Projecting Yellow Media
Because of my work situation I am faced with a limited amount of time to analyze my investments.This precipitates the need for efficiency and a focus on the questions that matter most.
Thus I spend a good deal of time thinking before I spend any time analyzing. This is particularly true when I am just introducing myself to an opportunity. I think about how I can distill it down to one or two questions that I can focus on. Rather than taking the approach that I need to understand every aspect of the company (something that I simply don’t have the time to do) I look for the lynch pins and focus on understanding their mechanics in great detail.
To give a few examples; this was my strategy for the mortgage insurers, where I focused strictly on whether or not they would pushed into run-off or bankruptcy by the regulators. With Arkansas Best I focused on what the upside might be if the company negotiates a union contract similar to that of YRC Worldwide. With YRC Worldwide I focused on their leverage to the upside. When I initially bought PHH I focused strictly on the value of Fleet, which allowed me to view the mortgage operations as an upside option.
With Yellow Media, I narrowed it down to two questions. They are:
- When and at what level is the online business going to grow enough to offset the declines in the print business.
- What assumptions should be used to answer question 1 Read more