PHIL TOWN

BANK OF AMERICA COLLATERALIZES DERIVATIVES WITH YOUR CHECKING ACCOUNT

Remember that Bank of America bought Merrill Lynch?  Merrill had a problem.  It didn't have the ability to post enough collateral to cover its $54 TRILLION of derivative positions and was going to be forced into a Lehman bankrupcy.  The Bank of America took them over and put that $54 Trillion obligation into a holding company.  

On October 18th, Bloomberg news ran an article exposing the fact that Bank of America shifted the obligation from the holding company to its retail banking unit, Bank of America, NA.  That $54 Trillion is now collateralized with your checking account.

Here's why they did it: They got pressured from the 'Too big to fail' banks and hedge funds who are counterparties to those derivative contracts and who will not get paid if the Holding Company didn't have the resources.  B of A was going to have to put up an additional $3.3 Billion to keep them happy.  Instead, B of A got clever and asked the Federal Reserve for an exemption to Section 23A, the section that applies to FDIC protected deposits in banks.  With an exemption to 23A, B of A can (and did) literally collateralize these obligations with your money. 

The concept is simple enough: Your money is guaranteed by the FDIC so if B of A can't pay the derivative obligations it can use your money to pay them off and you get repaid by the FDIC.  And the tax payer is on the hook for the FDIC.  

Naturally, the vastly underfunded FDIC objected to the deal and were overruled by Bernanke and crew.  The were simply following precedent.  Other financial institutions have similarly been allowed to pledge checking and savings accounts to cover their gambling risks.  These banks include HSBC, Fifth Third, Bankcorp, ING, GE, Northen Trust, Citi, Morgan Stanley and  Goldman Sachs. For example, JPMorgan Chase Bank uses its checking and savings deposits to secure 99% of the NY firm's $79 trillion of notional derivatives.

What the hell?  Its one thing to set up the FDIC to cover us if a bank run starts but its another thing entirely to let banks take derivative risks and secure those risks with our money.  Essentially, wall street gamblers are uploading all the counterparty risk to the Federal government - which ultimately means you and me.

Maybe Occupy Wall Street hasn't caught on to the real shenanigans going on out there but when more serious people figure this out, we're going to see some fireworks.  The question isn't going to be whether the Wall Street Big Guys and the Washington Big Guys have been messing with us.  There is no question.  The question is going to be whether in our attempt to get control of the Wall Street Big Guys we inadvertantly or explicitly make the Washington Big Guys bigger.  

How about we make them all smaller? How about we take away Washington's funding by instituting a mandatory balanced budget amendment, repeal the 16th amendment, replace it with FairTax and get rid of about 10 Federal agencies?  

Now go play.

MY GREEN MOUNTAIN (GMCR) SHORT

 

I rarely discuss things I do because what I do isn't what you do unless you are copying me in which case you're missing the point of this blog - to help you learn to do this yourself.  But sometimes I will put up something I just did after its done and what you do won't affect what I do.  Sasha wrote me that she's long GMCR so I thought I'd put up some information about GMCR that she may have missed.  

Ten days ago, David Einhorn made a deadly presentation at the Value Investing Congress that just killed the stock.  He basically said two things:

1.  It is engaged in fraudulent booking of sales that don't exist

2.  Its patents run out in 2012 and competition is going to kill its growth.  His conclusion is GMCR can not sustain these lofty multiples and must come down.  Here's his presentation.

Meanwhile, Sasha said this about GMCR: "On the other hand some things from my past "carry over " my preferences- now that's abstract. In other words it's a process: the more I work on it the better I get. Example: GMCR -it's testing my guts, my meaning, my knowledge, my money."

In other words, she's long GMCR and it is taking a beating so let's take a look at this thing:

First, Meaning: Melissa and I like GMCR product.  We have two of their coffee makers and we drink their coffee.  I understand why people like this product.  It is the future of a big segment of coffee.  I wanted a piece of this thing.  But paying a high price for a rosy consensus, as Buffett sometimes says, has a lot of risk, even when it seems its a good story.  I couldn't make sense of some bad Moat numbers and weak Management numbers.  OCPS Growth is all red, all the time for ten years.  Note below that ROE is good but on the low end and dropping while ROIC is in the yellow and dropping.  Debt is too high.  Big red flags. (Numbers from Rule One tools).

