Understanding business floats

Great contents are the ones which teach you new things, give you new perspective to think about every time you revisit them. It can be an article or a movie. Would like to share such an article series today.

Almost every serious investor has heard about float. They have read about Berkshire Hathaway's insurance float, how Berkshire Hathaway used blue stamp's float money to buy great businesses like see's candy & so on so forth. Float has always been a fascinating topic for investors. Recently came across Prof. Bakshi's old blog articles (which were written in 2012-2013) about the same.

While evaluating any business, one of the things I look as a proxy to float is it's cash-conversion cycle, the lesser the better (if it's negative, it's even better! ). The articles go in much more depth, they explain different kinds of floats, different quality of floats present in different businesses, when some businesses look like they posses float but in reality they don't. And all of this in a very simple & easy to understand language (even a non-finance person can understand it). It has been a very enriching read, to say the least !

Would like to hear your thoughts about the same!

Articles link:

3 part article series: part 1, part 2, part 3

Presentation to his students combining all 3 Articles: presentation

P.S. The discussions in the comments are also very interesting to read, do not give them a miss!