Recent Stock Pitch for IHS

Recently, I made a stock pitch and thought I’d share the output (the deck and model are linked below).  Fair warning: The deck may be of minimal value considering I’m opposed to text-filled slides and prefer to use them only as visual support of my thesis. I believe the company has competitive advantages, particularly in energy and automotive. I also think it’s intrinsic value exceeds its market value of about $94/share by about 30%. I welcome any feedback or challenges to my view on intrinsic value.

Also full disclosure, I was employed by IHS from 2/12-8/13.

IHS Deck_020416

IHS_020416_v2

Football and Math and 2nd Guessing

I watched the Packers vs. Cardinals game last night and it was a memorable one. I’m not going to recap the game; you can go to any one of a dozen websites for that. I’m going to scratch an itch by asking somewhat rhetorically: Do NFL teams have stats guys in the booth for purposes of providing in-game tactical guidance? As the Packers tied the game at the end of regulation on a Hail Mary, I was pleading for the 2 point attempt. As Bill Barnwell points out, the 2-pointer would have given Green Bay the best chance at stealing a win in Arizona (the better team throughout the season). Here is the visual probabilistic sketch. The probabilities I used from Bill’s article.

2 pts

 

I get it. Football isn’t all about statistics and there is a place for in-game “feel.” For McCarthy to choose to kick the extra point, however, the implication is he thought the Packers had a greater than 50% chance in overtime, even if losing the coin flip. Given the Packers pre-game expectation of a win was implied to be about 25%, the revised 50% probability is an aggressive departure from what the odds dictated at the start of the game. Especially since Rodgers may never get a chance on offense (see: Packers vs. Cardinals in 2010, Packers vs. Seahawks in 2015 and of course yesterday).

Plus, if you’re going with the “feel” factor, I wonder what Cardinals fans would have been more nervous about – the best QB in the league getting a couple yards on one play or playing out overtime? I would guess they would be much more nervous of Rodgers getting two yards.

So why the “safe” extra point? My guess as Bill points out is that it’s the less controversial decision, especially if the 2-pointer doesn’t work. I believe many coaches, similar to money managers, make decisions rooted in herding behavior. There’s a darn good reason McCarthy is on the sideline while I nervously grip my Miller Lite from my living room. I’m merely commenting on the small slice of the game in which I know enough about to be confused about.

Masters in Business podcast with Barry Ritholtz with Jim Chanos – Show Notes

Readers Note: For a more reader-friendly format of this post, click on MiB with Jim Chanos Notes.

Podcasts are gold. Digesting information through the spoken word requires active concentration, the pods are time efficient (I listen to most on my commute), and they provide extraordinary access to…well, the normally inaccessible. The Barry Ritholtz interview with Jim Chanos was so good that I took notes of the podcast below, literature discussed that will be added to my reading list, and an illustrative sketch of how a short seller can make a greater than 100% return on initial capital.
Masters in Business podcasts with Barry Ritholtz
Interview with: Jim Chanos, Kynikos Associates
Date: 8/16/14

Selected Links from the Episode:
MiB: Jim Chanos, Kynikos Associates

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Company Valuation: Deere & Company

Deere & Company Report: DE_071415

Deere & Company Model: DE model__rlw_071515

John Deere (NYSE: DE) is a company I came across twice in recent weeks – once as an investment made by Berkshire Hathaway as reflected in their annual report and again in this article. The author of the 2nd article points out some appealing characteristics of John Deere and then asks some very good questions regarding potentially “not so nice” characteristics about the company. These questions require further analysis, which I aim to answer followed by my sense of value. Of the questions posed from the linked article, I’ll focus on what I consider to be the most important; refer to the article for a complete list of the author’s questions. Please click on the PDF report above to read more.

 

Northern Tier Energy Prefers Cushion In Cushing

As an investor seeking to continuously develop my skillset, I find it beneficial to shadow a professional investor with a thought process I respect. And by shadow, I just mean follow his work online, perform my own work, and compare conclusions. That’s exactly how I chose to write about Northern Tier Energy LP, a company Vitaliy Katsenelson wrote about in November. As an active reader of Seeking Alpha, I noticed several articles have been written about the company since November, a significant amount of coverage for a $2.4B company by market capitalization. I have not read these articles prior to my analysis to avoid clouding my thoughts about the company. Understanding there is ample coverage, I will keep the investment thesis focused on what I consider the key points. Continue reading