dealraker

DG seems to be in a panic mode of growth to solve its issues. There's another company that I think is in the same mode, but it is very skilled at what I call "sales and stretch" - living off inflated stock prices and creative accounting. Yawl probably know what I'm referring to. Time is the issue, these things can go decades before the true colors are revealed.

Slinging this out off the cuff so it may be off but it won't be too far off: Andrew Bary's tongue-in-cheek Nov 1999 cover of Barron's was: WARREN: WHAT's WRONG? It hangs on the wall framed in my office. The article from the above headline highlighted how popular GE's Welch and AIG's Greenberg were vs how out-of-it Buffett was. Bary's writing basically was stating that he did not believe this would last. 1999 or 2000? GE's sales were 120 bil and earnings about 12 bil. Berkshire's sales were 30 bil and earnings about 1 bil. Now what's the combo of GE entities sales and earnings vs. Berk? Same for AIG! Oh my did we just moon walk on the heads of those guys!

I think Dollar General sells the "store where there's no competition" model but the reality is quite different. We shall see, it is a good debate. Every 9 days in NC. https://www.newsobserver.com/news/business/article286644025.html

I'll add to my previous off-the-cuff comment of liking significant additions to ideas that haven't appreciated --- to an appreciation of there being no mention yet of Dollar General. My snide bias, one that often displays how wrong I can be unfortunately, is that Dollar General has the best by far self-destructive business model. I live in a county of approx 172,000 people and there are over 25 DG's within this area. All but 5 are within single digit miles of WalMart and the two local stores to me are almost every day the subject of derogatory online discussions, some disgusting. And two more "stores" are underway close by in an area of rapid growth in housing/business.

Personally I've liking the posts of "I laid it out big time in X and it ain't gone nowhere yet."

Not a disrespectful or overly challenging post from me SharperDingaan, but one for thought. I'd say most of my net worth today is because I did not "take $ off the table as the position performed." A lengthy time period is involved which by definition will likely not be addressed in a forum such as this. Thus these type end results or outcomes will be somewhat invisible. Munger's comment about Ben Graham's holding GEICO for half his performance? Where did we read that? I never did, I just heard Munger state it.

There are many Wendy's type outcomes in such long term portfolios. In 1976 I got a call from my aunt who asked me to go pick up my first cousin Bob Philpott from the Greensboro airport, now called the Piedmont Triad Airport. I snatched Bob and the first thing he says is, "You know I work for JC Bradford and Co and I'm the lead guy bringing Wendy's public. You should buy some of their stock, I think it is going to do very well." I did precisely that. I'm still in college but I call Marshall at McDaniel Lewis and get a couple hundred shares as I remember. Big time multi-bagger for a while, then the financial crisis...and basically all the way back down to maybe a triple over many years. Up again to multi-bagger and now struggling again. I just own the stock.

Junior R I owned about 80 stocks in that small account. But I had stars such as Old Dominion and more recently Enphase - a result of when I put dividends into whatever seemed promising - from buying an energy basket about 5-7 years ago when energy-to-all-else fell to historically low levels. No AJG or Berk, lots of Lowe's, Tractor Supply, and Home Depot for instance.

Junior R, actually I already mentioned this on another thread, that I sold stocks on one day in this account. I did that because Parsad just happened to mention (not relative to this account but towards or related to overall investing) his bias towards concentration that owning a slew of stocks was...(you can finish this sentence with all the obvious things he or anyone would state...which are of course obvious). My wife Angela reads this forum (by my request) and she said, "Damn dude....why don't you sell something and concentrate for some much needed stimulation." LOL! I wiped the account clean in October of 2023 to all cash and concentrated. Spek was chanting value about defense stocks LHX and RTX.... and he was mentioning our insurance brokers, my long held Brown and Brown for instance...and I read his posts always. Already owning all of these discussed (by Spek and others) stocks in other accounts didn't stop me from doing this, I put the account entirely in the below- and I did it all on one day, the same day I wiped the account clean - and I can assure you there were no sales until then since the account began. Norfolk Southern LHX General Dynamics RTX Brown and Brown Wyllis Towers Watson The account all in these six now. For whatever reason, not sure if the entire market was down at this time, but all these stock had somewhat of a selloff in Oct.

