In this, the last part of the series, I'll try and wrap up the different parts of my analysis over the last three posts into one coherent outcome - what would I invest in, and why? For those who haven't read the other three parts, I'll link them with a brief description here.

Part 1: Introduction to the sector and an outline of the broadest differences

Part 2: Analysis of the key area where the companies differ; returns; and what it means for investors, with a focus on margins and costs

Part 3: Focusing on Vertu, a look at some key explanations for the differences relating to business model

The basics

We have four companies which trade on quite differing valuations relative to the amount of assets in the business. You might argue that valuing a business on its assets is dodgy ground, and I'd agree, but when looking at companies in a specific sector - and it's a sector which isn't driven by intangibles (think software development, accountancy etc.) - there's some attraction. After all, since there's no impossible-to-value intangibles, those assets are a loose guide to how much it'd take for someone to come along and replicate the business.

The question then becomes - how much more is there to this business than simply the assets? What are the best performing companies in this sector doing that the worst aren't? If you identify anything - are these factors easily replicable by the worse-performing businesses? If they're not easily replicable, the competitive advantage is sustainable - like Coca-Cola's brand.  If they're not replicable, it's reasonable to expect that the companies in the sector will tend to converge towards one another in terms of returns, as competition and the evolutionary nature of markets acts.

Since it's the final post, I won't be roundabout or pensive with my thoughts - there doesn't appear to be that much that Lookers and Pendragon are doing that Vertu and Cambria aren't.  I think most of the differences in returns can be attributed to, firstly, the differences in size - smaller companies have higher fixed costs relative to larger ones, and secondly to the fact that both Cambria and Vertu are more acquisitive and are younger companies. Speaking to Vertu's FD, as in my last post, there's relatively few adjustments you have to make to the operating profit figure (exclude businesses acquired…

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