LK Hyman
12 Oct 2017
Re: nick train falls in love... Bill,"you perhaps gloss over the Western World's burgeoning obesity and diabetes problems"That made me chuckle, coming from you as an IMB fan, m8! Anyhoo I've got the ULVR life expectancy reduction thingy hedged via my chunky LGEN holding.LKH on the flybridge
gamesinvestor
11 Oct 2017
Re: o/t """Saw Nick Train owns it in LTI as well as being terry smiths no.2. So put 3% in there and up 10% already with currency timing.""Nimbo - good move, especially after the PayPal announcement today.[link] [link] managed buy into this via eBay and offloaded eBay after the split and continued to add to PayPal. It is 2.6% of my wad and is so far it's almost doubled.Games -- speaking of things that harm, selling DGE at this point and popping it into IMB might be a better move in the next two years -- then again it might not!!
Bill1703
11 Oct 2017
Re: nick train falls in love... "Personally, if I had to put my entire family's worth into one holding, it would be Unilever, not Diageo... The fisc all over the world tend to attack booze, the stuff is bad for you... whereas ULVR's products are, by and large, either good for you or do little harm."Well, I think you and Trainspotter both know that putting your family's entire worth into just one stock is foolhardy in the extreme... that said, I sometimes wish I'd put all of mine into those magnificent Vimto purveyors at Nichols about 15 years back. Not that this makes it right...On ULVR, you perhaps gloss over the Western World's burgeoning obesity and diabetes problems, pivotal factors behind life expectancy rates being already on the way down in the US and now plateauing in the UK, the name but two countries... how long the unforgiving finger of blame gets pointed at excessive consumption of Pot Noodle and ice cream (now there's a two-courser fit for a king...)?
LK Hyman
11 Oct 2017
Re: nick train falls in love... Nimbo,"“If I had to pick one holding in the trust that I had to put my entire family’s worth into, this is probably the one holding that I would go for.”"Well, bully for Nick Train! Personally, if I had to put my entire family's worth into one holding, it would be Unilever, not Diageo.The fisc all over the world tend to attack booze, the stuff is bad for you, and Diageo are in bed with some pretty unsavoury characters in various countries around the world, whereas ULVR's products are, by and large, either good for you or do little harm. And the company is an essentially decent one from the ethical standpoint, as a result of the Leverhulme legacy.It's a no-brainer forLKH on the flybridge and ULVR has a higher yield, to cap it all
nimbo1
11 Oct 2017
Re: nick train falls in love... thanks for the heads up. Here is the whole text on Diageo. maybe i should up my personal holdings here from 8-10%. Also interested in Man utd...amazing thing about technology and information flow these days - can just copy what the best investors in the world are doing as they do it! “I think Diageo is a wonderful and beautiful company where the core engines of its growth are 200 years old, such as Johnnie Walker and Guinness,” said Nick Train of Lindsell Train.“You have global brand recognition and global distribution from these storied brands, which means you have the basis for exceptional profit.“When you add on top of that the gradual but inexorable increase in wealth of citizens on this planet, which is an optimistic view we adhere to, the likelihood that over 20 years more people will drink more Baileys, Tanqueray or Captain Morgan seems to be very high.“Emerging markets are part of that growth. But also there are different ways to look at emerging markets. If a brand has got strong presence in Brazil or Mexico and those people move up to American, that is an area where you have a chance to grow your brands.“If I had to pick one holding in the trust that I had to put my entire family’s worth into, this is probably the one holding that I would go for.”
nimbo1
11 Oct 2017
o/t games just wanted to say thanks - you posted something about holdings a coupe of weeks ago - anyway the one that caught my eye was PayPal. Saw Nick Train owns it in LTI as well as being terry smiths no.2. So put 3% in there and up 10% already with currency timing.
gamesinvestor
11 Oct 2017
Re: nick train falls in love... v - If it was 10% of my fund I'd be describing it as magnificent, not wonderful !!But to balance that little statement of Nick's, he did register big concerns about capital allocation in his last monthly update -- so clearly he sees some cracks here as well as a few people typing up their concerns on here.Games
valeite
11 Oct 2017
nick train falls in love... ....'a wonderful and beautiful company' is how he describes DGE ....the one company he would entrust his family fortune to .interview is in the telegraph (money section )
forddrive
11 Oct 2017
Diageo Well I hope that all the harbingers of doom are enjoying the share price.