Castanza, deceased parents thus inherited Berk in my teens. Dad's broker had several in my dad's family in the stock and basically all his clients had Berk by the late 1970's. First 17 yrs. or so for me in a trust fund, it began as a low 4 digit figure that at the time I figured if I could sell it would buy me a Jeep CJ5 which I greatly desired. 39% in Berk, almost 42% AJG. Several 1.5 to 2%: same ole boring story - Erie, Lowe's, Norfolk, Fairfax, Coke, Pepsi, Mondelez, Brown and Brown, Markel. Mondelez comes from Cadbury buy in 2000 and Erie shortly thereafter, the newest two. Brown 1994, Fairfax began mid 1990's, Markel 1987 or 88...can't remember. 1% position would be very large for me to buy. But these buys are important, they are meaningful when less than 1%, meaningful to me in every way. A taxable story, that's my issue. None of the above are where I'd be willing to sell and pay tax. Coke, Pepsi, Berk...all 1975 basis while Norfolk (inherited 1/27th of grandmother's) is 1976 basis. For nearly 3 decades I know for certain (my brokerage records) that this portfolio has advanced about 15% a year. That's basically an AJG assisted thing of course. I do have, not included in the above, a small IRA where I put in $30k, all before 1994. I have shared that here a few times. It continues to do well with almost no trading...ever. Below since 2011 and never a tech stock or any stock for that matter much followed or discussed on COBF: Year Return Beginning Market Value Deposits Minus Withdrawals Investment Results Ending Market Value Since Performance Inception +15.21% $126,513.16 +$118,684.57 +$1,334,075.73 $1,579,273.46 YTD +12.61% $1,402,465.52 $0.00 +$176,807.94 $1,579,273.46 2023 +16.90% $1,199,701.17 $0.00 +$202,764.35 $1,402,465.52 2022 +0.81% $1,190,031.46 $0.00 +$9,669.71 $1,199,701.17 2021 +20.59% $986,824.87 $0.00 +$203,206.59 $1,190,031.46 2020 +12.82% $874,655.60 $0.00 +$112,169.27 $986,824.87 2019 +24.56% $702,183.47 $0.00 +$172,472.13 $874,655.60 2018 -1.26% $711,136.40 $0.00 -$8,952.93 $702,183.47 2017 +12.33% $633,078.14 $0.00 +$78,058.26 $711,136.40 2016 +15.75% $546,940.28 $0.00 +$86,137.86 $633,078.14 2015 +0.15% $546,101.43 $0.00 +$838.85 $546,940.28 2014 +19.64% $456,465.26 $0.00 +$89,636.17 $546,101.43 2013 +41.70% $322,142.95 $0.00 +$134,322.31 $456,465.26 2012 +19.51% $269,559.28 $0.00 +$52,583.67 $322,142.95 2011 +16.33% $126,513.16 +$118,684.57 +$24,361.55 $269,559.28

That's the type of outlay that's stimulating to see. Interestingly I made an initial investment in CCEP last year and then again this year some was added. It has done well but my commitment was lame.

I thought that instead of a thread of what you bought today that this "largest" wording may reveal more of what's meaningful to you. My largest is something pretty mundane but to me the valuation and timing suggested to me that I would not lose money. Of course I'm tainted by my crazy lucky success in the insurance brokerage business...knowing full well the below won't even begin to be in that range. I'm not at all certain about the management and the balance sheet but the business seems likely to sustain. Regardless the buy does illustrate me, my method, over the last multiple decades. My second largest has been Medtronic. Cushman and Wakefield or CWK.

Ben Graham retired with 2 or 3 mil which can be extrapolated upwards from his death for inflation. As Munger says, "Half of it was simply holding one stock named Geico." And then there's the businessman Buffett, the business owner. Who dun the best...the in-and-outer or the businessman?

