Reece post-Morsco, page-46

@jg123456

Thank you very much for that. Valuable insights for all REH followers.

Ok, that's the nice commentary out of the way. Now for the devils advocacy.

That analysis, as insightful as it no doubt is, in my opinion is flawed analysis. If it were purely directed at an audience wanting to understand Reece, it would be fine, even great. However, as it is directed at the investor community, it must be considered flawed. Flawed because by being silent on the question of price, it does not address the investment opportunity.

It's the sort of analysis that is very beguiling to all the Buffett copycats, but dangerously seductive, because when prices are exceedingly high, it does not take much confirmation bias to find oneself with zero margin of safety, or worse. Because in seeking to reduce business risk to zero (even if that were possible), the Buffett adulators are taking on monster levels of price risk. And risk is risk, wherever it comes from.

Take the following:
"For any investment consideration, a robust analytical process is invaluable. Ideally this is a process that actively considers the nature of the business model, the financial pedigree of the company and, critically, the people involved as stewards of shareholder capital."

It's interesting that an investor that considers itself a "value" investor can make no mention of price, even in the essence (or ideal) of its process. This is typical of the Church of Warren, where value becomes divorced from price, and starts looking more like an ideology (an ideology we can be sure Buffett himself would not approve of).

Or take the following:
"Morsco is an American company there are few cultural differences, no language impediments, and a familiarity with the legal backdrop."


Really? Wow. That to me reeks of confirmation bias.