A Very Late 2022 Year-End Review

This post serves as my 2022 year-end update. In it you’ll find my musings on content statistics, my subscriber growth, takeaways from the year, business updates and the first ever Possible Value stock watchlist.

Content

I’ve been able to stay on track and keep writing long form research on a diverse range of businesses since the last update based on my average word count. It is up more than 14% since the middle of last year due to my work on Esquire Bank, Focusrite and Deckers Outdoor Corporation.

There was hardly any overlap in terms of industries compared to the 2022 Mid-Year Writeup with Squarespace being the sole outlier. I covered two SaaS businesses in the first part of 2022, but Squarespace is a materially different kind of businesses than dLocal and DocuSign. In addition to it, I count an outdoor and recreation business (YETI), an internet-based card retailer (Moonpig), a niche bank (Esquire Bank), a music hardware and software business (Focusrite), a mining services provider (Mader) and a footwear business.

The screencap below shows my wordcount per writeup, total wordcount and average wordcount per writeup.

Subscribers

The screencap below shows my subscriber growth since the inception of my newsletter back in October of 2021.

My subscriber count is up exactly 5x since the mid-year which makes me smile. I gotta tell ya, I was a little embarrassed to have <50 subscribers through the first half of last year, but I kept chugging along. The subscriber growth shows that my hard work is paying off. I feel like I started out with a tiny seedling that I put under the dirt, watered every day and didn’t know when or if it would start to grow, but then I woke up one day and it had flowered.

Takeaways

Being A Better Writer and Researcher

Being a better writer was a key focus at the mid-year and I feel like I’ve improved in that area. I still make errors, but the constant and intentional reading and writing over the last 15 months has sharpened my blade.

I also wanted to incorporate what I called “outside sources” in to my writeups. I feel like I’ve made improvements in this area, but I still am not doing as well as I can. “Outside sources” are those which do not come directly from the business that I am researching at the time. My main avenue of improvement was making a LinkedIn account and reaching out to people that I wanted to speak to through the platform. I ran in to a major issue less than a week after I made my account. LinkedIn sent me an email requesting a copy of my driver’s license or passport which I refused to do. I have no idea why those forms of identification were requested, but I feel like I had given them enough information about myself to confirm my identity. The email I received also claimed that the copies of my forms of identifications would be “deleted securely and safely” which I was highly suspicious of.

I’ve tried to mitigate the issue of not having a LinkedIn account by utilizing New York City, YouTube and internet reviews from reputable sites as much as possible. While not a perfect system, it has allowed me to do the kind of research and receive the feedback I want. However, having a LinkedIn would allow me to network with suppliers, business partners, competitors and former employees and ask them all sorts of questions that I have. Maybe I’ll bite the bullet one day, but LinkedIn remains missing from my research toolkit.

With all that being said, I feel like my writing has improved since the mid-year which has been a boon for my self-confidence. As someone who has struggled with that for most, if not all, of my life, it has been a most welcomed boost.

Continuous Learning

I’ve continued on the path of learning as much as I can which has been both enjoyable and rewarding. Who knew that marketing could be so effective at a business that sells coolers? Who knew that effective marketing could be so important to a business’ overall success? It seems obvious to me now, but it was a key insight that I learned over the last six months. I’m talking about YETI of course. If you’d like to know more about the businesses then please read my writeup which is linked here.

Other things I learned about include:

• The ruinous effects of stock-based compensation on an otherwise good business. Please read my writeup on Squarespace, linked here, if you want to learn more.

• What a true flywheel business model looks like. Please read my writeup on Moonpig, linked here, if you want to learn more.

• Why football (soccer) clubs aren’t very good businesses. Please read my writeup titled “A Type of Business I’m Not Interested In”, linked here, if you want to learn more.

• How small the Value Investing Community is. Please read my writeup about attending the annual Graham & Dodd Breakfast, linked here, if you want to learn more.

• Why music hardware and software can be a good business. Please read my writeup on Focusrite, linked here, if you want to learn more.

