Donhigginbotham

How to Evaluate a Home Builder 0

How to Evaluate a Home Builder

riverviewinnercityshowhomesHaving your very own home can be very rewarding as you do not have to worry about making expensive improvements that you will just leave behind like when you are renting.  When it comes to having a home, nothing beats having it built from the ground up because this gives you better control over the distribution or layout of the different areas of the home.  Of course, when having your dream home built, it is important that you hire the right home builder for the job.

There are many home builders all over the country and it is crucial that you properly evaluate the construction company that you will be hiring to build your home.  In the past, hiring a construction company meant that you will around town asking or perhaps scouring through the yellow pages.  These days though, things are more high tech because you can find home builders near you by searching the internet.  Some construction companies have their own websites and some simply have Facebook pages.  Either one will do as any of both will help you in properly evaluating a home builder.

Once you’ve located the website or Facebook page of a home builder in your neighborhood, try to assess the words and pictures within their websites.  Do not always trust testimonials on websites because many of such are just done by the website owners themselves.  Try to evaluate if these testimonials are real or just sugarcoated.  Check if these testimonials also have different dates.  If the dates are very close to each other, spanning only a few days, then they are most certainly not trustworthy.,

One of the important things to look for inside a website is the past projects that a home builder has done.  This is not always about showing off good homes, but more of allowing visitors to get glimpses of the projects you have been doing recently.  Laid-out floor plans also helps in assessing as this helps in giving you an idea on how you can distribute some areas around the home.  Other factors may include the home builder’s scanned images of their licenses and other important documentation the helps further prove their work and professionalism. New home builders Calgary inner city these days is one of the most highly sought after home builders within Calgary.  If you want your home done with very satisfactory results, this is the construction crew that you should hire.
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Riding the Hog 0

RIDING THE HOG

Riding the Hog

Harley-Davidson has been one of my favorite companies for several years now. A very “Buffett-esque” company, if you will, Harley-Davidson (HOG) earns consistently high returns on equity, sports very strong margins, reinvests a chunk of earnings profitably to drive growth, boasts a management that has achieved remarkable success over the past few decades, and, of course, enjoys a brand name and competitive position impossible to rival.

When evaluating a company, I always find it good practice to poke holes in its operations, prospects, management, etc. and give as much credence as possible to its competitors. It allows you to avoid getting too giddy about any company, and keeps expectations and risk factors in line with reality. In Harley’s case, this was a very difficult exercise. There’s simply not much to poke. And with around 49% of the heavyweight bike market, there’s no competitor nearly as dominant.

Some have expressed concern that Harley will suffer from shrinking profits as the baby boomer generation retires and stops buying Hogs en masse. That demographic has fueled growth for years, and it may be true that with its maturation comes Harley’s maturation. Indeed, 80% or so of the company’s revenues are still in the US, and the aging baby-boomer generation won’t drive profits domestically in the same way we’ve seen the past decades.

Nonetheless, the company is expanding successfully into new markets, and is seeing fast growth in Europe while also entering into China in the past few years, opening its first dealership in Beijing earlier in 2006. While a relatively small portion of Chinese middle-aged men (middle-aged men being the company’s most important demographic) have the discretionary income to go out an buy a Harley, the number is steadily growing, and if Harleys are successfully marketed to a burgeoning middle and upper class of Chinese, shareholders could see respectable growth for years to come.

Yet, what most people don’t know is that China’s motorcycle industry is already quite competitive, and the country is starting to see some of its own icons emerge. Harley has recognized the growing biker culture in China, and is flexing its muscle to capitalize on it. But call me pessimistic, this is going to be a tough sell. With the top 20% of Chinese only earning around $3700 annually, and given that the cheapest Harley will likely cost almost twice that in China (since the company is not manufacturing there), Harley’s share of any Chinese market is likely to be small (especially at first). But I believe their long-term strategy (which is not capital intensive and will focus on steady and sustainable growth) is sound and can yield dividends in the long-run.

So does that make the company a buy? Well, I virtually salivated over the share price when it hit around $45 about a year and a half ago. I felt, at that time, that the shares were worth at least $65-70. So I bought some near $50 and held for a while, only to sell out this year (stupidly, you might say) around $63. Why I did that is anybody’s guess.

