John Hjorth
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Posts posted by John Hjorth
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Here is another one posted today by Wish_ram [ ; - D ]:
If you don't own growth and just focus on hard core value investing ,then making $ is very hard.
Over several years I gradually shifted from value to growth. I understand the absurdity of this as Buffett says they both are joined at the hip. I started making good $ for me and my clients with this approach (outperforming S&P 500 over several years).
1) You need some core expertise in at least one area (like software, telecom, cloud , security etc)
2) Value investors don't lack the ability or knowledge, but lack the imagination to invest in growth. They want to see everything upfront (earnings, cash flow etc) before committing up front. The market is too smart for that. Market prices in potential upside.
Let me illustrate with an example:
Imagine Microsoft O/S that is growing well (30 years ago). If you value MSFT purely on O/S you will see that it is very expensive. The TAM may not appear to be that high. But if the company is at nascent stage of bringing ancillary products like word, excel etc then the TAM dramatically goes up over time. It hasn't happened yet, but will happen over time.
The leverage they've on one product will help them expand to others over time. There are many many examples in other companies as well. Market pro-actively prices it in.
In general MOST growth stocks are way undervalued (how else do you explain the subsequent superior returns).
Yes, when growth falters or margins shrink, it'll take a plunge. This was the case of MSFT during 18 years that it under performed.
3) Diversification is the key. This is why concentration will either produce terrible results in general. Value investors take so much pride in taking concentrated portfolio. This is the dumbest approach (you are not Buffett). Buffett should be sent to prison for few months for giving such a bad advice to his countless acolytes and ruining their portfolio.
4) Understanding of macro helps. If you have an approach of raising cash when yield curve inverts and Fed tightens, sell/trim when valuation of growth becomes really insane (like trading at 50-80 times sales) you'll do better.
5) Never get too attached to any growth stocks.
6) In growth investing, EARNINGS ARE FOR LOSERS. Bezos said if any of their subsidiary produces profit, they are not doing a good job.
You need to take an owner view. Say you have an omelette shop. Do you think of producing the max. profit? No ,you work on growth , reinvestment of all capital to grow more. The GAAP losses are sowing the seeds for future growth. the SG&A you incur now is building the foundation for future.
yes, it all depends on if the end state is something that can produce 20% FCF margin. This involves understanding the biz, industry, TAM, competition, and so many factors.
YOu constantly have to filter and refine the criteria for owning. No one understands a company fully (not even the CEO). No One knows the future. It is all calculated risk taking.
Even the greatest investor of all time, Buffett, started showing improved performance when he started paying up for growth.
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Posted by Mike [boilermaker] here :
This looks very interesting. But the value investor in me is going to wait till the Kindle version goes on sale!
Besides, I have more books in the queue than lifetime left, so I have plenty to read while I wait!
That would be the first time ever I've seen Mike buying puts on something [so far, I've only seen Mike selling them, primarily on Berkshire, I think!]
- Buying books in excess of reading capacity, reading plans and known reading patterns is a special kind of buying puts and - in a way - also hoarding, based on fear of going down on unread books!
It's also the build of a margin of safety & a certain kind of wearing both belt and suspenders! [ ; - D ]
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Thank you for the explanation and elaboration, rb,
-Great "flyer" & "teaser"!
- I'm personally quite heavy [still!] in three of the four major US Banks [JPM, BAC & C]. BAC has been a great investment for me so far over many years, all the way back to "the early days" for me. [i'm now almost 8 years into this non-zero sum game called investing.] I have had a good experience over some years with WFC, too, but exited about one year after the account scandal surfaced [i think it was about about one year, I haven't checked it while posting this] - I couldn't stomach the hair on WFC back then.
That basket of three US banks is still a large position for me - and then I have to add on a look-through basis what I own indirectly through my monster position in Berkshire. Some days I actually think I must be out of my friggin' mind doing this. I can't stomach more shares in US banks as of now because of the overall actual situation in USA.
I think I'll start taking a look at all the major Canadian banks on a cursory level, trying to take some notes about them individually, and get some understanding of their history and evolution individually, plus doing some reading to understand on overall level the Canadian economy.
It's a great exercise to study great companies, whether one engage in them or not [, based on price etc.].
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The really bad news of today :
Reuters [July 18th 2020] : Rouhani says 25 million Iranians may have been infected with coronavirus.
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LLOY is a wonderful customer focused retail bank in the mold of WFC and TD. Also one of the few FIs that didn't need a bailout in 2008. The reason i wouldn't buy it is he level household debt in the UK. I think that represents a large systemic risk.