These things don't drop a company off my radar screen on their own.  What they do is lead to some digging.  Here's the cash flow statement for 2010:

Its hard to miss that GMCR Cash from Operating Activities (OCPS on the Rule One tools above) is negative.  You can see above that Receivables and Payables are going in the wrong direction.  Negative cash is usually a bad sign.  GMCR attributes it to growth but perhaps this is a managment problem and requires more digging.  But before that, check the price valuation relationship.  Is this thing buyable?

Here's the Rule One tool for valuing a company using two techniques: the Margin of Safety analysis is based on my version of a discounted cash flow model (See my book, 'Rule #1', for clarification) and Payback Time, based on the time to recover the current price from earnings (a private equity calculation of value for buying the entire company.  See my book 'Payback Time' for more information.)  

The price chart shows the price in the red.  This means that based on the MOS calculation the price is at least 20% over the Sticker Price and indicates its time to sell it.

I did the MOS based on reasonably optimistic assumptions of growth - 20% per year with a 40 PE. Remember I'm looking way out there - 10 to 15 years of sustained growth compounding.  20% per year is a lot of growth.  It requires the company become 8 times larger in 10 years.  Few companies have sustained that rate for that long so this is not a conservative valuation.  

What this page shows is GMCR has a Sticker Price of $31.22 a share (if its not fraudulent and if the growth is sustained).  I should try to buy this at $15.61 MOS Price.  But if I want to be more conservative and pay a private equity price, I should try to buy it with an 8 year Payback Time Price of $10.10.  The Payback Time of the current price of $69.61 (as I write this - it was quite a lot higher last week) is quite a lot more than ten years, my outside limit.

These numbers kept me out of GMCR.  I didn't short it because it is dangerous to short a growth story. Mr. Market can be irrational longer than I have money.  But when Einhorn laid it out that the short case was about a lot more than just a too hot price, it was easy to jump on it having already seen that issues were showing up in the numbers and that it was massively over-priced if my assumptions were correct about long-term growth.  (Always do your own work.  Do NOT rely on my estimates of anything.  I have been wrong in the past.  I will be wrong in the future.  I'm probably wrong now.  Make up your own mind.)

If you own it, what should you do?  First, forget what you've gained or lost.  Look at what's in your portfolio as if you are being asked to advise a good friend whether to buy more, hold on or sell.  Sometimes consulting to yourself will get you past the emotions and keep you more rational.

I met with Whitney Tilson on Sunday and learned he was shorting GMCR.  I looked at the numbers and decided to dig in more on Monday.  Monday morning I watched Einhorn do his presentation and half way through I started trying to get a cell signal to short it.  Couldn't.  I ran upstairs to my room at the end of his presentation and put the short on.  The stock had already dropped from $90 to $82 while David was speaking.  I got in by selling it at $82, pretty certain it was going to be a long wait for a final outcome.  It wasn't.  

The stock dropped daily until two days ago when it hit $57.  A look at the chart showed $57 was a significant technical Floor, I was way in the black on the trade and it was moving back up so I bought it back at $58.

Thank you David, Whitney and Glenn.

Now go play.

 

HOW TO KNOW YOU KNOW RULE ONE STYLE

Here's a great question from Greg: 'How do you know if you know?'  

As I wrote not long ago, if you are stockpiling, you have to know you know.  You try to only stockpile a business you know well enough to know you really are happy that the price went down and you got put another 1000 shares.  (You try ... but you won't know for sure until it happens.  That's when the rubber meets the road on your confidence in your research.)  

So your question is how do you get there?  You roll up your sleeves and dig in.  Start by reading everything about the company: The SEC documents, the annual reports, seekingalpha.com articles, transcripts of quarterly calls, magazine articles, as much analysis as you can get from the pros.  

If this is a fast food place, eat there a lot.  Talk to others who eat there.  If its CMG, go to Moe's and ask someone why they like Moe's better.  Talk the workers behind the counter.  Are they good hires or boneheads?  Do they like working there or hate it.  Ask a lot of questions.  Think about it like a guy who is interested in buying a franchise.  What would you want to know?  Are they honest?  Can you trust them?  Is the company going to be there for you for the next 40 years?  Will people still love this thing all that time?  Get it down to this: Are they the best at what they do?  What would it take to knock them off?  If you had the market cap in cash to spend on building a competitive company, could you destroy them?

