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Matt Willes Profile picture
Matt Willes
@SkolCapital
Investor (Willes Capital, Mountain Mezzanine, SKOL Capital) and Minnesota Sports fan. Spouse (https://t.co/eBTcTWEcqg). Dad x4, Grandfather x2
Jan 31, 2022 • 12 tweets • 3 min read
A few have asked, so today’s thread is how I manage my own portfolio.

One thought before we get there:

Start Where You Are!

It doesn’t really matter where I am - play your own game, but yes I hope you are investing for your future. 1. I have a large chunk of my portfolio in private debt. This is what generates cash flow and pays the bills.

It’s my “job”
Jan 25, 2022 • 9 tweets • 2 min read
I ran a $1 Billion corp bond portfolio in the 00’s for a small insurance company

I beat my benchmark by 177 basis points annually from 2003-2008 (when I left) - If you don’t know, this is massive performance

Lots of chatter about about interest rates, so here are a few lessons 1. Don’t predict interest rates

If you are betting that your model is better than all the Wall Street banks and all the portfolio managers (especially those managing 10-1000x your institutional portfolio) you have already lost.

Play the game that you can win
Mar 10, 2021 • 11 tweets • 4 min read
As the kids say these days, “it’s been a minute” since we’ve done a mezz thread.

Today: my first mezz deal, and the answer to the question “How do you know if mezz is right for your business?” When I went out on my own I started from scratch - no deal flow, etc.

So, I hit the lunch circuit - take people to lunch, ask a lot of questions, ask for referrals, ask for other contacts, etc.

It started slowly, but it started
Feb 22, 2021 • 10 tweets • 5 min read
Last week @girdley made a comment about amateurish SMB financials ...

Thought I’d pile on here with a thread on evaluating different parts of those amateurish financials.

(Reminder, often there is opportunity, but it requires some work) First, a quick story ... my favorite moment at @uclaanderson was accounting class.

Professor: “What account did you use for your plug to make things balance?”

Classmate: “Well, I used two”

Professor:
Feb 2, 2021 • 13 tweets • 5 min read
Today in mezz threads:

Finding collateral where there isn’t any ... aka, my most innovative idea (and I’m giving it to you for free)! Let’s revisit this thread from my early (active) Twitter days. A few questions you might ask:

1) What was my collateral (why did I make this loan)?
2) Why did I have any leverage with the company at all (short of a foreclosure)?
3) Why did the “deep pockets” buy me out?
Jan 21, 2021 • 14 tweets • 6 min read
Last week I promised a few thoughts on cultivating deal flow.

I’m back after some time helping my wife with her art businesses, so the time is now!

How to make deal flow like: 1. Deal flow is a balance between active selling and sitting on your hands.

Who do you “sell” too? Everyone, but especially the “professional set” who are touching a lot of potential targets. For me: bankers, lawyers, accountants, etc
Jan 13, 2021 • 15 tweets • 6 min read
Today, a mezz thread!

Also, the answer to a few questions including:

Yesterday’s Value That Company!
Also, Why am I so dumb?
Finally, Why listen to me? 🤷‍♂️

Here we go! A few years ago, I get a call from an acquaintance (we have several mutual good friends). He’s running a fast growing consumer finance company and needs cash...

It isn’t “I need $5 Million by Friday” but it’s close...
Jan 12, 2021 • 5 tweets • 1 min read
It is time... For reasons that will be clear tomorrow, we are going into the archives for the first 2021 edition of Value That Company!

Today: Consumer Finance

TTM: 217 M Rev; 12.7 M EBITDA
Prior year: 97 M Rev; -4.4 M EBITDA
2 yr ago: 23 M Rev; -2.9 M EBITDA

More details: This company does VERY sub-prime “leases” for POS transactions (tires, furniture, eyeglasses, etc). If a customer doesn’t qualify for the store credit card these guys step in for “lease to own.”
Jan 5, 2021 • 13 tweets • 5 min read
Time for my first thread of 2021: Today, How I Measure Myself: a 2020 Report!

With some related thoughts on evaluating management and picking investment managers.

Important note: underlying everything that follows is integrity and trust. Without that, nothing matters. 1) Day to Day: Business Basics

Did I “keep the trains running on time” in 2020? Yes

Do I know how I measure my performance? Yes

How was my performance? Satisfactory

Overall grade: A- (I wasn’t aggressive enough in the markets at the bottom)
Dec 9, 2020 • 4 tweets • 1 min read
It’s time for everyone’s favorite game: “Value That Company”

This week: a services company with exactly one client: $AAPL

$6.6 M Revenue TTM (flat during COVID, 20% growth LY)
$4.5 M COGS (explained below)
$850k SG&A (depreciation ~0)
$1.25 M Net Income

A note below... This company has 10 employees that run around the world refurbishing woodwork (mostly tables) in Apple stores. Most of the expense (labor, travel, etc) goes into COGS.

