Most Canadian PM’s Have Crappy AIM
November 10, 2017
December 3, 2017


Kuppy, Great Call on TSLA. Already down 10% from where you wrote it up. Do you have a long-term price target?


“Stormy weather over in TSLA Bondsville these days”… It’s offered 93. Wonder if somethings wrong with the cash flow and balance sheet?? Ohh wait, TSLA has neither…

HAHAHA Yeah, Musk’s twitter taunt at shorts will rank up there with “Smartest Guys In The Room” and will be the title of the book when people write about this blow-up in a few years. As for the bonds, after 9 years of liquidity induced bull markets, you can wave your arms and talk about Mars rovers and get gullible retail equity guys to buy into your fantasies. Bondholders on the other, tend to be more focused on actual metrics that matter, like the rapidly dwindling cash pile and accelerating losses. With the bonds under par, the borrowing spigot will be cut off–now TSLA is onto equity only funding (which should crater the stock).

What did you think about JYNT’s quarter?

Looked good to me. Raised 2017 revenue guidance, EBITDA positive now and it looks like cash flow will accelerate into 2018.

Your Greek article reminded me of that great Michael Lewis piece on Greece in Vanity Fair.

Beware of Greek Baring Bonds:

I had originally read that back when it came out. After 2 weeks with Greek companies, it’s even funnier now.

Firstly, thanks a lot for sharing your thoughts. As a relatively new investor, it’s been a great learning experience reading your blog.
I wanted to hear your thoughts about position sizing.
How do you decide whether to make a position 5% vs 20%? For example, in your last Ask Kuppy you wrote you dont know which one of JYNT or AIM will perform better. Yet you also wrote that AIM is an unusually large position for you right now…
Thank you.

I want to start by saying that what works for me, won’t work for other investors who want lower volatility or more diversification.

For me, position sizing starts with looking at the downside risk. AIM has substantially less risk than JYNT as AIM has so much net cash and other assets that it can sell. There was just no way it could be worth less than the $2s area where I was buying. Heck, even if everything went wrong, it was obvious that it was going to go higher unless something came completely out of the blue or management raised capital to dilute me. When I bought JYNT, it was still losing money and it wasn’t exactly cash rich, though it had the ability to borrow more funds to tide it over. It just seemed less safe, so I played smaller. This doesn’t mean that I believe one will perform better than the other as they both potentially have a few hundred percent upside–just that AIM had substantially less risk so I could size it much larger.

In terms of position sizing, I don’t believe in having any position that’s less than a 5% position. Either I believe in it enough to play it big, or I don’t bother. This forces me to stick with only my best ideas. Most of my positions cluster in the 10% range and I have a cap at 25% for a position maximum, though I pyramid down. So if a position is at 25% and it drops 10%, I’ll add 2.5% more to it to bring it back to 25% and keep doing that on the way down, so sometimes something I really believe in will be 30% or so at cost if it overshoots to the downside. I also try to let my winners ride, so I can end up with positions that are much larger than my 25% position limit if its up a lot.

Kuppy, as a Greek guy, I have some advice for you about Greece: Enjoy the country, but Ignore everything that everyone tells you. They’re all lying and they’re so good at lying that even other Greeks cannot tell when they’re being lied to most of the time…

I actually got a few similar emails. I’ll do my best to stay objective. Thanks.

Hey Kuppy,

Love your blog man. I picked up some shares of JYNT yesterday because I think it’s a compelling story of steady strong growth and increasing margins. I wanted to ask how you some tips about how you value a company like this that you think is close to turning a profit?

JYNT is VERY tough to value. Either you think it’s cheap at today’s $75m ($50m where I wrote it up) market cap for a concept that has a potential global footprint, high teens positive comp sales and 4-wall unit ROA of ~50% by year 5 or you don’t like the concept. It’s at break-even and pretty asset light, so normal valuation metrics won’t work (another reason I sized it smaller as noted above), so you have to believe that they grow the unit count and comp revenue enough to cover a fixed overhead and get some operating leverage off that overhead (which should happen at a franchise business). In summary, you either have to believe or not believe as there’s no objective valuation method that you can use. However, I cannot think of the last time I saw a retail facing business with such amazing unit economics while exhibiting such great comps, even 5-years in when most franchises drop into low single digit comps at best.

I really thought you’d come out swinging with your AIM article header. “Bad AIM?” Does AIC have a compliance dept. now or something? When AIM opened for trading on Thursday and it was down 17c, I remember your subject line to me was “WTF is wrong with Canadians??”

Yeah, but I didn’t want to offend anyone. Thankfully, us Americans picked up the intellectual slack and bought it green… haha

Still believe Trump will be one of the best Presidents in US history?

uggh.. Fortunately, the bar is pretty low for the last half century at least…