• There are wonderful small businesses all around the world. You just have to look. Please read my writeup on Mader Group, linked here, if you want to learn more.

These are by no means the only things I learned, but the one’s that popped into my head as I was writing this section. There’s still so much more out there to learn about and I’m excited to keep plugging along.

Enjoying the Process

I was starting to feel a little burned out in the fall, but I’ve righted the ship since I dropped my posts down to once a month. I feel great now and have relieved any pressure that I was feeling then. Looking back, I’m proud that I was able to crank out two articles per month, but I have no idea how I was able to do it. It was a blistering and unsustainable pace. I’m a big believer in work, especially the focused kind, but I needed some sort of balance. I have since been able to have more of a social life and do the research that I want almost without conflict. I told myself that the newsletter would be a marathon and not a sprint and I now feel that I’ve been able to pace myself accordingly.

Miscellaneous Takeaways

Still waiting on finding a mentor or a job, but I feel like both will happen in the future. Seeking both out constantly made me feel desperate and taking a break from looking for them feels right at least for now.

I asked for comments or feedback in my 2022 Mid-Year review. That post received 4 likes and several other posts have been liked and even commented on. It’s a start, but I’d like to get more feedback via Substack from my readers.

Where I have been getting more feedback is through Twitter. My tweet views, followers, likes and replies are up significantly over the last six months. I try and limit my time on Twitter because it can turn in to aimless scrolling and browsing rapidly, but I do recommend it. I’ve been able to network with a significant amount of people that I otherwise couldn’t have without it. Plus, I’ve found some great ideas, writeups and interesting discussion threads. The last thing I’ll mention about Twitter is that you can count on at least one belly laugh per month if you’re on there for more than an hour a week.

Getting Respect

Rodney Dangerfield used to joke about not getting any and Ali G would give it when he heard something he liked. I can tell you with certainty that I’ve never received it when discussing my previous employment. Almost everyone replies with “Oh” or something similar and we move on to the next topic with haste.

Something interesting happens when I tell people about my newsletter though. It doesn’t happen all or most of the time, but there have been situations where a switch flips and I notice that I get respect from whomever I’m talking to about my newsletter with almost immediate effect. For some reason, I’m treated like I have authority. People don’t gush over me or anything like that, but we usually discuss what I write about, why I write, what kinds of businesses I research and then we often jump to the most important topic which is the other person and their portfolio. I’ve even had a few people ask for my take on things as if I’m some sort of arbiter on the stock market or business environment. I haven’t been able to figure out why this is happening, but it’s a noticeable change.

We, me included, often mock or make fun of people who are constantly being praised in the media for their takes on financial matters, but I must say that having even one person ask for my opinion on something related to finance or investing is a nice feeling. It’s one hell of a stroke for your ego and can quickly spiral if you aren’t careful. That’s why I try and stay away from having takes on such matters without having something to back it up with. I’m going to sound like Buffett and Munger here, but the best response is usually, “I don’t know.” If you don’t know and are going to respond anyway you should preface it with, “My intuition is this…” or “I feel like…” and then admit at the end that there’s a high probability that you’re wrong about whatever you just talked about.

Final Reflections

What a year-and-change it’s been! I look back at all the annual reports I’ve read, all the hours I’ve logged, all the editing I’ve done, all of the videos I’ve watched, all of the schlepping I’ve done around New York, all of the events I’ve been to and feel happy with it. I still have the desire to keep improving towards my goal of being the best investor that I can.

I said it in the mid-year review, but the Possible Value newsletter continues to be the most intellectually stimulating and rewarding thing I’ve ever done in my life. I’m more motivated than ever and continue to love the process of learning as much as I possibly can about great businesses. Thanks so much for tagging along and here’s to another great year!

Business Updates

Squarespace (NYSE: SQSP)

Squarespace has not released full year 2022 results as of the publishing date of this writeup, so I was only able to assess the first three quarters. Per the Q3 2022 10-Q, linked here, total revenue was $638.16 million. This was up 10.7% for the first nine months of the year versus the same period in 2021. Presence revenue increased 7.1% to $440.47 million while Commerce revenue popped 19.6% to $197.69 million.

