Last year AIOCF increased their spending to grow the top line. They about doubled their employees. The CEO said they were investing in the future and that the spending would lay the groundwork for their future growth. Getting to $500M in sales was this huge goal. He also said that after 2015 this rapid expansion and heavy investment would slow. Ok. I believe that you need to look at what people do and see if it matches what they say. If the spending will really slow we should see some really strong year over year earnings numbers for the next 3 quarters because the year prior comparisons will be saddled with all that extra spending. I had written down notes to add shares in May 2015 in preparation for the excellent y/y earnings growth.

The problem is that I’m not convinced that I trust the CEO to follow through. I think he might always try to find a reason to spend more on top line growth. I know some people like this. Whenever they get some extra money or some windfall, they always find something to spend it on. They never seem to get ahead financially and always complain that they don’t have enough money no matter how much more they are making than the year prior. I like companies that can grow the top line and the bottom line rather than always deferring the bottom line growth for later.

Well, we’ll find out what Fernandes says this time. Hopefully, profits will now start being more important than revenue.



Hi Chris,

I too love CEO’s who do what they say they are going to do. So, since Fernandes said what he said, then I’m really hoping he follows through.

Now, on your other point, i’m much less convinced. I love businesses who plow their money back into their businesses. BUT, and this is a huge BUT, it has to be used smartly. If you just plow your money back into your business because you can, then that is disaster. But, if you plow your money back into your business because there is a real need and real growth, then that is AWESOME.

Look at AMZN. It was trading at $20 when the NASDAQ bottomed in 2002. Now it is at $450. That’s a pretty big gain. Maybe the largest gain out of all the major Internet players since 2002. They have never showed a consistent profit. But, the market loves them because they have plowed that money into making their existing businesses incredible, and branching out into new businesses. If they are trying to build a sustainable business for the next 100 years, then plowing all your excess money back into the business for the first 15, 20, 30 years of existence isn’t a bad idea.

Now, on the other hand, look at all the newspaper companies who were growing in the 80’s by buying other newspapers. The only business they new were newspapers, so they took all their excess money and grew by buying more newspapers. That turned out to be a disaster. A total disaster.

For AIOCF, we need to gain trust in Fernandes. If he said he will slow spending, then we need to see that. But, I’m all for putting you excess capital back into the business if the business is the right business.

As always, time will tell


Long Aiocf

I too like a CEO (or anyone for that matter) who does what he says he’s going to do. But I really dislike blind obedience to some statement made a year ago simply because “that’s what I said.”

A lot can change in a young business breaking new ground in a dynamic arena with new products, markets, competitive forces, etc.

If Fernandes changes his tune, I want to hear his reasons. If they are compelling, I’ll keep my position, if it’s fluff I’ll consider selling.


Thanks for bringing this to my attention. AIOCF, is indeed the company from my area code and the company I almost worked for! (instead I went for something else) I will take closer look at this investment idea and see if I can make something out of from TSX.