GrubHub Stock Deservedly Up 25% Today

If I made acquisitions for Microsoft, I would not spend my time adding LinkedIn to the stable but instead focus on the acquisition of a company like GrubHub which offers the best combination of sustainability and growth out of all the new tech companies that have arisen in the social media era.

There are four things I like about GrubHub that distinguish from many of its industry peers: (1) it actually earns a profit; (2) that profit is growing at a very high rate; (3) the expected share count dilution over the coming years is not obscene; and (4) the business model doesn’t exploit an illusory faddish concept.

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Benjamin Franklin: The Way To Wealth

Happy 4th. I include below one of my favorite Benjamin Franklin passages, written in 1757 under the guise of Franklin’s alter ego Poor Richard:

Courteous Reader,

I have heard that nothing gives an author so great pleasure, as to find his works respectfully quoted by other learned authors. This pleasure I have seldom enjoyed; for tho’ I have been, if I may say it without vanity, an eminent author of almanacs annually now a full quarter of a century, my brother authors in the same way, for what reason I know not, have ever been very sparing in their applauses; and no other author has taken the least notice of me, so that did not my writings produce me some solid pudding, the great deficiency of praise would have quite discouraged me.

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Hershey-Mondelez $107 Takeover Bid: Five Thoughts

Five thoughts on the news of a possible Hershey takeover beyond what the mainstream news has already reported:

#1. Rationally, Nestle should the highest bidder for Hershey stock. Due to an old agreement with Rowntree (a confectionary business now owned by Nestle), Hershey gets licensing rights to sell Kit-Kat in the United States. Those licensing rights terminate, and revert to Nestle, if a transfer of control occurs at Hershey. About $600 million worth of Kit Kats get sold in the United States every year, which flows through as $120 million worth of profits to Hershey shareholders. Assuming, in a takeover scenario, that those rights are worth 25x earnings, then Nestle ought to be willing to pay $3 billion more to acquire Nestle than any other competitor.

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