I've searched the Investment Ideas forum, and TD does not pop up in my searches. Why is it so? [i remember posts from CorpRaider and Uccmal about Canadian banks here on CoBF.]
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Copied from the "Corona Virus" topic - today [perhaps grabbing it out of context, - one never really know] :
Make piss out of lemons much?Members here at CoBF goes by their handle, or what ever - over time - is available - here on CoBF.
Jeff,
Amazing to receive a personal & private message from you, about to find & gain focus & strength, exactly when it was most needed.
Now I revert exactly the same message to you, that you've send to me.
Take care.
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rebought a small position in BAM, added to ESRT, and added a little to ILMN.
Why did you sell BAM in the first place?
I sold along with BX towards the end of last year because I just didnt like the risk/reward anymore. For myself, I'll never be the guy to find the accounting errors or shenanigans with companies of this type of complexity, so position sizing and awareness of where we are at least perceived to be, in the cycle is important.
I still find the risk to be quite high, but I think we are starting to get a decent idea of where/how the current situation can play out, and without question, players like BAM, SPG, BX have both the expertise, and finial strength, to become large benefactors of such opportunities. So I'd say the risk is probably the same, maybe even a bit higher than 6 months ago, but at the same time, the opportunity for reward over a medium duration time horizon has increased significantly.
Absolutely awesome post, Greg,
Food for thought.
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In short, as an european CoBF member, it's just soo frigging sad - really heart-breaking - to observe what's going on COVID-19 related in USA.
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Georgia in 2020.... when you're trying to be dumber than Alabama."Georgia Gov. Brian Kemp forbids cities, counties from requiring masks as coronavirus surges in the state"
https://www.washingtonpost.com/nation/2020/07/16/kemp-georgia-mask-mandates/
WTF is wrong with these people?
The people of Georgia got what the people of Georgia voted for. So is democracy.
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I'm sorry for double posting.
To me, this is soo funny, posted by BG2008 in the PSH topic :
The whole SPAC Mania is insane at the moment. Draft King, Virgin Galactic, really any tech, software, spaceship, story that sounds kind of cool is getting a 40-50% pop upon merger news. Then you have this crummy plastic packaging company that throws off likely close to $1bn of FCF next year and it trades for 6x that today. This crummy plastic packaging company can also get debt financing at 1-3% today.
The investing wisdom today is literally "a bird in the bush in 2025 is worth more than 2 birds in your hand today"
Please don't try to tell me that there is not always something to do.
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Q [ref. the topic title]: If it sucks, does that make you a sucker?
As much as a $700 cordless Dyson Torque
Q [ref. the topic title]: If it sucks, does that make you a sucker?
This is a deeply philosophical question that scholars have not nearly contemplated enough.
Well, I just have to say that I consider it a privilege to have such fellow members as co-members here on CoBF in this environment! [ : - D]
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Q [ref. the topic title]: If it sucks, does that make you a sucker?
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Thank you for an awesome write-up, wabuffo,
I just ordered the book. I'm really looking forward to the study of it. [From your write-up, I suppose it's more like a study than a read.]
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But why play all these mindgames with the market when instead they can just simply announce and execute a massive buyback?
Because there are literally billions of dollars at stake for the continuing, long term shareholders of Berkshire, to get this right - long term, ref. also longinvestors post.
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Value investors don't buy yachts - period. They are cheap-skates [, perhaps with some kind of weird obsession to cars or whatever - not yachts!][ ; - D ]
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Now back to Buffett/Berkshire - General news.
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rb,
You're right. The last time I bought something tangible & expensive [for my part: a car] I paid with a certified cheque, too. Later, I have at my broker bought Berkshire shares in one transaction above that figure in the car transaction - the difference is the broker already knows the cash is present and available.
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Maybe he wanted to buy a boat??
Okay, I chuckled at that! You never know..
#metoo! [ : - D] -Well, with a salary of USD 19 M for 2019 [including a bonus of USD 3 M or something like that], I suppose you "just" swipe some plastic if you want to buy "a boat" [not a yacht].
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I believe I've now updated both sheets to reflect the current known portfolio. The links in this old post will still work.
The spreadsheet I'd advise you to Make a copy of for your own use is:
• Berkshire Hathaway Look Through Earnings & Holdings
The spreadsheet that is publicly editable by anyone (but anyone can see any edits you make, the edit history, or corrupt the spreadsheet) is:
• Berkshire Look through earnings - Public editing allowed
Just FYI, publicly editable spreadsheet looks like it's been corrupted. At least some values are grossly incorrect.
This should have been expected but FYI if someone is still using it.
