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Facebook undertakes the world’s most expensive PR exercise

MB Core

US Internet

Facebook CFO Dave Wehner stated that operating margins will “trend towards the mid-30s” on Wednesday’s earnings call, which is well below the 2017 operating margin of 50%. This margin target doesn’t make sense. It implies Facebook either invests $40bn per year for no revenue reward, and/or is losing money outside of the US & Europe. … Continued

What’s Waymo Worth?

Digital Economy

MB Core

Alphabet’s valuation has risen in the past year, with the firm is now priced at 25x P/E and 20x EV/EBIT. These multiples are high for good reason: Google is a great business protected by a strong moat and its cash flows are growing quickly. But these multiples are elevated vs. the market, currently 20% higher relatively than … Continued

TAL Education: Muddy Waters slings mud…

China Internet

This report contains my initial reaction to the Muddy Waters’ accusations on TAL Education (TAL). It represents my views as of posting time & date [Note: this was originally published June 14th], but please recognize that these are fast moving situations and so my views could change. Note that I own TAL Education stock. I … Continued

Cogent Alpha: Better process, better insights

CA Core

I believe individual investors deserve access to better investment insights. Insights built on a consistent and comprehensive investment process. Insights as to why a company’s strategy will help them prosper. Insights that dive deep into a company’s financial prospects. Insights that directly compare a company to the market, so we know why owning that firm is a better … Continued

Trade war raises risks for BABA ownership structure

China Internet

Alibaba (BABA) may be listed in New York, but it is a Chinese company at heart. And a fantastic firm as well, with large, profitable and sustainable businesses. My focus here is not on the quality of Alibaba’s businesses – which is excellent – but on the risks of owning their US-listed shares. This risk … Continued

Cogent Alpha: Lessons learned from beating the market

CA Core

Twelve months ago, I published an article called 20 Firms For 2020. In it I outlined 20 firms that I thought were great long-term investments, using my selection process for “high quality, high growth” firms. This approach has worked out very well, with the 20 firms beating the market by 20% on average over twelve … Continued

20 firms for 2020: an investment strategy to last the decade

CA Core

Rising competitive pressure from superabundant capital and new tech-enabled business models makes franchise durability more vital than ever. Few firms are creating value at a rapid pace, making some value creators intrinsically more valuable. Thus, my investment strategy is to own 20 high quality firms with rapid intrinsic value growth priced at low valuations considering their rate of … Continued

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