My thoughts tomorrow, but I can’t wait to see what you come up with!
Dec 4, 2020 • 7 tweets • 3 min read
UPDATE: As promised, my thoughts...

1) Thank you to everyone for participating! Yes, I’m a nerd so I enjoy this, but it’s also a learning exercise for me. FinTwit is a wonderful place!

2) As I’ll explain below, my belief is this company is worth $15 M OR $30 M (LOL) The challenge here is the zero growth unless additional capital is provided. So there are three options:

A) Sell to a strategic (another pest company). It’s well established in this industry that these companies can be had for $1.5x ARR so in this case ~$15 M
Dec 3, 2020 • 4 tweets • 1 min read
It’s time for another edition of “Value that company!”

Today, Pest Control - NW US!

$10 M ARR (24k customers at $100/q plus a little one-time)
95+% Customers are on cc autopay.
80% GM
$1.5 M SG&A
20% attrition in customer contracts can be replaced with part of SG&A Additional additional grown can be had for 1x first year revenue (see thread below) ...

What’s the value of the company? My thoughts tomorrow!
Dec 1, 2020 • 18 tweets • 7 min read
Yesterday, as I was responding to a message on MLM’s I realized it was time for another mezz thread.

This morning when I was responding to a different message about placebos I realized the time is now!

This week: “Are you kidding me?”

Or: MLM’s are big (and controversial) in Utah.

$NUS was early (I have several friends that made serious money there), but there are dozens of imitators because everyone wants to move up.
Nov 23, 2020 • 18 tweets • 7 min read
It’s time to #GiveThanks

What does a monk, a maverick, the Illuminati, and a “cereal killer” have to do with mezzanine finance?

Time for a thread! Late 1950’s : Dad is attending West High in SLC. Classmates include (soon to be) Gail and Larry Miller (below) who would go on to be long-time owners of the Utah Jazz.

More importantly, the woman who would become my mother was the year behind Dad in school.
Nov 16, 2020 • 13 tweets • 5 min read
Why did I start a new, different job shortly after starting my mezz fund?

Related: Why am I biased against specialty retail?

Given the $SPG / $TCO news, it’s time for a mezz thread...

Today, the beginning of my mezz fund... 2012: I was helping my parents with their investments, and had developed the idea for what would become Mountain Mezzanine.

We’d do a traditional mezz fund, but go downstream in terms of check size, etc.

I loved this plan and was having the time of my life getting started.
Nov 3, 2020 • 20 tweets • 6 min read
You’ve voted! Now relax and enjoy another mezz thread!

Today’s topic is intercreditor agreements (You’ll understand the pic later)... A few years ago, a small local PE shop calls. They had previously bought a small building products company and financed part of the deal with an out of state mezz group.

The company was trying to roll-out beyond their historical base, but things weren’t going well.
Oct 22, 2020 • 13 tweets • 5 min read
Just got back from lunch with a friend of mine;

We debriefed a situation that was the worst financial loss for both of us.

Painful, but time for a mezz thread on lessons learned: My friend is a very successful consumer product CEO. If I told you his current or last company names you would know them.

He’s also an active investor in the middle market. He does equity; I do debt, and it’s a nice symbiotic relationship.
Oct 7, 2020 • 12 tweets • 4 min read
It’s been a while since I’ve done a mezz thread so...

How do I make money on these guys? Every summer, companies in Utah and Idaho recruit and send out thousands of young people (mostly men) who have recently returned from missionary service.

Their missionary service has prepared them for one unique aspect of business: door to door cold calling...
Oct 4, 2020 • 8 tweets • 3 min read
Ok, with $GLD at $178.50 I’m adding it to my Best 2021 “Permanent Hold” Ideas List.

NOT advice, but simply what I am doing in the markets.

A few thoughts below: First, historically, I’ve hated Gold as an asset. It doesn’t produce any income, it has minor utility, and is generally a bet on increased fear.

So, what am I thinking?
Sep 28, 2020 • 12 tweets • 3 min read
It’s slow today (I made my political tweet last week), so here’s my:

Top 10 “Favorite” Things to Hear From Potential Borrowers: 10)
Potential Client: I’m Buying a business for $5 Million.

Me: So, how much do you need?

Potential Client: $5 Million
Sep 27, 2020 • 10 tweets • 3 min read
Here’s me (about age 6-7) going in for a hug with my Gampy.

Why am I posting this? It’s my SMB buyout that should have been...

Time for a thread: After Gammy died, Gampy would give us the “true” breakfast of champions: