Briefly noted
RAK – $17mn satellite contract announced … obviously the value of this stuff is clear and why it’s a desirable company to be sold (we have the view it must be sold one way or the other…hell or high water…). +3mn of revs for FY25. Continuing to see value here. Link. Up +14.00% on the day…
DUR – continues on a tear @ 1.05 today… these guys do deathly boring business but are the best at what they do.
WHS – lots of feedback to y’day’s piece I wrote (and the excellent BD piece from Rebecca) … all concurring. Grayston is not a good retail manager … this is an example of what NOT to do in retail.
Worth thinking about Sam Walton’s 10 rules for business — cc: Nick Grayston (also KMD management)… good reading for us all
Commit to your business. Believe in it more than anybody else.
I think I overcame every single one of my personal shortcomings by the sheer passion I brought to my work. I don’t know if you’re born with this kind of passion, or if you can learn it. But I do know you need it. If you love your work, you’ll be out there every day trying to do it the best you possibly can, and pretty soon everybody around will catch the passion from you—like a fever.
2. Share
Share your profits with all your associates, and treat them as partners.
In turn, they will treat you as a partner, and together you will all perform beyond your wildest expectations. Remain a corporation and retain control if you like, but behave as a servant leader in a partnership. Encourage your associates to hold a stake in the company. Offer discounted stock, and grant them stock for their retirement. It’s the single best thing we ever did.
3. Motivate
Motivate your partners. Money and ownership alone aren’t enough.
Constantly, day by day, think of new and more interesting ways to motivate and challenge your partners. Set high goals, encourage competition, and then keep score. Make bets with outrageous payoffs. If things get stale, cross-pollinate; have managers switch jobs with one another to stay challenged. Keep everybody guessing as to what your next trick is going to be. Don’t become too predictable.
4. Communicate
Communicate everything you possibly can to your partners.
The more they know, the more they’ll understand. The more they understand, the more they’ll care. Once they care, there’s no stopping them. If you don’t trust your associates to know what’s going on, they’ll know you don’t really consider them partners. Information is power, and the gain you get from empowering your associates more than offsets the risk of informing your competitors.
5. Appreciate
Appreciate everything your associates do for the business.
A paycheck and a stock option will buy one kind of loyalty. But all of us like to be told how much somebody appreciates what we do for them. We like to hear it often, and especially when we have done something we’re really proud of. Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They’re absolutely free—and worth a fortune.
6. Celebrate
Celebrate your successes. Find some humor in your failures.
Don’t take yourself so seriously. Loosen up, and everybody around you will loosen up. Have fun. Show enthusiasm—always. When all else fails, put on a costume and sing a silly song. Then make everybody else sing with you. Don’t do a hula on Wall Street. It’s been done. Think up your own stunt. All of this is more important and more fun than you think, and it really fools the competition. “Why should we take those cornballs at Wal-Mart seriously?”
7. Listen
Listen to everyone in your company.
And figure out ways to get them talking. The folks on the front lines—the ones who actually talk to the customer—are the only ones who really know what’s going on out there. You’d better find out what they know. This really is what total quality is all about. To push responsibility down in your organization, and to force good ideas to bubble up within it, you must listen to what your associates are trying to tell you.
8. Exceed
Exceed your customers’ expectations.
If you do, they’ll come back over and over. Give them what they want—and a little more. Let them know you appreciate them. Make good on all your mistakes, and don’t make excuses—apologize. Stand behind everything you do. The two most important words I ever wrote were on that first Wal-Mart sign: “Satisfaction Guaranteed.” They’re still up there, and they have made all the difference.
9. Control
Control your expenses better than your competition.
This is where you can always find the competitive advantage. For 25 years running—long before Wal-Mart was known as the nation’s largest retailer—we ranked number one in our industry for the lowest ratio of expenses to sales. You can make a lot of different mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if you’re too inefficient.
10. Swim
Swim upstream. Go the other way.
Ignore the conventional wisdom. If everybody else is doing it one way, there’s a good chance you can find your niche by going in exactly the opposite direction. But be prepared for a lot of folks to wave you down and tell you you’re headed the wrong way. I guess in all my years, what I heard more often than anything was: a town of less than 50,000 population cannot support a discount store for very long.
