[HN Gopher] Listerine Mouthwash Royalties
___________________________________________________________________
Listerine Mouthwash Royalties
Author : hodder
Score : 136 points
Date : 2022-04-21 17:23 UTC (5 hours ago)
(HTM) web link (auctions.royaltyexchange.com)
(TXT) w3m dump (auctions.royaltyexchange.com)
| ddod wrote:
| Related to Listerine: I have a memory of reading a study that had
| people use mouthwash (possibly Listerine) the night before taking
| a cognitive test. The mouthwash group did worse than the control
| group for some reason.
|
| I'd really love to find the study again if anyone else knows
| where it is (my googling is apparently not good enough)
| rvba wrote:
| Maybe someone who brushes teeth regularly also studies
| regularly, while someone who uses mouthwash cuts corners?
|
| Or the alcohol / other chemicals.
| kurupt213 wrote:
| It's been a while since I've used listerine, but anecdotally,
| the only option that left a seemingly cleaner mouth was the
| 'original' formula/flavor. I doubt it's actually original. It
| also has the worst flavor.
| snikeris wrote:
| Maybe alcohol absorbed sublingually?
| Scoundreller wrote:
| Dunno, but most contain alcohol which could have a negative
| effect, even after the ethanol itself is cleared.
|
| Many are re-formulating to alcohol-free formulas, and I think
| it's because they fear tobacco-style lawsuits from anyone that
| gets oral/throat cancers.
| giarc wrote:
| Many stores also won't carry it due to shoplifting concerns.
| I've seen many drug stores with signs posted on the door that
| they carry only alcohol free Listerine.
| Covzire wrote:
| I wonder if it's the Sucralose, a chemical completely unrelated
| to sucrose(table sugar) and was originally developed as a
| pesticide. I used Listerine for many years before I developed a
| severe allergy to Sucralose. It started with the skin inside my
| mouth peeling slightly, it wasn't painful at all just kind of
| weird. Eventually I began getting hives and rashes on my hands
| and arms and slowly it kept getting worse and worse. If I use
| mouthwash or use toothpaste with Sucralose today I'll have very
| bad hives all-over hives that'll persist for a couple days.
| Ingesting any via food/snacks means a week of hives and needs a
| round of predisone to feel somewhat normal until it's all gone
| from my system.
| mometsi wrote:
| One morning, as Gregor Samsa experienced the pesticidal
| effects of a sweetener used in his mouthwash, he discovered
| that he had been changed into a monstrous verminous bug.
| Covzire wrote:
| I had to look up that reference to Gregor Samsa, lol. Btw,
| I ordered the complete Far side in hardcover immaculate
| condition that came in 2 giant books for around $50 a few
| years ago from someone on ebay. For any Gary Larson fans
| it's a great library addition though it's more like $75-100
| these days, and I imagine they'll only get more expensive.
| david_l_lin wrote:
| Might be related, but mouthwash use is correlated with a drop
| in systemic nitric oxide levels due to the negative impact on
| the oral microbiome. You can find a review here:
|
| https://pubmed.ncbi.nlm.nih.gov/35081826/
|
| At Bristle (oral microbiome testing) we advocate against broad
| antimicrobial mouthrinses as they can negatively impact your
| oral health similar to how antibiotics cause dysbiosis in the
| gut.
| TheDong wrote:
| > The mouthwash group did worse than the control group for some
| reason.
|
| I give it higher odds that the study's results were based on
| bad statistics, or an insufficient sample size, than that
| there's an actual notable difference here.
|
| The reproducibility crisis has made this, I think, a reasonable
| default assumption for old studies of this sort.
| prepend wrote:
| How does one value perpetual earning investments? The $2.1M is
| 18.36 times the annual earnings. So after 18 years you've paid
| off your investment and get $100+/year forever. In 36 years
| you've doubled your money and the return would be 2% using the
| back of napkin rate divided into 70 doubling time.
|
| But over time it just keeps paying off, so the stability is good
| but likely many other investments would give higher returns.
