![]() This makes quite a bit of difference to the interpretation, because buying something over implies that the other party has decided there are better uses for their capital, as opposed to perhaps having to maintain portfolio diversification, or not having more to invest being a closed fund. One thing I haven’t yet seen postulated is that the DJI investment was not necessarily a buyout: it may well have been an expansion with issue of new shares ( Note: I don’t actually know if this is the case). The Kumamoto earthquake in 2015 affecting what is pretty much the main supplier of photographic sensors (Sony) has made things even more challenging: here’s a textbook example of why monopolies are a bad thing for all parties in the long run. I think it’s pretty obvious where higher than expected demand is a good thing, but at the same time can cause some cashflow consternation and delay if you have to order 4x or 5x the number of sensors you initially planned for. There are huge cash outflows in the R&D and early production periods, and you don’t get anything back until the product ships – upon which you’ve only got a year or so to recover most of that cost whilst the demand is still hot. On top of this, even with a relatively long-lived product like a medium format camera, the life cycle may not be more than a few years – so the economics are even more challenging. However, you probably won’t see any cashflow in return until the product sells to the end consumer (by the time you factor in dealer credit terms etc.). I would imagine that the capital commitments are both high and far in advance of any revenue coming back in: you need to lock in the most expensive component (the sensor) months or years in advance, which in turn requires payment. The cameras are shipping, though demand remains strong and waiting times longer than anybody would like. ![]() If I had to guess, Hasselblad’s biggest challenge now is twofold: firstly, they have a competitive product lineup that is in demand (X1D, H6-100) but need to make significant investment in production to satisfy far greater than expected demand. **Drones are becoming increasingly commoditised, which means lower margins and higher investments required for product differentiation – in the long run, this is a bad, high-capital and low-margin business. *Even so, without official confirmation, we are simply speculating. ![]() ![]() Clearly, therefore, the people making decisions at DJI know something that the rest of us public do not – and this gives them confidence that any investments will generate the desired returns, which in turn can only mean there’s something to sell. Secondly, if you take a small stake in something that isn’t working, why would you subsequently take an even larger stake later on? That is nothing but sheer insanity. Even if* at some point in the last few months, DJI increased their stake from the initial position in 2015, it can only be interpreted as a positive move for two reasons: firstly, DJI itself is a successful company, but limited by the nature of their product** and market (consumer, i.e. The official word is that there has been no change in the identity of the major owners in Hasselblad: they remain Ventizz Capital and DJI. With that, let’s get on with the analysis.
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