100,
Here's my thinking after this weekend's conversation:
If a company gains control or leverage of the value chain in a market in tornado, it's definitely earned the right to a tremendous amount of investor attention. But it's not necessarily a gorilla. (I know, I've changed my mind.)
Here's why, imo - correct use of definitions will keep things from getting increasingly murky. I'm guessing the authors made the criteria for gorillahood pretty stringent for a reason. They weren't concerned with the greatest possible returns, but the greatest combination of return and safety. And the more we play with stretching the definitions - like I did this weekend :) - the greater the danger of calling companies gorillas that may be more vulnerable than a true gorilla. I still like my argument about the value chain. I just think it's wrong. :)
With that in mind, JDSU looks more and more like a king to me. I'd be more comfortable calling them the most bad-a** king on the block than a true gorilla.
With jdsu the threat of someone running faster is lu bringing the component production in house. the questions are, is there fat enough margins to make it worthwhile for lu to bring it in house and to support jdsu as a gorilla.
and if lu does determine the margins are juicy enough to do so, can they or are there patents preventing this.
That's a great point, and an example of why they may not have gorilla DNA. By definition, once a gorilla is embedded in the value chain, their position is unassailable. That, I think, is the key. Once there, there's no way they can be knocked out. If LU or anyone else can decide to do things differently and threaten JDSU, they're a king. About the patents...I'll defer to someone who knows more about them than I do.
A king with the power to charge full tariffs entering into a tornado market for their product will most likely develop into a gorilla.
I'm pulling back from my idea that a king can morph into a gorilla. However, I think that noticing that they look like a gorilla is a great observation, because it means you've probably got a terrific investment opportunity on your hands. And I like Lindy's idea a lot...to go out and find us some more kings.
investing in those companies at that time
will yield tremendous profits.
I'm on board with you 100% on that one. :)
Sam |