| rahimnathwani wrote:
| DCF
| tantalor wrote:
| https://en.wikipedia.org/wiki/Annuity#Valuation
| ghaff wrote:
| The short answer is Net Present Value or Discounted Cash Flow.
| Future money is worth less than present money for inflation and
| other reasons. So you discount any future moneys by some amount
| per year--doesn't need to be a fixed amount--and eventually you
| reach a point where that dollar you're receiving in 50 years is
| worth... not much.
|
| Very theoretically stocks are valued in the same way based on
| future dividend payments. But that's not really how analysts
| price companies.
| pc86 wrote:
| But if this is royalties from sales, wouldn't the amount
| theoretically rise with inflation, especially for a mass
| market consumer product like Listerine? So I don't see how if
| you hold on to this royalty (easy to do), and Listerine sales
| don't tank (out of your control), wouldn't your earnings be
| more or less constant in real terms?
| ghaff wrote:
| I was answering a specific question--how you evaluate. Yes,
| in this case, I would assume royalties would track roughly
| with inflation, i.e. future cash flows will increase
| although there are other reasons to discount beyond that
| number. Even absent inflation you can earn some money by
| banking it. And there's also risk of "stuff" happening as
| you move into the future.
| bombcar wrote:
| DCF still works if you assume 0% inflation, as even without
| inflation tomorrow dollars are worth less than today
| dollars.
| vasco wrote:
| It's especially great if you live forever, as in 55 years
| you'll triple it and in 73 you'll quadruple it!
| eloff wrote:
| I don't see how it compounds. It's just a royalty stream?
|
| It must keep pace with inflation though (I guess through
| increasing sale price of Listerine over time?)
| syspec wrote:
| > ABOUT THE ASSET
|
| The history of Listerine brand royalties is one of contract law
| legend.
|
| In 1879, Dr. JJ Lawrence invented Listerine and in 1881, licensed
| the secret formula to J.W. Lambert and Lambert Pharmaceutical
| Co., ultimately settling on a royalty based on the number of
| ounces sold, to be paid to him and his "heirs, executors, or
| assigns" for as long as Listerine was sold.
|
| For the next 75 years, the Lawrence family collected these
| royalties, with the ownership stake splintering between various
| heirs, some of whom sold portions of their stake to additional
| owners (such as New York real estate broker John J. Reynolds, who
| acquired half of the share of these royalties from the Lawrence
| heirs in 1950).
|
| After Lambert Pharmaceutical merged with Warner-Hudnut in 1955,
| the newly merged management contested the $1.5 million a year
| they were paying in royalties in court... a case they famously
| lost in a decision that remains cited in contract law cases and
| classes today.
|
| As a result of this decision, the Listerine royalty payments will
| remain in force for the lifetime of the brand, paid to whoever
| owns a share. Today, those entities include not only the heirs of
| the Lawrence family, but also various pension funds,
| universities, hospitals, and multiple individuals.
|
| This is your chance to be part of this exclusive group.
| [deleted]
| srmarm wrote:
| Are you getting royalties for use of the Listerine brandname or
| something in the formula?
|
| If they changed the formula to something totally new but kept the
| Listerine branding are you getting paid? If they kept the formula
| but gave it a new name would you get paid? Just a new spelling?
|
| Also how much has this royalty been subdivided?
|
| The numbers and concept seem interesting but the site seems to
| lack a lot of details.
| ghaff wrote:
| The original contract was something like a two sentence
| contract. Presumably the royalty stream has been subdivided _a
| lot_. And it 's the best selling mouthwash in the US. AFAIK,
| all the mouthwashes under the brand, including alcohol-free
| ones, are still covered by the original contract and there have
| been significant reformulations.
| golergka wrote:
| This kind of asset is exactly what NFTs (backed by real-world
| contracts) would be ideal for. I'd love to buy 1/100th of that
| asset just by interacting with a smart contract.
