Any thoughts on the waste management industry?

Recycling is really a spread business. It’s actually very similar to another business on the other side of the environmental spectrum which is refining. The reason I say that is that in both businesses you need to watch out not only for the price of the product you are selling, that varies in a certain way, but also the price of your “feedstock”/inputs that can vary in a very different way and more importantly on a uncorrelated manner. So from my perspective some of the most important things when looking at a recycling business are 1- where are you getting your feedstock/inputs, 2 what price will you pay for them 3 - where are you selling the recyclables 4- what price are you paying for them 5- are the two prices correlated and how do they work together,. Fortunes have been lost in recycling (and refining) because while the input cost stayed the same or went higher the output cost went lower and so the margin got squeezed and even went negative, and it’s a really tough day when each product you sell costs you money rather than losing it. There are other things to consider, but this would be one of the first ones I would look at before deciding if I want to spend more time in a business. The ideal recycling businesses are the ones where people pay you to take the waste out of their hands and where your recycling cost gives you plenty of margin to be competitive with the newly produced/non-recycled product. Regulation has created a few of these situations. Hope this helps

Four things about collection, as mentioned is that 1- density really makes you more or less competitive 2- linked to 1, route optimization and fleet efficiency particularly in a computer/gps driven world can really make a difference 3- collection is really about relationship and winning contracts 4. If they have 3, even though you might have bought a business from someone, all that it takes to start a competitive business is a bunch of trucks (that they can probably lease) and a few employees, so the barriers can be low, which is why 1 is particularly important, ideally if you are gaining that density with unrelated contracts, i.e. no one can steal it from you by getting just one contract.