An enjoyable read as always! Great writing style and once again charts support the narrative — yes the shares outstanding chart is comical and yells “management doesn’t dilute shareholders!”
I also end up asking myself questions after reading your posts. Last week, based on one of your comments, I asked myself how would I go about valuing Meta’s metaverse business. And the answer is — I have no clue. Zero idea.
I like mocking venture capitalists because they invest so much money in silly endeavors (FTX is a prime example). But at the same time some VCs can actually put valuations on businesses such as the metaverse, and they bring value by doing so.
Reading about this nanocap, my thought is how does one manage to research in detail a company for which little information is available, and yet avoid the sunken cost fallacy of “now that I’ve spent so much time looking into this company, might as well invest in it to avoid wasting all that work.” (Obviously such thoughts are not conscious.) Maybe by studying many such companies and therefore not focusing on a single one?
I spend most of my time reading. That includes researching A LOT of companies. Many are discarded. Some are placed into a 'consideration' pile. A select few end up, for whatever reason, capturing my attention and I feel compelled to obsessively dig. United-Guardian definitely falls into that last bucket. I do have exposure to it, as disclosed at the footer of the post. However, it's currently a non-material position for me as well as the company.
It's easy to avoid the sunk cost fallacy by appreciating the tremendous amount of value generated from the process itself. Digging through decades of old filings, hunting for obscure data sources, collating data, marking models, and occasionally gaining opportunities to speak with management all helps refine the approach. I think of UG as a great mental exercise, and the company showcases both great and terrible attributes. I've also had no issue acknowledging the lack of clarity and a deficit in my own conviction - thus expressed in the small stake. And while I theorize that UG may be setting up for something compelling, it's only one of many names I track (though many I have not published on publicly). I like to be patient and wait for clarity and fat pitches, even if that means they never come from a particular name. Above all else, I prioritize capital preservation and survival.
An enjoyable read as always! Great writing style and once again charts support the narrative — yes the shares outstanding chart is comical and yells “management doesn’t dilute shareholders!”
I also end up asking myself questions after reading your posts. Last week, based on one of your comments, I asked myself how would I go about valuing Meta’s metaverse business. And the answer is — I have no clue. Zero idea.
I like mocking venture capitalists because they invest so much money in silly endeavors (FTX is a prime example). But at the same time some VCs can actually put valuations on businesses such as the metaverse, and they bring value by doing so.
Reading about this nanocap, my thought is how does one manage to research in detail a company for which little information is available, and yet avoid the sunken cost fallacy of “now that I’ve spent so much time looking into this company, might as well invest in it to avoid wasting all that work.” (Obviously such thoughts are not conscious.) Maybe by studying many such companies and therefore not focusing on a single one?
I spend most of my time reading. That includes researching A LOT of companies. Many are discarded. Some are placed into a 'consideration' pile. A select few end up, for whatever reason, capturing my attention and I feel compelled to obsessively dig. United-Guardian definitely falls into that last bucket. I do have exposure to it, as disclosed at the footer of the post. However, it's currently a non-material position for me as well as the company.
It's easy to avoid the sunk cost fallacy by appreciating the tremendous amount of value generated from the process itself. Digging through decades of old filings, hunting for obscure data sources, collating data, marking models, and occasionally gaining opportunities to speak with management all helps refine the approach. I think of UG as a great mental exercise, and the company showcases both great and terrible attributes. I've also had no issue acknowledging the lack of clarity and a deficit in my own conviction - thus expressed in the small stake. And while I theorize that UG may be setting up for something compelling, it's only one of many names I track (though many I have not published on publicly). I like to be patient and wait for clarity and fat pitches, even if that means they never come from a particular name. Above all else, I prioritize capital preservation and survival.
Thanks for the great comment, Tian.
Thank you for sharing your process!