Jirka Rysavy, the founder of Gaiam, is a rather remarkable guy. He came to the US in 1984 from Czechoslovakia with no money, spoke very little English and proceeded to roll up the office supply market into Corporate Express which Staples bought in 2008 for $2.65BN. He also started Gaiam in 1988. Sometime in-between then and now, he bought an 80-acre forested tract in mountains above Boulder, complete with a cabin, no running water and an outhouse so he could live sustainably and meditate. Which brings me back to Gaiam – a company that makes products and media for sustainable living. Gaiam is Jirka’s baby. Up until very recently, Gaiam was a mish-mash of unrelated business units, making it difficult for investors to understand what exactly they were investing in. To give you a sense, since Gaiam began they:
Gogo Inc (GOGO)
Stock Price: $22
Diluted shares: 84.2MM
Market cap: $1.85BN
Cash: $266MM
Working capital deficit, ex-cash: $54MM
LT Debt: $236MM
Other Liabilities, not including Deferred Taxes and Lease Incentives: $14.4MM
EV: $1.89BN
One of my secular investment themes is mobility (which I plan on covering in detail in a future note). GOGO is a pure-play on this theme and happens to be a really interesting story in a largely untapped niche. While I am a value investor and generally avoid overpaying, I do make exceptions when I believe a company is in the process of building a monopoly-like position in a large market. GOGO fits this profile which is why I’m a buyer post the 4Q13 earnings drop. Here are my notes:
GOGO brings the mobile internet age to aircraft via 3 products: Gogo Wifi, Gogo Vision, and Gogo Text & Talk. Each of these products could stand on its own; together, they make Gogo the communications nerve center for an aircraft and the undisputed leader in the industry. Some specifics on each product:
Imagine standing at the beginning of a very long hall of mirrors. What you’d see as you looked down the hall is your figure repeated over and over again almost to infinity.
This analogy can be applied to investing: a winning trade that you can repeat over and over is what’s known as the Hall of Mirrors trade.
When you find a Hall of Mirrors trade, you’d better not tell anyone because your profits will soon become someone else’s profits. And this business is tough enough without giving away all of your trade secrets.
But in rare cases, it’s worth pointing out a Hall of Mirrors trade to drive your own returns. Let me explain by way of an example.
I don’t make a habit of writing about small cap companies with very little liquidity given the difficulties of entering and exiting a position, but today I’m making an exception because I believe this Company will grow into a much larger one over the coming years (and therefore eliminate the share liquidity issue). However, given current trading dynamics of the stock, I have kept the Company nameless below. If you’d like to learn more just send me an email at: analyst at this domain.
Company X provides direct investment exposure to one of the world’s fastest growing economies without the risks typically associated with emerging market investment opportunities. This company possesses all the qualities one would look for in a great long-term investment: