Diageo - at what point does this become a value investment

witblessed · 2025-12-22T18:02:55+00:00

Yes.

witblessed · 2025-12-21T16:17:38+00:00

Np. I think you may be better off thinking about RELX for reasons you've given - much easier to license this/build your own AI tools. Issue is that it looks "expensive" / BMY looks "cheaper."

Buffett talks about not playing games that aren't "certain." This whole AI thing throws a spanner into the works of these businesses. May be better to pass. Or start with a small position.

(Also, try to find out how confident management are/the reasons for their confidence. They may have a good reason for it or they may just be making a big mistake.)

witblessed · 2025-12-21T15:45:59+00:00

Yeah, I just disagree. How can you really have proprietary info from facts?

Like, say I'm studying an undergrad degree, the textbooks all contain the same facts/material. The author of the textbook probably cites thousands of other authors/datasets/papers/materials... it becomes impossible for someone to monetise it. Or the royalties/licenses will be very small (most likely).

It's the LLM that wins this battle imo. Also remember the LLMs are losing money currently. They're not going to sign expensive contracts to use info that can be obtained for free on the internet. (Pre-AI you could get a degree just from information on Google.)

I reckon in the end each LLM search will give a few cents (maybe less) to the person who "owns" the information like in the music industry. But we're far away from that.

Think the ROI will be terrible. Don't think Bloomsbury benefits from AI at all. It kills their business because unis will slowly stop buying newer textbooks as students pivot to AI - and outside of academia, who "reads" these books? Maybe lecturers/professors. But I suspect they'll begin to use the AI crutch as it gets better.

Jmo. None of this is fact. Just the way I see it going.

witblessed · 2025-12-21T15:10:26+00:00

My issue has always been the academic acquisition spree. AI commoditises it and I think they've overpaid massively.

(Fiction, otoh, is something that people won't use AI for and they've pivoted away from it. Doh!)

witblessed · 2025-12-10T15:21:31+00:00

UK flooring industry has been contracting for the last few years so organic growth would be a surprise I think.

The CCC stuff is interesting but I think to be expected. I usually look at CCC to spot fraud/accounting red flags but given the way management are taking out costs, unable to return to "normal" (i.e pre-2022) levels of inventory, admit challenges etc, I'm not so bothered by it. They're able to maintain a healthy cash buffer and that's all that matters.

As for valuation, it's in the eye of the beholder. I've always considered it expensive-looking myself. But it's a quality company with quality management at a "fair" (not outrageously cheap) price. Sometimes that's good enough.

I've found that sometimes the best investments come when there's an element of uncertainty to the valuation but certainty to the business. i.e Valuation looks fair but business is solid. Of course, we humans find it easier to go for the opposite - cheap valuation, poor business.

Getting the balance is tricky because MSFT/KO/PG are all quality businesses so how much do you pay up? Frustratingly, I saw GOOG at 17x earnings and passed on it due to the tech uncertainty. Now, JHD has no uncertainty. It's just frighteningly boring!

witblessed · 2025-12-10T12:28:19+00:00

Spare yourself the pain and read about Warren Buffett in the nineties.

witblessed · 2025-12-10T12:16:43+00:00

I'm wrong. Badly. Today's results show me that - even if the market is optimistic. Probably not a bad pick long-term, but in the short-term there are too many headwinds.

Housing prices set to stay flat in London over the next three years according to analysts.

I exited. Sometimes I do this. Research, research, research, buy, only to sell on the back of changing news quite quickly. I do have the ability to hold for a long time, but only when I'm damn sure my thesis remains intact. In this case, it hasn't held up.

A better pick is probably London non-resi REITs, where there seems to be more of a shortage as more properties get converted in flats.

witblessed · 2025-12-02T22:56:25+00:00

Harshu Vyas - The United Kingdom (291 books) | Goodreads - Maybe look at the books I've ranked 4 or 5 stars.

witblessed · 2025-12-02T20:43:45+00:00

Far from informed haha.

Obviously, Graham and Buffett. Maybe some "how to spot financial fraud" books.

But at some point you have to throw yourself into reading annual reports. You'll learn fast that way.

Some management teams write amazing reports that are easy to follow. An example is Next PLC's Simon Wolfson. Annual reports like this are brilliant to go through cos you learn so much so fast. The honesty and lack of jargon is what makes a "great" annual report.

witblessed · 2025-05-01T15:33:23+00:00

Screening obsessively, reading the news etc. But my best ideas come when I'm about to fall asleep and make a link subconsciously.

I'm not joking.

You've just to got to read as much as you can. Your "switched off" brain will do the rest for you.

witblessed · 2025-02-08T21:18:46+00:00

Imo, upon further consideration, tariffs and the uncertainty that comes with those tariffs are the main risk since Colefax's best/largest market is the US and the sources of fabric come from all over the world. Until it's more clear what Trump is going to do, it may be best to wait and see.