| riskneutral wrote:
| Securitizing the Listerine royalty would require setting up a
| Special Purpose Vehicle (basically a legal entity whose sole
| purpose is to own the Listerine royalty rights). It would
| require bank accounts to be setup to process the royalty
| payment. It would be considered security and as such would need
| to registered and regulated by the SEC in order to be sold. All
| this would cost a several hundred thousand dollars in legal,
| administrative and banker fees. This would only make sense if
| several hundred million dollars worth of Listerine royalties
| were being securitized, and if there are investors who are
| willing to buy the hundreds of millions of dollars of resulting
| securities.
|
| None of those securitization processes could be made more
| efficient, secure or cost effective with an NFT or any other
| blockchain technology. Introducing cryptocurrency into the
| securitization process would only be for the purposes of a
| marketing stunt that would make the process more costly,
| complex and risky.
|
| You say you would love to buy 1/100th of an asset that has a
| list price of $2 million, so presumably you would be willing to
| invest $20,000. Well, I have news for you, multi-hundred
| million dollar securitizations are not done because someone
| says they would love to "interact" with a "smart contract" and
| have $20k to invest, they are done because multiple investors
| have promise to buy tens of millions of dollars of those
| securities. And those investors are interested in earning
| dollars, not "interacting" with "smart contracts" for fun and
| games.
|
| So no, NFTs are not ideal for this kind of asset.
| humanistbot wrote:
| mfringel wrote:
| So.... let's say that was even possible, and you did that.
|
| You pay: $20,000 in $some_coin (ignoring gas fees for the
| moment) 1/100 of annual royalties is $1,142, taxable at your
| marginal rate (say 20%), so $913 free-and-clear.
|
| Even without doing discounted cash-flow magic, that gets you to
| an annual 4.5% annual rate of return. Not great, not terrible.
|
| BUT, you're doing this all in NFT-land, which means either you
| hold it (in a cold wallet, ready to be shown once the next
| royalty agency asks who owns this stuff), some other entity
| holds it (and you trust them and pay their fees), and no one
| has stolen your metaphorical apes over the next 21 years, which
| is just what it would take to make back the investment. Also,
| making the double-bank-shot bet that courts will recognize NFTs
| as proof of ownership, and that the NFT itself does not become
| taxable property, as a security.
|
| Short of some kind of presumably inherent joy in interacting
| with a smart contract, I'm really not sure what you intend to
| gain, here.
| bombcar wrote:
| I wonder why you don't see Johnson and Johnson bidding on it; if
| they acquire it they are effectively paying themselves at that
| point.
| ds wrote:
| It a 5.5% cap with nothing backing it. Il take any random real
| estate deal (which has tons of tax benefits) over this any day of
| the week, plenty of which exist at the same cap or higher and
| come with actual assets (land, building, etc..)
|
| Dont get me wrong, Listerine is definitely as strong a brand as
| there is (I cant even name a competitor off the top of my head)
| so im not that worried about this going to zero, but that said I
| would still expect a cap of ~8-10% to have this make sense over
| other options backed by assets.
| conductr wrote:
| I wouldn't mind if it wasn't priced so high (what isn't these
| days).
|
| Assets have downsides too. Insurance, taxes, maintenance, and
| general overhead in the sense that they are significantly less
| passive. I don't get the "nothing backing it" part, maybe it's
| not tangible but the brand here does have massive value and all
| but guarantees substantial gross sales year after year.
| dvt wrote:
| > I wouldn't mind if it wasn't priced so high (what isn't
| these days).
|
| It's funny, to me it seems extremely cheap. With $2M, you can
| basically guarantee 100k/yr in perpetuity while being hedged
| against MMT interest-rate-fiddling, money-printing-induced
| inflation, a crypto crash, a stock market crash, a housing
| bubble crash, a tech bubble pop, etc.
| intuitionist wrote:
| The brand may not be a hard asset but I'd say it's likely to
| hold its value better than plenty of hard assets (is an office
| building in San Francisco really less risky than Listerine?)
| and than lots of other royalty-generating intangibles at
| similar cap rates (will there still be any Neil Diamond fans
| alive in 20 years?)
