Don’t Confuse Growth With Sustainable Competitive Advantage
“The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors.”
–Warren Buffett, Fortune magazine, 11/22/99
Watch Ryan Fusaro, Value Investing Challenge winner present his top idea: Jack In the Box
Ryan Fusaro, winner of the Value Investing Challenge, shared his analysis of Jack in the Box and how the company’s refranchising efforts will unlock enormous value at the 8th Annual New York Value Investing Congress. Click here to watch a video of his presentation! http://bit.ly/PoQQLy
Long Jack in the Box (JACK)
Fusaro won and pitched Jack in the Box (JACK) in his talk entitled ‘Thinking Outside the Box.” He started with some history that JACK has refranchised from 25% in 2005 to 75% today.
– Incomplete financial reporting
– Potential margin improvement
– Great brands
– Cost structure hasn’t caught up with franchise model
He touched on how JACK owns Jack in the Box but also owns Qdoba, which has typically been too small to really matter but is now worth $580m by itself and value could be unlocked with a spin-off. Think McDonald’s (MCD) when it spun-off Chipotle (CMG). JACK also owns the real estate.
Fusaro says there’s a growth business embedded in a value business and also touched on unlocking real estate value.
Presentation:Fusaro-VIC-Presentation_Jack in the Box_JACK
Let me know if you think the above was worthy of a prize?
Dinner with Pabrai? Who will beat my bid?
Mohnish Pabrai is auctioning off two items: lunch with himself (plus a stock tip) and a life-size bronze bust of Charlie Munger. The proceeds of both will go to the Dakshana Foundation, which he established to help academically promising poor kids in India:
Do you have trading greatness? http://www.marketpsych.com/tradingedge.php
Your personality: http://www.marketpsych.com/personality_test.php
Youth has gone Austrian: http://mises.org/daily/6147/The-Future-of-the-Austrian-School
Have a good weekend.