Company Notes Digest 4.11.13
- Scott Krisiloff
- April 11th, 2013
Throughout the week I spend a lot of time reading conference calls, SEC filings, etc and leave summaries of quotes in the company notes section which can be found here. Below is a digest of some of the best insights that I’ve gathered from the calls during the last week.
On how to succeed in business (frame this one and hang it on the wall):
- “The formula for success [is asking the question] are you giving your customer what she wants? Understanding the customer…If I don’t understand what it is my customer wants when they come in a grocery store and make sure I satisfy that need every trip, I’m not going to win over time. And I think where people have fallen by the wayside is they focus on numeric results rather than satisfying the customer. If you have a whole bunch of satisfied customers, the numeric results will follow.”
You can have the wrong picture of an industry if you’re only paying attention to the public companies:
- “The fact of the matter is, is the full-service grocery industry in the United States is very healthy. It’s just that a lot of those folks that are running those stores, they aren’t publicly held companies…the Publix, H.E.B, Hy-Vee, Wegmans, WinCo, all of these companies are great full-service grocery operators doing just fine like we are. It’s just a lot of people that invest for a living don’t recognize that they exist because they can’t own a piece of that action.”
Glacier bank (a $7 billion in asset regional bank) acquired a small ($346 million in asset) community bank. This was the explanation Glacier gave for why the bank sold:
- “I think that it’s just like so many other banks, I mean, especially the smaller community banks. I think that the regulatory burden…I think they recognize that that was not going to get any better.”
The moral of the story is that regulation increases barriers to entry. It hurts smaller businesses and benefits those with the scale to implement the regulations.
Maybe commodities markets aren’t as soft as they seem:
- “while I can’t speak for the other metals, the decline in aluminum prices is not reflective of the overall current market fundamentals.”
In China it’s up to the government to decide how to restructure an industry, and there is still uncertainty around what the new government’s agenda is.
- “the new government has said I think they are aware of the situation right now…I think the government has put more attention to is to restructuring consolidation in these industry…It’s a good news for the survival we strongly believe that Jinko solar is one of the company’s who will survive”
Pandora will tell you that its secret sauce is in its music genome project.
- “what makes Pandora special isn’t creating static playlist, it’s about creating real live dynamic algorithms.”
- “Pandora’s algorithms…have to…evolve with both cultural and personal tastes, and that’s really what the power of the algorithms are.”
Investors weren’t the only ones who were trained to get more aggressive in a downturn by 2008. This type of thinking could lead to a more shallow recession when we do get one:
- “we’re not going to give up on the big picture because even if we did get into a recession, we found that that’s a good time to invest and a good time to take market share.”
Financing is getting easier for everyone:
- “If you look at the APR or the contract rates that we’ve given, the origination metrics, you see that it’s trended down to 7.1% this quarter. It was 7.7% last quarter, and I think it was 8.7% last year.”
- [analyst comment] “It seems appetite for subprime loans has improved quite a bit recently.”
What’s the bottom line?
- “The bottom line is, Sharon, it’s a great time to buy a car. Rates are cheap, and we have lots of inventory.”
We complain about over-regulation (see above), but forget that it’s generally worse in other countries.
- ”in Colombia….Probably the biggest challenge once you find the site…is the fact that you have to go through permitting and very complicated and slow permitting process…Colombia is very regulated”
Ecommerce has some hurdles in other countries that we don’t always think about here.
- “one of the challenges for sure is delivery times. We’re trying to look at different ways to reduce the delivery time so that the members don’t have to wait two or three weeks before they get their merchandise…The other challenge, believe it or not, there is still a lot of, in some of the cultures where we’re operating, there’s still a lot of fear of providing the credit card information”
Shuttering capacity has consequences down the line.
- “we’re very bullish in energy prices in the middle of the decade when those coal plants are retired or other types of plants, given rules in New Jersey, and what will be setting price is increasingly either well units or even demand response.”
Retailers that blame weather and tax refunds are just whiners.
- [analyst comment] “a lot of retailers have talked about the negative impact from the delay in tax refunds, unseasonably cold weather in March. I found it kind of strange you guys didn’t really discuss that at all. I mean, was that a headwind?”
- [pier 1 answer] “Well, no. I mean, we’ve reported that we had an incredibly strong Q4. You saw the numbers. So none of those things were an impact there, and we’re only at the end of month of Q1 of this fiscal year. But as I said in the prepared remarks, we think that — think the year’s got off to a great start. So we’re pretty happy.”
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Scott Krisiloff, CFA is Chief Investment Officer of Avondale Asset Management, a Los Angeles based investment firm, which manages investment accounts for individuals and institutions More.
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