January 2020 #2
Access to some materials included in this newsletter may be limited to Red Forest Capital funds.
ARTICLES
Memo from Sequoia on their original investment in Youtube
Thought this was an interesting article about fraud in the car dealerships’ space. It also mentioned PointPredictive, a software company designed to detect loan fraud. I wonder if there are other fraud detection software companies out there, which could prove to be counter-cyclical. https://www.wsj.com/articles/an-809-car-payment-a-660-income-how-dealers-make-themath-work-11576924201?mod=searchresults&page=1&pos=5
Interesting article on Brookfield Property, normally an extremely savvy investor, on their contrarian bet on malls. https://www.wsj.com/articles/brookfields-bet-on-malls-looks-riskier-than-ever11577019601
Article on innovation in the NFL. https://www.wsj.com/articles/nfl-playoffs-old-coaches-reid-belichick-harbaugh-11577977407?mod=flipboard
Article on the challenges in food delivery. This was interesting to me as I originally did a bit of research on Grubhub and (wrongly) thought that their position seemed fairly impregnable. This shows how large amounts of liquidity in VC funds (allowing companies to operate at a loss for significant amounts of time) can erode some competitive advantages. https://www.wsj.com/articles/grubhubs-unexpected-new-menu-options-11578576683
INDUSTRIES
Education software. See Lexia (owned by Rosetta Stone) example, discussed extensively on Value Investors Club. Here a 2018 writeup, and there are more recent ones: https://valueinvestorsclub.com/idea/ROSETTA_STONE_INC/1193337407
Corporate training: https://www.wsj.com/articles/employers-want-to-train-workers-but-are-swimming-inoptions-11578393001
Waste management software: https://www.wasteworksonline.com/waste-management-solutions/
Retail store closure services: https://www.wsj.com/articles/everything-must-go-record-pace-of-shut-stores-fuelsbusiness-for-the-closers-11578001910
Example: https://greatamerican.com/solution/retail-solutions/
Generator services: https://www.primepower.com/
Somewhat similar, disaster recovery services. https://www.powerplus.com/disaster-response/