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Berkshire Hathaway Inc. Message Board

kmacattack12 5 posts  |  Last Activity: Jul 11, 2014 1:03 PM Member since: Oct 23, 2012
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  • Reply to

    SPU - Shadow banking problems?

    by cavoter68 May 7, 2014 12:42 PM
    kmacattack12 kmacattack12 Jul 11, 2014 1:03 PM Flag

    Cavator, if I wanted to believe in conspiracies, I'd think that you, like Absaroka about 3 years ago, were shorting the stock and then bashing the hell out of the company with doom and gloom predictions. I made some really nice profit betting against shorts in SPU, but the options market is so thin on this company, I don't think you would be able to manipulate the stock. Why don't you write the company and ask them at what point they will break even, and what the profit projections would look like based on increasing sales 100% (which wouldn't take much)?

    Sentiment: Buy

  • Reply to

    SPU - Shadow banking problems?

    by cavoter68 May 7, 2014 12:42 PM
    kmacattack12 kmacattack12 Jul 11, 2014 12:53 PM Flag

    Your logic reminds me of the brilliance "God is love, and love is blind. Therefore, God is blind."
    If this company were buying chickens for the absolute bottom dollar price of $0.50 per pound, for example, and selling them for $0.40 per pound and was selling so many they decided to buy a bigger truck, I could see your point. But they don't BUY CHICKENS from anybody, they MANUFACTURE fruit juice.
    If a manufacturer spends $10 million, for example, building a new plant, and their sales the first year are $12 Million, they are probably going to lose money. But the rules of economy of scale dictate that if the next year, their sales top $20 million, since the bottled juice has an extremely high profit margin at wholesale, they are very likely to make a substantial amount of money after sales volume crosses the break even point.
    For a "real life" example, check out Sirius XM radio. In late 2008, when the economy was on the verge of a second great depression, and the big 3 US automakers were in danger of extinction, Sirius stock dropped to $0.05 per share because the Sirius had purchased rival XM just before the economy tanked. Liberty Media bought tens of millions of shares of Sirius, loaned the company enough for them to weather the storm and about a year later, I bought 15,000 shares at $1.00 per share, even though the company was still losing money. When Sirius topped about 16 million subscribers, they broke even. And with every new subscriber, their profit margins increased. The stock was over $4.00 per share a few months ago, dropped down to about $3.00, and is now back up around $3.30. The profit margins are ENORMOUS. Sirius became the most profitable holding of media giant Liberty which owned about 47% of shares.
    I don't lose sleep at night worrying about Sky People, because if their business model changes prove to be wise decisions, and IF THEY INCREASE SALES VOLUME, their $80 million cash in the bank will be a popcorn fart compared to future earnings.

    Sentiment: Buy

  • Reply to

    SPU - Shadow banking problems?

    by cavoter68 May 7, 2014 12:42 PM
    kmacattack12 kmacattack12 Jun 19, 2014 1:34 PM Flag

    Good points, tino !

    Sentiment: Strong Buy

  • Reply to

    SPU - Shadow banking problems?

    by cavoter68 May 7, 2014 12:42 PM
    kmacattack12 kmacattack12 Jun 19, 2014 1:31 PM Flag

    See my reply to Shiftsuper, if you want my two cents worth. I don't think it would take much for this company to take off like a rocket. Their problem, to me, is in their sales and
    marketing efforts.

    Sentiment: Strong Buy

  • Reply to

    SPU - Shadow banking problems?

    by cavoter68 May 7, 2014 12:42 PM
    kmacattack12 kmacattack12 Jun 19, 2014 1:27 PM Flag

    Just saw your post a month later, and as usual, it makes a lot of sense. I have a friend of about 30 years in Tulsa who is a major regional furniture distributor. I'm going to talk to him about the possibility of distribution in the US of Sky people products, He flies to China about every 3 months and is in daily contact with his suppliers in China. When I met the guy, he was selling cheap items such as stuffed animals, toy cars, $3 Cameras, etc. Now he's selling tens of millions of dollars per year in living room, dining room, bedroom furniture, etc.
    It seems to me that the company's biggest problem is in sales and marketing. My friend could most likely help them get going in China as well as expanding into selling in the US. It seems to me that the botttled drink business could explode for them. If I were marketing the product in the US, the first thing I would do is come up with an attractive looking label for the bottles, and find a name which Americans would respond to more quickly than "Sky people" or the other names they use in China. On the other hand, the first time I heard the name "SNAPPLE" , I asked "What the hell is that?"
    I've been pretty inactive as far as taking care of my portfolio for more than a year due to my wife's numerous hospitalizations (about 9 months out of 12), but she is doing much better and our daughter has moved home from Florida to help me take care of her. I'd LOVE to get back into distribution sales with a new product, maybe work with my Chinese friend. I was district sales manager for a major appliance distributor for 15 years, and have about 30 years retail experience in addition, the first 5 years were in the grocery business.
    I really believe this company has huge upside potential if they get some help with sales and marketing.

    Sentiment: Strong Buy

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