The business wasn’t profitable over the nine-month period ended September 30, 2022 which was a little concerning. It’s frustrating to see a business with gross margins that will make any investor salivate be unable to turn a profit. The screencap below shows its 2022 Q3 Income Statement and was taken from p. 5 of its Q3 2022 10-Q.

The liberal issuance of stock-based compensation (SBC) was a concern when I first researched the business. While the figure was down considerably over the first three quarters of 2022 versus the same period in 2021, the business still issued $75+ million of it. The screencap below highlights its SBC issuance for the first three quarters of 2022 and was taken from p. 12 of its Q3 2022 10-Q.

If you were to include SBC in your calculation of free cash flow, which I think is appropriate, then the figure is $41.21 million.

Debt was another concern that I had for Squarespace. As of 2022 Q3, the business still had $517.1 million of debt on its balance sheet. While I don’t think it’s fair to say whether management is handling the debt situation well or not, it’s something that I must keep my eye on. Hopefully there will be an update when the business reports its 2022 full year results.

International sales growth slowed substantially through the first nine months of 2022. Revenues increased by a meager 2.1% to $181.58 million.

Lastly, Nathan Gooden was appointed as Squarespace’s new CFO in October. He was most recently the CFO of Amazon Alexa Worldwide. Press release information regarding his appointment may be found here.

What about its stock price? I published my writeup on the business on  7/19/2022. The stock price closed at $19.99/share that day. The stock price closed at $24.04/share on 3/6/2023 which is an increase of 20.3%

YETI Holdings Inc. (NYSE: YETI)

2022 ended up being a mixed bag for the business. Per its Q4 2022 Press Release, linked here, sales for the year increased 13% to $1.59 billion. DTC sales increased 17% to $917.7 million and wholesale revenues increased 8% to $677.5 million. Drinkware sales increased 14% to $947.2 million and Coolers and Equipment experienced sales growth of 11% to $612.5 million.

Both operating income and net income decreased during the year with the former decreasing 54% to $126.4 million and the latter decreasing 58% to $89.7 million.

Inventories increased 16% to $371.4 million which marked the second straight decline in inventories since their peak in Q2 of last year.

Total debt was reduced to $90 million, down from $112.5 million at the end of 2021.

Per the same press release linked above, in January of 2023, YETI issued a voluntary recall on its Hopper M30 Soft Cooler, Hopper M20 Soft Backpack Cooler and SideKick Dry gear case. The products were recalled due to a malfunction on the magnet lined closures on the product. The business wrote off $34.1 million in inventory and established a reserve of $94.8 million for “estimated future product refunds, cost of recall remedies for consumers with affected products, recall-related logistics costs, and other recall-related costs as of December 31, 2022.”

Management expects “adjusted sales” to increase only 3 – 5% in 2023.

Matthew Reintjes, the CEO, commented on the product recall issue stating, “Since 2018, we have sold approximately 1.5 million units with this material construction and we are aware of approximately 1,400 units, or 0.1% of the units sold that have experienced issues with the magnet-lined closure. Importantly, we are not aware of any reported injuries sustained from this product at this time. However, the safety of our customers and the quality of our products remains imperative. After a thoughtful analysis of the situation, we acted decisively in January to remove these products from the market and to stop sale as we coordinate with the CPSC and relevant global agencies on a proposed voluntary recall.” I’ve noted the issue, but it doesn’t strike me as a long-term problem with the business.

During the same call, Mr. Reintjes commented on YETI’s product development stating, “Two important aspects of our 2023 product lineup will be deeper expansion into newer product families and new customization options for customers. As we focus on thoughtfully broadening our range of products, we recently announced our new cargo line with the launch of three GoBox storage products to very strong response, emphasizing durability, waterproofness, dust proof protection and versatility of storage. We're excited to take this next step in the cargo family. And we're supporting the launch with an array of creative and marketing support across channels.