| icelancer wrote:
| >> It a 5.5% cap with nothing backing it.
|
| This is not true. Listerine has one of the most famous contract
| law cases in the world backing the royalties for life, tested
| in court.
|
| It is almost assuredly the most secure contract of this type
| you can possibly acquire.
| ars wrote:
| > I cant even name a competitor off the top of my head
|
| Store brands are the competitor. They are exactly the same, but
| cost less.
| cgriswald wrote:
| Also Crest Pro-Health, ACT, and TheraBreath of the top of my
| head. I imagine Colgate also has a mouthwash.
| reaperducer wrote:
| This is what used to be called "passive income."
| yakak wrote:
| That's a silly comparison. Investors would be comparing this to
| some pretty low yield bonds they would buy to mitigate the
| risks of being over invested in real estate and stocks. Even in
| a recession after a lot of bubbles burst, consumer brands of
| household items tend to sell pretty well.
| icelancer wrote:
| Right. At some point you can't just buy more VTI, houses, or
| whatever. It's almost like the term "hedge fund" means
| something.
| ffhhj wrote:
| Stoped used it due to hypogeusia:
|
| https://en.m.wikipedia.org/wiki/Hypogeusia
| latchkey wrote:
| At the current highest bid of $1.51m, it would be 13.2 years
| before breaking even (not counting taxes).
|
| For that amount of money, I can think of better investments.
| giarc wrote:
| The last auction for Listerine royalties ended with a winning
| bid of $561,000 on $32,040 revenue over past 12 months... or
| 17.5 year pay back!
| Giorgi wrote:
| that's not bad, considering if you want to pass something to
| your offspring.
| bombcar wrote:
| If you had a $700k or so house, you could have mortgaged the
| house and used the Listerine to pay the mortgage!
|
| Probably causes you to become insufferable about other
| brands, tho.
| icelancer wrote:
| >> For that amount of money, I can think of better investments.
|
| The group buying this contract can, too. But that's not the
| point of owning a diversified portfolio of assets that are of
| varying correlation.
|
| EG is not the same as EV.
| stickydink wrote:
| Is that the right way to view it? If you believe Listerine
| isn't going anywhere, at that price you're making a reliable
| 7.5% return that should track with inflation. On something you
| presumably could sell just as easily as you bought. Doesn't
| sound that bad!
| riskneutral wrote:
| This is not a great investment.
|
| You can earn LIBOR + 7% on a BB rated CLO (Collateralized
| Loan Obligation) bond. Since you earning a floating rate
| (LIBOR) plus 7%, you would be far better protected against
| interest rate increases. The Listerine royalty is a
| perpetuity, which means that its value declines very rapidly
| when interest rates increase.
|
| The value of the Listerine royalty has some natural immunity
| to inflation because the price of Listerine would increase
| with inflation, but it is difficult for manufacturers to pass
| on costs when it comes to retail consumer products like
| Listerine. The CLO bond is floating rate, so it is also
| protected somewhat against inflation.
|
| You would need to dig into all the details of the Listerine
| mouthwash business before investing, and those granular
| details are unlikely to be available from the owner (Johnson
| & Johnson). The CLO bond will be backed by underwritten loans
| to 100+ large, private American companies across all
| different industries, so the commercial risk is far lower due
| to the diversification benefit of a CLO. The CLO structure
| itself also ensures that chances of the CLO BB bond
| defaulting are very low. The default risk can be reduced
| further by investing in multiple CLOs. You could also
| diversify beyond CLOs through other kinds of floating rate
| securities that have a similar LIBOR + 7% yield, for example
| Mortgage Backed Securities. With $1.5 million, you could
| construct a very nice structured credit securities portfolio
| for any target yield and risk level that you're looking for.
|
| By the looks of this auction, the Listerine royalty is not
| easy at all to buy or sell. A BB rated CLO bond would be more
| liquid than this, and if you can afford to invest $1.5
| million in a mouthwash royalty then you can also get an
| investment broker who can help you buy and sell structured
| credit bonds and perhaps even lend you money to increase your
| leverage if you want to.
