In Part 1 we had a an introduction into the longer game plan for us and covered off important lessons such as not budging when the road is boring and there is not much scenery around...let's investigate some more ideas as to what makes a great company and why holding out has it's rewards. In Part 2 I'll even give you a name of a very unique management fund not long after I disclose the performance of managed funds in general and why YOU and I are already ahead of the game.
THE PRINCIPLES CONTINUED...
PRINCIPLE 8 - Strong Management and excelling attributes.
What makes for a great CEO?
a) Great Allocators of capital b) They make money irrespective of what the overall market is doing. The classic case was APT, it didn't matter the world was entering phase 1 lockdown of the pandemic, their sales kept going, people still had to buy food and essentials... c) They do not think like other management or even other CEO's.
All good in theory Mozz, I can read this out of a text book...yes...I get your point...ok, how about some specifics that relate squarely to us:
1) Getting Aussie footballers on board - Brilliant...put the spot light directly on people that are acutely needing it and are in the limelight. What beacons of marketing excellence they have made!
2) SAS alongside Phase 2B - Why not run a clear and open test ALONGSIDE the main exam? Gives us shareholders insight of raw proof in parallel.
3) Acquiring real word evidence for PGIC - will come in handy later on when we get to the selling phase.
4) Bringing on experts in the field. Dr D Felson on board, US based CMO on board, Master stokes.
5) Multiple pots on stove - research tie ups . Don't be just reliant on the one revenue stream.
6) Cement our relationships - Tie up with Bene. This relationship has been built, it wasn't always like this.
7) De-risk - MPS - FDA sees this in different light, compassionate stance.
8) Break up the third phase OA trial into multiple trials, yes yes I know it adds time,...but who here has thought about the sheer exponential VALUE it is going to add. Mate, I tell you if the data comes positive for the DMOAD...even I will wish I had a few more shares and had sold my spare blankets and that silly desk lamp to buy a couple more shares.
Do I need to go on? Can you get a sense of the achievements PAR has made already...this is setting us up for the strongest of foundations. I understand the SP STILL isn't reflecting this yet...but as I mentioned before earlier this year...
A) Look at the SP over the longer term since inception, what a lift, and this is all without a cent of real revenue B) It's a coiled spring, getting tighter and tighter....our explosive days are ahead of us, our foundation is strong...think Rubber Concrete strong.
Strong foundations, crossing all our t's and dotting our i's. A slow laborious task but the rewards are coming.
"Many of the best performing stocks of the past 50 years had such [Eg Jobs, Walton Ichan] a big figure for at least part of their history". Mozz Take: Yes I know there have been stumbles in regards to PAR, but look at the few quick positives I can come up with...
Foresight and experience
Bed down the IP and lock it up using BMLS in terms of patents
Develop excellent supplier relationship
Heck, why not try the product on oneself if it's so good?
Think outside that square, do something not many of done, Aussie Footballers, EAP Program, SAS Program and of course R&D Day...love it...love the thinking, maybe not all resulted in the mass publicity we anticipated but now the evidence is in the books, it can be used along with our submissions and perhaps as importantly, later with the Docs and medical associations to say nothing of the payers, Govt and Insurers. Real world evidence? I want me some of that.
PRINCIPLE 9 - It's not bad to NOT be at the centre of the financial hubs (Wall st).
In fact a lot of successful companies are outside NYC. (Hey, us too!)...they don't get influenced as much by the herd mentality of those brokers in suits. Not saying they are all bad, but a company can't be in shackles, at the whim of these brokers, they need to find their own path and prosper....independently. This independence is already on display.
How Mozz?
Guys, we HAVEN'T done a deal yet. This is a GOOD thing! The longer we wait, the more our evidence builds up...the raw data from the multiple trials are coming...when the Big Pharmas get a whiff of it....well I don't need to tell you what will happen. PAR has the foresight to HOLD off...wait for a much more MASSIVE prospect in terms of lucrative deals. We want these BIG Pharmas to FIGHT over themselves to beg us to do a deal.
