When I visited the best investing forum I know, I found this curious first thread page today:
Signaling a market top?
When I visited the best investing forum I know, I found this curious first thread page today:
Signaling a market top?
exploitation of the love of storied narratives to influence elite opinion, and exploit the public and investors (who transfer assets to promoters). Credible stories about new or emerging opportunities, markets and technologies appeal widely and are most dangerous over time, particularly if supported by strong favourable emotions, positive market action (recently emerging markets, and so called accelerating technology/unicorns) and celebrity. The recent Valeant (VRX) and Theranos (THERA) disasters are timely warnings (MFF was not exposed to either). Out of favour sectors have less expensive fundamentals.
He's talking about Tesla (TSLA) right?
Geneba Properties is real estate company that emerged after a prepackaged bankruptcy. I started buying shares early 2015 at €1,60 each. Sometimes lower, sometimes higher. January 2017 the company paid a one time dividend of €1,30. Geneba continues to be so highly undervalued even after the super dividend.
Some stats from the fresh annual:
Geneba doesn't operate under a REIT structure which it could and should do in the future. Only then you can compare the pre-tax direct investment result to the widely used, in the U.S., FFO stat.
The company is researching its strategic options. I imagine a sale to a Dutch or German listed REIT company would be ideal. At a small premium to NAV that could bring in €3 per share but if you look at FFO multiples the company should be able to get a little bit more.
An exit at between €3-€ 6 per share before end of 2017 wouldn't surprise me. I'd be content with a return of between 168% to 356% on my largest investment that's for sure.
You can still grab pieces on the NPEX below €2 on a regular basis.
Start-up Accelerator Rockstart Nijmegen hosted a Demo Day event where 10 Digital Health start-ups presented their concept to a room full of mentors, partners, media and potential investors. The event was held in the Vasim and the turnout and atmosphere were excellent. Below you will find a short description of each startup that I received from Rockstart ahead of the event in blockquotes with my notes below.
The BabyMoon Smart Carrier monitors and reports on the health of infants, empowering confident parenting and accurate communication with pediatrics.
BabyMoon wants to bring a high-end baby carrier to market. The standard version should retail for €230 and the smart version for no less than €640. The baby carrier contains a number of sensors that can provide a pediatrician with accurate information. Its CEO called out its ability to monitor babies while awake as a unique selling point. BabyMoon is looking for €500K to take their product to market.
At EyeSense, we believe that fulfilling the human needs should remain at the centre of innovation. A unique design philosophy enables the blind and partially sighted to pursue a joyful life with more independence. EyeSense solution consists of a computer vision software using artificial intelligence to recognise faces and personal objects. And a new revolutionary hardware wearable device.
Eyesense's stuff looked a little bit clunky to me but that's not necessarily a problem as a lot of solutions aimed at the blind and partially sighted look kind of clunky when you don't share this disability. Think of something like braille or dragging along a dog. It seems like a huge hassle now but if you are blind these innovations were truly liberating. I feel severely handicapped having to assess the viability of a product like this. So I won't.
They bring a free app to market along with the €725 The Eye product. Their partners helped them with a patent track but I've been negligent by not asking the team whether they actually got anything patented. My bad.
Empowering hospitals & patients
GoClinic is looking for €500K which I assume equals a 12 month burn rate. Most of the companies tried to raise enough for another year. By my understanding they came u pwith a EHR app that lets consumers tap into their official personal patient information filing system. Apparently this solves a regulatory issue that's coming up for 2018. A very attractive feature of this investment case. They are running a pilot with the largest European hospital chain which is another attractive selling point while the backend technology is built on the blockchain.
healthbit is a clinical analytics company that develops, markets & sells predictive health software. healthbit software supports caregivers in clinical decision making for better and faster diagnosis of critical medical conditions.
If I remember correctly the CEO used to be at IBM? I could be wrong. But it wouldn't surprise me because Big Blue's playbook is evident here. Healthbit is hunting for a very attractive target market of original equipment manufacturers and hospitals. Very conscious of the value added they were providing to their customers and ready to help them defend their installed base by including their product within their ecosystem. I've seen similar technology in different areas show good results so I'd be surprised if it doesn't work. This company looks like it has a reasonable path towards being acquired by a larger medical device firm once they need the efficient and large salesforce. They are looking for €250K to provide a 12 month runway.
iThrive is your personal coach that helps you to transform counterproductive habits and thrive.
iThrive is looking for €175K to thrive on another 12 months. It's charismatic CEO held a powerful presentation convincing the audience its app reduces stress which consequently raises productivity by 400%. That seems like an awful lot to me but even a slight improvement would justify its €6 per month/user price tag. The app looks good and appears grounded in science. I like how they are starting a paid trial with Pleurijn on 750 users. Just 750 users get them to ~€50k revenue per year. Let's forget about VAT for a second.