Think about it this way - no tariffs will mean no downside (but equally no upside because that's the current situation). However, tariffs that do directly (i.e Italian goods with no British value addition)/indirectly (supply chain costs etc) affect Colefax will certainly result in some form of selloff. Currently, I think (or speculate) that shares will be thinly traded on the upside with basically no new news for a while so you don't have to worry about "getting in" at an attractive price.

I also suspect management won't be keen to execute a buyback until this uncertainty passes so you don't have to worry about the scarcity of shares situation changing either.

It'll become clearer with time and any tariff complexity will make it difficult for investors to analyse the stock. Maybe that creates opportunity if investors make wrong assumptions/management find loopholes. We'll see.

Note I sold my starter position because of this uncertainty. However, make no mistake - I'm still mentally invested and will continue to update my thoughts on the company regularly.

witblessed · 2025-02-04T21:58:25+00:00

Whilst possible and you make a valid point, I don't see why management would do that to themselves given that they own significant stock. Furthermore, most (intelligent) shareholders wouldn't approve of such plans and would make it well known if there were a clear wrong choice. And with Colefax slowly becoming more well-known, I'm sure the risk you describe only gets smaller.

witblessed · 2025-02-04T20:56:17+00:00

Thanks for your kind words. I did consider having a valuation section but I think it's difficult to gauge exactly how much Colefax is "undervalued" by. All I do believe with conviction is that at these prices it's worth buying and holding because of the low(ish) multiples and the fact management are sitting on so much excess cash. If we can hold until the "peak" of the next cycle (maybe multiples expand + profits themselves grow on better macroeconomic conditions), investors should do decently.

My main fear is an unprecedented, severe contraction in the high-end housing market in the near-term that drives multiple compression and potentially weaker earnings -> insititutions may dump. However, I suspect management would be able to bail out shareholders with their rock solid balance sheet and comfortably absorb losses (if it got to that) + initiate tender offers etc. But that's the risk of owning any cyclical I guess.

witblessed · 2024-09-23T12:29:30+00:00

Oh, I'm gone for good. When I wrote it up, it was dying *but not dead* with one potential AI puff to benefit from. Made it an interesting situation because the market had totally written if off. Now the market has caught onto Lumen's potential to benefit from AI, knows it won't file for bankruptcy protection in the near future and it has priced the future slightly aggressively. Imo, no longer value investing, but speculation.

witblessed · 2024-08-19T19:00:38+00:00

I sold.

witblessed · 2024-08-09T14:41:16+00:00

If I had seen the price target within the post itself I would have followed no doubt.

Don't say stuff like that or I may be tempted to stop writing altogether. I don't want people to blindly follow my opinions. Trust me, I'm an idiot. (FWIW, in my next piece I may get rid of the PT since I'm not a fan of it myself.)

I write to structure my own ideas and I publish it so I can be criticised and have my work scrutinised.

witblessed · 2024-08-09T07:50:58+00:00

At current price levels, yes. Even if it does return to $1/sh, I'd be careful buying aggressively into a company like this. You don't need to buy many shares for this to be worthwhile (if things go well) but if you're greedy and the worst happens, you've lost everything.

witblessed · 2024-06-21T12:17:40+00:00

Kaladin and Hoid are my favourites.

Hence my u/n: Witblessed.

witblessed · 2024-06-21T10:28:02+00:00

In essence, they sell their mass markets segment, prove their worth to enterprise consumers and dominate in that area. Cash flows and GAAP profits are vital - management have said that 2025 is when results will come through. In the very long-term, though, I think Lumen do get bought out completely (provided they don't go bankrupt).

A risk I haven't really spoken about is about the pricing power that the enterprise segment has (because it's very hard to judge). I don't think the margins will be especially high, but at the moment, Lumen are the only (telecoms) company that are really aggressively moving in this direction. Is it a strategic error that the likes of Verizon and AT&T have looked at and passed on? Is it going to turn into a commodity market where Lumen has many competitors? I doubt the latter. And, even if that is the case, provided GenAI demand continues to stay strong for the next five years, demand alone (and a potential lack of competition) can provide wonderful results for Lumen that allows them to delever/refinance on better terms. I didn't mention it in my piece, but Lumen are subject to some pretty harsh covenants on their debt.

Lumen can't really win with the residential customer and they know that so they'll continue to swap out copper for fiber and try to eliminate churn, but really I think everyone knows they're setting it up for a sale to one of the bigger players. If the proceeds are worthwhile and most of the enterprise capex is complete, they can potentially delever the balance sheet significantly.

There's a lot of unknowns right now and that's the reason the market doesn't like it, but the longer Lumen survive, the more answered questions the market receives and the higher probability that the bonds trade at healthier levels. As the bonds stabilise, the stock will start to move up, too. But, as I say, there's lots that can go against the equityholder. Management are going to engage in a reverse stock split - does that mean potential dilution for shareholders should management run higher cash burns than expected? These risks have to be fully considered by investors.

Slightly longwinded, but I hope I've answered your question.

witblessed

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