“I’ve lived through some terrible things in my life, some of which actually happened”
– Mark Twain
book of the week – Prisoner’s Dilemma by William Poundstone
I was truly excited to read this, given I’ve been a huge fan of Poundstone’s other work. However, I think Prisoner’s Dilemma fails to live up to the quality of his other books. It provides a solid historical representation surrounding the origins of Game Theory which stems from the brain of John Von Neumann.
Where it started to lose, me was through the middle section. It gets quite bogged down in the post-WWII nuclear arms race between the United States and Soviet Russia. While interesting, I think it deviated a little far away from the core concept of the book.
Overall, I thought it was a decent read and I give it 2.5/5
An Aussie micro-cap that I’ve written about previously on SumZero reported an excellent trading update ahead of its full year results, due in August. Redhill Education, said that EBITDA for the 2H of the year was $3m – putting them on a run-rate for over $5m (zero growth scenario) for FY18. While not as attractive as when I first invested, I still think it offers reasonable risk/reward given the company has an enterprise value of < $35m
top articles of the week
wexboy – a great value investing blog – put out an interesting thesis for Irish small cap Applegreen. It looks like an interesting growth story and the unique working capital dynamics provide an interesting funding situation for future expansion. I’m heading over to the UK next month and will look to have a meeting with the management team
A relatively unknown Aussie micro-cap fundie, Tony Hansen, pitched the extremely interesting thesis of Kangaroo Island Plantations. It sounds like a potentially lucrative “heads I win, tails I don’t lose much” investment and may be worth further investigation. With a hard catalyst coming up, the value creation could also be explosive.
Patrick O’Shaughnessy interviewed one of my investing idols this week – William Thorndike – this week. This is a must listen and Thorndike’s book The Outsiders remains one of my favourite books of all time. Some interesting points from the interview were:
- If Thorndike could put one of his “outsider CEO’s” in any business right now it would be a niche insurance firm. He reckons the unique dynamics of insurance float provide an incredible compounding machine for the right capital allocator
- He reiterated a point that I’ve been noticing a lot lately – that having intelligent, long term focussed LP’s in your fund is one of the biggest competitive advantages a capital allocator can have
Ian Cassel over at MicroCapClub, wrote a thought-provoking piece that has actually led me performing an “experiment.” I’ll have a piece written about this in the coming weeks. In the meantime, the article is well worth a read.
I’ve always found going on short walks around lunch-time has allowed my mind to wander in a creative way – now there’s science to back it up!
Finally, a micro NZ brewery, ParrotDog, is raising capital for expansion. I haven’t looked at this much further and the 6x trailing EV/sales multiple is punchy. But, I can confirm the beer they make is VERY good.