Anyone else out there not having very much fun these last couple of months? It feels like the bid for anything small/off-the-run has totally vanished since July. Micro-caps are down 7% year-to-date and are 35% off their June 2021 highs. It’s grim. But what do we do when the market is doing us no favors? We redouble our efforts! There is no shortage of value out there. No shortage of value, but also no shortage of value traps. One of them caught me.
Dave does not mention the biggest flag about Four Corners: It is incorporated in Nevada.
Hi Dave, a new reader to your substack. Enjoyed the writeup. To follow up, I have a doubt which I hope that you can clarify/shed light upon and I hope I am not asking much of your valuable time. Imagine a company that is competitively strong vs peers, growing and in a go-go industry that is expected to continue enjoying the tailwinds infinitely to the future. Despite such an description, if management or controlling shareholders of the company engages in questionable activities, or displays lack of ethics (for eg-scooping off revenues/value generated in form of costs/rents to related parties, family members; employing incompetent people across the board/management to oversee business; cheap capital access/siphoning to controlling shareholders/management in form of cheap loans etc.), what would be your approach to valuing/investing in such a company? Would you price in the possible risks in your valuation estimate, or completely steer clear from such companies even if they are available for huge discounts?
Hi Dave, I owned asa Wilhelmsen partly because of your write up (thanks), at least I heard about it from you. They also spun off Treasure entity (holding Hyundai Glovis). Did you include that in your return analysis?
Nice article Dave! Thanks for sharing your experience and insights with Four Corners and Wilhelmsen.
Cool post, Dave!
All very interesting bits!
Thanks for sharing the Four Corners story. It's a good example that small caps investing, while it can be more profitable, is certaintly not easier.