This Really Is What I Do All Day …

On September 1, 2010, in My Businesses, by Joshua Kennon

It is true … 90% of the day, I am sitting behind my desk, reading and trying to learn (and, in turn, figure out how I can use that knowledge to do something profitable for Kennon Green Enterprises).  Today marked the start of our busy season.  Coupled with the huge uptick in stocks, it was a nice opening to the last third of the year.  My goal is to keep paying down the small amount of debt we have through regular amortization, continue building our investments and cash reserves, and grow revenue profitably.  It isn’t complicated, it just requires diligence, focus and a realization that every day that passes, we are closer to our goal.  How do you build an empire?  Brick by brick.

Joshua Kennon Reading in His Investing Office

 
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Stock Market Finishes with Worst August Since 2001

On August 31, 2010, in Investing, Making Money, My Businesses, by Joshua Kennon

Investments

I must confess to a moment of weakness yesterday. Given everything going on in the businesses our lives lately, I briefly (for about three hours) wanted to sell everything and park it in fixed income investments like municipal bonds and real estate to just collect cash each month without being involved in any way, shape or form. I went to sleep and woke up in my right mind. Time to buy again.

The stock market crash this month was the worst August since 2001.  At times, it was, to paraphrase Buffett, “like a bird flying into the middle of a badminton match.” The long-term investment accounts were unscathed (there, in fact, we love falling prices) but the speculation accounts took a beating.  For now, it’s all on paper due to most of the maturities in our derivatives coming up in January.

I joked with my dad yesterday that if I were to sell all of the businesses and take a very large check, I think just to catch a breather I would park every penny in tax-free municipal bonds for a year to form strategy and rest; maybe run off to Bora Bora or something.  On paper, a banker would think I was a 95-year-old retired tycoon living off his money.  I even thought about buying Series I savings bonds just for good measure!

His response?  “I’ll be parked right next to you in the adjacent space.”

The good news is I still rejoice at the small cost cuts I managed to find in honor of Buffett’s 80th birthday plus it looks like we are geared up for one hell of a good winter!  Sales are on a straight trajectory skyward.  It was swift, it was sudden, and it was powerful.  The steady drumbeat of the busy season is starting to be heard around here, faintly in the background but growing louder each day.  I can’t wait.

At the rate we are going, by the time this recession is over, we are going to be sitting on a veritable fortress with little or no debt, tons of excess short-term liquidity, and ownership of a range of assets that makes us money year-round.  We keep reducing our (relatively small) liabilities through regular amortization and extra payments and investing in expansion so it will be interesting … when the storm passes, we will be like a bird that has been hunkered down in the side of a cliff only to emerge and realize he is the only one left standing and now owns the entire mountain.

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Five Business Lessons I Learned from My Mom, Tammy Kennon, and Her Company, Chenille Appeal

On August 29, 2010, in My Businesses, My Life, by Joshua Kennon

Tammy Kennon

My mom, Tammy Kennon, from whom I got my quirkiness and ruthless competitive drive that makes me want to crush people that get in my way when it comes to business.

This is my mom.  You’ve probably read about her but never seen a picture.  She’s the same one that would slip notes into my lunches in elementary school telling me how wonderful, intelligent and loved I was.

Back in the early days when she and my dad started their company in a two hundred square foot garage, she would work during the day (my sister, Kelsey, and I would help run the machinery) and my dad would come home from his day-job and work the night shift.

Today, she and my dad are still the sole shareholders of that company, called Chenille Appeal, which has grown into one of the best known manufacturers of affinity athletic awards in the United States.  The motto growing up was: The business comes first.  There were years we setup the Christmas tree in the office instead of at home because we knew it would be the only way to enjoy it since we were sleeping at the factory in shifts to help get the business off the ground.

Business Lesson #1: There Is Always a Way (My Mom Provided the Faith)

Whereas my dad is the one who provides the analytical skills and operating details, my mom is the one that was the driving engine of faith and ruthless competition.

Way back toward the beginning of the company when we were all still kids, they needed something like $180,000 at a time when that was all the money in the world (adjusted for inflation, that is about $240,000 in today’s dollars).  They always sat us down and talked to us about what was going on, treating us like adults.  My dad said it just wasn’t possible on paper to come up with that kind of money on terms that would be favorable enough without risking the firm’s cash flow. (more…)

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The Sugar Refiner Shares We Own Are Surprising Me (and More Portfolio Updates)

On August 19, 2010, in My Businesses, by Joshua Kennon

Sugar Company Stock Certificate

I hardly ever talk about the portfolios I manage (the last time was when I added Campbell Soup to the blue chip reserve portfolio in Some Changes In the Portfolio), mostly because investment ideas are rare.  Still, I write about it to the same extent I would be willing to discuss something over coffee with fellow investors so here are some thoughts about what has been going on at Kennon Green Enterprises lately.

The shares of the sugar refiner I had one of my businesses buy only 3 months ago are already up 15.40%, giving a fantastic annualized return.  I’m thinking about selling them but need to go back through the financial statements one more time before I make a decision.

What I really want for Christmas is for General Electric to break $20 per share because if that happens, Joshua Kennon, my friends, is going to break out the champagne.  We started buying it at $6 at the height of the recession and it is already up to $15 to $16 but I have a substantial block of call options through one of my retirement plans that expire in January using a strategy that is not appropriate for anyone reading this.  At this point, every $1 change in share price means a massive gain in our position value. (more…)

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Kennon Green Enterprises Redesign

On August 13, 2010, in My Businesses, by Joshua Kennon

As part of our secret project, the Kennon Green Enterprises site was redesigned following the divestiture of two of our retail businesses.  There is still a lot of work to be done on it, but a year from now, it should all be worth it when people find out what we are doing behind the scenes.

Kennon Green Enterprises New Site

 
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Cherrywood Capital Group Successfully Divested Two of Its Investments

On July 20, 2010, in My Businesses, by Joshua Kennon

Phase I of our secret project and my third quarter goals are both going really well, even though I’m spending an inordinate amount of time on the manuscript for my next book, which is a guide to calculating intrinsic value of stocks, bonds, real estate, and other assets.

Everything Merging Under the Kennon & Company Brand

Remember the $31,000 we spent on the paid search advertising pilot program last September?  Yeah, part of that involved testing various keywords to determine if we were better off running our retail companies as separate domains or under one, parent brand.  I didn’t tell you that at the time because there was no reason to do so.

Baby Gifts from Kennon & Company

Following the successful divestment of JustBabyGifts.com and WonderfulWeddingFavors.com, we are bringing in luxury niche-market baby gifts and such to the Kennon & Company store and online boutique.

The results of that test helped us confirm our belief that we can grow even faster by consolidating everything under a single brand name and online store and unleashing all of our advertising dollars, search optimization efforts, and time on that one luxury “superstore”.  The search engines and shopping engines, which serve as a major source of new customers, are now sophisticated enough they don’t require individual domains for various product lines.

Thus, as part of the launch of Cherrywood Capital Group, we successfully divested JustBabyGifts.com and the WonderfulWeddingFavors.com, leaving us with a pile of cash to focus our attention on building a retail holding structure that mirrors our sporting goods businesses all under the Kennon & Company brand.  (My guess is, those two sites will be shut down later this week and absorbed into the new business that owns them.)

Don’t misunderstand me … we will still be in the baby and wedding gift businesses, but they will be departments within the larger Kennon & Company family, giving us access to far more prestigious product lines that require physical retail locations and economies of scale when it comes to purchasing and banking relationships. (more…)

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