This is a repeat of a prior post. I only wish I had listened to my own advice as we made so much money on this trade we didn’t keep enough of a tail.
We have a small but exciting position in an Israeli based company, SodaStream International, Inc. You basically buy their product and make your own sodas and carbonated water. It’s a classic razor and razor blade model. They recently targeted the underserved US market and had an IPO in November. The stock nearly doubled from its initial public offering price of 20 but has pulled back recently into the low 30’s where we have begun to accumulate our stake. This is truly a disruptive company. What I mean by that is that this Company, SODA, has the potential to destroy Coca-Cola and Pepsi’s business model. We know that is a strong statement and we don’t own a lot of this stock yet but we are a big user of their product and haven’t brought home a six pack or case of Coke or Pepsi in a month. Trust me, we know our soda. This is the best business model (low tech little risk of technological obsolescence, low capital investment) that we have seen in a long time. The only risk is that Coke or Pepsi could easily enter and dominate the market but the reality is that very few if any companies ever truly cannibalize themselves. By the time Coke or Pepsi wakes up to this, SODA will be enormous. This is a case of Peter Lynch’s classic 10 bagger investment that can go up a whopping ten times. We are departing from our trader bias to take on a longer time frame with this company.