|
| The Listerine royalty belongs in a huge investment portfolio,
| such as a pension plan or hedge fund, where they have so much
| capital that needs to be deployed that they are forced to
| invest in highly obscure things like mouthwash royalties.
| fnordpiglet wrote:
| Still referencing LIBOR eh?
|
| Im not sure your perpetuity model fully applies. It's not a
| fixed rate perpetuity but adjusts with positive correlation
| to, presumably, inflation + growth + idiosyncratic brand
| value movement.
| howeyc wrote:
| Where can one buy these bonds?
| riskneutral wrote:
| You need a broker and a couple million dollars to invest
| for them to take you seriously. The bonds typically sell
| in minimum $100,000 pieces.
| pc86 wrote:
| You seem to need a couple million if you want to buy a
| Listerine royalty as well so there's that.
| kolbe wrote:
| Why are you comparing a BB rated bond to a cash flow from
| an American staple of consumption for a hundred years?
| Everyone knows more risk comes with higher yield. That fact
| doesn't make one or the other inherently better: just a
| different position on the risk/yield curve.
| riskneutral wrote:
| Because the BB bonds are currently yielding LIBOR + 7%. A
| royalty stream is similar to a bond in the sense that you
| pay a price today to own an asset that will pay an
| uncertain stream of future cashflows over time.
| Giorgi wrote:
| BB bonds are several years max, LISTERINE is forever.
| bombcar wrote:
| LISTERINE lives on, LIBOR is dead.
|
| https://en.wikipedia.org/wiki/Libor#LIBOR_cessation_and_a
| lte...
| ghaff wrote:
| Depending on which numbers you plug in, the bidders seem to
| be evaluating it about where you'd expect. It's presumably
| pretty low risk but not risk free, it's presumably fairly
| liquid but it's a rather unusual asset, and it presumably
| tracks inflation pretty well. Add all that together and I
| certainly expect better than essentially risk free, highly
| liquid investments but not outrageously so.
| latchkey wrote:
| I view time as money, so yes.
|
| I'm not convinced you could flip it for a profit quickly
| (taking in capital gains) and like property... there is a
| history of sales. You'd have to wait a period of time (>1
| years) before selling it again, you'd never really realize
| that 7.5%.
|
| As a safe counter example, for less money, I bought a condo
| in a popular beach community with low inventory and a lot of
| short term rentals. In the last year the property value has
| increased by a solid 23%. I could have also rented it out for
| revenue.
| kolbe wrote:
| What are the better investments?
| latchkey wrote:
| Property.
| kolbe wrote:
| Cap rates in my city are like 2.5%. Where are these juicy
| yields?
| ricardobayes wrote:
| That's why most real estate investors get mortgages. Then
| your ROI depends on the money down. Real estate
| investments benefit from leverage.
| uf00lme wrote:
| Stock index?
| kevmo314 wrote:
| Well, after 13.2 years you'd have broken even and be up one
| Listerine royalty. I don't know of any investments that have
| dividend yields that high.
| cool_dude85 wrote:
| Never seen this kind of thing before, but I wonder if there's a
| decent way to scam the music side. Invest a few months of return
| into click farms to buy streams for some of your licensed music,
| see if any of the algorithms decide it's popular now and you get
| more money in your pocket.
| 52-6F-62 wrote:
| Please don't.
| RivieraKid wrote:
| Everyone in the comments seems to know what this is about. Can
| anyone explain?
| scottlamb wrote:
| On the subject of (antiseptic) mouthwash, there have been studies
| linking it to diabetes in overweight adults [1] and mortality in
| hospitalized patients [2]. Nothing that conclusively proves
| causality AFAIK, but it does give one pause...
|
| [1] https://www.nature.com/articles/sj.bdj.2018.1020
|
| [2] https://pubmed.ncbi.nlm.nih.gov/33067640/
| jaywalk wrote:
| Look at this guy, trying to drive down the selling price. I'm
| onto you!
