Monthly Archives: September 2016

Advance Auto Parts Check-In

Key Points of Interest
In observing Advance’s ability to execute, I’m curious of the following:

  • Integration problems are driving concerns: difficulty rolling out daily replenishment whilst preserving high fill rates, which leads to dissatisfied customers and potential loss of market share
  • The absence of growth negates the prospect of unlocking shareholder value due to the high leverage structure in the business. Assuming constant costs, a !5% operating margin for AAP would require 6% revenue growth a 20% margin 13% revenue growth
  • Working capital optimization has the capacity to enable cash flow growth. The business currently has high levels of inventory from opening a new DC (for worldpac) and consolidation of CarQuest stores – more importantly, where will the company allocate its cash flow, if and when it begins to strengthen?

Status Quo

  • Abysmal comparable store sales (due to continued integration of CarQuest stores. Greco noted that they’ll slow down integration efforts to continually focus on best practices)
  • Albeit improved versus recent periods, Gross Margin and SG&A still hostage to declining top-line performance

Investment Models

Macroeconomic Model for Growth

Simple Diagram which outlines the relationship between growth and inflation.


Risk Return Profiles for Various Asset Classes

Once we develop an understanding for trends in macroeconomic environments, we can begin to select which asset classes to diversify in to. In general, investors should be compensated marginal returns for marginal risk assumed.

[pdf-embedder url=”/xls/Theorems/Risk%20Return%20Profiles.pdf”]


Assessing Risk

Risk compensation is determined by our degrees of understanding with an important emphasis on truth versus belief. The more we cannot assess, the higher degree of risk we take on (and theoretically, higher degrees of return). As such, contemplate the returns of the following asset classes:

  • US Treasuries: guaranteed return (based on ability of the US to raise interest rates)
  • SP500 Stocks: returns affected by industry competition and ability to execute
  • High Yield Bonds: returns predicated on cash flows aligning with liabilities
  • Leveraged Buyouts: can the business be turned around?
  • Venture Capital: can the company capture market opportunity?


Assessing Market Opportunity


Resource Market



Tableau Competitive Positioning

Question (Brent Bracelin Pacific Crest Securities – Analyst): I just want to drill down there a little bit. What question can you answer that I can’t get Microsoft, PowerBI try to answer, you got to get a concrete example of that.

Response (Francois Ajenstat Tableau Software, Inc. – VP of Product Development): So, a good concrete example, let’s say you want to look at your year-over-year difference in sales, very simple question, what is the difference this year compared to last year? In Tableau, that’s a three second solution. Three clicks, you’re done. And PowerBuoy or even tools like Qlik, you’ll have the right code, you’ll write complex calculations that would get you there. Which means, in order to do that, very few people, only specialists can do it, where what we want to do is expand the opportunities for the number of people that can do that. It’s a very simple question, right. Even in a running sum. What’s our running sum of sales this quarter. Really simple question. Extremely hard to do in any other tool. Three clicks in Tableau.

  • Ajenstat also notes that DATA is available in cloud or on-prem (as well as deployable in AWS). He notes that PowerBI is Cloud-Only (and not AWS compatible) and that Qlik is on-prem only with no cloud option. Note that Qlik was recently acquired by Thoma Bravo

Barometer of Societal Interest

I had the opportunity to spend part of the weekend with my family, and a major concept involved reiterating to my younger brother the importance of knowing what’s going on in the world. For the most part, this encapsulated having a solid foundation of both history and relevant macro trends / drivers in society; but taken literally, I’d asked myself the same question: what are * most people * interested in at any given time?

While not a project top of mind, currently, it will be interesting to assess, over time, the most popular trends on the following platforms:

  • Wikipedia
  • Google
  • Twitter

More to come in the future.

Design Principles

Principle 1
Organizing information in a single, (visually accessible) flat plane

The normal human mind operates largely on a high level of conceptual thinking, rather than concerning itself with myriad, low-level details…We are conscious of the whole and not the parts that make it up…It seems plausible that evolution could have honed our brains to work in this manner. For example, rather than obsessing over every little detail of a lion’s face, like the tint of each hair, our brain quickly surmises that –boom! – this is a predator and we need to react, fast.

Principle 2
Establishing a single system of record including:

1. Temporal navigation (how ideas grew over time)
2. Spatial organization (breadth, depth and relation of ideas)

Principle 3
Findability. Ideas embedded in images are not searchable, therefore are sub-optimal.


forrest from the trees

Ochams razor

The new economy is a marketplace of ideas and knowledge. The plane represents the sphere of information to be harvested. The blocks represent an organized system of organization. The tall “building” represents a finished good that is structurally sound and aesthetically appealing which can be sold in the marketplace.

Oracle and AWS in IaaS

The transition from DBaaS to SaaS to IaaS has been done out of necessity, analysts say. Amazon Web Services has grown into a $7 billion-plus annual revenue vendor focusing almost solely on IaaS. At its re:Invent conference, AWS Senior Vice President Andy Jassy practically mocked Oracle for its aggressive sales tactics and lock-in licensing. AWS is aiming directly at Oracle in its products too, releasing a database migration tool that will automatically replicate an Oracle or any other database into an AWS equivalent one. Aurora is AWS’s MySQL cloud database, which it says is now the fastest growing product in AWS history.

“From a purely competitive standpoint they need to halt customers from moving to a public cloud IaaS provider such as AWS, Azure and others,” wrote Gartner cloud analyst Sid Nag. “AWS (and others) are adding and continue to add new features, capabilities and toolsets for customers to migrate Oracle’s products, for example databases, on to AWS.” This summer Oracle’s profits slid 24%, thanks to cloud competitors. Oracle had to stem the tide.

Source: Does Oracle have a shot in the IaaS cloud market versus Amazon and Microsoft?

Information Mining

To construct an analogy for mining information and displaying it on digital mediums, I’ve used diamond excavation as an example.



  • Exploration: Diamond Prospectors explore the possibility of diamond existence deep below the Earth
  • Mining: Once kimberlite or diamonds are discovered after the process of exploration then mining operations are used, to extract these minerals
  • Sorting: Once the rough diamonds have been mined and processed, the next step is to sort, classify and value them. In this process of sorting, these rough diamonds are grouped, according to their size, shape, quality and color, in to thousands of categories
  • Cutting & Polishing: The next step for the rough diamonds are cutting and polishing. This is a great skill, with meticulous techniques that have been practiced for ages
  • Jewelry Manufacturing:  At this point, the polished diamonds are ready to be set into finished pieces of jewelry, which is the manufacturer’s job
  • Retailing: USA represents the largest market share (55%), followed by Japan (15%), Europe (10%), Asia Pacific (5%), Asia Arabic (5%) and other countries (10%)

Source: Swiss Gemological Laboratory