Understanding The Alternative Finance Sector Through Gary Rivlin's Broke, USA, Pt. 2: Regulation

In my previous article, “Understanding The Alternative Finance Sector Through Gary Rivlin's Broke, USA, Pt. 1: Competitive Advantages,” I described how one can learn about the alternative finance business by reading Broke,USA, Gary Rivlin’s book on the industry. In that article, I noted that the book shows how the strengths of such companies as payday lenders, pawn shops, and rent-to-own stores include high returns on investment, pricing power, and growth opportunities.

That said, it would be wrong to focus on only the industry’s competitive advantages. This is an industry that, after all, focuses on making high interest loans to lower and middle class people. As a result, an investor in this industry faces many risks, the most prominent of which is regulation.

Regulation is the best known risk to the alternative finance industry because it can totally eliminate some parts of the industry, especially payday lending. As Billy Webster, the founder of America’s largest payday lending chain, Advance America Cash Advance, says in Broke, USA, “it’s hard to invest in the future earnings of a company if you don’t know if it’s going to have a future.”

And yet, Broke, USA also shows how regulation is not necessarily the threat to the alternative finance industry that some would believe.  (Read More)

Bloomberg View Introduces RSS Feeds For Contributors

As you might already know, a few months ago, I created an RSS feed for Matt Levine, one of my favorite financial bloggers, since at the time Bloomberg View didn't offer RSS feeds for its bloggers.

Well, Bloomberg View has introduced a new site format for contributors, which includes an RSS feed that can be accessed via the RSS symbol next to the contributor's name. Unfortunately, their format change has also made their site incompatible with my custom feed. I could probably edit it so that it would still work with the changes, but there's no real reason for me to do so, since their feed works just as well as mine.

Thus, to access Matt's posts via an RSS reader, just use this feed:

http://www.bloombergview.com/rss/contributors/matt-levine.rss

St. Louis Public Library Branch Map

I recently put together a little project which I've been thinking about for some time. Specifically, I created a map of the St. Louis Public Library's branches in which you can see each branch's hours of operation when you click on the icon for the branch.

Here's the map: St. Louis Public Library Branch Map With Hours of Operation

I've always found it inconvenient that the SLPL's website has no map of their branches. There is a list of branch addresses, but that's somewhat difficult to use if you don't have an intimate knowledge of St. Louis geography. Since there are seventeen locations, it's hard to figure out which branch is closest to you, especially since you have to keep track of all of them without a map.

Understanding The Alternative Finance Sector Through Gary Rivlin's Broke, USA, Pt. 1: Competitive Advantages

Broke, USA by Gary Rivlin is a book about the alternative financing industry. This industry, which focuses on lending money to lower and middle income individuals, includes payday lenders, tax preparation companies, and pawn shops.

It is easy to tar this industry, which Rivlin calls "Poverty, Inc," with the same stigma as the subprime lending industry that got the US into so much trouble during the 2000s. Both industries serve many of the same customers, and both appear in the book.

That said, from an investing perspective what is interesting is the difference in performance between the two industries. Unlike most subprime mortgage lenders, companies such as payday lenders and pawn shops passed the 2008 financial crisis with flying colors. In turn, though, such companies face unique risks that their mortgage lending brethren do not. Broke, USA shows us both the competitive advantages and risks of this sector.

Before we begin, though, it is worth noting that Broke, USA was written to criticize the alternative financing industry. Its heroes are those who campaign against payday loan operators and tax refund lenders. Thus, there is a certain irony in mining such a book for investment ideas in the industry it criticizes-an irony which some may not be comfortable with.

That said, it is because of the very success of this industry that a book such as Broke, USA exists. Without the various characteristics that have made payday lenders, rent to own stores, and pawn shops so profitable, (Read More)

Book Review Of Distant Force: A Memoir Of The Teledyne Corporation And The Man Who Created It

I first read about Distant Force, the biography of Teledyne and its founder Henry Singleton, in an article by Geoff Gannon titled "What Would Value Investing 101 Look Like?" Teledyne Corporation was a conglomerate founded in 1960 as an electronics company by Singleton and George Kozmetsky. The company would eventually diversify into such areas as aeronautics, steel, and insurance before breaking itself up into such successor companies as Allegheny Technologies (ATI), insurance company Kemper (KMPR), and of course, Teledyne Technologies (TDY) through a series of spinoffs in the 1990s and early 2000s. During that time, the company’s stock gave investors 17.9% annual returns for 25 years, causing Warren Buffett to describe Singleton as having "the best operating and capital deployment record in American business." The reasons for that record are in this book.

That said, Distant Force isn't one of those investing books that neatly gives each concept its own chapter before wrapping up with a nice summary at the end. The author began his career as a metallurgist, and the book focuses heavily on technology rather than finance.

Thus, it is necessary to read between descriptions of rocket nozzles and rolled steel, of managers and mechanics, to understand the basis of Teledyne's extraordinary performance. Once you do so, though, you discover that there were five key factors to this performance—(Read More)

RSS Feeds for Geoff Gannon and Matt Levine

Two of my favorite financial writers are Geoff Gannon and Matt Levine. I learned much of what I know about investing by reading Geoff's posts on Gurufocus, while Matt's posts on the financial world on Dealbreaker and Bloomberg View are always amusing and insightful.

The one problem with both of these writers is that there isn't an RSS feed available for much of their work. Though Geoff blogs extensively at Gannon and Hoang on Investing, his Gurufocus work isn't available there, and since it lacks an RSS feed, it can't be accessed by a blog reader like Feedly. Similarly, there are no RSS feeds available for Bloomberg View columnists.

Thus, I created my own feeds for both Geoff's posts on Gurufocus and Matt's on Bloomberg View.

Hello World

My name is Xinyun Hang, though I go by Charles Hang. This is my blog.

In the near future, this blog is mostly going to be about investing. I'm going to be writing reviews of books that I think will be useful to an investor, especially a value investor. I'll also post some writeups of interesting investing opportunities from around the world.

Thank you for reading!