What about the here and now? With shares trading around $70, is it still a bargain? Well that depends how you look at it. Even at $70, you’re getting a great company at a decent price. While it’ll be hard to trounce the market at these levels, steady growth prospects along with the plethora of aforementioned selling points should make for a comfortable and likely market-beating return over the long-run.

That said, I’d estimate the shares to be a bit more fairly valued on a DCF basis today than they were around 18 months ago. I estimate the shares are worth somewhere between $65 and $85, so those seeking huge bargains won’t find it here, but anyone looking for a first-class operation with a wide (and widening) moat should keep riding the HOG.

Tech 0

Eternal Technologies (ETLT.OB)

I received an email earlier today from a reader suggesting a micro-cap value company, Eternal Technologies, Inc. (ETLT.OB). Operating in China and incorporated in Nevada, the company offers embryo-transfer services, large-scale improvement of livestock quality, and the development of agricultural and medical  products. If you know exactly what any of that means, shoot me an email. I’d love to know.

But all joking aside, the company seems compelling due to its attractive valuation.  Its price to tangible book value, coupled with boatloads of marketable securities and cash on hand, give the company around a 40-50% discount to realizable asset value. All the while, the company has virtually no debt, a profitable income statement, and is cash flow positive. It also expects much of the same in the coming year(s).  So with all that going for the stock, it’s a no-brainer, right?Tech

Not so quick. Before getting too giddy about the opportunity, I wanted to share my email response to the suggestion. Forgive me again for allowing my cynical side to run amuck, but I believe their are several risk factors in the company that are tempering my greedy side. Here goes:

“I’ve checked out ETLT before and went back to take another look. The cash in the bank is tempting, but I’m a bit    hesitant to buy any shares. I see the company as having several material risks offsetting its net asset value.

First, the company is a Chinese operation with ‘government backing.’ Truth be told, I have no idea what that means, and, for that matter, I don’t know if I like the Chinese government backing anything I have my money in right now. I know little to nothing about China, and I believe investors face substantial risks investing there, and should be prepared to heavily discount any investments there.

Second, the company may have that cash stash, and you may be right that their acquisitions are good. But I just don’t have the ability to say one way or another. And generally speaking, when I can’t tell for sure that an acquistion is good, I assume it’s bad. That said, I’d love to see [more of] your research on this.

Third, the business is inherently complex, and given the high tech area in which it operates, I have no special knowledge that can give me an edge. Tell me that management planned to distribute what they have in the bank or allow it to earn returns in a much simpler business then that’s a different story. I have no idea what they plan to do with the assets, and because they’re investing in (other) high tech businesses, I’m especially afraid that whatever they do, it’ll be stupid.

Fourth, be careful not to fall into the trap of looking at the total asset value and not the diluted per share values. The company has been issuing equity at a rapid pace, and has 2.5 million shares worth of in-the-money options waiting to be exercised. Running a quick calculation reveals a ‘true’ per share value of about $1.11 in book, not $1.30.

And last but not least, I always worry about these very small operations having materially significant deficiencies in accounting and control procedures. Though their auditors (whom I’ve never heard of) issued a clean opinion, they also reported at least two material deficiencies [in the past few years, including 2005]. And, on a completely different note, their somewhat sketchy website doesn’t ease my worries. I’m not saying they’re fraudulent, but you never know what ugly practices lurk behind the scenes.

Again, I’d love to see or hear more research. If my aforementioned fears could be eased, I’d be very interested in purchasing shares…”

I’ve seen a fair bit of bullishness on the stock on message boards, other posts, etc. The enthusiasm is understandable. Give any investor a profitable and growing company trading for less than liquid assets, and they well should be excited. But I believe ETLT is a different can of worms, with a set of unique risk factors that must be taken into account and fully realized before any investment is made.

1 0

Soon to come…

I’ll be publishing something cliche to the extent of “Where to Look in 2007″ within the next few days, but don’t expect anything too special. I don’t like touting stocks when I don’t have very many good ideas (and trust me, I may have a few, but not many), and I’ll probably focus more on areas to look rather than specific stocks.

That said, I’m always on the hunt for bargains and ideas, and I research ideas every day. So I’ll continue writing as much quality content on specific companies as I can, but I want to be sure to give them fully deserved attention. Fair warning :-)

See you soon.

