KEDM Weekly

Starting off this week’s theme, we were reminded of an old article by Erik that really challenged the way we think. In his piece titled “Stop caring about earnings” (paywall removed for KEDM subscribers), he explained how Warren Buffett pioneered the no-dividend company.

Prior to Berkshire, investors expected companies to return capital in the form of dividends. The idea that a company would retain all cash and reinvest it on behalf of investors was revolutionary. BRK could hypothetically pay out its cash any time it wanted. It just chose not to.

And it worked. BRK retained its cash, avoided paying taxes on its dividends, and made all its early investors rich.

Similarly, Erik argued that Jeff Bezos pioneered a new paradigm. One where profits are tax-inefficient and shareholder value is maximized if all cash is reinvested in the business. Reported profits would be zero. Value investors would short your stock and talk about the market being in a bubble, but meanwhile, their grandkids would order their TP and sign up for the streaming service of the same company.

Now where’s the investment angle? For that, let’s shift gears and talk payments. Specifically, cross-border payments or remittance.

In the old days, José Hernández would walk into a Western Union store and hand over his hard-earned cash. A few days later, Grandmother Hernández would pick it up at the local bodega. He would pay 5% in fees, which was split between the two store owners.

Then, 20 years ago, the digital disruptors emerged. They aggressively undercut the legacy store operators on price, often charging around 2%. As is often the case, the legacy operator couldn’t cut their prices in half without upsetting Wall Street, meaning they lost market share.

Remitly (RELY US)

While we’re thinking about sticky customers, the market seems to have turned every company into a collection of factors. RELY fits the factor ‘decelerating growth’. This means RELY crashed and now trades at ~1.25x 2026 EV / sales. If their customers are as sticky as we think they are, that’s a buying opportunity…