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.
I published my first write-up on Seeking Alpha today. The summary of my thesis is:
- Franklin Covey (FC) is going through a SaaS transition that is temporarily harming its financials.
- The new, improved business model should become more obvious to the market in the coming quarters.
- There is upside of 40-80% over the next 18 months with potential for more longer term.
To read the entire write-up, head over to https://seekingalpha.com/article/4084174-franklin-covey-nearing-inflection-point
As of this writing, Wiedower Capital owns shares in FC. This is subject to change.
Calloway’s Nursery is undervalued on an earnings basis, owns valuable property in addition to that, and is run by a very successful investor. Calloway’s runs 19 nurseries and garden centers mostly in the Dallas-Ft. Worth area (with one in Houston). These nurseries are more specialized, have more variety, and are more expensive than the garden centers at Lowe’s or Home Depot.
I’ve followed Calloway’s (CLWY, $4.00) for years, but what pushed me to take a closer look last year was Peter Kamin taking control. Kamin co-founded ValueAct in 2000 with Jeffrey Ubben. ValueAct was immensely successfully while Kamin was there, but he stepped away and started 3K LP in 2012. 3K has no outside investors and they focus on micro-cap companies, both public and private. Kamin seems to be following a similar script at Calloway’s that he’s done at other public companies. That script includes: gradually build a position over several years, eventually take control, repurchase shares, pay down debt, and decrease public company expenses (by down-listing or de-listing). In the case of Abatix Corp (formerly ABIX), Kamin went through the aforementioned steps and eventually took them private at a 39% premium to the market price. Knowing Kamin has taken a controlled company private at a reasonably fair price gives me comfort in him being a majority shareholder at Calloway’s.
At Calloway’s, the game plan looks similar to the above. 3K started buying shares in 2012 and Kamin got a board seat in 2013 after a proxy fight. From 2013 to 2015 Calloway’s paid back roughly half their debt. In February 2016, 3K bought out two major shareholders (including the founder/former CEO). In the year since Kamin took over, operating margin increased from 6.5% in 2015 to 9.6% in 2016. Calloway’s also decreased shares outstanding by almost 25% in 2016. Finally, public company expenses have been decreased as they are now listed on the Pink Limited OTC marketplace and their quarterly releases consists of the three financial statements and nothing else.
Continue reading “Calloway’s Nursery: Undervalued with Aligned Ownership”