Fund Letters

3rd Quarter 2019 Andaz Private Investments  - (CBS.B, $VIAB) Appleseed Fund  - ($SINA, $WB, $CRTO, $BMWYY) Artisan Mid Cap Fund  - ($A...

Friday, May 31, 2019

Great Southern Corporation GSBC


GSBC is boring small regional bank.
It IPO'd during S&L crisis.
Survived the great recession of 2008. Well, not just survived but it thrived.
Just look at GSBC's total return since IPO 17,000%. It is amazing that no name regional bank can have such stellar returns.


A family run, regional bank with market value of about $780 million, GSBC operates in 11 states in the Midwest region.

So what's the secret to GSBC success? I believe it is because of the ownership structure and their long term view instead of chasing short term profits. Insider ownership is over 30% and Turner family owns about 25%. Here is the ownership percentages from their latest proxy:

Having skin in the game has tremendously contributed to the excellent performance.

The company is well capitalized too.In their recent annual meeting CFO Rex Copeland said "Strong capital is a priority for our Company. Winners in banking are those that have strong capital and are thus able to take advantage of the opportunities that may arise.  We recognize that our common equity level of capital is very strong and might be considered almost too high by some in the industry.  We prefer a somewhat higher level and how it may benefit the Company. We want to be in a position to take advantage of the opportunities that may arise during various phases of the business cycle, including the opportunity to capitalize on market dislocation that may occur, among other things."

That is the holy grail in the banking industry. Sooner or later there will be recession and banks will fail. But strong banks like GSBC will have the chance to scoop up very good assets at depressed valuations.

And the president and CEO Joe Turner about the long term view
"We are optimistic about the rest of the year and our priorities are straight-forward and consistent with previous years. 
As we focus on these priorities, we do so with a long-term mindset. Someone asked me what having a long-term mindset means in practical terms. It means a number of things. For instance, we don’t get caught up in giving public guidance on what our earnings are going to be, what our asset totals are going to be, or what our loan totals are going to be. This type of thinking can influence how you make decisions since a performance bar has been set. You could quickly find yourself making short-sighted decisions just to meet next quarter’s growth goals. Instead, what we tell people is that we are going to continue doing the things that we’ve always done – to understand our current and prospective customers’ needs and then fulfill those needs whenever we can in a manner consistent with safe and sound banking. 
With a long view perspective, we manage the Company with a disciplined approach and strive to be positioned for opportunities that may come our way. This means that at times we will be able to grow and expand, and there will be times when, because of competition and economic conditions, we will not be able to grow. We firmly believe that it is unrealistic to expect that growth is going to be possible and rational every single year. We’ll do the best we can do every single year, but we’re not going to force anything. For some years the best we can do may mean that our loan and deposit totals stay relatively flat. Then, in another year, we may be able to participate in an acquisition opportunity and experience measurable growth. A disciplined approach is key."

The company went though multiple cycles and never stopped paying dividends. Here is CFO again: "Since 1989, through good and bad business cycles, Great Southern has paid 117 consecutive quarterly cash dividends to our common shareholders."

Below is a financial highlights taken from GSBC website. You can access it here.


While GSBC have strong liquidity, they are not waiting for recession to come. They are expanding in new markets such as Denver CO and Atlanta GA which overtime will contribute to their loan portfolios. Kris Conley Director of Retail Banking said "In just a few months, the Denver office produced approximately $14 million and the Atlanta office produced more than $13 million."

Overall, I like this bank. I like the fact that the bank is led by family who have the majority of its net worth in the stock.

There was good article on GSBC in Bank Director magazine in August last year (here).

Would like to hear any thoughts you may have on this name.

Wednesday, May 29, 2019

Selected Tweets

It's time for some tweets.
If you want to share any tweets with me please send me email. 
Thanks for reading. 