| pg_bot wrote:
| I'm surprised that Johnson and Johnson wouldn't want to
| immediately snap up any available royalties that they could.
| Getting rid of perpetual royalties seems like an absolute no
| brainer to me if I were the CEO of JnJ.
| webmobdev wrote:
| On a slightly different topic - those of you who use Listerine
| daily, have your teeth become more sensitive?
| snikeris wrote:
| I haven't noticed that, but I always rinse w/ water after using
| it.
| [deleted]
| conductr wrote:
| I'd also look into the "daily" part. All my bones are more
| sensitive than they once were. I'm in my 40s and starting to
| think all the days passing has something to do with it.
| whiddershins wrote:
| Meanwhile, I believe mouthwash is a scam and actually makes your
| mouth drier and more prone to halitosis if used over time?
| david_l_lin wrote:
| This is because of negative impacts that broad antimicrobials
| have on your oral microbiome. These mouthwashes essentially
| burn away your microbiome and allow for new species to
| repopulate the niche. Many times this means that anaerobic
| species that cause halitosis can come fill in the space.
| icelancer wrote:
| A few comments with informational stuff from your company is
| fine, but you're taking it too far with the repeated replies.
| quags wrote:
| This also peaked by interest, as well as the general concept or
| royalty investing. But so far, I haven't found anything that
| seems worth it. First, none of the royalty are guaranteed, so you
| could buy something that may or may not get the same returns year
| in and year out. Some of the royalties are small slices of
| certain songs, like a small writer credit - so you are not clear
| on exactly what is being bought with out more research. As an
| example there have been songs like jcole + kanye west workout /
| workout plan. There were a bunch of songs, three may be
| considered well known, but you are getting a small slice from one
| writer in that case. So you really need to dive into what is
| being bought. Best case I can see on the songs is that maybe one
| day some movie or tv show uses the music and you get a nice bump
| in earnings, or there is some popular cover in the future. 100k a
| year royalties, not guaranteed might make sense at a million
| which gets you a 10% return which is decent, but this trades more
| like a bond. Your resale may not be great if interest wanes in
| this royalty exchange and you can get more stable returns in the
| bond market in vanguard (trading actual bonds not etf's). I like
| to invest in what I understand and what is simple, this just so
| far is not. I do use Listerine zero (less intense / alcohol free)
| which I'm not sure counds in this stream. I haven't bought the
| original in a long time, since it has no flouride.
| jmbrook wrote:
| Interesting angle there for a form of 'insider trading' -
| people in tv/film industry could easily buy this up and slide
| their assets into their own creations.
|
| What I don't quite get is why the royalty payers don't start
| buying as well, feels like an easy way of boosting profits
| (assuming they can finance at a lower rate)
| prometheus76 wrote:
| "This has also piqued my interest..."
| david_l_lin wrote:
| Not directly related, but Listerine and other broad antimicrobial
| mouthwashes have been shown to have a negative impact on the oral
| microbiome similar to how antibiotics cause dysbiosis in the gut.
|
| At Bristle Health, we advocate for products that foster an
| environment that supports your oral microbiome rather than
| destroy it, as it's crucial to both your oral and systemic
| health. You can find more about our research here:
|
| www.bristlehealth.com
| kingo55 wrote:
| Very interesting... So does that mean avoiding mouthwash
| altogether and only brushing with very simple fluoride
| toothpaste?
|
| I'm guessing you don't cater to Australia.
| david_l_lin wrote:
| Depending on your oral microbiome, there are more specific
| mouthwashes that primarily target anaerobic species that are
| implicated in diseases like gum disease and halitosis.
| Fluoride is highly effective at reducing caries incidence,
| but some newer ingredients also exist (such as
| nanohydroxyapatite) with high clinical efficacy if you worry
| about fluoride overexposure.
|
| Additionally, depending on your oral microbiome, and your
| risk for oral disease, we recommend other products that can
| reduce your risk of disease and prevent the outgrowth of
| species implicated in oral disease.
|
| Unfortunately we don't ship to Australia yet! Someday soon I
| hope!