Think about that for Chipotle.  The answer is no.  Take a billion and you can't compete.  They defined the space.  Good luck knocking them off.  Or McDonalds.  No way.  They've got all the corners.  They have a brand to thank God for.   (Ask me about Apple and I'm not so positive even though I love their stuff ... I've lived through their decline and I left them.  It can happen again.)  Goldman.  Best in the world.  Smartest in the world.  No way can you build a Goldman.  WalMart.  Enough said.  See?  Not hard once you know what you want to know.

Rule One investors try to be intensely rational.  We try to get emotion out of it.  We love it when someone on this site blows up our thesis because that person just saved us from losing our butts because of something we didn't see.  We are like scientists: We put forward a theory, spell out the support for it and then try to blow up our own theory.  And if we can't and no one else can either, then cool.  Add one to the watch list.  If our friends here blow us up, we thank God when they do.  We're weird like that.  

You'll find most investors run from the facts and from pressure on their pet ideas.  Rule One investors embrace reason, logic and homework.  

Do as much as you know how to do and then post it up here.  Ask questions but do the homework so you can take the questions deeper over time.  You'll get some push back and some support and you'll decide what's worth listening to and ignoring.  But most of all you'll learn how to avoid emotion, how to be patient, how to do homework, how to think like this business is the only one you'll ever get to own and you will, if you stick with it, evolve into a good investor.

And then you'll have other people asking for your advice on their projects.

Now go play!

TOTAL WEALTH AT THE VALUE INVESTING CONGRESS

Nick rocks!  He's a college student and a Rule One investor.  We just met at the Value Investing Congress in New York.  Princeton should be proud.  He is excited about a couple of the pitches we heard.  I agree with him about Fortune and MSFT and hope he digs in and posts here.  I'll front page him like the rock star he is going to be if he sticks with this.  

It was pretty interesting hobnobbing at the Marriott.  Everyone around me was managing from $50MM to Billions.  This place was Woodstock for Great Investors, no doubt about it.  

I went on the street to see the protests and couldn't help compare the people in both places.  The crowd at the Marriott were all the smartest guys in the room.  The crowd on the street - not so much.  More like the kids who couldn't stand being in the room or were asleep in the room or were pissing on the room.  

The truth is, what you put your attention on in your life grows stronger and stronger in your life as time goes by.  If your attention is on playing around, being here now or being one with the flower, that's cool with me.  I've got that t-shirt, too.  But you have to be okay with living with the results of where your attention has been.  Maybe some of them, like Bill Murray in Caddyshack, earned total consciousness on their deathbeds and they got that going for them.  But whatever they got or don't got, what they've done everyday up to now has a whole lot to do with it.

So Nick, if you keep this Rule One effort going, my prediction is you'll have total wealth going for you.  

And that's nice.

Now go play. 

RULE ONE MEANS YOU KNOW YOU KNOW

Stockpiling a stock requires a high degree of certainty.  I try to think that its the only business I'll buy. Ever.  Y'all know that already of course.  

Its easy to say it, but it puts up a heck of a bar, doesn't it?  Last year I bought 3 businesses.  This year I bought one.  I'm getting pretty comfortable with several more but I have to learn a lot before I get past the first M.  

The key is the first M, isn't it?  Knowing the Meaning of business and the industry; understanding where the profits come from, how durable they are and what the real value is and whether there is a MOS - all that follows from the first M.  

If you're having trouble finding a good Rule One business, you may be working in too many industries (or too few).  BP at $27 required some understanding of the first M, didn't it?  The best buys are usually like that - there is so much fear surrounding the business, or there is just no catalyst that is going to take the stock price out of the hole, that you really have to know what you're doing to make a buy in the face of that negativity.

Look at the entire financial industry, for example.  You don't think ANYTHING is on sale?  Or you're worried that the entire industry will disappear or get regulated into a utility?  But what if a really good bank was available for a lot less than tangible book value?  Wouldn't that be something to dig into regardless of the last few years of messy losses and bad management?

I'm not saying you should buy a bank but I am saying that often the best deals are right in front of us but obscured by smoke.  When you know what's on fire and what isn't, you can make a fortune in an industry that has uniformly been covered with dirt.  Get on top of the first M and you'll be able to buy more companies.

But let me add this.  Maybe you are lucky if you haven't found anything.  Cash is awesome right now.  As is patience.  Pull the trigger when you know you know, not when you hope you know. 

Now go play.