MyTheresa – Looking to go private and likely nab Net A Porter off Richemont (could be PE transaction where Richemont still owns some…)…Richemont will be glad to see the back of NAP… as I have written before, there is marginal value in third party luxury sellers…the real money is owning the house…
Marc Jacobs – Miss Tweed reporting that LVMH no longer interested in selling. Not surprised. Still brings in decent chunk of cash and Arnault owes a lot to Jacobs — he revived Vuitton as a modern powerhouse; the collaborations with Kusama, Sprouse, etc.
Anglo American – Don’t see this fight stopping anytime soon. DeBeers business has been in a rut for a while, sale of some Aus assets only highlights that Anglo is playing defence. Pride of S.A yes but…everything at a price.
AI — Everyone is very excited about the new OpenAI and Google releases. Per the AFR: The new version of Gemini can write poems about objects it’s seen, or even tell the user where it last saw her glasses.
I prefer Pablo Neruda.
$10bn PE feeding frenzy — Thinking of the recent Squarespace buyout and potential MyTheresa buyout. I suspect PE is hungry for more. Ran a screen and a few names cropped up:
Potential targets for Daddy Private Equity $$$:
TeamViewer — €1.88bn company; €150mn of buybacks announced in Dec. Permira has been selling its stake (its former PE daddy) and the stock has disappointed since doing well in the pandemic. Actually makes money. 17x earnings. Would hungry boy firm Thoma Bravo be interested in buying it?! You know how they love their technology…
Krispy Kreme — The billionaire Reinmann family controls Krispy Kreme via JAB Holdings— they paid about $1.35bn for it. It’s listed. JAB has recently signalled a pivot into insurance, after spending the last decade building a sprawling consumer empire (Tim Horton’s, Keurig Dr Pepper, etc). Krispy Kreme has disappointed since listing — it’s down 37% over the last 5 yrs. Could a big PE daddy want to buy this?
E.l.f beauty — Hear me out. Estée Lauder is out on the ropes. L’Oreal is chugging along. Coty has done fairly well after being a disappointing stock for years. E.l.f has grown revenue in the double digits while competitors have lagged (47% revenue growth YoY FY23). It’s under $10bn. Someone might want it? I don’t know who even shops at e.l.f? Who do they sell to? This is implausible, maybe.
Gamestop is back, baby?
Picture me last night: in bed, my tired eyes looking at the screen on my phone, tucked under my linen sheets, my in-house pianist playing the Goldberg Variations for my on the Steinway in the corner to lull me to sleep, rare freshly-cut french lavender being wafted around by my servants. A normal Tuesday night. And my eyes are growing a little surprised and I am starting to wonder if we are back in 2021 as the pre-market trading for GME hit $48.00, $50.00, $70.00… AMC was doing the same… for a moment I thought I was back living at my Château in the South of France (where I rode out the pandemic)… I had the distinct sensation of groundhog day. Were interest rates low again?? Was JPow printing money? Had stimulus been given to the hungry masses?? WERE WE BACK, BABY?!
And then just like that GME closed at around $48.00. Up 59% for the day, but not the $70.00 it had traded at previous to open. I am not going to bore you with too many details but basically, Roaring Kitty came back, made a tweet with a meme, and then everybody went a bit nuts.
I mean, on May 9 a dude called Zack Morris posted this on Twitter:
Which is interesting, because five days later Roaring Kitty posted this tweet —
I don’t know if this is securities fraud or not — all I am saying is, if a dude posts a meme, then maybe he buys calls, and then the figurehead of the entire Gamestop movement posts the meme five days later…is it securities fraud?? I don’t know! There’s another fun thing here — Zack posted about AMC (“I intended to promote and long AMC, your honour”), while Roaring Kitty … um, posted a meme. The chair is a different colour (“your honour, the chairs were different colours, ergo different content was being talked about by my client”) etc. Anyway — some people made a lot of money.
A lot of POS stocks went up last night. Joby Aviation went up, as did Trupanion. Blackberry went up. Most of them gave back their gains by the end of day. Virgin Galactic went up 22% (!) … a real POS! For a moment there it was like we were in the halcyon days of 2021 where everyone was making sourdough and watching Jacinda make daily pronouncements to us that, in retrospect, feel a little reminiscent of 1984. The climate has changed, though — interest rates are high now and consumer savings are done. Where did people get their cash from to pump this stuff? (One theory: volume fell out of Bitcoin last night; maybe WSB-ers moved their coin from one speculative currency to a speculative stock).
I don’t know, you guys. I’m short Joby and Trupanion and Virgin Galactic in smalls.