Investing in the Wake of a Shock

March 2020 Investing in the Wake of a Shock It is not the strongest of the species that survives. Nor the most intelligent. It is the one that is the most adaptableto change. – Charles Darwin In nature nothing is created, nothing is lost, everything changes. – Antoine Lavoisier Long periods of low risk and […]

Covid-19 and Unusual Economic Scenarios

February 2020 Covid-19 and Unusual Economic Scenarios In respect to the risk criterion, we were looking for someone with a hard-to-evaluate skill: the ability to anticipate the effects of economic scenarios not previously observed. Warren Buffett – 2010 Letter to Shareholders of Berkshire Hathaway The ongoing world outbreak of Covid-19 is stretching health care systems, […]

Inherent Value Update

January 2020 Inherent Value Update This month we update the analysis of Somar’s Founder’s Class vs the inherent value created by our long portfolio (Fig. 1). The methodology was described in our letter from January 2019[1]. This update shows a continuous and even accelerating growth in the sales per share of our companies. This, however, […]

The Year Ahead

December 2019 The Year Ahead At the beginning of a new year, market strategists and media outlets compile their views for the year ahead. Prominent attention is given to the macro outlook. This year the consensus is predicting a supportive macro environment for the year ahead: Phase 1 trade deal with China limits the probability […]

2019 Year in Review

November 2019 2019 Year in Review I’m extremely pleased with what the Somar team achieved in 2019. This year put us in a strong position totake advantage of the opportunities that 2020 will bring: The businesses we own executed very well, growing profitability and sales ahead of their share pricegains on average (Fig. 1), despite […]

Mark to Market – The Forest and the Trees

October 2019 Mark to Market – The Forest and the Trees With a 24/7 news cycle populating our smartphones and breaking news throughout the day, investors may feel they need to check their portfolios continuously. While investments in Real Estate, VC or Private Equity don’t provide daily updates to valuations, and investments in private markets […]

Earned Growth vs. Rented Growth

September 2019 Earned Growth vs. Rented Growth Not all growth is created equal. At Somar we distinguish between Earned Growth (EG) and Rented Growth (RG). EG occurs both when a company grows with their existing clients and / or when they take market share by offering new clients a better value proposition than its competitors[1]. […]

IPOs: Separating the Wheat from the Chaff

August 2019 The Short Book – Part 2: IPOs – Separating the Wheat from the Chaff Initial Public Offerings (IPOs) are unique landmarks in a company’s life. They gather a lot of media attention, open up liquidity for early investors and for employees, provide a currency (stock) the company can use in future acquisitions and […]

The Short Book

July 2019 The Short Book After pausing for a couple of months to celebrate our anniversary and provide an update on the inherent value creation of our portfolio, we complete our discussion of Somar’s mission this month by talking about our short book, our third pillar (Fig. 1). The short book adds alpha to our […]

Inherent Value Update

Inherent Value Update In our January 2019 letter, we introduced an analysis of our long portfolio inherent value creation. This month we update this analysis (Chart 1). Please see the appendix where we reprint our description of the methodology behind this analysis. Chart 1 Source: Somar Analysis Note: Index December 2016 = 100 Our performance […]