A Heist
Bank robberies probably make massive ROIs, right? There aren't too many expenses. All you have to do is walk in, grab the cash and get away.
In the 1995 film, Heat, Robert DiNero & crew hit Far East Bank in downtown LA. Their mission? $12M in cash. The crew's biggest expense is probably to Nate, who arranged logistics and intelligence. Nate likely took 10% or $1.2M. The rest of the expenses went to guns, ammo, tactical gear, interesting sunglasses etc. This was probably $500K. When you factor in that the guys could have been working legitimate jobs instead of planning the heist, their opportunity cost was maybe $50K for two months of scheming. That leaves nearly $11M to split 4 ways or $2.7M per person.
But, as investors, we're looking for — er — risk-adjusted returns. The Heat plan had some risks. Those happened. The police killed three out of the four bandits. One survived but needed permanent medical care and lived in exile. And Chris — the survivor — didn't make out with much. So, the actual return was really sorry. This is not far off from how most bank robberies go.
Still, you can understand the simplicity of the plan:
Go where the money is
Take it
Risks can undo even simple plans like this one.
Since Lamplighter has things like morals and principles, this type of thing is far, far outside our investing remit. That's before the risks. In the real world, though, there are businesses that do keep pots of money. You might not be able to shoot for that 2,000% ROI, but they're available if you look and have the flexibility to take action.
What else can you do to get a pile of money?
Anyway, here's Brinks, it announced in February that it would purchase NCR Atleos, an ATM service provider, network and safekeeper of cash. Lamplighter's talked about NCR Atleos before. The short story is that it provides ATMs as a service and its own network of ATMs. Banks want to expand branches and reduce staff. This is tailwind for NCR Atleos. It spun off from NCR in 2023.
The Brinks merger logic is sound. Both Brink's and NCR Atleos are leading operators in their markets. They both handle large amounts of cash and provide related services. The combination would bring Brinks into closer alignment with its biggest rival, Loomis.
Oh behave
One of the durable ways to go after better returns in public markets is to behave in ways that other investors can't or won't. This is a foundation of Lamplighter's investment program. It's not original or unique. Sometimes other investors can do things that Lamplighter can't. For example, someone could buy one of its portfolio companies outright for a song. Someone like Brinks.
The lesson here is that even if you try to play a slightly different game than others. Sometimes they have moves to make where there's no counter.
When it first introduced NCR Atleos back in September last year, Lamplighter anticipated enjoying watching management execute on a solid, durable, quality business and compound a bargain share price for a long time. Instead, it will take a very modest short-term gain and move on.
Disclaimer: None of this is investment advice. It's meant to illustrate ways LCM thinks about investing. Things that LCM decides are good investments for LCM and its clients are based on many criteria, not all of which are covered here. Some or all of LCM's ideas may not be suitable for other investors. LCM does not recommend investing either long or short any position mentioned. LCM may own positions in some of the companies mentioned. Some of its ideas will lose money — investing entails risk. See full disclaimer here.