Please dive into Berkshire specificics, Jurgis.
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This sheet doesn't have the cash/t-bills right? Just making sure I didn't miss a cell.
You got it right, CorpRaider.
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I hope you're right, Charlie [ : - ) ],
Then there is the retail part of the "Insurance and other" part of the whole "Berkshire circus", and how the construction related companies within the Berkshire sphere have fared? -Time will tell.
[Disclosure : I may suffer from a great deal of home bias related to latter part ... - Here in Denmark, the real estate sector has continued to be glowing hot during the pandemic - I'm not in any way sure about how to interpret that.]
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Also amazing is that Apple is at 1.663T market cap and Berkshire at 443.17B market cap.
There could be a share price run up pretty soon, because of the acquisition, buyback activity, Witmer insider purchases, good earnings (the mayor investments should be earning good money) and 5% of Apple. I bought more on Friday after I read about the buyback activity. ...
About 4 - 5 weeks from now, we'll see the next Berkshire 10-Q. It for sure will be an interesting read. Time will tell how Berkshire has fared through this storm, discussed recently in several separate topics within the last couple of months or so, with different focus [focus on the insurance part of Berkshire, the energy part of Berkshire, etc.]
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... One of the greatest scams of the government shut down, one that certainly many lobbying dollars supported, was the fortification of big business. It dawned on me a couple months ago while NJ was shut down. My son and I every Friday(pre Covid) used to go to the local toy store and he'd see, and play with, and pick out a toy car or truck. So a few weeks into lockdown, he noticed this hadn't happened and asked why we hadnt gone in a while. I loosely explained the world to him and he asks "where can we get toys". I thought, holy shit. Walmart and Amazon. While the little mom and pop store, with great, quality Bruder trucks and imported toys, was forced shut despite, "maybe" seeing foot traffic of 2-3 people AN HOUR. How in the world is it that in the name of public health and safety, and keeping large crowds from gathering, forcing everyone to go to a high traffic super center box store is deemed safer than simply letting a business that sees a dozen customers a day stay open? Oh, lets say only "essential" businesses. Great, but then why are the "essential" businesses allowed to sell "non essential" items? Its a total load of shit and more evidence of a crooked system. This is also, not to be confused with bars and shit like that, which is entirely different.
Similarly, I saw a taxidermist who had similar thought. "I work out of my shop, and sit by myself working on mounts all say. I might get 4-5 customers stop by, PER WEEK! Why cant I work? I have to pay my bills."
Welcome to America.
I hear you, Greg,
If this is true [i suppose it is], it's a shame, tragedy & scandal in its own right.
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Going anecdotal and local [, as a Danish analogy to Greg's post] :
Danish numbers :
Population [from worldometer] : 5,792,835.
Hospitalized COVID-19 related persons as of yesterday : 17
Of which persons in ICUs : 4
Of which persons in ventilators [in Danish it's called respirators] : 4
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In short : Everything should be reopened by now here.
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Now what's the status? : Well, the MPs have left the Danish parliament [called "Folketinget"] for vacation. What's "hung" of restrictions? A really stupid restriction that tourists from abroad have to book at least for 6 days when visiting Copenhagen. So the hotels in Copenhagen are still bleeding dearly! I suppose it must be evident to everybody that July is peak season time for hotels in Copenhagen.
Tweet by Anni Matthiesen [Yesterday].
Ultra short translation :
Q : "What does it take to get rid of the "six days" rule?"
A : "Sorry, the Danish Parliament can't reply until August because of vacation."
To me, it's soo appalling.
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well I have a suggestion as to how not to do it. until recently advertising on site has been noninvasive. recently the site has been going to a full page ad that I have to click X out of when I land on the home page and do my first click. this is a big turn off for me. I wonder if the delta ad revs are worth the trouble this creates for users...
I have personally had the experience pictured & quoted above by cherzeca lately, and speculated it was a software bug.
Personally, it has been, to me, an unpleasant & very annoying experience.
That said, no way, I'm going to leave, nor stop participating & reading CoBF. [i suppose, if CoBF stops to exist, I'll go into suicidal mode. [ : - D]]
Buffett/Berkshire - general news
in Berkshire Hathaway
Posted
navmehta,
gfp has been around here at CoBF now for more than ten years. gfp has never been involved [at least to my knowledge] in any [heated?] conversation here on CoBF.
To me, gfp always posts facts [based on ""on the ground" basic work" [which over the years has been a lot of valuable sharing!], sometimes spiced with a bit of a personal [forward looking] opinion & judgement - but never any kind of sarcasm.