LK Hyman
11 Oct 2017
Re: Economics 101 for Ivan Bill,One wonders how many other mothballed distilleries Diageo owns, which could easily be given a lick of paint and brought back to life .....LKH on the flybridge
LK Hyman
11 Oct 2017
Re: Economics 101 for Ivan Bill,"I decided, on balance, that it meant 800,000 litres EACH."Yes, sorry, I misread what you said in your initial post on the subject.Whether it is 800,000 litres each or 800,000 litres in total, it doesn't alter the fact that Casamigos is massively more expensive than Port Ellen and Brora on a "per case" basis and it highlights the fact that Diageo has, for many years, overlooked a screamingly obvious attractive "organic" capital investment and has preferred to engage in sexier, but far less profitable, M&A. Which is largely why I, for one, have sold all my Diageo shares despite my enjoyment of many of their brands."you could say, it has helped them to make out like Mexican (or southern Islayan?) bandits when gradually selling off the remaining bottles for the proverbial king's ransom, and perhaps they planned it that way?"It's possible, I suppose, though I would have thought that the manky few bottles of left over stock of Port Ellen and Brora that they have sold for a king's ransom would have been overwhelmed, in total profit terms, if they had rebuilt the old distilleries and reintroduced the two brands several years ago when the malt aficionados were begging the to do so, thereby selling 800,000 (or 1,600,000) litres a year rather than a once-off couple of hundred barrels."maybe no-one told Ivan the sheds were there?"Certainly, to judge by the length of time it took Ivan to correct the "brands" bit of the website, when he was still showing brands such as Red Stripe and Blossom Hill as owned by Diageo when they had been sold a long time before, it's quite possible that he had no idea about the opportunity which should have been blindingly obvious. Or he may have said "I don't want to be bothered with any capex opportunity involving less than [insert number of klebbies slightly higher than £35 million here]". It still seems a bit surprising that no underlings were jumpin' up and down and screamin': "This Brora and Port Ellen stuff is selling for thousands of quid a bottle. OK, yes, we realise that, to a large extent, this is down to the rarity collectors' value but ffs, Ivan, why don't we rebuild the roof, put in new stills and make out like bandits on our home soil rather than faffing around with Indian wide boys, Brazilian campaneros, Hollywood cheesecakes and suchlike M&A stuff?"If only Ivan had done the Port Ellen and Brora thingy FIRST, ie BEFORE Crassamigos, he might have got away with the Randy Gerbil, Mike Milkmaid and George Clowney deal subsequently, despite its high cost. As it is there will be many many large shareholders, as well as small ones, who will increasingly be thinking that Ivan is wasting shareholders' money on some of these large and doubtless hugely enjoyable M&A deals.LKH on the flybridge
gamesinvestor
11 Oct 2017
Buybacks -- again Interesting set of stats of the impact on share price over time of various companies that have implemented big buyback programs.The results highlight their lack of worth without real improvements in fundamentals :-[link]
Bill1703
10 Oct 2017
Re: Economics 101 for Ivan "I thought EXACKLY the same thing, m8! I agree with you that it's probably 800,000 litres combined, which was why I referred to "just under 100,000 cases" (a case is 9 litres)..." Apologies if I was similarly obtuse, LKH - I decided, on balance, that it meant 800,000 litres EACH. Based on one article I found which said as much - though who knows whether this was an informed clarification or they just guessed - and on some historical information which suggested that both distilleries used to produce about a million litres a year (give or take). Which is why my calculations (FWIW) assumed 178,000 cases pa. (2 x 800,000, divided by 9). But as you say... wtfdik?! "I think it's a LOT different. I've never actually been to Mexico... but my impression is that crime is the main industry out Jalisco way..."I wouldn't be too sure... I've always suspected that anything goes in those barren, godforsaken badlands of southern Islay, where the long arm of the law has never quite extended! And did you never read about the shocking events in a Brora hotel, many years ago, where a gang of well-refreshed revellers broke into the snooker room in the early hours and relieved them not only of a few goodly measures of gin and vodka but also a fine bottle of scotch which had evidently been set aside as a worthy prize for something or other...Er, no, you probably didn't... as it was never reported (thankfully), and I only know about it as... er.... well... Suffice to say, not one of my proudest moments... but ultimately no-one was hurt (though I still fear the delayed reaction of my liver). But I digress... ! "... if one does already own two iconic brands and the sheds are already sat there just waiting ... why on earth did it take Ivan so long to decide to spend tuppence ha'penny to get the Jocks to start shovelling malt into the boiler..."It's a good question... you could say, it has helped them to make out like Mexican (or southern Islayan?) bandits when gradually selling off the remaining bottles for the proverbial king's ransom, and perhaps they planned it that way? Or... maybe no-one told Ivan the sheds were there? Such details often fall between the cracks in huge global companies...