MOAT AND RULE ONE

Figuring out whether a business is durable and predictable requires we use both both objective and subjective information.  

If we think of investing as an analysis of the road ahead of us when we're driving in the fog, we see that we'll use both objective information and subjective analysis of it to determine whether we should be driving in these conditions.  

The view out the back window of the car is a view of the road already traveled and is objective more or less.  We see where we've been, how fast we've gone, whether there were potholes or big problems with the road behind. All of this part of our analysis is objective.  

The view out the front can be anything from totally fogged in to clear for a ways depending on how predictable the road has been in the past.  This is subjective opinion based on objective information and our experience driving.  

What makes a road predictable?  History and an understanding of what kind of a road we're on.  If we know we're on a freeway then the road ahead is predictable enough that we could drive at night with no lights and probably not wreck.

A business is similar.  Its history can tell us a lot about what to expect from the future as long as we know what kind of business this is.  A business with a durable competitive advantage is like a freeway.  The durable advantage allows it to become very predictable over time.  There will occationally be turns but mostly its just straight ahead at a set speed.  That sort of historical predictability combined with a durable competitive advantage is what allows us to make a rational judgment about the road ahead.  

MCD, PNRA, BWLD and CMG have nice straight roads behind.  This leads us to believe its possible that they will have a nice straight road ahead as long as their competitive advantage holds up.  Therefore, we should know what that competitive advantage is and whether it is durable.  If we don't know those two basic things about a company, then there is no way to predict the road ahead will be a freeway or suddenly turn into gravel.

Each of these has a proven success formula for their restaurants.  What that means is that each new restaurant they open has a predictable growth pattern, predictable revenues, cash flow and earnings.  Each new restaurant has a set capital cost and return on that investment.  They have these things because the public likes what they do and they've found they can repeat it almost endlessly.  Because they've done it successfully so many times, they know when things are going right and when things are going wrong and can step in and fix the things that are going wrong. Its this repeatable aspect of the operation of the business that creates durability for each of these companies.  As long as the market is not saturated, the road ahead looks quite predictable for each of these.

Our job, then, is to look at the past as objectively and rationally as possible, understand the industry and determine the moat.  When we do that and when we find a durable, repetitive business like these four, we can see the road ahead pretty well.

Now go play.

GARRETT'S RULE ONE THOUGHTS ON BWLD AND PNRA

Once in a while an investor comes on the site who takes an interest in sharing his or her ideas with others and does such a good job that people begin to come back to my blog to read his or her stuff.  One of those is Garrett.  He's a former airforce pilot who is flying for SouthWest Airlines now and he's an avid Rule One investor who has such a good sense of the strategy that I'm going to start posting some of his commentaries.  Here's one:

I really like BWLD and I love PNRA. We visit each of these frequently. I've traded BWLD based on "The Tools" and have never been disappointed. When PNRA was trading around $70 a share, I was so tempted to buy it, but I was trying to get a better price. Our daughter loves PNRA and she was the one who introduced me to them several years ago. Now that she's 14, and knows everything, :) PNRA is the one place for us to take a "Daddy/Daughter" date when Mom's working late. Corny as it may sound, I'm grateful for the people at PNRA who have made our lives better by creating a successful and profitable franchise. I'm still waiting for a better price on PNRA. Fortunately, I shared with my parents what I knew about PNRA and dad loaded up on it a bit (SBUX too). Part of my "Wealth Strategy" is to increase my inheritance!

Regarding PNRA, you may find this interesting. Mom and dad are retired and PNRA opened up this summer in their private community down in Florida. Ironically, this morning I was returning Mary Buffet's book on "Stock Arbitrage" to the library and I noticed that I had a copy of the PNRA news article being used as a book marker which had made headlines in their local newspaper. In that Grand Opening PNRA set a one week record in volume: 13,470 bagels 10,000 sandwiches 9,000 soups 6,000 coffees and espressos. That's a heck of a lot of business. I think that speaks highly of PNRA's 5 star BRAND MOAT. Their MANAGEMENT is 5 stars, MEANING for ME is 5 stars, and MOS...oh..bummer...I still value them at $120/trading today at $111.00...1 Star. But Dad did buy them at $70!...I told dad to consider that little tip my payback for all the money he spent on me for college!

