| | | Speaking of brands, there's a few I'm thinking long and hard about. Haven't come to a conclusion in any of them -
1. VFC -> I like Bracken Darrell + the team he's built around him, I like some of the brands (Vans and The North Face) and I think the turnaround is starting to materialise (my cousins went to Cali and came back with "cool" Vans "sneakers" - with no bias from me), but I don't like the balance sheet or tariff uncertainty. Wonderful brands doesn't mean you're immune from financial risk.
2. Capri -> TPR acquisition blocked was the beginning. Now, upcoming sale of Versace to Prada = cleaner balance sheet + potentially accretive share buybacks if the valuation stays "low." Yes, brand mismanagement (Versace) and missteps (greedy, empire building management), but talented management nonetheless. Sometimes a public failure with no permanent financial impairment is all you need to right your wrongs. Oh, and Michael Kors is as unpopular as ever, too.
3. Gap -> just feels cheap. Can't quite put my finger on it. Everyone talks about Gap being out of fashion, but what about Banana Republic or Old Navy? And if there's anything I've learnt about fashion it's that everything comes back into fashion... eventually. Least sure about this one.
At the end of the day, all of these brands are completely cyclical. And all three suffer from brand mismanagement NOT a cash-strapped consumer - and just because a broke consumer has not happened in a very long while doesn't mean it won't happen at some point. But Idk how to measure this accurately which is why I'm nervous to pull the trigger on any of the three. Branded fashion is expensive and not so repeatable.. unlike a can of Coke.
My concern is always macro with these plays. And macro matters far more than I used to give it credit. Globally, too, since most brands are global today. As does the competitive landscape. Valuing the business solely on its own merits is like trying to eat soup blindfolded with a fork.
I guess the main question that burns in my mind now has become "what can go wrong and what's the probability?" as opposed to sheer upside potential in the past. I've scaled back on many companies I even look at - purely because I can't work them out. If I don't have the ability to say confidently that the business is going to be materially larger and earning more in a decade, I can't own it.
Finally, some caution - investors today love narratives and love to run with them. (Maybe they always did, but I notice it far more now.) I see even the "best" investors falling into the trap. But I think narratives breed charlatans. Empirical analysis is all that matters.
FWIW, I only own two stocks - Supreme PLC (£1.76/sh) and Berkshire Hathaway ($480/sh).
Back off to hibernate... |
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