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Fourth Quarter 2017 Letter: Virtuous Circle

Click here to read our fourth quarter letter which, at this inflection point in our growth, reviews where we’ve been and where we’re going.

Speed Read:

  • We had a decent year (+27.0%), the performance of which was broad-based. We outline two mistakes we made during the year. The risk-reward of the portfolio remains very robust.
  • Just as importantly, we’ve successfully launched our first constructivist coinvestment fund, significantly increasing our assets and taking our company engagement to a whole new level.
  • We review the areas where we continue to innovate and differentiate in a virtuous circle of continuous improvement.
  • We outline measures we are taking to accelerate that same virtuous circle.
  • To help accelerate exchange, we invite you to join us for lunch any Tuesday and Friday starting in April.
  • Our appendix briefly discusses what’s happening at each of our investments.

Exhibit 1: GreenWood’s Continuously Improving Process 

I continue to be humbled by the trust our outstanding partners have given us, and who have joined this journey which is very much only beginning.

Fourth Quarter 2017 Letter

This Post Has 5 Comments

  1. I am suprised by your unwind of the Awilco position. Why is there no value left with the current cash generation and low debt situation?

    1. Clearly it’s still very cheap, but the risk-reward significantly deteriorated now that there is more downside. We most likely sold too early, but I continuously hear my mentor Wally telling me (particularly in cigar Butts) to “feed the birdies when they’re hungry”…

  2. What price do you think a strategic buyer would be willing to pay to acquire TRIP if results don’t begin to improve in 2H 2018 ?

  3. Hey Anthony – we don’t actually want a take-out and have refrained from putting out a precise estimate on that, because it will be precisely wrong. We can tell you CTRP paid 11.7x sales for Skyscanner, another meta site. Priceline has a very strong balance sheet and would likely pay cash so any price would be “accretive,” and it would be very important strategically for PCLN to have TRIP in the portfolio. We also know Liberty would not sell for a meager take-over premium, so the upside would probably be substantial.

  4. Hi Steven
    Would be interested to hear your reaction to comments by TRIP’s CFO on the Q4 call that the company is no longer emphasizing direct booking by users through their site:

    “On the hotel side, instant booking or the ability to actually finish the transaction on TripAdvisor remains part of the product on all platforms in most countries. We think of it as burning its spot in the meta auction. So where we have signals that the consumer prefers this, then that’s what we will show in the premier position. Otherwise, it is yet another option.

    It’s not a strategic thrust for us to grow that channel as it happens because a segment of a population like it, that’s wonderful for us. If not, that’s okay. So we’re no longer, as of a while ago, we’re not trying to push that forward and we’re not investing a ton of resources in that particular path versus a click-off to a supplier or an OTA.”

    Do you think he’s serious or just saying that to publicly assuage the likes of Priceline, etc.? If he is serious, does that undermine your main thesis on the stock? Thanks as always.

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