6 ms·

I think this is great and not often looked way to diversity. They are selling at 20X annual earnings (or 5% annual returns) and have track record of producing e

I think this is great and not often looked way to diversity. They are selling at 20X annual earnings (or 5% annual returns) and have track record of producing earnings for over 100 years. Additionally, royalty is brand dependent (it seems), not whether Listerine actually uses formula. Also, this is regular consumable that is unlikely to get displaced anytime soon. The best thing about it is that it is inflation protected. Not a bad deal to diversity in low-risk, low-return zone.

comex 5y ago
The royalty is actually a fixed dollar amount per X weight of product sold - so not inflation protected.
- bombcar 5y ago
  Is it? The finalized says ten per cent of gross apparently.
  - Rastonbury 5y ago
    Surely they sell more that $1.14m worldwide per year
    - bombcar 5y ago
      True, though this is an unspecified fraction of the royalties.
- missedthecue 5y ago
  Since this has been a thing since the 1800s, wouldn't it be paying out pennies per ton at this point? There has been a lot of inflation in the last 150 years.
thematrixturtle 5y ago
I thought the medical consensus these days is aligning on mouthwash being actively harmful? Kills good bacteria in your mouth, increases risk of oral cancer, etc.
- IncRnd 5y ago
  You're thinking of mouthwash with ethanol alcohol.
  - noduerme 5y ago
    Listerine is 21% to 26% ethanol. https://en.wikipedia.org/wiki/Listerine https://en.wikipedia.org/wiki/Listerine Personally, too weak for me; I gargle with moonshine.
- jafitc 5y ago
  if you're worried, you just need to buy a non-alcohol non-chlorhexidine based one. Listerine offers it too. https://www.listerine.com/mouthwash/listerine-zero https://www.listerine.com/mouthwash/listerine-zero
- waych 5y ago
  This may be medical disinfo. Listerine was long considered a great remedy and preventative care against flus and colds for a long time. This was lobbied against, they were sued and the ftc made them stop advertising as such.
  - astrange 5y ago
    Why would a mouthwash be effective against a virus in your nose? Using alcoholic mouthwash is bad for the same reason taking antibiotics is - and you may actually want to take oral probiotics for the same reason the ones you eat are healthy. Though I don't know the current state of evidence for them.
  - thematrixturtle 5y ago
    "Disinfo" by who, exactly? Mouthwash is a very American phenomenon though, AFAIK it's not used as commonly anywhere else in the world. Which suggests at least part of its American popularity is due to marketing.
    - bennysomething 5y ago
cannaceo 5y ago
I can get a 4.5% cap rate on real estate in a hot market like Los Angeles. I can get a 50% loan on the property as well. The property will likely appreciate on the backend and when it's time to sell I can 1031 exchange in to another property or do an opportunity zone to defer taxes. I can get a conventional loan from a bank against that property if I ever need to pull dollars out. A 5% return royalty is largely illiquid, can not likely be collateralized at a low interest rate, has limited ability to appreciate in value, etc. etc. I don't see it as that valuable...especially with the decline of major CPG brands. The remaining risk with this investment is completely unknown to me.
- Red_Leaves_Flyy 5y ago
  Considering the volatility in the housing market, and the growing populous demand for affordable housing I think you’re valuing real estate extravagantly.
  - noduerme 5y ago
    >> and the growing populous demand for affordable housing Not unless you expect a communist revolution in the next ten years
    - deleted 5y ago
      [deleted]
    - JohnJamesRambo 5y ago
      No one ever expects the Spanish Inquisition.
    - cannaceo 5y ago
      Maybe not a full-blown communist revolution but I expect the rules surrounding residential investment properties to change. Whether that's rent control, eviction moratoriums, increased taxes, or whatever other concessions populists will make. There's considerable regulatory risk going forward.
  - 5y ago

comex 5y ago

The royalty is actually a fixed dollar amount per X weight of product sold - so not inflation protected.

bombcar 5y ago
Is it? The finalized says ten per cent of gross apparently.
- Rastonbury 5y ago
  Surely they sell more that $1.14m worldwide per year
  - bombcar 5y ago
    True, though this is an unspecified fraction of the royalties.
missedthecue 5y ago
Since this has been a thing since the 1800s, wouldn't it be paying out pennies per ton at this point? There has been a lot of inflation in the last 150 years.

thematrixturtle 5y ago

I thought the medical consensus these days is aligning on mouthwash being actively harmful? Kills good bacteria in your mouth, increases risk of oral cancer, etc.

IncRnd 5y ago
You're thinking of mouthwash with ethanol alcohol.
- noduerme 5y ago
  Listerine is 21% to 26% ethanol. https://en.wikipedia.org/wiki/Listerine https://en.wikipedia.org/wiki/Listerine Personally, too weak for me; I gargle with moonshine.
jafitc 5y ago
if you're worried, you just need to buy a non-alcohol non-chlorhexidine based one. Listerine offers it too. https://www.listerine.com/mouthwash/listerine-zero https://www.listerine.com/mouthwash/listerine-zero
waych 5y ago
This may be medical disinfo. Listerine was long considered a great remedy and preventative care against flus and colds for a long time. This was lobbied against, they were sued and the ftc made them stop advertising as such.
- astrange 5y ago
  Why would a mouthwash be effective against a virus in your nose? Using alcoholic mouthwash is bad for the same reason taking antibiotics is - and you may actually want to take oral probiotics for the same reason the ones you eat are healthy. Though I don't know the current state of evidence for them.
- thematrixturtle 5y ago
  "Disinfo" by who, exactly? Mouthwash is a very American phenomenon though, AFAIK it's not used as commonly anywhere else in the world. Which suggests at least part of its American popularity is due to marketing.
  - bennysomething 5y ago

cannaceo 5y ago

I can get a 4.5% cap rate on real estate in a hot market like Los Angeles. I can get a 50% loan on the property as well. The property will likely appreciate on the backend and when it's time to sell I can 1031 exchange in to another property or do an opportunity zone to defer taxes. I can get a conventional loan from a bank against that property if I ever need to pull dollars out. A 5% return royalty is largely illiquid, can not likely be collateralized at a low interest rate, has limited ability to appreciate in value, etc. etc. I don't see it as that valuable...especially with the decline of major CPG brands. The remaining risk with this investment is completely unknown to me.

Red_Leaves_Flyy 5y ago
Considering the volatility in the housing market, and the growing populous demand for affordable housing I think you’re valuing real estate extravagantly.
- noduerme 5y ago
  >> and the growing populous demand for affordable housing Not unless you expect a communist revolution in the next ten years
  - deleted 5y ago
    [deleted]
  - JohnJamesRambo 5y ago
    No one ever expects the Spanish Inquisition.
  - cannaceo 5y ago
    Maybe not a full-blown communist revolution but I expect the rules surrounding residential investment properties to change. Whether that's rent control, eviction moratoriums, increased taxes, or whatever other concessions populists will make. There's considerable regulatory risk going forward.
- 5y ago