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[Ethical Equities Contribution] Kip McGrath Education Centres (ASX:KME) FY 2018 Annual Results

The tutoring company Kip McGrath (ASX: KME) released its results on Friday showing a continuing implementation of its long term strategy. It’s steady as she goes.

Net Profit after Tax (NPAT) has grown by 41% to $2.0m. The company has done this amidst a flat revenue of $13.7m (more on that below). This represented an expansion of NPAT margin from 11% in FY17 to 15% in FY18. More impressively, this was not a 1 year trend. Kip McGrath has consistently grown its margin from 2% in FY12.

Behind this steady increase in margin lies a change in the business model of Kip McGrath over the years. They have become less a labour-intensive business, to a more capital light franchise operator. The journey started 8 years ago when they first trialled the Gold Franchisees model.

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[Ethical Equities Contribution] Energy Action (ASX:EAX) Improving: FY 2018 Annual Results

A Turnaround Story

The turnaround story here is not too uncommon. Energy Action once had a nice little business which was capital light and high margin. Under the old management, the business committed major unforced errors; ‘di-worsification’, neglecting their existing technology, and taking on too much debt. Theirs was a misguided strategy, as we publicly and correctly predicted it would be.

Cue the new management, who do some things right, such as keeping costs under control, marketing their existing business and not acquiring low margin projects businesses….

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[Rask Media contribution] Aussie Private Equity: Not Everything It’s Cracked Up To Be?

Private equity (PE) as an asset class has boomed globally. Demand for ownership of businesses which are not listed on stock exchanges (making them ‘private’ companies) has been a boon for investors.

As the Australian Financial Review (AFR) reported last week, at the end of 2017, the global PE industry was, “sitting on a record level of dry powder of $US633 billion.” This was a direct result of fundraising activity of global PE firms. Data from industry tracker Preqin showed that global PE firms raised a huge $US453billion in 2017.

But in the face of the demand for these investments, Daniel Rasmussen of Verdad Advisers has a sceptical opinion on the state of the current PE environment….

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[Rask Media contribution] The Best Quotes From Warren Buffett’s Latest Berkshire Hathaway Letter

Berkshire Hathaway’s latest chairman letter was released late Saturday night. The annual letter by Warren Buffett has been a great source of wisdom for aspiring investors globally. While this letter was one of his shorter ones in recent times, it still is a very worthwhile read for investors…

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20 Ticket Punch Card investing and why it is so important for me in micro-cap investing

“An investor should act as though he had a lifetime decision card with just twenty punches on it.” Warren Buffett.

“The success of Berkshire [Hathaway] came from two decisions a year over 50 years.” Charlie Munger.

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