Later in the year, we will also start evolving our Drinkware category into tabletop and outdoor entertainment offerings, expanding beyond what customers know and love in our Drinkware. Customization has long been an important driver of business, and we're excited to offer customers even more new ways to personalize YETI products this year. With our Yonder bottles, we will introduce color customization to our Drinkware category for the first time. And internationally, we will begin to introduce and expand customization options for both ecommerce and corporate customers.”

YETI also promoted Mike McMullen to full-time CFO in February of 2023. He was acting as Interim CFO since October of 2022. A press release regarding his promotion can be found here.

What about its stock price? I published my writeup on the business on 8/2/2022. The stock price closed at $51.80/share that day. The stock price currently trades at $38.51/share on 3/6/2023 which is a decrease of 25.66%.

Moonpig (LON: MOON)

Moonpig posted its half-year results on 12/7/22. Links to its half-year report, investor presentation and earnings call video can be found here, here, and here.

Revenues were flat versus the same period in 2021 with earnings per share plummeting 60%+ from £0.045 to £0.017. Moonpig and Greetz revenues were actually down 8.1% to £131.1 million, but were bolstered by the addition of Buyagift.

Per the midyear report, the number of orders were down 13.3% from COVID highs due to the easing of lockdowns and strikes at the Royal Mail. Per p. 9 of the midyear report, attached and standalone gifting revenues were down 16.7% and 17.7% versus the same period last fiscal year due to customers “trading down to lower price points in the UK and the Netherlands.”

The business has deleveraged a bit too and plans to get to less than 2x leverage by the start of FY 2024.

Management expects FY 2023 revenues to be ~£320 million which would equate to a ~5% increase in sales. This tells me the boost from COVID has largely worn off and maybe its growth will be steadier, but slower going forward. I’ll have to keep my eye on this.

The playbook for the business is largely unchanged from my writeup. I didn’t see, hear or read anything about expansion plans to the United States.

What about its stock price? I published my writeup on the business on 8/30/2022. The stock price closed at £1.96/share that day. The stock price closed at £1.25/share on 3/6/2023 which is a decrease of 36.22%.

Esquire Bank (NASDAQ: ESQ)

I’ll re-post what I said recently about Esquire on MicroCapClub. “2022 was another record year for the bank. Earnings were up 59%, return on average assets was 2.31% and ROE was 19.44.” A link to the full press release and Q4 Investor Presentation can be found here and here. Esquire continues to be a wonderful business.

What about its stock price? I posted my original writeup on the business to MicroCapClub on 8/4/2021. Esquire’s stock price closed at $24.09/share on that date. The stock price closed at $44.31/share on 3/6/2023 which is an increase of 83.94%.

Focusrite (LON: TUNE)

Focusrite’s fortunes were down a bit in 2022. Revenues were up 5.6%, but -2.8% on an organic constant currency growth basis which the business defines as Fiscal 2022 revenues minus Fiscal Year 2021 revenues adjusted for change rates and the impact of acquisitions.

The screencap below provides a revenue breakdown of each of Focusrite’s business segments for Fiscal Year 2022 and was taken from p. 14 of its Annual Results which is linked here.

Operating income was down ~20% to £28.66 million from £35.77 million in Fiscal Year 2021. Net income was down 12%+ to £24.78 million from £28.28 million in Fiscal Year 2021. Martin Audio was hit particularly hard due to supply chain, component, and lockdown issues. It seems that my concerns about the huge uptick in sales during COVID were valid.

The biggest concern on the balance sheet was the increase in inventory which popped 133% to £48.34 million from £20.75 million the previous Fiscal Year. This had a subsequently ruinous effect on Cash Flow From Operations and Real Free Cash Flow. Per the FY 2022 Annual Report, these were mostly finished inventories and there was little commentary on the increase other than a blurb on p. 17 that states, “We have rebuilt our inventories, which were depleted during peak demand, achieved price increases to support Group margins, which have come under significant pressure, and since year end are finally seeing cost reductions in shipping.”

