The Munger Way

Dear Reader, the last time I have written a post on this blog was well before I had to write my master thesis. It was impossible to blog anything because I had to finish my thesis (deadline 1st of July) and after 1 week vacation, I began to work in my start up which currently takes off. We opened new offices in Berlin and New York City. We visit and get visits from C-level executives of fortune 500 companies - which is pretty awesome if I imagine that I sat on these uncomfortable wood chairs in lectures a view month ago and now I sit on these ultra comfortable leather chairs if we negotiate with customers in their offices. My company has not so comfortable chairs as we manage ourself as a LEAN startup - lean is bold and in capital letters, because we are super lean on our CapEx :-) I remember lying on my girlfriends bed in 2011 reading Warren Buffett quotes and a particular quote resonated strongly with my deep self: "I am a better investor because I am a businessman, a...

SMT Scharf   is the world market leader for underground monorail systems. The company is based in Hamm, Germany. It keeps appearing in my return on invested capital screener. The screener is based on Bruce Greenwalds Book (Value Investing: From Graham to Buffett and Beyond) and some minor tweaks which he addresses in a couple interviews. This post address ROIC, CROIC (sometimes called FCFOIC). And it was my first non-software company I researched. I take much time to analyse this company, primarily because it is not my circle of competence. It is very dangerous to be outside of the circle. To be clear, I took nearly 10 month to think about SMT Scharf. My investment style is much like building a startup. I have 100s if not 1000s ideas per year, about products I could build and ship. But real potential have only 1 idea every 2 years!If I begin to invest my time and energy, the whole startup story has to be defined and the major risks pointed out - I want to kill the startup a...

I stumbled over some snippets out of "Mosaic" by M. Pabrai. (Here the source & a must read!!! http://outlierallocators.com/2014/02/25/excerpts-from-mosaic-perspectives-on-investing-mohnish-pabrai/) (Mohnish Pabrai is one of my favourite investors and some kind of personal role model. One thing I share with him is a concentrated portfolio approach. I think it lies in a personal trait to have some kind of entrepreneurial spirit - being able to withstand the stress your company causes to your mind when shit hits the fan. I was an entrepreneur - before selling the startup to an investor I now work for. Mr. Pabrai was running his company before starting his investment career.) One thing I tried to figure out since 2010 and a major cause to  start this blog was to figuring out what causes a few software companies to get big and many to fail? I knew, if I could figure out some few right ideas, I could extract huge returns as an entrepreneur and investor. Mr. Pabrai desc...