Scale. It’s a fickle thing. All companies want to harness its absolute potential, yet only a few really are able to fully utilise it. Every company who made the jump from a microcap used it. It is one of the oldest theory in economics, yet many microcap investors overlooks it. One aspect particularly overlooked is when a company is sub-scale. Continue reading
Jumbo Interactive (ASX:JIN) is an Australian online lottery seller. It has a simple enough business model, yet it was the complete opposite of BPF in terms of its moat and the impact to my portfolio. It is (still) one of my best investments. The reason why it was misjudged by the market was due to 2 main reasons: internal short-term woes AND a misunderstanding of the strength of its business model.
Bulletproof (ASX: BPF) is a cloud services provider in Australia and New Zealand. It has 3 main businesses: private cloud, public cloud and professional services. In a nutshell, the company has previously been growing revenue and Earnings before Interest Taxes, Depreciation and Amortisation (EBITDA) significantly through organic and inorganic growth. However, things have taken a turn for the worse.
This was an article I wrote when I was in university 6 years ago for the investing club (I am getting old…). I have learnt a lot more since then, but the core ideas in the article still stayed true. Some of the examples are outdated:
- for BHP the mining boom has turned into a bust and is undergoing its mini-revival. The stock price of BHP has stayed flat (it is at $23.67 as of 10/3/17). You would have done better buying their South32 spinoff…at the right price of course (Forager Funds did a great write-up on it 2 years ago).
- Warren Buffett has bought IBM, airplane stocks and Apple (another testimony of how much of a learning machine he is!)
So without further ado… here it is!