Mozz Take: Sure we need brokers to get the word out....we need them for funding, the road shows are important, so too the conferences not unlike the one in mid-Jan, but it shouldn't not come at a cost of stifling our ideas or changing our pathway and our thinking/product development, our R&D.
My fellow investors, not many analysts follow us currently...it's all very hush hush out there, a bit like the trading volume over the last few sessions...but our time is coming...the JP Morgan conference will get us warmed up but the real show will be IND and beyond. I'm not necessarily anticipating a large SP change on the day of the announcement but things should start on a more positive trend some time after this milestone is crossed. A lot of large instos over in the US deliberately wait for IND to vet out the companies that don't make the FDA P3 cut.
Principle 10 - Networking.
Great networking doesn't show up on financial statements. Mozz Take: See who Paul has brought over from CSL...from Mesoblast. Leaders in their field.Getting the Good Doc Felson on board as a consultant, other recent top talent some of which we have heard from just recently at the R&D Day.
Principle 11 - The Bottom Line
Other key areas on the path to success: 1) Low costs 2) Modest borrowings (we have none) 3) Low staff turn over - The combined effect of the above when done well provides for explosive wealth for all organisational stakeholders.4) Personal capital at risk (How many shares do senior management have?) 5) It helps to back talent.
I'm not a big gambler, I'll have a flutter here and there but I set my limits BEFORE I enter the casino...before I have a cards night with the boys... New guys to us and HotCopper-Par, Kenny Rodgers had a great song called The Gambler with some choice words that actually pertain to us..."You gotta know when to hold them"...indeed...DO the research, FORECAST what the future might be like and HOLD them (My views).
Read this (click on the blue hyperlink) post that cover's some of Kenny's words, a bit about bio markers and quotes from the master, Dr D Felson himself--- > Kenny
Don't be a random Panda and not set limits before you go gambling, same thing with PAR, know the risks, know the potential, invest wisely.
The House will win in the longer term! But you know what...the best way to make the house's money is from PAR...We ARE the ultimate house...and we also provide a decent pain relieving therapeutic at the same time, a win - win for both parties.
PRINCIPLE 12 - The Buffet Principle
1) Use other people's money to get rich. 2) He stepped back when the risk/reward ratio was not present...he just held and held until it did pay off. 3) He does the due diligence, no, this doesn't necessarily mean pouring through the accounts, quite the contrary, he is more interested in management, past track record and future potential, all traits that we, I believe, possess.
Of course in my view, It's not just blind holding on and being oblivious. Nah it requires some re-evaluation and some basic monitoring. Every 6 months, re-evaluate, watch for any changes in terms of the company we hold and keep tabs on the competition...what are they up to, is there anything better? Perhaps there is nothing better per se but the mode of delivery is better (one injection instead of multiple, or 2 pills day instead of injections)...but is the efficacy there, is the safety there...keep your ears...keep your eyes open....just because some Mozz poster bloke thinks it is the best thing since Caramel slice (or those awesome macrons)...means nothing...do your own homework, evaluate for yourself...keep a watch.
Macarons La Belle Miette style? - Please Mozz, do not post pics like this...too dang tempting...luckily this store is closed at the time of this post *whew*...no late night ordering for me.
Mmmmmmm tasty! But make sure you know what others are up to in the kitchen!...well pharma kitchen anyway.
PRINCIPLE 13 - Management Buy in - Skin in the game.
When they win, we win...easy. The more the better to a point. But of course there has to be some free float...management having too much % would be restrictive and lead to il-liquidity.
A MOZZ BONUS - THEY AIN'T MAKING FUNDS LIKE THIS NO MORE
Paradigmers, a section in Mayer's book reminded me of a lot of research I had done (Pre PAR!) in terms of managed funds. Now in my early days I, like many, was quite naive in my thinking in that I really thought Managed Funds were a great way to get ahead of the curve. I thought if you didn't have much idea and time to invest and research, these things were great. Just give your investment dollars to a professional dedicated outfit and they will look after your money for you utilising their teams of analysts and comb the markets and opportunities on a daily basis....