"You have enemies? Good. That means you've stood up for something, sometime in your life." Winston Churchill


 Chartstravaganza by @planmaestro


Interesting comments in this tweet


Growth vs Value


Steven Sinofsky thread


Read the comments




Tuesday, May 28, 2019

Recommended Links


"Always be yourself, express yourself, have faith in yourself, do not go out and look for a successful personality and duplicate it." - Bruce Lee

Glenn Surowiec on Contrarian Investing in Cyclicals - Manual of Ideas

What can Long-term Value Investors Learn from Traders? - Sanjay Bakshi

From Bank Director January 2017 issue PayPal’s Big Bet $PYPL - Jack Milligan



Friday, May 24, 2019

Selected Tweets

It's time for some tweets.
If you want to share any tweets with me please send me email. 
Thanks for reading. 


Quote: 
"I cannot give you the formula for success, but I can give you the formula for failure - which is: Try to please everybody." Herbert Bayard Swope 




New Battle Ground Joint Corporation $JYNT
$JYNT Bear Thesis



And $JYNT Rebuttal



Tren Griffin on Cash Flows. I agree with him



Multi-Baggers



Billion-Dollar Natural Disasters in the USA



Software Universe Metrics


Everbridge Notes


See the source image

Wednesday, May 22, 2019

Selected Tweets

It's time for some interesting tweets
If you want to share tweets with me or want me to post any please send me email. 
Thanks for reading. 

Quote:
"Ation may not always bring happiness; but there is no happiness without action." -  Benjamin Disraeli


iQiyi - $IQ - If interested please see here Hayden Capital ValueX Vail presentation on $IQ.



Thread on Niederhoffer’s Education of A Speculator - you can find his book here.


GrubHub $GRUB


Chartstravaganza by @planmaestro


CKX Lands Inc $CKX Thesis


The Power of Writing Online



Monday, May 20, 2019

Selected Tweets

Following are tweets i like. If you want to share tweets with me or want me to post any please send me email. Thanks for reading. 


This post Quote:
"The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man." - George Bernard Shaw

Things that reduce the odds of long-term success @farnamstreet




 Thread on Valvoline $VVV

Upslope Capital is short $COKE - More from Upslope's letters here.

 BEST Inc - $BEST


How to keep your reader's eyeballs moving - Thread
Some Thoughts on Magna $MGA

Being an operator vs VC - thread

Friday, May 17, 2019

Nutanix and some Links

Nutanix

Have you heard about the "invisible" company Nutanix $NTNX? It is fascinating one. Learn more about it from their 2019 investor day (link). They explained it in such a detail, I was blown away. What is interesting is they expect to more that double their revenues by 2021, to more than $3 billion by adding new customers but also by selling more to the existing ones. They are taking revenues from their competitors too.

I pulled interesting tweet about Nutanix NEXTConf.
From this video Dheeraj Pandey, the CEO of Nutanix, said they are laser focused on the 3 D's. Data, Design and Delivery:

Q: "So let's talk about, you mentioned control plane earlier, you have a quote on your deck that says, that I reviewed, it says control plane matters, this speaks to some of the product leadership. What does that actually mean, the control plane message, 'cause we hear this a lot come up in multi-cloud hybrid, and certainly within the data conversation around data control planes, control planes. For you guys, what does that mean? Control plane matters?"