| KennyBlanken wrote:
| Brush your teeth regularly, eat decent foods, user a waterpick
| and/or floss a couple times a week, and get a dental cleaning
| periodically.
|
| You can find out more about my theories here:
|
| www.stopfallingforshittybiomestartups.com
| sizzle wrote:
| doesn't the alcohol content in listerine increase the risk of
| oral cancers I read somewhere?
| david_l_lin wrote:
| Regular oral hygiene is a decent predictor of oral health.
| However this does not explain why the incidence of caries and
| irreversible gum disease are so high. Almost half of all
| Americans have some form of gum disease, which we can predict
| using the oral microbiome, which are the same people that
| regularly see a dentist and have "normal" hygiene habits.
|
| Let's stop normalizing reactive medicine and start thinking
| about personalized preventive approaches to health. There is
| no one size fits all approach to your systemic health, and
| the same applies to oral health.
| plasticchris wrote:
| I was in my thirties before I was taught to floss halfway
| correctly, and since then my gums have sorted themselves
| out great. I think we just don't educate people enough on
| this.
| luckman212 wrote:
| Please share the correct way! I didn't realize I'd been
| doing it wrong all these years.
| ShakataGaNai wrote:
| I question the legitimacy of this service. You say that you're
| all about oral health but yet the marketing material [1] goes
| onto use the fictional condition of halitosis. Which Listerine
| basically [2] made up for marketing purposes because it sounded
| scientific. So aren't you just playing to peoples fears rather
| than actually trying to do so some good education?
|
| [1] https://assets.website-
| files.com/621fba879a7423c6c3a5c77d/62...
|
| [2] https://dentaldepotarizona.com/history-of-halitosis/
| hodder wrote:
| This is a very interesting asset on an interesting site I just
| found at an attractive FCF yield assuming current bid gets hit.
| Does anyone have experience in investing in, or securitizing a
| royalty stream? Quite fascinating.
| fffobar wrote:
| Not sure if a P/E of 18.38 is so so attractive, it looks
| neither cheap nor expensive for something that will at best
| keep up with the (nominal) GDP growth.
|
| Why is it so cheap though in terms of absolute value, is the
| percentage of revenues claimed by this asset very low? The
| offer lacks detail. Where's an appropriate SEC form when you
| need one :)
| phkahler wrote:
| >> Not sure if a P/E of 18.38 is so so attractive, it looks
| neither cheap nor expensive for something that will at best
| keep up with the (nominal) GDP growth
|
| P/E is just an indicator (E/P) of what dividends _could_ be.
| In this case the return is real and is over 5 percent. But it
| 's not quite the same. As others have pointed out there is no
| physical asset behind the investment. OTOH it appears there
| is also no way to "cut the dividend" ever, so it's as solid
| as the brand.
| bombcar wrote:
| It's not very tradable on the open market, so you really
| _are_ buying a revenue stream.
|
| However, pensions and endowments are probably quite
| interested.
| Scoundreller wrote:
| It's an auction, so it'll go up, but there have been auctions
| before, so it seems like different heirs/successors are
| selling their stakes sliver by sliver.
|
| My fear is that this is a branded product and as the royalty
| stream gets further and further away from the
| manufacturer/marketer, they'll just kill off the product and
| push royalty-free alternatives.
| thucydides wrote:
| To put the wisdom of buying the royalty stream aside for a
| moment, why would a manufacturer abandon an iconic and
| profitable brand like Listerine after more than a century
| just to avoid paying royalties they've been paying during
| that entire time?
| mfringel wrote:
| Looking at most of the auctions, this looks like: "these are the
| deals that don't make the hurdle rate of the typical buyers, so
| let's make some money selling them to the dentists who like the
| idea of owning a song and won't look too hard at the return."
|
| I'd love to be wrong, but I'm not seeing a good alternate
| explanation.
| avs733 wrote:
| I'm looking at this and thinking about how to model the cost of
| having creating a massive increase in the number of plays of
| one of these songs and the resulting Roi
| sytelus wrote:
| 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.
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