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Submit Your Own Idea

Given the oustanding quality of readers’ analysis and comments I’ve received on the site and through email, I’ve added a Submit an Idea page to promote more of a community atmosphere. I always love to hear your ideas and research, and I’m happy to publish articles of high quality content and top-notch insight (with a link to your site, of course). Feel free to submit anything you’d like me to take a look at. Looking forward to hearing from you…

Over Stimulation 0

Over-Stimulation

It’s hardly a problem when it comes to sex, but it’s a big problem when it comes to investing. What, was that too forward?

Okay, fine. I apologize. But seriously…Over Stimulation

When investing, it’s easy to become caught up in hype and activity surrounding the stock market. We have a natural tendency to want to just do something when everybody else is doing something. Red and green tickers flashing every few seconds, streaming news stories, hyper-active Wall Street types screaming their buy orders, and a host of other signals all tell us, often without our conscious awareness, that we are being left behind and that, to keep up, we must partake in the festivities. After all, who wants to miss that quick buck promise from a screaming Jim Cramer? And who wants to sit idly while someone (on TV, nonetheless!) tells them their favorite stock is a dud?

So what’s the problem with this? Well, to put it in plain English, intelligent investing often requires you to sit quietly on your ass. Active trading does several harms to your portfolio.

First, it fails more often than not. Those who believe they know where a stock is headed in the next day, week, or month often have no clue and are merely speculating. Second, it takes away valuable time for thorough research. Time spent sitting and staring at your tickers does nothing to give you great ideas, presents an opportunity cost since you could be reading a 10-K and getting to understand a company instead, and often results in anxiety because you’re so damn worried what the stock will do next. But who cares? If you’re right about it, it’ll go up eventually. Give it time and leave it the hell alone. Third, active trading increases transactions costs. Granted that with extremely low online commission expenses one trade is not that big of a deal, but if you’ve actively traded for an entire year, you’re looking at hundreds, if not thousands, of dollars in excess commissions by year’s end. For most people with portfolios of a small size, this can represent a large percentage of the portfolio. And finally, it ups the value of taxes you have to pay. With short-term capital gains taxed at income levels, trading gives you an extra hoop to jump through in order to beat the market.

How is one to deal with over-stimulation? I, for one, force myself not to look at my portfolio more than once a day (if that), and I never keep any sort of streaming quotes on my computer screen. I avoid reading anything having to do with a short-term trading idea (some say this is ignorant. If so, I say ignorance is bliss. And lucrative). I limit the amount of time per day I spend syphoning through blog posts, message boards, or any other potentially stimulating activities that don’t give much in the way of researched ideas or sound advice (do me a favor and please tell me if my own blog diverges from this). Finally, every time I’m tempted to check quotes or start buying and selling things on a whim, I walk away, take a break, come back and read a 10-K instead.

Conquering the desire to stay active and do something is no easy task. It often requires boring substitutes like reading SEC filings. But I believe avoiding the devastating tendency and conquering over-stimulation is necessary for prolonged success. After all, some things are better saved for the bedroom.

3 0

USG Corp. (USG): Behind the Sheetrock

USG has gotten a fair deal of press given Warren Buffett’s holding in the company and its emergence from Chapter 11 Reorganization to handle its asbestos liability claims. Plenty of folks are calling it a bargain, and some are itching to keep buying, but to temper myself I took a more in depth look at the company to get a feel for what it’s worth.

First things first. In summary fashion, the plan of reorganization and the company’s own plan to finance it are as follows: The company has paid $3.95 billion to a trust established under section 524(g) of the Bankruptcy Code which will be used to fund all past, present, and future asbestos liabilities. With over 100,000 cases previously brought against the company, at least they won’t have to bother with them again.

The company is financing this large sum with a combination of available cash, the use of an approximately $1.1 billion tax loss carryback expected in 2007 thanks to net operating losses incurred in connection with establishing the original asbestos reserve, and proceeds from a “Rights Offering,” in which shareholders had the right to purchase an additional share at $40 for each share they owned. With Berkshire Hathaway backstopping the offering, almost 45 million shares were sold, for net proceeds to the company of $1.7 billion. Despite the dilutive effect of the rights offering, I believe this combination was an intelligent way to finance the nearly $4 billion liability (of course, it helps that $1.1 billion of the liability is going to be financed by benefits received from the original loss incurred by it).

