Geoff Gannon – Watch the Weight of High Debt And Operating Leverage

Geoff Gannon is a portfolio manager, podcaster, and investment writer. He manages accounts at Focus Compounding Capital Management, and he co-hosts the Focus Compounding Podcast with Andrew Kuhn. He started writing and podcasting about value investing in 2005, at the ripe young age of 19. Since then, Geoff has written hundreds of articles for Seeking Alpha and Guru Focus. He wrote the Gannon On Investing newsletter in 2006 and two GuruFocus newsletters from 2010-2012. In 2013, he co-founded Singular Diligence (a monthly investment newsletter) with Quan Hoang and authored all issues from 2013-2016. In 2017, he co-founded the Focused Compounding member website (with Andrew Kuhn). In 2018, he co-founded Focused Compounding Capital Management, where he manages client accounts. Lastly, in September of 2019, Geoff Gannon and Andrew Kuhn announced their partnership with Willow Oak Asset Management, a subsidiary of Enterprise Diversified Inc (SYTE US), to launch a hedge fund with a target launch date of January 1, 2020.   “If you have a monopoly or something like that, it’s okay to have a lot of operating leverage and a lot of debt.” Geoff Gannon   Worst investment ever Geoff got into investing as a teenager when he dropped out of college after one semester. He figured college wasn’t his thing. Instead, he wanted to do something related to investing as well as writing. So by the time he made his worst investment, he’d packed some good years of experience in investment and risk management. Even the most experienced investors make blunders Geoff’s worst investment ever was a personal investment. He’d been interested in the Weight Watchers stock for a long time but didn’t buy it as the price was always too high for his liking. He’s a value investor and likes to pay a low price for things. The lucky star shines on the seasoned investor As luck would have it, a couple of factors affected the price of the stock. The controlling shareholder decided that they should take on a lot of debt and buy back a lot of stock, which caused the stock price to shoot up. However, the price got so high that nobody wanted to buy it, which then caused the price to drop more than it should. Suddenly he was looking at the cheapest stock amongst its competitors, some that he never thought were as good as Weight Watchers. Now he got pretty interested in the stock. He goes against his better judgment Weight Watchers was a controversial stock at that point. But he liked the price, and it had all the things about a business that he liked as well. However, Weight Watchers had...