If you read my initial writeup on the business, linked here, you will remember that I was concerned about the incentive structure. The CEO didn’t achieve his performance targets for his bonus which wasn’t surprising. 2022 was a tough year for almost every business. I read a bit further and learned about the 2023 awards and found out that one of the performance metrics will be changed. Per p. 75 of the Fiscal Year 2022 Annual Report, “Given prevailing volatile market conditions, the Committee has decided to change the performance criteria from 3yr EPS CAGR to 3yr cumulative EPS value. The Committee has been mindful of the need to set challenging targets that are nevertheless appropriately realistic so as to be motivational in this context. As previously awards will be subject to malus and clawback provisions. PSP awards will also be made to other senior management.” One thing you can count on is that the Compensation/Remuneration Committee will simply move the goalposts when the business isn’t achieving its stated performance hurdles.

The business made a second acquisition in addition to Linea Research in 2022. It acquired Oberheim, an iconic synthesizer brand, for £4.5 million.

What about its stock price? I published my writeup on the business on 12/6/2022. The stock price closed at £8.45/share that day. The stock price closed at £7.11/share on 3/6/2023 which is a decrease of 15.86%.

Mader Group (ASX: MAD)

Mader posted its half year results a little over two weeks ago and by golly were they impressive.

Total revenue for the business was up 51% versus the first half of Fiscal Year 2022 to A$280.3 million. Its Australian segment experienced revenue growth of 36% to A$218.5 million from A$160.2 million in the first half of Fiscal Year 2022. Its North American market continued its hockey stick growth by increasing revenues 198% to A$57.4 million versus A$19.3 million last fiscal year. Management is now guiding for at least A$580 million in total revenue for Fiscal Year 2023.

Another point of note was its Safety Update. Quoting from p. 2 of the First Half Fiscal Year 2023 Results and Guidance which is linked below, “Mader’s safety performance continued to improve, reaching a record low TRIFR at the end of the half year period. Several safety-focused projects and campaigns were delivered, with a zero-harm goal embedded into all operations and implemented through strong frontline leadership and safety interactions. Continued enhancement of driver processes and development of In Vehicle Monitoring Systems for more than 1,000 support vehicles worldwide remained a key focus for the business.”

The only two concerns, if you want to call them that, were its debt load and revenues in its Rest of World segment. Quoting the Results and Guidance document again, net debt increased A$24.4 million to A$50.9 million due to:

• “Continued growth in Group revenue - the increased working capital requirements stem from the difference in timing between the Group’s payroll (every 14 days) and receipts from customers (days sales outstanding 65 days).

• The expansion of the Group’s offsite rebuilds and repair service offering at the Mader Maintenance Centre has more than doubled the working capital requirements of this business unit.

• The exceptional growth rates in North America in addition to the nature of the services provided has also increased the level of working capital required, particularly in Canada.”

The Rest of World segment experienced a 21% decline in revenue to A$4.4 million, but management remains committed to it.

Mader, like Esquire, is firing on all cylinders and appears to be doing an excellent job. I continue to believe that it is a wonderful, but fully priced business.

The list below are links to Mader’s First Half Fiscal Year 2023 updates:

Link to Mader’s First Half Fiscal Year 2023 Report

Link to Mader’s First Half Fiscal Year 2023 Results and Updated Guidance

Link to Mader’s First Half Fiscal Year 2023 Investor Presentation

Link to Mader’s First Half Fiscal Year 2023 Webcast

I will not update Mader’s stock price as it has only been about two months since I posted the writeup on the business.

Deckers Outdoor Corporation (NYSE: DECK)

There is no update on Deckers currently as I published my writeup a month ago.

Additional Updates

Plumas Bancorp (NASDAQ: PLBC)

2022 was another record year for the bank. Per its 2022 Q4 Press Release, linked here, the business reported record net income of $26.4 million or $4.53 per share, an increase of 26% from 2021. Return on average assets was 1.61%, up from 1.52% during 2021. Its return on average equity was 21.9% versus 17.8% during 2021.

