jeudi 20 avril 2017


That fucking stock market is a crazy place.

You'd probably believe that Canada is a safer place to invest money than most other countries. It's probably the case, but still, we have a lot of crappy stocks and even, disasters.

First, let's recall that the 2008-2009 crisis was caused by a big part of the american banking industry. The US governement had to save many big institutions that were "too big to fail". Then, about 8 years later, we learn that Wells Fargo, the most respected bank in America is involved in a massive false accounts scandal. OK, that's not comparable at all to the subprime crisis, but we see that there's still a lot of shit in this industry.

In Canada, in the very recent past, we've had Valeant and Concordia. Two multi-billion dollars companies in 2015 heading now to penny stocks. Can you believe it? Those fucking Mike Pearson and Mark Thomson should be covered by tar and feathers for the rest of their fucking lives to look like what they are: fucking chickens.

We've also had that fucking Baazov playboy with his insider shit at Amaya.

And even more recently, we're having Home Capital Group, that's going downhill like a fucking dead body in the ocean. Deeper and deeper, day after day. Waiting for the laws of physics to crush it.

That stock was loved by many, only a couple of years ago. It was the darling stock of Jason Donville and many, many others. And now, it looks like a fucking scam.

One could be tempted to go out of the stock market with all that crazy shit. I'm disgusted by what I've saw in the last 2 years. But still, I'll repeat what I now believe: boring industries that go quietly are much less inclined to be part of that kind of scam. When you sell auto parts or hardware and your accounting practices are standard, your chances of trying to fuck us are way lower.

Truth is, most industries are runned by honest but so-so management. Some industries are runned by dishonest or reckless management (when you're dishonest, does it matter if you're efficient or not?) and few business are runned by honest and efficient management.

What's scary is that who seems honest now, and for many years, could very well be dishonest in reality.

7 commentaires:

  1. The front page story in the Journal de Montreal (Quebec's #1 daily newspaper) on Thursday was about Mitch Garber's $275 million compensation last year... for running Caesar's Entertainment group (running it into the ground)?! This casino company is going bankrupt and restructuring and the guy at the top somehow gets $275 million for his outstanding performance??? Creditors may pursue Caesers and Mitch Garber for up to $1,000,000,000.
    When I invested in the biggest drug wholesaler in the world (McKesson), I discovered a compensation package of $145 million that year for the CEO. What the @#$! ? They are just stealing our money.
    You need to look hard for companies where the management have skin in the game and try to gain from making the stock price go up (not fleecing the shareholders).
    The most impressive CEO I have come across is Mark Leonard of Constellation Software who makes $1 per year, guarantees us that the company will never dilute, and forces all his employees to fly economy class and control expenses at every turn. He has made hundreds of millions of dollars by making the stock price go up. Your interests and his interests are aligned.

    1. To echo what Angelo spoke about. I think when senior management owns a meaningful amount of stock in their own company it can only align their interests with that of their shareholders. It’s probably the best proxy there is for everything a shareholder wants to look for in a stock.

    2. Yeah, but insider ownership isn't always an insurance of honesty. I think that the best insurance we have is a long track record for the same management.

    3. To be honest there are no guarantees of anything in this world so you have to deal in probabilities. It's been my experience that insider ownership puts management and shareholders in the company they manage on the same side of the table. That can only be a good thing. Just my opinion of course.

    4. I don't really disagree with you.

  2. Does anyone know if Donville is still holding a significant position in Home Capital?

  3. What I find most shocking about the Home Capital episode is that this is an owner operator type company. Gerald Solloway spent a good chunk of his life building this thing out. His legacy slashed and burned in a year. I hope the lesson is when we think about investing in any company, what value does it add to the whole value chain? Constellation Software seems to add value by giving retiring small software shops liquidity for their businesses and improves the product for users of their software through cross pollination of best practices. The other possibility is no matter what system we use for investment, there will always be some misses. Maybe they both can be true.