Warren Buffett recently made an investment in the Pilot truckstop chain. While I believe that this was one of his soon to be top investments, even though the market is overpriced in general, he has the right idea but made the wrong investment in that sector.
Where he went wrong, was investing in only the Pilot chain. What he should have done was invest in another. If not my choice, he should have double downed, and invested in this chain.
Love’s truckstops, are a much better overall quality. They tend to have the same standard of cleanliness, and associate attendance to the facility and their prime customers, the CDL community. Love’s no matter where they are located, are all without a doubt, the prime when it comes to every location overall. I have yet to find a bad one.
With Pilot, you all know that there are a few of them, that are poorly planned, and under managed causing a slip in the Pilot standards of operations. The bad apples are bad, while the good are great.
Where they both are below par, is in the restaurant typically within the facilities. They need to have a good portion of the locations a home cooking sort of restaurant, instead of the fast food every damn where you go. Fast food, really?!? I may be an Operator, but damn, we do tend to care about our health, and yeah I do want a good meal every once in a week or two…..shit, I even get tired of coffee and crackers.
Financials on both Love’s and the Pilot are poised for even more growth with their ever expanding networks. Pilot will be seeing more and more renovation and expanding repair costs in the upcoming future, due to the aging network and the maybe soon bad apples that they have, are going to be a surprise to the Pilot upper Management.
Where Mr. Buffett got his investment wrong was the fact that he is not the prime customer of the investment, and should have had an advisory team of true truckers, help his organization with their investment decision.
Will this investment pay out? I am sure, he has probably already locked in a healthy profit just by announcing his investment choice. Will it pay, yes! It will. However, I think his return would have been greater, for a much safer investment, if he would have chosen Love’s for the fact of the aging network Pilot has coming forward in the very near future, better management needed at the bad apple locations, and depreciation being lost due to age of the structures around the country.
While a great investment, not the best I think he could have made.
Unknown Routes, and morning mountain runsby