Nonperforming assets which are comprised of nonperforming loans, other real estate owned and repossessed vehicles were $1.2 million, down from $5.4 million at year-end 2021.

The bank also managed to sport an efficiency ratio of 46.9%. Not too shabby.

What about its stock price? I published my writeup on the business on 12/17/2021 on MicroCapClub. The stock price closed at $32.82/share that day. The stock price closed at $41.53/share on 3/6/2023 which is an increase of 36.48%.

Best of the Best plc (LON: BOTB)

Per its Fiscal Year 2022 Annual Report, linked here, revenue was up 95% versus Fiscal Year 2020 results to £34.68 million. Profit before income tax was £5.14 million versus £4.21 million in Fiscal Year 2020. Management stated that 2020 was the most comparable year which to base results on which I agree with because 2021 was clearly an outlier in terms of both revenue and profits.

The dividend increased to 6p per share versus 5p in Fiscal Year 2021 and 3p in Fiscal Year 2020.

The business also announced a strategic investment from Globe Invest Limited on 9/8/2022. For full transparency, I got caught lacking on this announcement. I was unaware of it until a month or so ago.

Per the press release, linked here, Globe Invest Limited, the family office of Teddy Sagi, took a 29.9% stake in the business. They also entered into a licensing and distribution agreement which, per the press release, states, “Under the Licensing and Distribution Agreement BOTB will exclusively license to GIL (with a right to sub-license on a B2B basis) the BOTB business model, concept and related services, in all territories outside the UK.” The two entities also agreed on marketing and collaborate on agreement. The terms of it are as follows and were also taken from p. 1 of the press release, “The Marketing and Collaboration Agreement will allow GIL to promote BOTB content in the UK non-exclusively, based on an agreed revenue share or CPA model. The parties will also discuss and agree cross-promotional commitments in connection with each party’s products and services.”

The rationale for the deal was that the partnership with Globe Invest Limited and Teddy Sagi was the best way to expand the business internationally. I don’t totally buy that reasoning, but what can I do? I’m just a guy that likes its business model and returns on capital.

Globe Invest Limited acquired shares from William Hindmarch and Rupert Garton which brought their holdings down from 32.06% and 9.06% of the company to 11.86% and 3.35%. Globe Invest Limited also has the right to appoint two non-executive directors to the Board.

The business also released its 2022 Interim Results on 1/26/2023 which are linked here. Per the document, revenue was £13.65 million during the period compared to £7.60 million during the first half of Fiscal Year 2021. Profit before tax was £2.71 million for the period versus £1.38 million during the same period for Fiscal Year 2021.

Best of the Best still pulls at my heartstrings because of its high returns on capital and long growth runway. I’ll just have to see how this new partnership works out.

What about its stock price? I published my writeup on the business on February 8, 2022. The stock price closed at £4.15/share that day. The stock price closed at £6.26/share on 3/6/2023 which is an increase of 50.84%.

Valvoline (NYSE: VVV)

Valvoline announced an agreement for the sale of its Global Products Division to Aramco on August 1, 2022. A link to the press release about the agreement can be found here. The purchase price was $2.65 billion. There was an update in early February via its Q1 Fiscal Year 2023 Press Release, linked here, stating that, “Sale of the Global Products business remains on track with closing expected in early calendar year 2023 with $1.6 billion of the net cash proceeds expected to be returned via share repurchases in the 18 months following close.”

Per the press release, linked here, Valvoline completed the sale of its Global Product Division to Aramco on March 1, 2023. The purchase price was $2.6 billion in cash. Quoting Sam Mitchell, Vavoline’s CEO, "Today, Valvoline Inc. becomes a pure-play, automotive services company with a right-sized capital structure and enhanced capital allocation. Additionally, Valvoline Inc. expects to offer significant capital returns to our shareholders through equity buybacks over the next 18 months. We are excited about our future and our ability to continue driving long-term shareholder value.”

Most intriguing is that Valvoline plans on repurchasing $1.6 billion of shares over the next 18 months.

