the company all together to concentrate on the research of other companies, until it came out that Dole was planning to do a massive buyback of its shares. I thought this was a very good thing for them to do since I found the company to be very undervalued when writing my second article on them, so I started to look into them a little bit again. Before I could do even minimal research into the new situation at Dole, though its management made another very strange decision.  A few days after Dole announced that it was going to buy back $200 million worth of its shares, it changed its mind and all of the sudden decided to update its fleet of container ships instead and canceled the proposed share buyback program.

Of course this sent the share price falling and again led me to believe that its management was trying to manipulate the share price lower so that it could be taken private at an unreasonably low valuation.

Unfortunately, it turns out that I appear to have been right because a month or two after Dole decided to cancel its proposed share buyback program to instead buy new container ships, which of course sent the share price lower, Mr. Murdock announced that he was putting in an offer to take Dole private at $12 a share.

Mr. Murdock brought Dole public in 2009 at $12.50 a share so this in and of itself is ridiculous since the company is much more financially stable now than it was then due to getting rid of its giant debt load. In my opinion this entire situation from the changing of the estimated value of its land by 50%, shortly after announcing that they thought it was worth $500 million, announcing the proposed $200 million share buyback and then a few days later canceling it, and then Mr. Murdock attempting to take the company private again at an incredibly low valuation, should be investigated. If Dole is allowed to be taken private at $12 a share, which it probably will, because Mr. Murdock, at my last check, still owned 40% of the company, then the company should be investigated for manipulating its stock price. If the company is taken private for a paltry $12 per share, then its remaining shareholders are getting screwed.

If a situation like this happens to a company you own, be very careful, trust your research, trust your instincts, and get out of owning the company, if you think you need to. There are a lot of other companies you can spend your time researching and owning rather than spending your precious time and capital having to worry about whether a company’s management is going to screw over shareholders.  Dole’s current shareholders are fighting back by suing the company and I wish them good luck because the proposed buyout offer is ridiculously low.”

Most of the time this would have ended things and shareholders would have no recourse.

But not in this case…

Not only did litigation continue,  but shareholders won a $148 million decision. Below is quoted from the linked article above.

The billionaire chief executive of Dole Food Co., and his top lieutenant must pay $148.2 million of damages to shareholders they shortchanged when the produce company went private in 2013, a Delaware judge ruled on Thursday.

In a decision that may cast a pall on management-led buyouts, Vice Chancellor Travis Laster said, Dole Chief Executive David Murdock, 92, and former Chief Operating Officer C. Michael Carter, were liable for depressing the stock so that Murdock, who owned 40 percent of Dole, could buy the rest at a lowball price.

The judge said the $1.2 billion buyout undervalued Dole by 17 percent, letting Murdock pay $13.50 per share rather than the $16.24 that Dole was worth.

And further down…

JUDGE FINDS FRAUD

Shareholders accused Murdock and Carter of driving down Dole’s share price by downplaying the Westlake Village, California-based company’s ability to boost profit by cutting costs and buying farms, and canceling a stock buyback.

In his 106-page decision, Laster saw Carter as the main engineer of the scheme, calling him Murdock’s “right-hand man’ and saying Carter “actually engaged” in fraud.

Still further down…

But shareholders called the move a power play. Laster appeared to agree, calling Murdock ‘an old-school’, ‘my-way-or-the-highway controller’, fixated on his authority and the power and privileges that came with it.

The judge said, Murdock hurt himself during trial testimony, where defense counsel portrayed him as both a “confused old man” and a disengaged CEO.

“By dint of his prodigious wealth and power, he has grown accustomed to deference and fallen into the habit of characterizing events however he wants,” Laster wrote.

“That habit serves a witness poorly when he faces a skilled cross-examiner who has contrary documents and testimony,” he added.

This is great for Dole’s former shareholders, and should send a message to companies doing terrible things to depress their own stock price.

But all is still not well here…

While the $148 million paid to shareholders is great, it still undervalues the company by a huge margin.