With this success and Buffett’s purchase and commendation of the company, it’s no wonder many are tempted. So now let’s look at the operating business, independent of the now bygone liabilities. USG is the top producer of gypsum wallboards and boasts a strong brand image (ever heard of Sheetrock?), low-cost producer status, and great economies of scale. It’s qualitative moat, if you will, rests on the fact that anyone, even with tremendous resources, will have difficulty achieving the scale, distribution, and cost structure of USG’s main product lines, and will probably have a tough time replacing Sheetrock’s brand image. Given management’s experience and its top-notch performance in bankruptcy court, you can rest assured that the company is in good hands.

Regular operations (prior to distored earnings from last year) sport a high return on equity and strong cash flows. The company has been successful in expanding its top and bottom lines over the long term. While plenty of pundits predict slowdowns in the residential property sectors and hence USG’s sales, the company draws over half of its revenues from commercial buyers. And regardless, the long-term, big picture is more important than trying to predict the next swing in the housing market. So, what about the valuation.

Before getting too giddy about Buffett’s buying, investors should consider 1) that he originally purchased shares at bargain basement prices in 2001 and 2) that his recent accumulation of shares was done at $40-45 (as opposed to the current $55 pricetag). Also, keep in mind that his costs were partially offset by USG’s $67 million fee to Berkshire Hathaway for backstopping the rights offering. Thus, enthusiasm tempered, we can try to look at a DCF.

Generally speaking, I don’t like quoting anything near precise figures for any DCF, since the output is only as good as the inputs, and because if the analysis doesn’t scream at me as giving a huge margin of safety, I’m not too interested anyway. That said, I estimate the value of the shares to be somewhere between $50 on the low end and $85 on the high end. I know, I know, that’s a wide discrepancy, but like I said, I think seeking a high degree of safety (a margin of error) is paramount to seeking a high degree of precision. Considering the limited downside and potential 60%+ upside, investors looking to coat-tail Mr. Buffett may still do reasonably well in USG, though no one should expect many-fold increases with high probability (though I’m the first to admit it is possible).

Lens 0

Concord Camera (LENS): Still Room to Fly

I wrote about LENS two weeks ago in a post briefly discussing my basic thesis on the stock. To briefly sum up the general idea, LENS, despite the terrible economics of its core business (single-use cameras), LENS is sitting on a boatload of cash and saleable assets while trading for just a fraction of its tangible net worth. Today, I would like to more fully discuss catalysts behind the stock’s recent run-up, and potential future catalysts for reaching what I believe to be an intrinsic value still plenty higher than the current share price.

The stock has nearly doubled in the past two months, largely thanks to 1) a reduced quarterly cash burn and increased earnings thanks to heavy cost cutting measures and 2) extraordinarily heavy insider buying by the company’s CEO, Ira Lampert (which has constituted a tremendous chunk of volume in the last two weeks). Lampert has accumulated an additional 4.24% of the company since mid-November at prices between $3 and $4.60 per share, bringing his total ownership around 8.4%. The transactions have been largely open market, with one recent 75,000 share purchase via exercisable options.

In any case, it’s clear to me that Lampert is either a) very bullish about the prospects of profitability going forward (I’m not), b) accumulating as many shares as possible at low prices before planning to commence some sort of buyout or larger tender offer, or c) crazy. A few would argue c), more would hope for b), and I speculate that it’s a), due somewhat to my tendency to be pessimistic and cynical. Which presents a problem, of course, since I don’t think the company will reach sustainable long-term profitability anytime soon, and, possibly ever (yes, I said it).

Despite having a large chunk of the single-use camera market, the market is shrinking quickly and will likely not exist ten years down the road. Disposable cameras are dinosaurs in the “image capture market,” analogous to the horse and buggy during the early parts of the 20th century. So don’t hope for miracles in this department.

The company is aware of this, and is attempting to enter other markets via the manufacture and marketing of, for instance, personal security equipment (check out their OnGuard Kids site). My guess is that they believe their current manufacturing infrastructure can be relatively easily diverted into making new widgets like these watches, while their solid relationship with Walmart can be leveraged to get these things on the shelves. This would mean low entry costs with safe demand, opening up new sources of revenue for the company. But here’s the problem with that as an investor.