How little I knew.
How about this for an eye opener of a fact: Actually why not make it a Mozz Quiz® . I can tell you have missed and crave the Mozz Quizzes.
What % of professional ACTIVE Fund managers over the long term BEAT the Share Market?
These are the guys that are allowed to swing in and out of sectors as they forecast the near term, medium term horizons...these are the very same guys that have access to senior management of many companies, who have dedicated meetings and can supposedly garner information a heck of a lot better than you and I ever could. These are the networked professionals, with their super fast pc's and their direct lines.
A) Easy-peasy, it has to be high, these guys are paid top dollars and have the best stock picking talent there is...let's go a full 90% of them beat the market.
B) 81% beat the S&P 500 ... it has to be a decent percentage....
C) Can't be lower than 65% right?
The answer is 4%.
Yes I haven't got it the wrong way around...
"An incredible 96% of actively managed mutual funds fail to beat the market over any sustained period of time ." 4
Paradigmers, there are a very very few that can beat the market over time and these active fund managers charge a stack of fees. Over the long term it doesn't make a lot of sense to use them. There are MUCH better alternatives. As another example, here is one of the rare mutual funds from Mayer's book: Voya Corporate Leaders Fund, is so successful, their simple mandate was to pick 30 stocks at the time, that will stand the test of long term time and NEVER SELL!
There have been little to NO funds like this since...why not?! Because they don't make the fund managers any money...but they make client's heaps of money... THIS IS A VERY RARE FUND... PAR-folk...active managers make money when they buy and sell your stocks...they are in constant flux so they generate heaps of money...FOR THEMSELVES. hey pocket a small amount every time they buy AND sell...they skim off the bid ask spread. Now remember, this post isn't a discussion on investing styles, I'm including this as an example to give you a comparison on the merits of doing our own research and to just touch on the alternatives out there. What you do, at the end of the day is up to you.
I've been trading options for some time now...the biggest lesson I have learnt in order for me to get my probability of success up, is to simply remove the emotion. Make it clinical, make it automatic, remove the entire human emotion side out of it. When I place a trade, at least for the majority of the contracts, my chances of winning increase when I AUTOMATE the exit. Do this with PAR. How Mozz?
A couple of ideas as part of the MTM)
1) Say you have $5000 to spend right now and you are buying PAR for the first time...LOCK away some % of it that makes sense to you, never trade this, hold it always...ride the ups and downs. Stay with the course at least on this part of your shares.
2) Dollar cost average...love it, automate it...say you have $1000 spare per month...or even $1000 spare per three months....set aside a % of this to go into PAR and the rest into some other form of investment...some months will be cheap, some expensive, but over the long term you are automatically building up....over time you will amass a decent position and if it's all automatic, you won't even notice it's coming out of your pay.
In 7 years contact me...send me a post here and tell me what it is now worth and how happy you are that you held on to some of those PAR shares and rode the deep troughs of the wave at the time, (not advice, there still is some risk it can go down, dyor as always and don't put it all into PAR). Want more material and motivation in this longer term hold area? Simply read the 100 Baggers book.
Ok how about a quote from the book to illustrate it further...
"Pfizer, whose stock lost ground from 1946 to 1949 and again from 1951 to 1956. "Performance minded clients would have chewed the ears off an investment adviser who let them get caught with such a dog," Phelps wrote. But investors who held from 1942 to 1972 made 141 times their money".
This is what I want from you.....I want you in the very long term to say out loud "I still own me some of those PAR shares", maybe you traded some along the way, maybe you sold some to pay off loans or buy your family something nice...BUT you still have some holding, always.
And that's what they call 'a wrap' for Parts 1 & 2. In Part 3 I'll start off by putting Mayer and a buddy of his through a test, let's see how he performs! We will then cover additional material related to a longer term 100 x approach...but we will source the material from other places....
Foresight and experience
(20min delay)