It’s not about us, it’s all about you - the shareholders
We want to get the focus back on shareholders in order to unlock value. We want CEOs to work for shareholders and boards to act diligently for their shareholders.
We got really disappointed by CEOs’ inaction or incapacity to create shareholder value. Most of the time, they seemed more preoccupied with their own image with Wall Street rather than working for their shareholders. There seems to be a temptation to build palatial headquarters scaled to the size of their ego, or to try to grow companies at any price, regardless of the value creation for their shareholders. All that plus the fact the boards are more often categorically accommodating to their CEOs, rather than defending their shareholders as they are supposed to do.
Our solution: Hey, like you, we're "just" small individual investor; we're no heavyweight investor who is going to influence CEO’s or boards. So, the only thing we can do is to sell and go away (and leave money on the table, which is very frustrating) after realizing that the given company is most seemingly managed by people who don't really care about their shareholders
Then came the idea to group individual retail investors to unite their weight. Once the groups get significant numbers of shares, we partner with existing major shareholders such as fund or institutions. As we invest in smaller market capitalization companies, the stakes of these major shareholders (in these companies) usually represent a fraction of their total investment or, put it simply, "peanuts". These "peanuts" are usually not significant enough for them to justify having someone full time to follow and chase their investments. However, these "peanuts" are more gold nuggets to us and it's definitely justified to us to do the work and chase these investments, ours and theirs. That's how we team up as this becomes a win-win situation for all shareholders, small and big.
To sum up, we gather all possible shareholders, small and big, to gain influence over these companies to get the focus back on us, the real owners, in order to unlock value.
Our newsletter: We provide subscribers with stock market ideas. So, two or three times a month, paid and free subscribers receive investment newsletters detailing our findings. Generally speaking, these will be companies to keep on our radar. That said and as Mr. Warren Buffett explains it, "Whether we’re talking about socks or stocks, I like buying quality merchandise when it’s marked down". So we wait until the market marks down the companies we have been keeping on our watch-list; we basically "shop the sales". This strategy provides us with better returns and greater margin of safety.
Once the stock market marks down the companies on our watchlist, we issue the investment newsletters to our subscribers. The first emails go to our paid subscribers and the email delivery timing is simplu a function of their plans; the more they paid, the sooner they get the newsletters. This tends to provide them with better returns and greater margin of safety. Besides, paid subscribers get our sell signals. Sell signals are as important as buy signal not only or specifically to maximize returns but more to keep some cash aside and to be ready when the market marks down good quality stocks again. On the long run, this proven strategy will bring you greater returns. Have a look at our subscription plans and pricing.
The Guide Lines
We believe that these guide lines can return the focus to the shareholders and create value. We will urge companies to follow these principles. In other words, these guide lines represent our management philosophy.
- Meritocracy: Reward the top performers - keep the best, let go of the rest.
- Lean organization:
- Meet cost saving objectives, focus on non-core productive expenses.
- Turn to zero based budget organization - every expense must be newly justified every year
- Decentralized organization: delegating operations to the lowest hierarchy level possible.
- Open-plan offices: because corner desks and closed offices are never productive.
- Focus on long term returns and shareholder value and not on organizational growth, which only projects bringing and retaining the best returns.
- Boards must be composed of a small number of people that have significant company ownership.
- Disregard “Wall Street” issues, earning guidance and performance…but focus on "free cash flows".
- Reinvest free cash flows in the best ROI projects, such as internal projects, stock buy-backs or buy-backs of other companies' stocks.
The Profile of the Prospect Companies
- They either generate or have the potential to generate significant float (“other people's money”) and/or free cash flos.
- Their businesses show substantial long enduring earning powers (e.g. barriers to entry).
- The price makes sense.
- There is enough float (stocks) to be acquired on a significant measure to influence companies’ directions.
What You Should Not Expect
Durable short term gains: there will be price fluctuations, as some of the companies in which we invest are rather illiquid; but you should not try to surf on those fluctuations. You may very well make short term profits on an ad-hoc basis, but this situation will certainly bring losses in the long run, as this method cannot be systemized. In other words, to make money, you have to be in for the long run.
What You Should Expect
Durable, very long term gains: the prospect companies will certainly develop better shareholder focused characteristics than their peers, and this will definitely be reflected in their shareholders’ portfolios over the long run. In other words, to make money, you have to be in for the long run.
Fell free to contact us. We want to hear from you.