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Financial analysis and non conformist thoughts from Bruce 

2
Oct
2019

Ergodicity

I first came across the word ergodicity in a book about information theory, which I was reading because I was interested in the (unicycle riding, flame throwing trumpet playing mathematician) Claude Shannon.* Then I discovered NN Taleb and Ole Peters talking about ergodicity in a totally different context.  Put simply: the concept is about calculating 2 types of average: ensemble...
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12
Jul
2019

Cluster One

Last year I was playing around with Euclidean Distance, https://brucepackard.com/wood-from-the-trees/ taking a sample of companies from 5 years ago, and seeing if the best performing companies used similar words with similar frequency. The technique comes from Mathew Jocker’s book, and has been used in the past for authorship attribution for documents where authorship is disputed. Two documents which are close...
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25
Jun
2019

Jeux sans frontiers

I’ve been meaning to publish something on Games Workshop since it has become my largest position.  According to Bloomberg the shares are up 1000% in 3 years (best BREXIT performing stock).  It’s rather nice when a medium conviction idea (ie third largest position by cost) becomes a ten bagger.  Sadly my higher conviction ideas (Bank of Georgia, The Mission Marketing...
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1
Mar
2019

Same, Same, but different

Even before Warren Buffett gave up on showing long term book value progression in his Annual Shareholders letter, others were noticing that price / book had a problem.  According to a paper by OSAM there are currently over 100 companies in the US with negative book value. To me, it is the qualities that book value can’t capture that matter....
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24
Jan
2019

Everyone’s a winner

Drinks with an outsourcing analyst last month we were laughing about how, for her sector, it was 2008. It’s not fun to be an analyst when your sector becomes uninvestable. “No one trusts the management, the numbers, the forecasts, the accounting.” I laughed, it brought back some old memories. There are interesting parallels. Like banks 10 years earlier, companies like...
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9
Nov
2018

Heroes and Xeros

I’ve been thinking about “story stocks”. In case you don’t know “story stock” is normally a term of abuse among value investors. It means companies like Xeros or Cap XX, which have an exciting potential “story” often about a new technology but fail to deliver profits. To try and understand why we are drawn to these types of stories I’ve...
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12
Oct
2018

How to suffer loss

A friend, who has started his own litigation finance platform, https://www.axiafunder.com/ has asked me to write something about litigation finance.  He’s not paying me – but maybe he’ll buy me a pint in The White Hart at Barnes Bridge on the River Thames.  The idea of litigation finance is simple, legal cases cost money and sometimes a claimant is unable to...
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5
Oct
2018

Signals in obfuscation

A reader of this blog contacted me to suggest that when I look at financial text, instead of trying to analyse stories, I could instead test for “readability”. The idea being that the more readable a text, the clearer the strategy then the better the company might perform. Or indeed the more jargon, obfuscation and evasive language, the worse a...
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