LK Hyman
10 Oct 2017
Re: Economics 101 for Ivan Bill,"it is slightly unclear whether the "new" Scotch distilleries will produce 800,000 litres each, or combined (I hate badly worded press releases)."I thought EXACKLY the same thing, m8! I agree with you that it's probably 800,000 litres combined, which was why I referred to "just under 100,000 cases" (a case is 9 litres). But why, in the name of all that's holy, can't the mup pet who puts out the press release make it clear, as you say? "how different can it be to employ a handful of people in Mexico vs a handful of people in remote parts of bucolic Scotland?"I think it's a LOT different. I've never actually been to Mexico, though I have the highest admiration for Katy Jurado and Marty Robbins, but my impression is that crime is the main industry out Jalisco way. I would have thought that the arrival of the hyper smooth Ivan with a huge bag of Diageo money would be every Mexican mafioso's wet dream but wtfdik?"DGE already owns the whisky so the $45m is merely refurbishment capex"True enough. However, as you imply, if one does already own two iconic brands and the sheds are already sat there just waiting for new pot stills and a few tiles on the roof, why on earth did it take Ivan so long to decide to spend tuppence ha'penny to get the Jocks to start shovelling malt into the boiler, especially when every malt whisky fan in Christendom was beggin' him to do just that? Blimey, the Diageo-owned maltings are RIGHT NEXT DOOR to Port Ellen.It's money for jam .... Ivan could make the Port Ellen and Brora pot stills out of solid 24 carat gold and still end up with an investment INFINITELY cheaper than Casamigos.[link] on the flybridge
Bill1703
10 Oct 2017
Re: Economics 101 for Ivan "One involves spending $1,000 million for a tequila company that sells 120,000 cases a year of a relatively unknown tequila made in Mexico... The other involves spending $45 million on refurbishing two iconic Scotch malt whisky distilleries with a capacity of just under 100,000 cases a year of famous old brands for which whisky lovers are prepared to cut off their left nut..."LKH - it is slightly unclear whether the "new" Scotch distilleries will produce 800,000 litres each, or combined (I hate badly worded press releases). Assuming it's the former (as I think the evidence suggests), then you are talking an upfront capital investment of a bit over $8k per annual case for the tequila, and around $250 per annual case for the Scotch! Okay, there is the small issue of the 15 years they'll have to wait to start selling the Scotch... but you could look at this as merely a "time value of money" opportunity cost, which means (at a 7% pa. real 'discount rate') this $45m is worth more like $125m on an equivalent basis, in today's money. So, a tad over $700 per annual case - around one twelfth of the tequila cost.If you follow my reasoning and maths (don't blame you if not, I'm unconvinced enough myself).Okay, Ivan could argue the tequila deal is buying the brand and assets, whereas DGE already owns the whisky so the $45m is merely refurbishment capex, etc... but ultimately it's all hard-cash capital investment, and no-one said they had to buy Casamigos. As for relative operating margins, etc, I am in the dark... but how different can it be to employ a handful of people in Mexico vs a handful of people in remote parts of bucolic Scotland? And raw material costs will be similar (ie, next to nothing). So I doubt there will be a huge difference in profitability per case...All of which leads me to conclude that Casamigos will have to demonstrate HUGE growth before the two "investment opportunities" even begin to equate... though you have to acknowledge the head-start advantage of the business which they already effectively own.