By my conservative estimates, the company was worth somewhere north of $20 a share when taken private. But the judge in Delaware deemed the company to be worth only $16.24 per share, or at least a 19% discount to what I thought Dole was worth.

So while shareholders are getting paid some of this value, I stand by what I said in my book in 2013.

“If a situation like this happens to a company you own be very careful, trust your research, trust your instincts, and get out of owning the company, if you think you need to. There are a lot of other companies you can spend your time researching and owning rather than spending your precious time and capital having to worry about whether a company’s management is going to screw over shareholders.  Dole’s current shareholders are fighting back by suing the company and I wish them good luck because the proposed buyout offer is ridiculously low.”

***

In the end, Dole shareholders won a major victory over Dole and the manipulation of its share price before going private and gained back a significant amount of capital in the form of damages.

However, Dole shareholders still didn’t get the full value of the company as Mr. Murdock was still allowed to take the company private at a 19% discount to the MINIMUM I thought Dole was then worth.

I still stand by what I said then as well. So If you come across a similar situation, you need to be careful.

“If a situation like this happens to a company you own be very careful, trust your research, trust your instincts, and get out of owning the company if you think you need to.  There are a lot of other companies you can spend your time researching and owning rather than spending your precious time and capital having to worry about whether a company’s management is going to screw over shareholders.  Dole’s current shareholders are fighting back by suing the company and I wish them good luck because the proposed buyout offer is ridiculously low.”

P.S. We just launched the new Value Investing Journey Masterclass. If you want to learn how to do the above things yourself, check out the course at the link above.

P.P.S Make sure to check out the brand new Value Investing Journey Training Vault here, to gain access to $10,000 training sessions for as little as $97 a month.

Throwback Thursday – Dole Investment Analysis Case Study Part 2

Throwback Thursday – Dole Investment Analysis Case Study Part 2

***

This is the seventh post in our new Throwback Thursday’s Series, where we share with you posts from the past blogs to bring you as much value as possible.

Today, we’re continuing the case study on Dole from articles in 2012 and 2013.

In Part 1, I valued Dole and compared it to its competition.

Today, we’re going to see what my evaluation in Part 1 led to in only 104 days before we get to some of the more important case study aspects on Dole.

I researched and wrote extensively about Dole when I began doing ‘real’ investment research in 2012.

I’m going to be reposting a series of my past research and investment articles on Dole beginning today.

They’re a great case study in doing deep work. Here are some of the things we’ll be looking at in this series…

  • HOW to find the value of potentially hundreds of millions or billions of dollars worth of hidden assets
  • The signs of a company potentially having hidden value
  • Doing deep work to find the value of these and other things people won’t look for
  • Valuations and how and why I’ve done these valuations
  • And more…

I hope you enjoy this series and know we can all learn a lot from doing this.

Oh and please excuse the poor writing style and huge paragraphs. I wrote this in 2012 before I learned how to write.

As always, nothing is changed below from the past article in 2012.

Jason

***

Closed out partial position in Dole up almost 70% in Just 104 days

Dole spiked up more than $2 per share at one point and ended closing today up $1.21 per share or 9.42% on the following news, the quoted text is from The Wall Street Journal Online:

Dole Food Co. Inc. said Wednesday it is in advanced discussions with Japanese trading house Itochu Corp. for the possible sale of its packaged-foods and Asian fresh fruit and vegetable businesses.

The California-based company, said no definitive agreements have been reached, and it continues to be in discussions with several other parties regarding these and other assets.

Dole said it divulged the talks in response to market rumors. Japanese business news provider Nikkei reported that Itochu is poised to purchase the U.S. firm’s businesses for as much as $1.7 billion.

Dole launched a strategic review of its businesses in May after reporting a slump in profits. The company said in July that it was considering a full or partial separation of one or more of its business, including potential spin offs, joint ventures and sales transactions.

Dole’s second-quarter profit fell 21% as the company saw lower fresh-fruit revenue, though sales of fresh vegetables and packaged foods improved.

