I am invested in Ethereum for similar reasons that I am invested in Amazon Web Services, Microsoft Azure, and Shopify. I want to own the platforms that internet businesses are built on top of. One of the reasons I am attracted to these types of platforms is that customer stickiness is very high. When a company has built their business on Amazon Web Services, switching to a competitor is risky, time consuming, and expensive.
Just as important though, the businesses built on Shopify have a vested interest in making Shopify better and more successful. And this same dynamic is seen with Ethereum. Ethereum is by far the most popular blockchain in the crypto economy, and thus has the most projects and people working to make it successful.
Continue reading “My Ethereum Investment Thesis: Fundamentals and Flows”
Burford Capital is the largest legal finance company in the world. While Burford is mostly known for funding lawsuits, they provide legal capital in a variety of ways. In the simplest example though, Burford funds a plaintiff’s lawsuit by paying their legal expenses. If the case is lost, Burford loses their entire investment. If the case is won, the plaintiff pays Burford a share of the winnings. I believe there are numerous benefits for plaintiffs to get funding from a company like Burford.
At a high-level, litigation funding can flatten the legal playing field. Lawsuits are expensive. Many legitimate lawsuits are never filed because the potential plaintiff cannot—or does not want to—pay for the legal expenses. Plaintiffs often do not like the traditional hourly billing model that many law firms operate on. But working with a litigation funder allows a plaintiff to exchange having to pay their own legal expenses for a percentage of their winnings if the case is victorious. To date, many plaintiffs have welcomed this trade-off of less downside, less upside, and more flexibility.
Continue reading “Burford Capital is By Far the Most Undervalued Company I Know Of”
Shopify is a commerce platform that helps merchants sell across all their sales channels: online, physical retail, social media, and marketplaces such as Amazon and eBay. In 2004, Shopify was founded as an e-commerce platform for new entrepreneurs and small businesses. While that is still a meaningful part of their business, they have moved upmarket via Shopify Plus, which is a higher-end platform that starts at $2,000 per month and manages commerce for brands doing up to around $1 billion in revenue per year.
Tobi Lütke, founder and CEO, has made the comparison that Shopify is like an operating system for retailers. I think this is a good analogy. The platform that runs a merchant’s sales is arguably the most mission-critical system that company has. Like the Windows operating system, once a merchant runs their business on Shopify, they are unlikely to switch to a competitor.
Continue reading “Shopify and its Strong Competitive Advantages Continue to Take Market Share”
My 2018 annual letter is linked below. Topics include:
- How I define a high-quality company
- A 4-page deep dive into Trupanion’s competitive advantages
- What led me to sell JD.com
Wiedower Capital 2018 Annual Shareholder Letter
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
Two weeks ago I gave a presentation on Trupanion at the Value Investing Seminar in Italy. The presentation is brief for two reasons:
- I only had 20-minutes to present.
- 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
My 2018 interim letter is linked below. Topics include:
- My evolution to focusing exclusively on compounders
- JD.com investment thesis
- Four significant changes to Wiedower Capital to help align my investment strategy with my partners and my own pay structure
Wiedower Capital 2018 Interim Shareholder Letter
My 2017 annual letter is linked below. If you’re interested in the below topics you should probably check it out 🙂
- Why I think Issuer Direct has a durable competitive advantage and can grow for many years
- How undervalued Parks! America is
- What I learned about myself as an investor through investing in New York REIT
- Setting short-term goals that don’t hinder long-term goals
- Other general musings and portfolio updates
Wiedower Capital 2017 Annual Shareholder Letter
“What about Where Food Comes From initially caught your attention as a value investor?
Where Food Comes From checks several of my favorite investment boxes: small, founder-led, high insider ownership, zero debt, profitable, and growing. I love industries that have long runways of growth ahead of them. Where Food Comes From benefits from several major trends in food—organic, non-GMO, gluten-free, animal welfare, and more generally, consumers demanding transparency in the food chain and wanting to know where the food they eat comes from. I like large industry tailwinds because it makes business much easier. In a fast growing market, competitors are less likely to engage in price wars or other detrimental practices. This is because most participants are growing revenue, even if they’re losing market share. Growth is harder to come by in mature markets so there’s more likely to be competitive practices that are harmful to all participants.”
The above is an excerpt from an interview I did recently about Where Food Comes From. The rest of the interview can be seen at The Business (And Stock) Behind Where Food Comes From.
As of this writing, Wiedower Capital owns shares in WFCF. This is subject to change.
I published a write-up on Seeking Alpha yesterday about Trupanion (TRUP). The summary is:
- Trupanion is building a durable competitive advantage in an industry that is set to grow 10x+ over the coming decades.
- The company is still run by their passionate founder who has the vast majority of his net worth in Trupanion stock.
- The current valuation looks very expensive, but starts to look reasonable the farther out you look.
Read the full write-up here: https://seekingalpha.com/article/4090526-trupanion-long-term-compounder
As of this writing, Wiedower Capital does not own shares in TRUP. This is subject to change.