Porc, re: LWN,
Too bad you couldn't convince your reader to sell when the selling was good. I was going to short it then, but just couldn't get a good enough handle on it to be comfortable with it to be convinced that it would be an "investment grade" short. (Hey, if I'm going to mention shorting on this thread I've gotta keep in line with Graham et al. ;-)
The principal owner was forced out within the past year. If that was a big problem as you indicate (I was not aware that it was), then that certainly fixes that.
"Blockbuster Mortuary", I like that! True, the economic rationale behind bringing many small funeral homes under one roof may have never existed. But provided that the debt is safely less than the intrinsic value and the debt servicing capabilities of the operation, could one not look at this as an opportunity to purchase a a large block of viable businesses at a bargain price? (If in fact both those characteristics are true! As I said before, I don't know the answers yet).
I.e., provided the price is cheap enough and the debt manageable, who cares if 1000 funeral homes offer no economies of scale at all?
Something I find surprising is that industries which I "feel" to be very expensive (for the value given), such as funeral homes, military contractors, aerospace firms etc, do not seem to necessarily generate exceptional business returns for their shareholders. It's as if their high cost to value is due to inefficiency and not fat profit margins.
- Daniel |