After the news came out, I sold just under half of the position I bought for a couple people’s money that I manage, cost basis around $8.50 per share sold around $14.50 per share, or up around 66% in just over 100 days since I bought it for them. Here is the link to my first article about Dole that got published on June 13th on Seeking Alpha.

Dole Is Undervalued, Could Be A Winner From Spin-Off Or Asset Sale

I sold about half of the position because most of the margin of safety is gone and I wanted to lock in some profits in case the deal ends up falling through with Itochu.

I kept just over half the position because I valued Dole at the very low end at $18.25 per share and as high as $48.93 per share in June. I also kept about half of the position because if any of the potential deals do go through then Dole will be able to pay off most, if not all of its massive debt which is Dole’s biggest problem at this time. Also, if it is able to pay off most or all of its debt, it could possibly start to grow its operations which could also help the share price.

Sometime in the near future I am going to start working on an updated Dole article and apply the knowledge and techniques I have learned from the original article.

***

From here, things take a bit of an unexpected turn for the worst when it comes to this companies management and going private transaction.

P.S. I put on a FREE webinar last month teaching The 3 Secrets That Have Helped Me Beat Buffett In The Stock Market, so you can possibly do the same. If you’d like to sign up for FREE to view the replay of the webinar, you can do so here.

P.P.S  Make sure to check out the brand new Value Investing Journey Training Vault here to gain access to $10,000 training sessions for as little as $97 a month.

Preliminary Analysis Case Study #1 Part 8 – Cash Conversion Cycle, NCAV, and More

Preliminary Analysis Case Study #1 Part 8 – Cash Conversion Cycle, NCAV, and More

Last week I announced we were going to begin doing a real-world case study on Constellation Brands – Stock Ticker STZ.

Well, after releasing this post, my team reminded me that there was actually a preliminary analysis my client did before this one. So before we get to the STZ case study, we’re doing to take a detour to talk about Canopy Growth Corp –  Stock Ticker WEED.

I didn’t want to skip this one because there’s a lot of context and talk in this discussion that we don’t necessarily go over in the later training sessions because we’ve already talked about them.

This post is a continuation of the prior posts in this ongoing case study. All parts thus far are below.

Below is his unedited preliminary analysis for reference – without any of my comments – for you to get a  look at.

Canopy Growth Corp – WEED

***

WEED – Canopy Growth Corp (Canadian Company)

All numbers are in millions of CAD unless noted otherwise.

  • FY Ends March 31st, 2017
  • 3,404 market cap (medium)
  • N/A dividend yield.
  • P/B TTM = 4.92
  • TTM Operating Margin is -39.2 and has somewhat increased over last 2 years.
    • 5 year average OM is N/A
  • Share count has done increased from 77 to 119 from FY16 to FY17. Current TTM is 149m.  Statement of shareholder’s equity??
  • Book value per share has increased from 1.34 to 1.55 from FY16 to FY17. Current TTM is 3.73.
  • Morningstar ROIC TTM is -6.58 and a little higher than the last 2 FY’s
    • 5 year average Morningstar ROIC is N/A
  • TTM ROE is -6.45 and a little higher than the last 2 FY’s
    • 5 year average ROE is N/A
  • TTM FCF/sales is -151 and we can’t tell any pattern. See con note on FCF
    • 5 year average FCF/sales is N/A
  • CCC: No info on the payable period (assume the product is cheap to grow) but DIO exploded on FY2017 to 5,494 days (FY2016 and 2015 avg is about 650 days). Research online says cannabis takes up to ½ year to grow so I would need much more investigation on why inventory takes so long to turnover.
  • EV=3,312
  • EV/EBIT is -73.6
  • EV/FCF is -37.6
  • EBIT/EV (earnings yield) -1.3%
  • FCF/EV (earnings yield) -2.6%