A: "Well if you take back like 10 years ago. We were very bold and audacious. We were the only company to say look we will not be building a tab in vCenter. Contrarian, highly contrarian. Most people said you'll lose a lot of deals because you are not adjunct to vCenter. You're not a tab in vCenter, every hardware renderer was really bending over backwards to please VMware because that was the only way to the heart of the virtualization administrator. We took a very different stance. Prism was the control plane, they said if you do a really good job at Prism make it a distributed scale out platform. Make it consumer grade one click delight. Then customers will actually look at this as a very powerful thing, and then we virtualized the hypervisor. So Prism was a multi hypervisor platform. It worked for Vmware, it worked for Hyper-V and it worked for Nutanix AHV. So over time, we just kept doing more of it. So now we have a control plane for multi-cloud. We were saying look, the world does need an automation orchestration engine. That is multi-cloud come is that thing for us. We've taken Prism to the next level with Prism Pro which is about ML and AI and what does it mean to really do operations management and capacity planning and security and analytics. So, we've doubled down on design which is the second D that I talked about with these control planes and going forward and as you see us getting to multi-cloud desktop delivery, we acquired a company almost a year ago, which is really about a cloud native desktop delivery solution where, now the control plane of desktops could belong in the cloud but the desktop itself could be running on prem. And that's a very powerful concept that you can have these cloud enabled cloud holstered cloud serviced control planes but the data place could actually be anywhere. 
It could be running-- This is the invisible cloud concept you're talking about. Absolutely, yeah. In fact the fact that the controller could be running anywhere, and the thing it controls could be running someplace else."

I encourage you to learn more about the company by yourself and share the findings with me.
All presentations from the 2019 investor day can be find here.

Links

For anyone interested about tech i recommend one of Steve Jobs favorite books:
Inside the Tornado: Strategies for Developing, Leveraging, and Surviving Hypergrowth Markets - by Geoffrey A. Moore

Getting Rich vs. Staying Rich by Morgan Housel

Earnings Updates + The Best New Book I’ve Read This Year - by Chris Mayer.$HHC, $AL
The book Chris recommends is Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life - by Rory Sutherland.

Additional Good Read - This Thing For Which We Have No Name. A Conversation With Rory Sutherland

Rory Sutherland article in Entrepreneur Magazine The Best Ideas Are the Ones That Make the Least Sense

Be a cog, not a clog: Servicing complex value chains - by Colin Wong ($APH)

CWS Market Review – May 17, 2019 - by Eddy Elfenbein

Thursday, May 16, 2019

Selected Tweets

This is very interesting observation by Adam Robinson


Thoughts on $IBKR Interactive Brokers




Pricing Power

Moelis $MC



The Contango Story

Observation of  WeWork’s "Investment" Losses


Wednesday, May 15, 2019

Selected Tweets

IPO's


Charlie Munger's 7 Iron Laws Thread

Parsons $PSN
Intertrust $ITRUF


Chartstravaganza by @planmaestro


Tuesday, May 14, 2019

Selected Tweets

Thread about Broadridge Financial Solutions. $BR



For anyone interested in media Matthew Ball @ballmatthew is a must follow.




 Chartstravaganza by @planmaestro



The 5 best TMT acquisitions over the last 20 years from both a financial and strategic perspective by @GavinSBaker


Zillow Group $ZG Thread by @BluegrassCap



Nate Tobik from @oddballstocks thoughts on risk provoked from the above thread


Mohawk Industries $MHK Thread



Saturday, May 11, 2019

Selected Tweets

Athene Holding Ltd $ATH Thread

Artko Capital on investing 3.0 and maybe even 3.0

Thoughts on Slack



Always Interesting Chartstravaganza by @planmaestro



Xilinx $XLNX Thread

Recommended Links

Diamond Hill Industry Perspective Aircraft Engine Manufacturers: Providing the Thrust - by Harsh Acharya

Notes From Omaha - by Chris Mayer. Talks about the Pet Economy $ODC, $HSKA, TRUP, $CVET, $ELAN, $ZTS, $PETQ, $IDXX

Looking For The Next ROIC Machine - by Todd Wenning, Ensemble Capital

Hissing Sounds up North - GreenWood Investors

Book of the week:  The Billionaire Who Wasn't: How Chuck Feeney Secretly Made and Gave Away a Fortune - by Conor O'Clery

Wednesday, May 8, 2019

Fund Letters


3rd Quarter 2019




2nd Quarter 2019



1st Quarter 2019



4th Quarter 2018



3rd Quarter 2018



2nd Quarter 2018



1st Quarter 2018