Regarding BWLD: Other than their BRAND MOAT, I think one of BWLD's advantages versus any other sports bar is that they can get better pricing on chickens because of their size. It's kind of hard to screw up a business model based on beer and sports. And I think BWLD is kind of recession proof. Give people beer and football at a fair price and you've got a pretty good business. I'd price BWLD at around $85-$90 a share. Currently trading at $59.00. I've never seen BWLD get to it's market value...so maybe I'm just overly optimistic or perhaps the rest of the world just hasn't taken notice. I'd give BWLD 5 Stars for MEANING, 5 Stars for MANAGMENT, 3.5 STARS for MOAT, and 3 Stars for MOS. If BWLD gets to about $62.00, it might be just enough to spark the MA into a BUY signal. Football season is underway, northeast weather is going to get yucky...might as well sit around drinking beer and watching football. That might be enough reason for someone to consider trading BWLD till the Superbowl.Just a theory...you can back test it and see if it would work!

I think if you decided to trade these based on "The Tools" you could do pretty well, but you've got to watch out for the downward trends and getting whipsawed in-and-out of the market while you take several losses along the way. Remember, Phil wrote Payback Time for a reason. "The Tools" are great in a Bull Market, but you can get burned on the sideways and long downward market. It's happened to me. So be careful out there. If you decide to trade based on "The Tools" then you've GOT TO be disciplined enough to follow them and check EVERY DAY! Before you know it, you're on "three red arrows" and you missed getting out. If you aren't excited about the price getting lower and lower, then you're rationalizing your mistakes. Know what your "Wealth Strategy" is going to be before you make that purchase.

To Your Wealth!

Garrett

STEVE JOBS AND RULE ONE'S 3RD M

When Steve Jobs passed we lost big.  

I knew Steve a bit.  I worked with him while I was investing in a small company that was building document management software for the NeXT computer.  I wrote about it on the Huffington Post Small Business Board of Directors article they put up yesterday.  Here's the link:

http://huff.to/nbhh1o

Let me just say that Steve could be really tough on people's feelings.  He had no compassion for a job badly done and many engineers lived in terror of their pet project not meeting his expections.  Once in the early days of NeXT a group of developers were invited in to show what they were making out of the new NeXT operating system.  I watched as Steve wandered around looking over develper's shoulders at their demo's.  He would look a while, maybe grap the mouse and toy with it then turn and say 'This is cool'.  Beaming faces all around.  And once in a while he'd straighten up and say, 'This is bullshit.'  Not so much beaming.  He'd explain why.  Less beaming altogther because he would somehow cut straight to the heart of the problem - a problem the design engineers didn't solve.  Sometimes he's solve it for them.  He did for my company.  And sometimes he'd just mutter and walk away and that was often the end of that developer's idea.  I heard a rumor that when Steve went back to Apple (where they paid him $1 per year and no stock options) he did the 'Cool' / 'Bullshit' thing on all the existing Apple products and only a few got 'cooled'.  The rest were jettisoned.  The ones that got 'cooled' included the iPod.

Steve had no tolerance for bad design.  He threw me out of his office once because the design of the product I'd just demo'd to him was no where close to what he thought was acceptable and I'd had the temerity to argue the point.  I told him the buyers didn't care about it being pretty or even easy to use.  They were all IT guys coming over from IBM mainframes and anything we did with the interface looked like nirvana to them because it was the first time most of them had been able to even have an interface worth mentioning.  The buyers were all ecstatic to get the functionality.  My argument was 'Damn the interface.  We have to ship on time.'

The next day, Steve insisted I return and took me on about an hour walk around the NeXT campus.  This time he couldn't have been sweeter.  Todd Rulon-Miller, head of sales, had explained to him that my company was a conscientious team devoted to NeXT and working their asses off to deliver for him.  And that if we didn't deliver, NeXT would lose about $40 million in computer sales.  Steve explained that we had to deliver AND we had to change the interface and he would help if I'd pay to fly out the head designer.  

The next day she arrrived, a really smart and beautiful woman named Peili Wang (who had won the 18 and under chinese chess championship when she was 12) and who Steve immediately took a liking to.  They sat down for the day and redesigned the interface.  It was a love fest.  I watched them figure all this arcane stuff out from the corner silently, forgotten forever.

Long story short, Peili and the team delivered and Steve publicly acknowledged their great efforts.  The software was a great, the design was great and it all shipped on time and Steve got his sales.

