Hayden Capital just published its second quarter 2017 investor letter. Hayden Capital focuses on earnings growth, defined as a company's return on invested capital (ROIC) times its reinvestment rate.
The letter describes some scuttlebutt type due diligence:
So how do you do this in practice?
Let’s assume that one of the warehouses is being built in Rochester, NY. This warehouse is meant to replace another one 300 miles further, in order to cut the distance to the customer in half, and deliver goods quicker to households in the region.
The first thing we should do is call the Rochester Chamber of Commerce to get the public filings for this project. Whenever a company plans to build a new warehouse, it needs to get approval by the city. The firm will need to report how many jobs will be created, the average salary per employee (which we can use to estimate labor costs), how much tax revenue it will generate (used to estimate revenues), how large the property will be (used to estimate how many packages it can handle), etc...
The letter continues with a discussion of several portfolio companies: Amazon (AMZN), JD.com (JD), and Zooplus (ZO1 Germany).
You can find the full letter here: