Quality Investment

Sky tough. Ground sound.

What contributes a good or even great business?
There are definitely many ways to measure.

However, to me, the key is in ROE or better yet, ROIC.

By and large, Airlines businesses generate low ROIC or even minus.
Flying in the sky is tough.
Assets are huge and competitions are tight.
It is an almost perfect competition in work.

However, handling the airlines grounding is generally milder.
Be it passengers handling, cargo handling or owning airports.

There are regulations, licenses and oversights either by Government or Standardisation bodies.
To a city, Airport is generally monopoly or duopoly.
To an Airport, it is more effective to give license to mono or duo established Ground handlers based on fulfilment of strict criteria and also the more important factor of good track records.

The barrier of entry of such ground handling businesses is much higher.


On Portfolio Change – LPCK

Generally I am a very consistent person.
I love sustainability.
I prefer evolution (gradual changes) than revolution (extreme changes).

This year, however, there was a swift change in my holdings.

LPCK was 33% of my portfolio before I divested almost all on Aug-2017.
I still hold tiny amount due to the cheap dark side in me.
But it is insignificant to move the needle.

Despite the divestment gain of about 10%, I do not consider it to be a decent investment. To me, it is a quality investment went wrong.
Quality in numbers but not in interest alignment.