Regardless of the optimism that one could easily get caught up in, investing on the basis that entirely new products will drive future growth is inherently entrepreneurial. As an entrepreneur, there’s nothing wrong with that. But as a value investor, there is. So allow me to do two things. First, the entrepreneur in me will evaluate OnGuard Kids as a new or “innovative” product (hint: it’s not), and second, the value investor in me will talk about the [better] reasons for investing.

The Entrepreneur: I just don’t think it’s a very great product. And if you disagree, I don’t think these things would ever sell to more than the overly paranoid soccer mom market. Here’s my take in short. The product is simply a watch with a loud alarm on it to warn others of danger or ward off kidnappers. That’s it. Nothing fancy. The problem with that as an innovation is that, well, it’s not an innovation. Better such watches exist, and new devices with GPS tracking power (which OnGuard does NOT have) have and will continue to hit the market (for instance, check outhere). Furthermore, the market for a second-rate product in a small demographic (overly paranoid soccer mom market) just isn’t that big. And for a second-rate and cheap-looking product, the watch is expensive ($40). As with single-use cameras, don’t count on miracles. If Wal-Mart is dumb enough to stock it, don’t expect much demand from the end-customer.

The Value Investor: The company can manufacture all the new widgets it wants. None of this matters all that much because LENS is, to me, an asset play! The company is conservatively worth around $7.80 per share and likely more, given its stash of cash, reduced cash burn, and “safe” liabliities. An investor should be investing on the basis of the margin of safety and the low probability that management depletes the boatload, and NOT on the promise of entrepreneurial riches (though I do hope the company will prove me wrong). While a successful new venture leading to profitability will send the shares skyrocketing, I wouldn’t count on it with any high degree of certainty. Yes, profitability seems to be on the horizon with the reduced burn. Yes, management at least recognizes that it is selling buggies to Ferrari drivers. And yes, profitability would be especially bountiful with $16.7 million of US and $54 million of foreign (mostly Hong Kong) tax-loss carryforwards expiring in 2010 and 2016. But that is all wishful thinking.

Luckily, the company has a plethora of other catalysts to make the risk/reward ratio quite low. A 50% margin of safety, heavy insider buying, a possible buyout for that matter, very little debt, the exitting of unprofitable business lines, etc. The main risk factor is that management does something stupid with its balance sheet and pursues highly unprofitable lines of business. But given how conscious they have become about costs, this seems unlikely, and I am betting that they maintain at least the present asset base. This would allow the shares to more than double (again).

Soccer moms and Wal-Mart aside, there is an unmistakable “venture-like” element here, but like a good value investor, it’s the stodginess and cash that courts me.

4 0

Newsletter added.

Bad news is no posts today as I was busy setting up the newsletter with the help of a friend (thanks G!).

Good news is that there is now a newsletter signup. Obviously I encourage everyone to sign up. I promise I will never spam inboxes or send more than 1 email per week ;-)
Cheers!

People 0

People, people, people.

In his Common Stocks and Uncommon Profits, Philip Fisher pointed out that the force that creates “an outstanding investment vehicle…is essentially people.

Warren Buffett says that one of his main tasks in evaluating a company is to look the management in the eye and see if they are truly passionate about their work.

Peter Lynch points out that he loves managements who love their companies and that pass up the fancy corporate offices for garage-style digs to save money.

Eddie Lampert says he places more emphasis on the people who put together a track record rather than the track record itself.People

Still yet, Marty Whitman told me that he’s been fortunate enough to “go to bed with great managements” and will look for the same in future investments.

Catching the trend?

Clearly, one of the most important jobs for investors is to evaluate the management of the companies in which they invest. Managements have the power to create gold mines or destroy castles, and with the way proxy machinery really works in corporate America (with managements typically choosing boards of directors rather than shareholders), it is absolutely essential that the “little guy” know what kind of people he is dealing with.

Not surprisingly, many investors will talk about how much they care about evaluating managements or how good they are at picking up talent. And who can blame them? No one would admit that they haven’t really looked at the people behind the scenes. No one would admit that they are simply not good at picking out talent and weeding out incompetence. And further still, no one thinks they are not a “people person” who can read others like a book.

But few – I argue very few – actually walk the walk. They think they know the management and how great (or bad) it is, but they’re often mistaken. Yet, one cannot really blame them for this. As the huge majority of investors are outside, passive, minority holders, getting access to management is not the easiest thing and often makes little sense given the size of the investment. So what is the average investor to do?

