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Investment Ideas / Re: CMG.TO - Computer Modelling Group
« Last post by bizaro86 on Today at 08:35:12 PM »
One factor that could be depressing the price here is that the company was removed from the S&P TSX Composite Index last month, which means Canada's big index funds have sold.

https://us.spindices.com/documents/indexnews/announcements/20190308-887958/887958_2019-03-08compositereview-pr.pdf?force_download=true
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Bass regularly makes wild and spectacular claims(in dramatic fashion) that when they play out leave everyone thinking "wow, this guy is a genius", and when they dont are quickly forgotten. Its a unique marketing strategy but as has been alluded to, I am not sure how much money he is actually making.
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Investment Ideas / Re: SBUX - Starbucks Corp
« Last post by TheAiGuy on Today at 07:59:04 PM »

a.  I have never see the introduction of competitors helped market dominating incumbents. 


The introduction of Starbucks itself on the global coffee seen has probably help Nestle and Dunkin Donuts, among others, by increasing the amount of money people are willing to spend on coffee.  (I admit this is difficult to prove, as you would need a counterfactual).

I would also argue that the rise of Nike has helped Adidas more that it has hurt it, by growing the market.

Same thing for MasterCard to Visa and Visa to American Express.

Android has probably helped Apple more that it has hurt it by growing the overall market for smartphones, and thus its ecosystem (I'm thinking wireless providers and manufacturing, not apps) and the size of the market for its products.

You can argue any of these, of course.



b.  You probably have never been in China.

Nope! But I have access to lots of reading materials that I can find on the internets. Sometimes podcasts are helpful.



2.  Starbucks margins and revenue is up from last year
a.  So were newspapers revenues and margins in the early days of the internet. 

Yes, yes, all things end and billions of years after we die the universe will disperse into an ever expanding, uniform field of entropy. 

The point is there is no evidence, as of yet, of any decline.


3. Luckin burning through cash:

I have no opinion on Luckin.  Fail, don't fail, who cares?  I'm here for the Benjamins.

I assume, that like the United States, Europe and Japan, Starbucks will face well funded and run competitors, that are popular and have better coffee at a cheaper price, and Starbucks will nonetheless sell more Frappacinos each year for like the next couple of decades.



Ultimately, Luckin does not need to be better than Starbucks.  The threat to SBUX's pricing power only depends on Luckin to be viewed as a viable competitor.  If people realize that they don't need SBUX, (...)

People like nice things.  The presence of cheep knock-off is not a bad thing for luxury products.

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Didn't he also say that Japan was a "time bomb" and that JGBs were all but certain to imminently default a decade ago? He's the Elaine Garzarelli of this generation.

Was it JGBs? I feel like I recall him saying that the pressure wouldn't play out in the bonds because the central bank wouldn't let it. I think he said the pressure relief valve would be found in the currency and that shorting the currency would be the play. Depending on when he said it, he was right.
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Didn't he also say that Japan was a "time bomb" and that JGBs were all but certain to imminently default a decade ago? He's the Elaine Garzarelli of this generation.
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Investment Ideas / Re: SBUX - Starbucks Corp
« Last post by Spekulatius on Today at 07:30:31 PM »
I have been to China a couple of times and I have been to a Chinese Starbucks. This doesnít make me an expert, but I do know how my Chinese colleagues felt about western brands. They loved Nike
E, Leviís, Adidas more so than there own brands, even though a lot of these goods were produced in China. The few Starbucks shops I have been too were pretty crowded and it was obvious that Chinese went there to show off. This was a couple of years ago and things may have changed, but Chinese coffee culture is in its early innings.
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Investment Ideas / Re: CLF - Cliffs Natural Resources
« Last post by Spekulatius on Today at 07:25:31 PM »
Lorenzo does a lot of smack talk thatís for sure. Rubs me the wrong way, I have heard this before - it reminds me a bit of the former CEO of TWI. Lorenzo has performed better, I admit as much.
CLF is a high cost producer though and their cost forecast conforms this. 70$/ton of ore is high cost. CLF will benefit from shortage caused by the Vale disaster, but this is a commodity industry and they will adjust. Nucor for example can use a lot of scrap input. Steel tariffs may not be permanent either and if customer get squeezed, so will get CLF. This could go either way, imo. If I were to make a bet in this sector, I would bet on Nucor.
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General Discussion / Re: Changing Retirement Allocation
« Last post by TwoCitiesCapital on Today at 07:13:01 PM »
Set a systematic plan and stick too it.

