Too Much Money
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Good News
In case you missed it… we were featured in the news! Thank you for being part of our Co/Investor family. We are SO EXCITED for what is to come.
Q1 Investor Letters
We’ve heard from our Premium Members that one good investment idea a year will pay for their subscription many times over. In an attempt to provide that worthwhile return on investment, we’ve started compiling a summary of our favorite potential investment ideas from the investor letters we have been reading, and continue to read as new Q1 letters are published every day. We’ll send the final compilation out to Premium Members around the end of the month. If you’re not already a Premium Member and want to join so that you will receive the final version, you can become a Premium Member HERE.
This Week’s Newsletter is Sponsored by:
The Waterfront Group
For more than 25 years, it’s been our mission to offer the finest properties at the very best values. To help turn your dreams into realities. And it’s our promise to make the entire process a positive experience. From acquisition and development to sales and post-sale coordination, Waterfront Group handles everything in-house, ensuring transparency and an overall seamless operation.
We’re here for you from start to finish, and beyond. Because we believe the relationship is far more important than the transaction—and because your satisfaction is the most important measure of our success.
-Waterfront Group Team
Economic Boom or Economic Warning?
U.S. stock markets have been hanging around record highs. Is this a sign of the post-COVID boom at our doorstep? Or is it a sign of irrational exuberance gone too far? Time will tell and opinions vary. IPO markets are breaking records, and many of our contacts in the private deal space—even those willing to pay fair prices—are continually getting outbid by eager buyers backed by eager investors and often more eager lenders.
Every transaction has a buyer and seller, but sometimes buyers are more impatient than sellers. And sometimes that causes prices to rise, we think. As DataDrivenInvestor wrote in an online article last year about what was happening in June of 2020, when the government was stimulating and people were hanging out at home and upgrading their patios:
Since early 2019, the total money market fund [MMF] investments have followed an upward trend. The accumulation drastically accelerated in the wake of European lockdowns and the rapid spread of COVID-19 in March.
At the peak in June, investors sat on more than $5.3 trillion — a record level of MMF investments. For context, the S&P 500 total market cap sits around $23 trillion.
Is the boom since then a result of this cash getting less patient? Or a sign of lower returns going forward? Maybe both.
In a September 2018 Memo, Howard Marks described the seven worst words in the world: “too much money chasing too few deals.” Savings rates are high. Interest rates are low. And it seems that nearly every well-known investor, athlete, actor, and sailor has a SPAC. Maybe there’s just too much money, chasing too few everything. As Marks wrote in another Memo 16.5 years ago:
If you could ask just one question about a possible investment and be assured of one honest answer, I think it should be “what’s the relationship between supply and demand?” If there are lots of assets for sale and few takers, those assets can often be bought cheap. If there are few assets offered and many would-be buyers, bargains are usually few and far between.
Do asset prices reflect the post-COVID recovery that is underway? Or do they reflect far too much optimism? We’ll let you, the readers, decide where you want to place your bets. But there is one thing we do know: every market has both smart and dumb places to invest your money.
Lunch at the Club
Alex Bossert will present his best investment idea at Lunch at the Club this Wednesday April 21 from 12:00-1:00 EST. Upgrade to Premium for $100/year so you don’t miss out on our monthly investor presentations!
Alex Bossert is the founder and portfolio manager of Bossert Capital located in Minneapolis, MN. Bossert Capital maintains a concentrated, long-term portfolio where each investment is carefully analyzed in a bottom-up approach inspired by legendary investors like Seth Klarman, Joel Greenblatt, and Warren Buffett.
Planet MicroCap Showcase April 20-22nd
Next week The Planet MicroCap Showcase virtual event will bring together the most promising companies and the top dealmakers in MicroCap Finance for three days of company presentations, 1:1 meetings and educational panels. You don’t want to miss out on this premier and insightful event!
This Week’s Favorite Podcasts
Costco: Relentless Focus On The One Thing
GARP Investing Since Day 1 with Ethan Tucker, Editor at the GarpInvestor.com
Capital Allocators Podcast: Yen Liow
In Case You Missed It…
Amazon 2020 Shareholder Letter
Amergent Hospitality Provides Year End 2020 Corporate Update
How To Optimize Your Compensation Plan
If you have not already upgraded your membership…
Avenel Financial Group, a merchant banking and advisory firm located in Charlotte, NC launched a new business venture called the Co/Investor Club. The Co/Investor Club is a community of value-oriented investors that collaborate on investment opportunities and ideas. You are receiving this newsletter because you are a Free or Premium Member of the Co/Investor Club!
Chat with Mike
Whether you’re an executive with investment opportunities or a college student looking to network, we would love to chat with you!
Email our Founder, Mike Pruitt at mp@coinvestorclub.com with questions and ideas or schedule a meeting.
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