Author: Travis Wiedower

The Future Looks Bright for Where Food Comes From: China Exports, Sustainability, and Progressive Beef

~ Travis Wiedower

From 2013 to 2018, Where Food Comes From more than tripled their revenue, yet their stock price is basically flat. I think there are two main reasons. While they have expanded their scale quite a bit, they have yet to show much operating leverage. This is fine as long as the investments widen their moat and improve their long-term economics, which I believe they have.

Second, there is already a lot of growth expectations built into the stock. This is because Where Food Comes From benefits from many large tailwinds including animal rights, food sustainability, and increased transparency in the food supply chain. It seems like a few of these trends may be approaching a tipping point. In my 2016 Where Food Comes From write-up, I predicted:

I think the most likely scenario is a few more years of 10-30% growth and then at some point a watershed of business comes via ADT’s next phase kicking in, more states (or the federal government) requiring non-GMO labeling, McDonald’s or one of the other giants forcing their farmers into audits, China ramping up meat imports, etc.

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Netflix: The Powerful Combination of Scale and Network Effects

~ Travis Wiedower

Netflix has the most scale of any streaming service. They have the most subscribers, the most content, and the largest content budget. This scale advantage benefits their business in many ways.

Having the most users allows Netflix to buy content cheaper than their competitors on a per user basis. The cost of a new show gets spread over Netflix’s 139 million paying members while their competitors have to spread that same cost over a far smaller membership base. All things being equal, Netflix can pay more than their competitors for a piece of content and still get the same, or better, return on their investment.
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YouTube Joins Facebook in Fight Against Human Biases

~ Travis Wiedower

YouTube made an important announcement two weeks ago regarding how they are changing recommendations. In summary, YouTube is trying to protect us from our own cognitive biases. Unfortunately, humans are more likely to click on things that are sensational, negative, or fear-inducing.

To be fair, this didn’t start with the internet. For many years, the adage of news programs has been “if it bleeds, it leads.” Basically, news stories get better ratings talking about murder than about decreased childhood mortality.
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Finding Durable Moats is the Key to Finding Good Investments

~ Travis Wiedower

In November, I spoke at a University of Texas MBA investing course. After introducing myself and my investing strategy, I spent the bulk of the presentation analyzing the competitive advantages of Amazon, Facebook, and Tesla. Specifically, I gave my opinion on how long-lasting each of their moats potentially is and tied that back into my long-term focus. Click below to view the presentation slides.

Finding Durable Moats is the Key to Finding Good Investments

Tesla and Product-Market Fit

~ Travis Wiedower

Though not on purpose, Tesla has been on my mind a lot lately. Professionally, I’ve been researching self-driving cars and that involves reading up on Tesla (and Waymo and several others). The new book Autonomy is great by the way. And then personally, I just got a new car and thus spent the past several weeks going through the car buying process.

I hate everything about the car buying process and I don’t think I’m alone in that. Every friend I’ve talked to recently about buying cars has said the same thing. I started by entering my information into a few automaker websites to learn more. I immediately regretted that decision. The next few days I was bombarded by calls, texts and emails from salespeople at nearby dealerships.
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Trupanion presentation

~ Travis Wiedower ~ 13 Comments

Two weeks ago I gave a presentation on Trupanion at the Value Investing Seminar in Italy. The presentation is brief for two reasons:

  1. I only had 20-minutes to present.
  2. I don’t like reading slides when presenting (kind of defeats the point of presenting), so most slides contain high-level thoughts that were explained more in-depth by me.

I wish I would have had 30-40 minutes to present. That way I could have done a deeper dive into the business. Nonetheless, I think some readers will get value out of it.  Click below to view the presentation.

TRUP Presentation – VIS 2018 – Travis Wiedower

Invest in what you know or what you don’t know?

~ Travis Wiedower ~ 1 Comment

Most companies I’ve invested in have been ones that I wasn’t previously familiar with. I only became familiar with the product and industry after many hours of research. This isn’t on purpose—just a result of me not being a user of most public company’s products. The advantage of this is that I approach learning about these new products from a clean slate with few biases. The drawback is that I will probably never understand the product as well as I would if I was a regular user.

The opposite of this is Peter Lynch’s investing style: “Invest in what you know.” Lynch advised people to invest in companies they know and love. Logically, this makes a lot of sense, but I’m not convinced this method is any better (or worse). The advantage of Lynch’s approach is that a user might have a unique insight into the value of a company that other investors may not have or appreciate. The drawback is the user will almost certainly overemphasize their own experience with the company and may discount what the greater population thinks (i.e. the base rate).
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My investment process

~ Travis Wiedower ~ 9 Comments

Idea generation

I generate new investing ideas mostly through reading investment write-ups online, talking to other investors, occasionally going through screens of companies that meet some high-level criteria I look for, and general learning (like reading books and news) that sometimes leads to an idea. I like getting ideas from others (via investing websites, blogs, and friends of mine) because it’s a quick way to get an overview of the business and industry. Thus, my research doesn’t have to start from scratch. Between investing websites and blogs that I follow, I look at several hundred investment write-ups per year.

Depending on how well I know the industry, my research for a new company generally takes anywhere from a few weeks to several months. Thus, in an entire year I only have time to get to know a handful of companies really well. This forces me to be very picky on what companies I spend time researching. I want to know a small number of high-quality companies very well, as opposed to knowing less about hundreds or thousands of companies.
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