He could be tough, but he was an amazing leader who was unafraid of his own values and his own decisions.  Only Steve could have brought us the Mac, the iPod, the iPhone and the iPad.  What makes me ache now that he's gone is that I can't help but think that if he'd had another 20 years to do his unique and special thing, we'd all enjoy another 5 or 10 work-revolutionizing wealth-creating products that would have enriched and blessed our lives.

And now we won't ever have them.

Take a minute to absorb the truth of this; A few men and women bring brilliant, life-changing ideas into reality.  Becasue these tools exist the rest of us become wealthier.  If you boil it down past all the bs, the rest of us have been riding along on their backs throughout history.

Steve was one of those.  Perhaps there is reincarnation and he'll return some day and help us all to live easier lives again.  Until then, perhaps we should treasure those others like Steve who are still around and try to keep ourselves from bringing them down to our level.

Let's give Steve a minute of silence and thanks and then go play.

RULE ONE AND CTSH - WHAT WE HAVE TO KNOW

Garrett, Tom and Tom (Pittsburgh) are cranking on Cognizant Technologies (CTSH) and have landed on a question of epistemology - what can we know.  I promise I won't go all philosophical on y'all and crank up my Bachelors in Western Philosophy ... wait a sec ... maybe I will.

There are two fundamentally opposed schools of philosophy about what we can know.  One says that the whole world is an illusion and that knowing the real things requires a state of enlightenment which you most definitely are not in.  That's Plato and the Hindus.  The other one says the world is real and can be known but only if you get real rational about when you know something and when you don't.  That's Aristotle and Ayn Rand.  Since experimental physics and logic have been so successful in determining the truth of physical things in the world, the idea that you can figure out what you know about the world by just thinking about a thing has been left in the dust bin of history.  Except for investing.

Investors are constantly looking for a short cut to true knowledge.  Does 'I had a feeling about that stock" sound familiar?  It should.  When I ask people why they invested in something I hear it all the time.  Feelings about a thing are so much easier to come by than actual knowledge.  

President Obama gave us a great example of the victory of feelings over reality during the campaign.  He was shown the evidence that whenever the capital gains tax on investment has been lowered, tax revenue on the rich went up and whenever it is raised, tax revenue went down, and then he was asked point blank why he supported raising capital gains taxes if he wants more tax revenue.  His answer was that it was more fair.  Can you see his emotions about what's 'fair' overwhelm his rationality?  He wants more revenue and he wants to make the rich provide it because in his mind its more 'fair'.  An seemingly obvious target is to raise taxes on long term capital gains since its the rich who benefit from the low capital gains tax rate. But experience shows that the tax revenues go down and the rich pay less, not more.  He locked himself into a point of view that is irrational.  (Maybe he got real with this and gave up on it because his new proposal is to simply add a 5% tax on all income over $1 million.)

The point of this is that people can get committed to a world view that isn't about the facts, its about what we want to believe will happen.  What should happen.  We can only prevent that by sticking to our Aristotelian guns and demanding of ourselves that we be rational and, most importantly, know when we do not know.

The problem with CTSH for me is that I don't know the industry very well.  I can tell you they must have a good moat from looking at their numbers but what the heck is it?  Brand?  Scary niche in tech.  Its very easy to find brands in tech that were not durable.  Secrets?  Not likely.  Toll Bridge?  Too much competition. Price.  Likely.  But that can't be all.  

They have to have a Switching moat, no?  They get in there, do stuff at a price, do a good job and get invited back.  When they come back they do a good job and get invited back again.  Pretty soon, there are a bunch of IT things going on that they know about better than anyone.  And now, the company is hooked. It will be very painful to cut CTSH off and go with Accenture because the new guys will have to figure out what the old guys were doing and that is going to waste a lot of time and money.  I think they may have a good moat.  But I'm not that sure about it.  This is me doing the Plato thing and trying to think about the world instead of doing the Aristotle thing and go out there in the real world and find out.

To get right about CTSH I'd suggest you ask their customers why they like them.  Ask their competition why they can't beat them.  Go visit their offices and find out if they work like you think they work.  I can do that at a grocery store like Whole Foods or at a tech company like Apple.  And I have to.  And if you really do want to not have a major screwup on a stockpile, you have to do it on CTSH, too.

What are you looking for?  Same-o, same-o; do you really understand the industry, are you sure they are durable, do you love the CEO, what's it worth.  4Ms.  

Now go play.