That could be moving a portion each month regardless of what markets do or starting off with a lump sum (10-15%) and reinvesting all cash flows and deposits on the fixed income side until you accomplish the goal.

Point is, pick an approach and stick with it as opposed to trying to tactically time it.
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Investment Ideas / Re: SBUX - Starbucks Corp
« Last post by cameronfen on Today at 07:07:34 PM »
^ I don't know the SBUX very well, I think I just like posting things sometimes but because I'm tempted to respond:

1.  The argument that Luckin will normalize coffee in China:

a.  I have never see the introduction of competitors helped market dominating incumbents. 
b.  You probably have never been in China.  In tier 1 cities, everyone knows what Starbucks is and most people drink coffee.  This is why ROEs are so good there are 2 or 3 starbucks on every block and they are all crowded.  And I readily admit that this is the bull case (but it is priced into the stock). 

2.  Starbucks margins and revenue is up from last year
a.  So were newspapers revenues and margins in the early days of the internet.  As were mall REITs/Retailers a couple years ago, even though anyone could predict that online retail would cause problems.  This is because the momentum of same store sales growth built up over time masks the effect of a competitors and threats to a companies moat, especially when the threat is relatively small but fast growing (granted Luckin is not small).  By the time you see deterioration much of the moat is already irreparably damaged.  I don't know how much Luckin will effect SBUX, but by the time you see it in the financial statements it will likely be too late.  I don't know what info SBUX provides, but if I were in the stock I would closely monitor IRRs for new stores and marginal returns on newly deployed capital overall in China.   

3. Luckin burning through cash:

a.  That never stopped companies like Uber or Lyft.  Or for public market comps: Amazon and many SaaS companies.  If a recession happens, it might be a problem for Luckin, but I see no wavering of demand for a emerging market brand that is rapidly taking share in a high ROE subsector (coffee shops)
b.  The fact that investors will subsidize Luckin will be problematic for Starbucks as they have to compete with prices that are below marginal cost
c.  I will say Luckin is probably opening too many stores/kiosks and is risking oversaturating the market.  If they over commit they could go belly up given unfortunate circumstances (like a recession). 

4.  Chinese go to Starbucks for the western brand effect.  (The expat market is small so I will ignore that)
a.  I do agree, but Luckin is so much cheaper by a long shot and I do think that will begin to play more and more of a factor. 

Ultimately, Luckin does not need to be better than Starbucks.  The threat to SBUX's pricing power only depends on Luckin to be viewed as a viable competitor.  If people realize that they don't need SBUX, but trade off the costs and benefits of SBUX vs Luckin, there goes SBUX's pricing power.   I'm not saying SBUX will go the way of the horse and buggy, but there vaunted ROICs are dependent on there domination of the coffee market in the main countries their in.  They have almost half of all coffee shops in the US and they had almost the entire Chinese market to themselves, but they are losing that. 
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Investment Ideas / Re: V - Visa
« Last post by SlowAppreciation on Today at 06:58:21 PM »
The multiples in those valuations are too probably low if you really get 13% revenue growth for five years....

Current big picture thoughts on Visa:

5 year revenue growth of 13%
share reduction to 2100
Exit EV/Rev TTM multiple of 15.5x
Debt of 70B, Cash of 10B
--> Mkt cap of 539B
share price of $257 at year 5
plus dividends of $8 gets a $265 total return... that gets you between 10% and 11% returns from this level

Anything I am missing?

You can look at it like this too:

Probably right.
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