Given the repurchase and that it is now a pure play oil change business, Valvoline may be the first business that I do a second writeup on. I’ll also hold on providing the change in its stock price until then.

Revolve Group (NYSE: RVLV)

2022 wasn’t the best year for Revolve. Let’s start with the bad. Per its Q4 and Full Year 2022 Press Release, linked here, net income was down 41% to $58.7 million from $99.8 million in 2021. Free cash flow was down 70% to $18.27 million from $60.12 million the previous year. Fulfillment costs were up 49%, selling and distribution costs were up 43%, marketing expenses were up 29% ad general and administrative expenses were up 29%. Lastly, inventory was up 26% to $215.2 million from $171.3 million in 2021. Sheesh. It does state in the press release that management believes, “… we are making progress in our efforts to balance our inventory within a dynamic operating environment, highlighted by a meaningful reduction in the spread between our inventory growth rate year-over-year and our net sales growth rate year-over-year in the fourth quarter of 2022 on a sequential quarter basis when compared to the third quarter of 2022.”

Feel free to take a shot of bourbon and chase it with another one at any time after reading the previous paragraph.

Let’s move on to the positives. Sales were up 24% to $1.1 billion. Gross profit was up 21% to $592 million. Active customers rocketed 27% to 2.34 million. Total orders placed ballooned 25% to 8.3 million. Average order value ticked up 12% to $304. These stats indicate that the business is growing, but they don’t do much to numb the pain from the previous paragraph.

What about its stock price? I published my writeup on the business on 7/2/2022. The stock price closed at $32.06/share that day. The stock price closed at $27.35/share on 3/6/2023 which is an increase of 3.76%.

Watchlist

Shown below is a screencap of the five businesses I’ve said I would own outright if I could afford them. Plumas is still the only one that I actually own shares of. My lack of ownership of the other businesses has a 100% correlation to not having disposable income or money to manage.

2021 and 2022 were consecutive record years for Plumas which makes it easy to continue by bullish outlook on the business. It’s trading at <10x 2022 earnings and will probably continue to do so until it starts getting covered by analysts or moves up into larger indexes. It remains a long-term hold for me and I’d still like to own the entire business if I could afford it and get regulatory approval. It is a wonderful business.

Like Plumas, 2021 and 2022 were consecutive record years for Esquire. It has the best financial performance of any bank I’ve ever analyzed and still trades at ~10x earnings. Again, like Plumas, I think it will continue to trade like this until it starts getting covered by analysts or moves up into larger indexes. It’s a wonderful business and I’d like to own the whole thing if I had the money and could get the regulatory approval to do so.

I’m happy with Best of the Best’s performance even though FY 2022 was a down year compared to FY 2021. It has a great thing going and continues to have high returns on incremental capital. I wouldn’t be surprised if Teddy Sagi or another buyer acquires the business if things go well with its international expansion. I wouldn’t mind being one of those buyers if I had the money.

Revolve is relatively flat since I wrote it up. 2022 was rough, but I still believe in its co-CEOs, its business model and growth runway. I think the business was being given away in late November of last year when its shares got to <$21/share. Like I said in my writeup, I’d own the whole thing if they were selling and I had the money to acquire it.   

If you read my writeup on Yeti, you’ll recall that I was bullish on the business and that I would buy shares if I had the money. Clairvoyance is a gift I lack and my bullishness on the business would’ve made me look foolish over the last seven months or so. I’m still bullish on the business long-term and thought shares were exceptionally well priced when they were trading at ~$30 from late September through early November of 2022. I can say that I’ve learned a lesson in buying fully priced stocks. For now, I remain a fool.

Thanks again as always for reading. If you liked this writeup then please feel free to share it and subscribe!

Please reach out to me at possiblevalueresearch@gmail.com, @PossibleValue on Twitter and @Heshy on MicroCapClub with any comments, concerns or questions. Lastly, don’t forget to tell someone that you love them.

*** Remember that this isn’t investing advice. Consult a trusted financial or investment advisor before making any kind of investment decision. ***

Disclosure: I am long $PLBC.