What are your Investment Rules?

[oldtech]

Snoopy, I like numbers 4 and 5 - a little bit tangential from the usual!

[Snoopy]

Snoopy, I like numbers 4 and 5 - a little bit tangential from the usual!

More on 4/ One of the examples that came to mind when I was writing this was my investment in Restaurant Brands. I can't say I have ever been a fast food addict, although I have eaten a modest amount over the years. That means I was familiar to the product and via being a shareholder gradually came to appreciate the metrics in running such a business. Then I saw all those franchise fees going out and thought:

"Hey where is all 'my' restaurant brands money going?"

When I figured out it was going offshore - regardless of restaurant profitability - to an outfit called 'Tricon Restaurants' (now renamed 'YUM Brands'), I decided I wanted to be part of that action. YUM of course owns the intellectual property, about which Restaurant Brands is based.

Later in 2016, YUM split by spitting out its China based division into a separate sharemarket entity 'YUM China'. My first instinct was to sell my interest in 'YUM China' because it was two steps away from the reason I made my original investment in RBD. However, it did satisfy my investment point 2, and it now provides a comparative 'paired' investment to my remaining stake in 'Restaurant Brands'. Furthermore NZ is now very dependent on trade in China. So I find it interesting to own a stake in a 'western concept' business that is trying to establish itself in the Chinese market. I am hoping that will help me better understand future investments I make in New Zealand that are trying to establish themselves in China.

More on 5/ I think 'imagining the customer experience' is a useful tool for thinking about business risk. And if you have personal experience that is relevant, and that experience is part of a 'positive solution' to a problem that makes any such investment more satisfying. I don't think anyone wants to go to bed at night having an investment in a company they don't believe in.

SNOOPY