Cons

  • Young company – only about 3 years old after name change (used to be Tweed)
  • Note only balance sheet on Morningstar has FY2015 so we need to look at 10K for data.  We cannot really tell any direction with a 2/3 year old history
  • SG&A & Other are over 163% of Revenue
  • SG&A roughly decreasing and “Other” is increasing
  • Op Income and Margin are (-) but are generally decreasing over time
  • Outstanding shares are significantly increasing over time
  • FCF is increasingly negative as both op cash flow and CapEx are also both increasingly negative
  • Not much experience with Canadian companies
  • Goodwill and intangible assets exploded on FY2017
  • Regulation laws in Canada and USA
  • They bought a lot of companies in FY2016

Pros

  • Cash exploded in FY2017
  • FY2017 Cash & Equiv – Total Liabilities = $39m
  • Book value/share is generally increasing but only for last 3 years
  • Low Debt (also reflected by the ROE and ROIC being similar numbers)
  • Revenue is increasing over time
  • STZ bought about 10% interest in WEED.  Industry took notice and WEED most likely gained some legitimacy with large companies
  • COGS is only 23% of Revenue (doesn’t take much cost to grow product?)
  • High Working Capital Ratio = 9.8 but this high typically suggests either too much inventory or not investing excess cash…

***

In this video, we talked more about the cash conversion cycle, NCAV, and more.

For some reason, when I talk, the audio cuts out so I’ve added narration to the video above for context.

If you have any comments or questions, please post them in the comments section below and I’ll answer them.

I’d also love to see your preliminary analysis as well, so feel free to post these in the comments below.

If you’d like more information about the coaching program this client is in, go to this page.

For reference, he’s in the $ 10,000, year-long program, and this is only after 1 month of coaching, doing nine 1-hour training sessions via Skype.

P.S. This analysis is based on the preliminary analysis template I developed over a number of years, and after evaluating thousands of companies. If you’d like a copy of this to do your own preliminary analysis, you can get yours for free here.

P.P.S. I put on a FREE webinar last Thursday teaching The 3 Secrets That Have Helped Me Beat Buffett In The Stock Market, so you can possibly do the same. If you’d like to sign up for FREE to view the replay of the webinar, you can do so here.

Preliminary Analysis Case Study #1 Part 7 – Goodwill, Dilution, And The Cash Conversion Cycle

Preliminary Analysis Case Study #1 Part 7 – Goodwill, Dilution, And The Cash Conversion Cycle

Last week I announced we were going to begin doing a real-world case study on Constellation Brands – Stock Ticker STZ.

Well, after releasing this post, my team reminded me that there was actually a preliminary analysis my client did before this one. So before we get to the STZ case study, we’re doing to take a detour to talk about Canopy Growth Corp –  Stock Ticker WEED.

I didn’t want to skip this one because there’s a lot of context and talk in this discussion that we don’t necessarily go over in the later training sessions because we’ve already talked about them.

This post is a continuation of the prior posts in this ongoing case study.  All parts thus far are below:

Below is his unedited preliminary analysis for reference – without any of my comments – for you to get a  look at.

Canopy Growth Corp – WEED

***

WEED – Canopy Growth Corp (Canadian Company)

All numbers are in millions of CAD unless noted otherwise.

  • FY Ends March 31st, 2017
  • 3,404 market cap (medium)
  • N/A dividend yield.
  • P/B TTM = 4.92
  • TTM Operating Margin is -39.2 and has somewhat increased over last 2 years.
    • 5 year average OM is N/A
  • Share count has done increased from 77 to 119 from FY16 to FY17. Current TTM is 149m.  Statement of shareholder’s equity??
  • Book value per share has increased from 1.34 to 1.55 from FY16 to FY17. Current TTM is 3.73.
  • Morningstar ROIC TTM is -6.58 and a little higher than the last 2 FY’s
    • 5 year average Morningstar ROIC is N/A
  • TTM ROE is -6.45 and a little higher than the last 2 FY’s
    • 5 year average ROE is N/A
  • TTM FCF/sales is -151 and we can’t tell any pattern. See con note on FCF
    • 5 year average FCF/sales is N/A
  • CCC: No info on the payable period (assume the product is cheap to grow) but DIO exploded on FY2017 to 5,494 days (FY2016 and 2015 avg is about 650 days). Research online says cannabis takes up to ½ year to grow so I would need much more investigation on why inventory takes so long to turnover.
  • EV=3,312
  • EV/EBIT is -73.6
  • EV/FCF is -37.6
  • EBIT/EV (earnings yield) -1.3%
  • FCF/EV (earnings yield) -2.6%