I propose a few easy steps to gain insight into the passion, competence, and shareholder friendliness of the people behind your investments. These are steps that any investor can take by making use of public documents, the written word, and some common sense. Some you’ve probably thought of or heard of before, but I hope you gain something from at least a few of them.

  1. Check the salaries. Managements of publicly traded companies must disclose their salaries in 10-K’s filed with the SEC. Take note of how generously the management is paid. Naturally, smaller companies should have managements that are paid less (a $20 million company shouldn’t have a CEO getting paid $1 million+). Larger companies generally display the reverse. But overall, the most important thing is to determine whether management deserves those salaries. Just because a company is large or has “potential” does not mean management has truly earned its paycheck. How long has top management been with the company? How well have they used shareholder money to gain high returns?
  2. Check the bonuses. Beware of managements that are awarded generous stock options, pension plans, perks, etc. This information is also disclosed in public documents, and you can easily find how many stock options management has been granted, what the exercise price and date of those options are, etc. The general theory behind options are that they align interest with the shareholders by giving management incentive to perform well for more pay. But keep this in mind – generous options packages can promote risky behavior since there exists unlimited upside and little to no downside for management if things fail. Also, more commonly, they can lead to practices that lift share price without creating real value (unnecessarily high dividends, unnecessary share buybacks, practices that show more earnings even though more tax effective methods are available, or, at its extreme worst, fraud). In short, be generally wary of managements that are willing to waste or dilute shareholder value to stuff their own pockets.
  3. Check the ownership. I prefer managements that have heavy ownership in the company and a large fraction of their net worth tied up in the company. It shows that they will have a greater tendency to think and act like you as an investor. I’m suspicious when I see executives sell-off a ton of shares, and I like to see when executives are putting their money where their work is and buying shares on the open market.
  4. Listen to conference calls. It’s probably the best way small shareholders have to get acquainted with management and hear them talk about the company, its goals, its attitudes, its triumphs and failures. Most importantly, focus on their discussion of the failures. The most honest and competent management will have no shame in and will not try to hide their mistakes. When management comes forward and says “we did this wrong, we need to improve here,” you can generally bet that your dealing with honest and competent people. When you hear them always blaming circumstances, customers, or other people, proceed with extreme caution. [Note: A great resource for analyzing conference calls can be found atSeeking Alpha, where transcripts are available free of charge]
  5. Note the tone in the 10-K section dedicated to Management’s Discussion and Analysis. This is similar to listening to conference calls – how does management discuss its failures and shortcomings? Are they confident? Over-confident? Honest? Suspicious? This is generally tougher since the section is obviously written before hand (unlike a conference call) and remains largely objective, but you can always be on the lookout for warning signs.
  6. Pay attention to the employees and rankings. I love to read Fortune’s list of the best places to work. When a company treats its employees with dignity and respect and pays them well for their hard work, I become a bigger fan of the company as an investment. Companies that make great places to work are usually so because people from the top have made it that way. I believe that, in general, a company that treats its employees well will be more likely to treat its shareholders well. Not to mention the improved productivity of the workforce whose hard work makes owners money.
  7. Pay attention to customers. Managements that stress superior customer service are people-conscious, and, as with #6, usually shareholder conscious. If customers complain about a company’s inferior service, nasty employees, and terrible value, you can bet on an inferior stock, with nasty management, and, well, terrible value.
  8. Fib a bit. If you have the guts and time, do what Peter Lynch recommends – fib a bit, call the company, tell them you hold a bunch of shares in street name, and that you wish to speak with management. While doing so, remember this: a company that refuses to talk with you, the “big shareholder,” is not worthy of investment for obvious reasons. And, if they do speak with you, make the most of it and ask away. Pepper them with questions and try to get a feel for their abilities.
  9. Trust your gut. If you have a sneaking suspicion that the CEO of the company you’re researching is some slick fast-talker who’s just looking for a quick buck, do yourself a favor and don’t invest. Even if you’re wrong, there are no called strikes in investing and you save yourself the headache.

There are clearly plenty more great ways to get to understand management, but I believe these are nine useful and generally easy ways to get to know the people behind your investments, even if you’re not a big shareholder. In short, look for passion, honesty, aligned interest, and people-consciousness. As Warren Buffett says, it’s simple, but not easy. Hopefully I’ve made is a bit easier.