What I expect will be a tough problem to solve is how to sell this app. I do like the caregiver Pleurijn route but I can't see how an employer, after paying for it, is going to have success getting its employees to use it...
The team looks like its up to a challenge and I hope they figure it out.
Making quality healthcare accessible, convenient and affordable
My notes on iVitalz are a little bit on the brief side. Inspiring CEO with tremendous ambition. They seem to want to make medical care available through mobile technology on the Arican continent. There's something called the second mover advantage and in some cases it applies to frontier markets like the African continent. With less existing infrastructure they are building up systems that are based on 21st technology instead of based on legacy infrastructure which is sometimes a mixed blessing in the mature markets.
I don't have good feel for the product pricing which seemed really low. The CEO mentioned 45K paying users but they still need €380K for the next 12 months. This team screams:
Go Big or Go Home.
MedInReal is helping medical professionals to mitigate the administration stress and empowering to take data-driven decisions during procedures.
Medinreal utilizes Google glass to make medical and personal data available to care providers. Looking at their website initial ambitions were a bit more lofty with VR applications or perhaps augmented reality which seems like a fit. If the data appears fast enough and they can build an interesting application that combines useful data sources I can see this work. It's a little bit like a Bloomberg terminal. Bloomberg doesn't own or collect the data but it provides it through its un-rivalled ecosystem. MedInReal is a far way off but the business model seems like it could work. They are looking for €250K to keep the fire burning another 12 months.
Behavior change platform for kidney patients to prolong onset of dialysis
RenalTracker is looking for €300K for the next 12 months. They've got 211 paying users enrolled. They charge an ongoing fee of $12 per month and weirdly enough a lot more in the initial few months. Which is kind of the opposite of what most apps do. It looks like the thing works and it obviously saves society a lot of money. The CEO already realized a successful exit in the past. I like how the use case is rather straightforward.
SmartBridge uses the collective brainpower of top oncologists from around the world to help investors cure cancer and improve health outcomes for cancer patients.
SmartBridge is lead by a passionate, borderline aggressive, CEO who wants to make oncology advice more readily available. The service is HIPAA compliant. Oncologist can be reached through the platform at €29 per question, €49 per phone call and an expert 2nd opinion runs the customer €300. Oncologists have been handpicked by an expert in the field from Duke University. The rates look a little bit low unless the company is essentially implementing a geo arbitrage strategy. SmartBridge may have some problems keeping the competition at bay but there's a plan to try and secure the competitive advantages of scale. This won't be easy but the CEO looks driven enough to pull it off.
Totem Open Health
Speeding up innovation in health with open source hardware, raw data and a community of great minds alike.
Totem Open Health looks very cool. This team brings to the market open source hardware and open source software and once they get the whole thing going should be able to monetize it in a few different ways. They've got this cool stuff you can get and build on here. Exceedingly difficult to estimate how things will turn out for this product. Definitely outside of my area of expertise. Totem is looking for €350k to keep winding up the flywheel for the next 12 months.
If you are interested funding any of the above you can contact them directly through their websites or give RockStart Digital Health a call.
Full Disclosure: I'm not affiliated with any of these parties and have no positions
Mark Suster on the Snapchat IPO:
My job as a VC isn’t to beat myself up or any other partner up for the one deal we didn’t do. My job is simply to make sure we’re getting into a few industry defining investments per fund and to make sure we capture enough successes. If you swing at every pitch you’ll end up with a lot more losers.
I think every sentence in this paragraph is a strike to put it in a parlance that will soon bore you like a Saturday spent with the Adhesive Postage Stamp. Let's go over them one by one: "My job as a VC isn't... "
About the time of the See’s purchase, Tom Murphy, then running Capital Cities Broadcasting,called and offered me the Dallas-Fort Worth NBC station for $35 million. The station came with the Fort Worth paper that Capital Cities was buying, and under the “cross-ownership” rules Murph had to divest it.