Cons

  • Young company – only about 3 years old after name change (used to be Tweed)
  • Note only balance sheet on Morningstar has FY2015 so we need to look at 10K for data.  We cannot really tell any direction with a 2/3 year old history
  • SG&A & Other are over 163% of Revenue
  • SG&A roughly decreasing and “Other” is increasing
  • Op Income and Margin are (-) but are generally decreasing over time
  • Outstanding shares are significantly increasing over time
  • FCF is increasingly negative as both op cash flow and CapEx are also both increasingly negative
  • Not much experience with Canadian companies
  • Goodwill and intangible assets exploded on FY2017
  • Regulation laws in Canada and USA
  • They bought a lot of companies in FY2016

Pros

  • Cash exploded in FY2017
  • FY2017 Cash & Equiv – Total Liabilities = $39
  • Book value/share is generally increasing but only for last 3 years
  • Low Debt (also reflected by the ROE and ROIC being similar numbers)
  • Revenue is increasing over time
  • STZ bought about 10% interest in WEED.  Industry took notice and WEED most likely gained some legitimacy with large companies
  • COGS is only 23% of Revenue (doesn’t take much cost to grow product?)
  • High Working Capital Ratio = 9.8 but this high typically suggests either too much inventory or not investing excess cash…

***

In this video, we talked more about goodwill, dilution, and began to talk about the all-important cash conversion cycle.

For some reason, when I talk, the audio cuts out so I’ve added narration to the video above for context.

If you have any comments or questions, please post them in the comments section below and I’ll answer them.

I’d also love to see your preliminary analysis as well, so feel free to post these in the comments below.

If you’d like more information about the coaching program this client is in, go to this page.

For reference, he’s in the $ 10,000 year-long program, and this is only after 1 month of coaching, doing nine 1 hour training sessions via Skype.

P.S. This analysis is based on the preliminary analysis template I developed over a number of years, and after evaluating thousands of companies. If you’d like a copy of this to do your own preliminary analysis you can get yours for free here.

P.P.S. I put on a FREE webinar last Thursday, teaching The 3 Secrets That Have Helped Me Beat Buffett In The Stock Market, so you can possibly do the same. If you’d like to sign up for FREE to view the replay of the webinar, you can do so here.

Preliminary Analysis Case Study #1 Part 2 – Release of Client’s 1st Preliminary Analysis

Preliminary Analysis Case Study #1 Part 2 – Release of Client’s 1st Preliminary Analysis

On Monday I announced we were going to begin doing a real-world case study on Constellation Brands – Stock Ticker STZ in this post here.

Well after releasing this post, my team reminded me that there was actually a preliminary analysis my client did before this one so before we get to the STZ case study we’re doing to take a detour to talk about Canopy Growth Corp –  Stock Ticker WEED.

I didn’t want to skip this one because there’s a lot of context and talk in this discussion that we don’t necessarily go over in the later training sessions because we’ve already talked about them.

Below is his unedited preliminary analysis – without any of my comments – for you to get a  look at.

Canopy Growth Corp – WEED

***

WEED – Canopy Growth Corp (Canadian Company)

All numbers are in millions of CAD unless noted otherwise.

