Economic Engines @EconomicEngines

Reverse-engineering exceptional businesses. economicengines.com Website 👉 Joined August 2022

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Economic Engines @EconomicEngines

7 months ago

Fair push on wanting to be tactical. Not disputing gross margins of international today… My question is more on the sustainability of GMs as they move out of the U.K. (half of international) into other countries… and increase international mix to 50%. Why shouldn’t GMs / margins be lower? 1. Same product being sold (we’ve been told) 2. Consumer spending (per cap, ppp) in the geos they’ve outlined suggests radically different willingness to pay / consumer budgets. So, either you maintain ASP and decrease the unit TAM or reduce ASP to increase the unit TAM. 3. In the U.S. you’re selling through Amazon/Walmart/Costco/Target and reaching a large portion of the population. In EU/LATAM, you’re selling through a much more fragmented retailer base 4. Because of (3) you have higher infrastructure costs to maintain your competitive position; and, in some markets, distributors are a necessary evil. Curious if you see it differently.

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Economic Engines @EconomicEngines

7 months ago

@lickitysplit_7 @DeepSailCapital It can be true that BE serves a band-aid need for the first MWs, and also that natural gas is being built simultaneously to take the hand-off. BE earns revenue from product sales. Once you start replacing with NG, and move Energy Servers around, sales go to zero.

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Economic Engines @EconomicEngines

7 months ago

@West4thCapital Which means they can maintain their positioning in midrange small appliances while investing into beauty / personal care (neutral to positive benefit to GMs) and expanding internationally (lower GMs). It should be a structurally larger business in 5 years.

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Economic Engines @EconomicEngines

7 months ago

@West4thCapital (1) How much was slushi a contributor to growth? (2) How representative is your scanner data of the total purchases made across all channels? (4) Shouldn’t you want them to chase demand, rather than risk inventory write offs?

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Economic Engines @EconomicEngines

7 months ago

@West4thCapital What makes this business special isn’t that sales will be higher next quarter… it’s that they, for reasons not worth getting into here, have: (a) 50% gross margins (b) Leverage with retailers (c) The financial strength to box out competitors

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Economic Engines @EconomicEngines

7 months ago

@EngineS quick question: do you plan to keep @EngineS long-term? It’s one of my favorite handles and I’d be interested if you ever decided to pass the torch. Thanks either way!

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Economic Engines @EconomicEngines

10 months ago

@lickitysplit_7 @DeepSailCapital

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Economic Engines @EconomicEngines

11 months ago

@ShakerBall_Cap **working** cash, yes

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Economic Engines @EconomicEngines

a year ago

@orrdavid Every time I pass a Dutch Bros, always packed.

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Economic Engines @EconomicEngines

2 years ago

@IrnestKaplan @KoyfinCharts “Size Matters” mjbaldbard.wordpress.com/wp-content/upl…

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Economic Engines @EconomicEngines

2 years ago

If you dig into his portfolio composition it actually makes sense. 5-6 core holdings (“generals”) were 50-60% of portfolio. Smaller positions in another 10-15. Workouts represented another 10-15 positions. These naturally had very short holding periods. If you do the math, it can be true that 5-6 core holdings were held for a long time while overall portfolio turnover was ~2 years. That’s very different than saying Buffett concentrated in 5-6 names and turned them over every 2 years