I knew that TV stations were See’s-like businesses that required virtually no capital investment and had excellent prospects for growth. They were simple to run and showered cash on their owners. Moreover, Murph, then as now, was a close friend, a man I admired as an extraordinary manager and outstanding human being. He knew the television business forward and backward and would not have called me unless he felt a purchase was certain to work. In effect Murph whispered “buy” into my ear. But I didn’t listen.
In 2006, the station earned $73 million pre-tax, bringing its total earnings since I turned down the deal to at least $1 billion – almost all available to its owner for other purposes. Moreover, the property now has a capital value of about $800 million. Why did I say “no”? The only explanation is that my brain had gone on vacation and forgot to notify me. (My behavior resembled that of a politician Molly Ivins once described: “If his I.Q. was any lower, you would have to water him twice a day.”)
Maybe only someone with the statute of the Oracle can afford such self-depreciation although it is a theme even throughout the early partnership letters where Buffett routinely serves himself a royal plate of crow.
Not that there isn't any blame to go around necessarily. I don't have the information to make that call. It wouldn't surprise me one bit if not investing is Snapchat at the time Suster could have, was actually the right call.
2. Ok then; "My job is simply"....
This is where I knew I had to type up a blog.
( Simply Sure ) + ( Industry Defining Investments / Fund ) = Does Not Compute.
Unless you are running an Impact fund I'd say investments are made to generate returns on capital as opposed to hitting industry defining winners. The latter isn't even hard if that's your only job which his next sentence implies it isn't or he would swing at every pitch. I had to start typing because this sentence screams peak VC. The idea that one's job is to simply ensure to get into a few / industry defining investments / per fund is just outrageous.
There are 35 investments per fund and a few of these should be the next Amazon, Facebook, Coca-Cola, Walmart, McDonalds, FanDuel or PayPal? Somehow he makes it sound like a humble goal.
That's what screams peak VC at me. Does he really think this is realistic?
3. The third is a Buffett maxim "If you swing at every pitch"
I think this is actually the right disposition for a professional investor.
Ironically, it's also the opposite of what Buffett recommends retail investors do. If you swing at every pitch in the stock market you end up with an index fund which is something he recommends. This whole index trend reminds me of another Buffett quote (apologies for all the Buffett quotes, I need to start reading more widely):
as a group, lemmings may have a rotten image, but no individual lemming has ever received bad press
But that's just an aside.
If you want to hit multiple industry defining investments per fund I think you'll have to swing at more pitches or you're going to run as dry as the Atacama desert at some point.
Although this is the right disposition to have it doesn't mean you don't have to be critical of swings you didn't take. I'll change it up with an original quote:
I don't really watch video, but I see the replay; like when I do strike out, and I'm walking back to the dugout, I look up and see if they do show the replay of me swinging and missing.
Its perfectly fine with me not to swing at every pitch. But both Buffett and Freeman study their strikeouts and it's good practice. My guess is that, as a baseline, successful VC exits involve loads and loads of luck and ones that end in zero's involve some bad luck. That means if you forego one and it's a huge IPO, it's almost certainly loads of bad luck.
It's up to those who made the calls to review them carefully irrespective of result and irrespective of connecting or striking out. After that, they can shrug their shoulders and get back to swinging or eat crow like Buffett.
After soliciting my fellow Seeking Alpha Exclusive Research contributors for their best investment ideas for 2017 they send me nine very interesting ones. I wasn't familiar with 7 out of 9 so it certainly yielded more work. Added up these research services end up at almost $6k on an annual basis. Worth checking out:
Students of human behavior who seek champions of “mob sentiment” need search no farther than the local newspaper or television newscast. Journalists present their publications as mere windows through which readers can view the world. This metaphor doesn’t hold up to scrutiny, for newspapers ignore events that don’t fit their biases, even as they distort and magnify the news that does match their pre-existing prejudices. In this way, newspapers are more like microscopes than windows.
In case you were expecting everyone to come around to your side because you are right:
Max Planck, the physicist, once explained why science is slow to change. New concepts, he said, aren’t accepted by changing people’s minds. Instead, science accepts a new truth “when its opponents eventually die, and a new generation grows up that is familiar with it.”
You may have to wait until your opp0nents are dead.