Flipper vs Keeper (Makes an Idiot out of Genius)

We have double standards, one that applies to us (not even in the mirror), selective application to ourselves, and the other standard that applies to other people.

Value investors often ascribe themselves as humble, kind, giving and so on. Then, we have a standard we label on the managers running our company. He/she should be honest, ethical, energetic, intelligent etc.

There is another angle I want to introduce here based on my recent learning and personal experience. I had a vision for the company that I invested in, Trilogy International New Zealand (Management had my money). Pre-IPO, they had the vision, and I had the money.

I wrote about it https://lifeandequities.wordpress.com/2016/03/17/befriend-the-trend-coz-women-will-overspend/ and https://lifeandequities.wordpress.com/2015/11/07/organic-trend-has-no-end-trilogy-new-zealand/

I bought the company in 2015 at approx 2 Dollars, it had already quadrupled from 46 cents in 2014 i.e quadrupled in the previous 12 months. I bought it for Non-Flipping, i.e. keeping for few years.

The stock was identified by institutions in 2016 and CLSA wrote a report on it, the stock went to 5 Dollars in a year. This was the only company that I took a bit of a loan to buy at 17% interest rate, first time in the past 10 years, because I was so confident. I averaged up to 5 dollars as well.

Then the company’s overseas expansion in the US and UK did not go as expected and the love affair was over, stock down 60% to 2 Dollars. 75% of the business in Australia and New Zealand is OK and growing at 5-10%. Stock is available at 10 PE. Its an FMCG stock.

Then management did something unexpected, they sold the whole company (delisting proposal) to a potential buyer at 2.9 Dollars. I just broke even or miniscule return after 3 years of play. Disposed 90% quantity two weeks back, holding minor quantity.


Lesson: The business managers of the company that you are invested in for the LONG TERM should NOT be serial entrepreneurs. Coz you never know which business they find more exciting in exchange for your business and willing flip it over. In this case the owners of Trilogy (http://www.thebakery.co.nz/) are serial entrepreneurs and had many other businesses to fund/incubate and grow, hence did not take long to flip at a non attractive price for minority. I had a feeling they may not be in for the long haul because they diluted their personal stake from 50% to 30%, they look at the listed business also like me, a piece of paper to be flipped at appropriate opportunity, hence I can’t really blame anyone. The companies that you want to own for the long term should be the one’s where it hurts the business manager to dilute even 2% of his holding. This you can ginfer from stock options and other acquisitions.



Disclosure: Invested in positions discussed. Views are personal notions and do not represent any organisation or company. Investment in stock market can (and many a times do) result in loss of principal capital.