  • FY Ends March 31st, 2017
  • 3,404 market cap (medium)
  • N/A dividend yield.
  • P/B TTM = 4.92
  • TTM Operating Margin is -39.2 and has somewhat increased over last 2 years.
    • 5 year average OM is N/A
  • Share count has done increased from 77 to 119 from FY16 to FY17. Current TTM is 149m.  Statement of shareholder’s equity??
  • Book value per share has increased from 1.34 to 1.55 from FY16 to FY17. Current TTM is 3.73.
  • Morningstar ROIC TTM is -6.58 and a little higher than the last 2 FY’s
    • 5 year average Morningstar ROIC is N/A
  • TTM ROE is -6.45 and a little higher than the last 2 FY’s
    • 5 year average ROE is N/A
  • TTM FCF/sales is -151 and we can’t tell any pattern. See con note on FCF
    • 5 year average FCF/sales is N/A
  • CCC: No info on the payable period (assume the product is cheap to grow) but DIO exploded on FY2017 to 5,494 days (FY2016 and 2015 avg is about 650 days). Research online says cannabis takes up to ½ year to grow so I would need much more investigation on why inventory takes so long to turnover.
  • EV=3,312
  • EV/EBIT is -73.6
  • EV/FCF is -37.6
  • EBIT/EV (earnings yield) -1.3%
  • FCF/EV (earnings yield) -2.6%

Cons

  • Young company – only about 3 years old after name change (used to be Tweed)
  • Note only balance sheet on Morningstar has FY2015 so we need to look at 10K for data.  We cannot really tell any direction with a 2/3 year old history
  • SG&A & Other are over 163% of Revenue
  • SG&A roughly decreasing and “Other” is increasing
  • Op Income and Margin are (-) but are generally decreasing over time
  • Outstanding shares are significantly increasing over time
  • FCF is increasingly negative as both op cash flow and CapEx are also both increasingly negative
  • Not much experience with Canadian companies
  • Goodwill and intangible assets exploded on FY2017
  • Regulation laws in Canada and USA
  • They bought a lot of companies in FY2016

Pros

  • Cash exploded in FY2017
  • FY2017 Cash & Equiv – Total Liabilities = $39m
  • Book value/share is generally increasing but only for last 3 years
  • Low Debt (also reflected by the ROE and ROIC being similar numbers)
  • Revenue is increasing over time
  • STZ bought about 10% interest in WEED.  Industry took notice and WEED most likely gained some legitimacy with large companies
  • COGS is only 23% of Revenue (doesn’t take much cost to grow product?)
  • High Working Capital Ratio = 9.8 but this high typically suggests either too much inventory or not investing excess cash…

***

And since I screwed up, I’m going to begin releasing my thoughts on this company today.

The video below is part one of our exclusive discussion from one of our coaching sessions about this company.

For some reason, when I talk, the audio cuts out so below each shorter video, I’ve created a video where I’m rehashing what I told the client during our training session.

And my context with the missing sound in the above video here…

Again, as I say in the video, I’m not sure why my sound cut out and since all of my past videos are like this – we’ve just fixed the sound issue today, hopefully for good – this is how I’ve got to improvise things.

What do you think of the preliminary analysis above?  Does it make for a possible good or bad investment?  Did he miss anything in his analysis?  What are the important points in the analysis above and why? What the hell is CCC?

I’ll begin answering the above questions and more on Friday.

If you have any comments or questions, please post them in the comments section below and I’ll answer them.

I’d also love to see your preliminary analysis as well, so feel free to post these in the comments below.

And if you’d like more information about the coaching program this client is in, go to this page.

For reference, he’s in the $ 10,000, year-long program, and this is only after 1 month of coaching via nine 1-hour training sessions via Skype.

P.S.  This analysis is based on the preliminary analysis template I developed over a number of years, and after evaluating thousands of companies.  If you’d like a copy of this to do your own preliminary analysis, you can get yours for free here.

P.P.S.  I’m putting on a FREE live webinar tomorrow at 12 PM EST teaching The 3 Secrets That Have Helped Me Beat Buffett In The Stock Market, so you can possibly do the same.  If you’d like to sign up for free to view the live webinar, you can do so here.