Speedwell Weekly Recap

Edition #1: Dumb Decisions, Sell-side Gripes, Floors (& Decor), and Korea's Amazon

This is a new series where we compile some of the best content we put out each week. You can expect to get a mix of interesting and insightful takeaways on various businesses and investing! Follow us at @speedwell_llc and @kevg1412 for more timely updates!

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Speedwell Research Universe

Restoration Hardware (Full Report coming soon)

In this thread, we share our learnings on Restoration Hardware’s advertising process and their relationship with Google.

Speedwell Research @Speedwell_LLC

Gary Friedman asked his team at $RH to analyze their $GOOG spend efficacy. The result? 98% of key words were “Restoration Hardware” and the 21 ways to spell it wrong.

In the following thread, we revisit CEO Gary Friedman’s first visit to a Restoration Hardware store after investing his life savings into the company — and see how he begins to turn the company around and the values he begins to instill.

Speedwell Research @Speedwell_LLC

“I may be half Jewish but I know what Santa Clause is. It’s May and we have 20 Santas in the middle of the store?” ‘Oh no, it’s an Aquatroll. It’s funny.’ “Funny is not a brand attribute.” (Friedman when touring a Restoration Hardware after putting his life savings into it)

Constellation Software

In the two tweets below, we share Constellation Software CEO Mark Leonard’s view of the sell-side (Hint: he doesn’t like them). His comments echo why we started Speedwell Research — learn more about our process and philosophy here.

Speedwell Research @Speedwell_LLC

Constellation Software’s Mark Leonard to the Sell-side: “I don’t envy your job” Lacking signal, analysts are tasked with fabricating meaning out of noise.

Speedwell Research @Speedwell_LLC

Mark Leonard on Sell-side price targets: They aren’t projections, but rather back solved from the current stock price. It’s sort of like changing your answer after seeing what everyone else put down.

General Updates

Earnings

On Thursday, we covered Coupang’s 4Q22 earnings. You can read a full report here and a previous update here. Below we’ve embedded our earnings tweetstorm.

Speedwell Research @Speedwell_LLC

1/ $CPNG is -10% since reporting 4Q22. This unprofitable “growth” company grew revenues just +5% y/y. And active customers growth slowed to just +1%. It looks bad… well, until you actually look… ⬇️ Coupang business update ⬇️

On Friday, we covered Floor & Decor’s 4Q22 earnings and provide a business update. Learn more about the company here, subscribe for the full report, and read the tweetstorm below.

Speedwell Research @Speedwell_LLC

1/ $FND is +22% YTD. They reported 4Q22 last week, guiding to their first ever negative sales comp. And management sees 2023 EPS potentially dropping y/y, but still will open >32 new stores. What’s going on? ⬇️ FND business update below ⬇️

History

Costco is one of the most widely-admired companies, with outspoken supporters such as Charlie Munger and Nick Sleep. However, it wasn’t the first company to discover what Nick Sleep coined “Economies of Scale Shared” — we share the story of A&P, which stumbled across the model nearly half a century prior.

Speedwell Research @Speedwell_LLC

In 2011, Buffett tells a fictional story of being on a hijacked plane with Munger. Each given 1 wish, Munger asks to to give a final speech on the virtues of Costco. Buffett asks “shoot me first”. But before Jim Sinegal and Costco, there was John Hartford and A&P.

One of Restoration Hardware CEO Gary Friedman’s heroes is Steve Jobs. Friedman explains the ecosystem of spaces and experiences he is trying to build with RH as being akin to Apple’s integration model. Below, we shared Steve’s first shareholder letter of the newly public Pixar in 1997.

Kevin G. @kevg1412

A Letter a Day -- Letter #59: Steve Jobs (1997)

aletteraday.substack.comLetter #59: Steve Jobs (1997)Chairman and CEO of Pixar | 1996 Pixar Shareholder Letter

Links of Note

• Gary Friedman on the drawbacks of ecommerce

• Volaris CEO on the importance of decentralization and P&L responsibility

• Gary Friedman comparing Restoration Hardware to Wayfair

• The benefits of A&P’s model - Costco before Costco

• META history that shows how ideas are worthless and execution is everything

• Chris Hohn on how activist investing creates inefficiencies and opportunities

• The original Sun Microsystems business plan

• Paul Tudor Jones on price limits

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Thanks for reading this week’s roundup! If you have any questions or suggestions on what you’d like to see more of, please reach out!