So an example of trying to conceptualize "When is business value built?" Our lowly ole builders supply is an example. Not the millwork business, let's do the builders supply. We sold 4 builders supply businesses some 30 ago and kept one. Outside the millwork bus its - our one builders supply - is our total focus. Capital allocation? Oh hell yes, on steroids we focus on capital allocation. We have some very expensive (to our little lives) stuff in the yard, we maintain it like Hershey and Mars do their production floors...this bunch equipment is immaculate! In the last 7 years, each damn year, I've received a 6 figure subchapter S corp sum of money and I'm only a 12.5% owner. So nearly everyone will say, "The business has done fabulously in the last 7 years, obviously great progress was made....hell dudes just look at the chart!" I could NOT passionately disagree more. The "value" of our builders supply has steadily diminished in the last three years particularly, even as profits skyrocketed. Oh my! Why would an idiot like me say that? Because competition, new competition, is being built all around. Yep, both new and bigger competition is going to hurt us and you can be assured with a vengeance we are 100% aware. Capital allocation? Did I mention that? Guess what we are not doing currently? When was our business "value" built? It was greatly enabled in the 2008 through 2013 time frame when our area basically had zero new houses being built. A few big ones on the waterfront on the big lakes in our area, a few big ones here and there, but nothing else. My...how does that happen? It happened because basically all, that's ALL, our serve-the-contractor-only (remember we serve custom contractors...not the big tract builders) competitors went out of business. Why did they go out of business? Easy call people: they were the bragging bunch making huge profits who added massive capacity during the 2000-2007 boom period. We didn't add capacity then. We had 125 employees in our builders supply in 2006 and by 2012 we were down to 22 part time. Those 22 all agreed to take time and salary cuts, including my nephew the head guy, so that no one else would be let go. That's exactly when our "value" was built. By 2013 we came out blisteringly hot and our profits today with a smaller staff are multiple times what they were in the 2000-2007 boom period when we had a huge staff. Wise leadership, generous leadership, one where many ex employees have left with half-a-mil in ESOP....all from a small town builders supply. Same ole story with the insurance brokers, my other once long ago life. Recently on the insurance broker forum it was brought up...a very lengthy discussion of soon-to-be sure-to-be less than stellar organic commission growth. That, by those who are hyper-focused on the industry, that lesser organic growth is the main thing that will lessen the value of these current industry leaders...that profits may get pressure and recede. And I sit aside observing, knowing full well the activity that takes place during these periods of awfulness - actually wonderfulness - in the industry. And all I can think is: That's precisely when the advantage is built, that's the profits of the future that come when pressure is put on the competition. The less wise competitor has done all kinds of things to make himself vulnerable, it is always the same. The weak are short term focused and bail out in the weakness. Stock price obsession with a hyper-focus on avoiding things that repeatedly come and go? That's an interesting way of living life but you can be sure I see few, actually none, succeed at it. Cyclical growth businesses are superb investments if the management understands the cycles.

Given time and some age progression you guys are going to realize that the investment world is simply dominated by the latest prices, both the quotes on this day and their direction up or down. "Are we at the top?" The obsession, and it is a dominating focus, is that literally everyone ranks both themselves and those they follow in the "in-the-moment" avoidance of lower stock quotes. Step back and think about me - given I'm old as dirt - for a moment. I'm reading a forum that's better than any other I've participated on...better by far, yet there are a couple of things that stand up and scream at me all the time. First is the yearly performance - this year about December or early January their will be the chants of how we all did this year and it will rule the minds of all - that's the envy mind steal - you can't avoid it because it is real. The second thing is that when markets fall those with cash are going to flood the discussion. Yep cash levels will rule like nothing else ever! And here I sit, years of hearing this stuff now given I've participated in investment forums for 30 years and heard it all in the years prior to forums on TV and in investment clubs. But there's one thing that stands out more than anything else, it stands so tall above all other things that it literally dwarfs them. Here it goes: I go around in life and see where the money is, where the net worth's are. When donations are needed for this or that there's the same ole thing cropping up endlessly. Those with the means are always long term business owners. The "nailed the top" bunch and the "I'm 90% cash in this downturn" superiors? I know online there's claims of fame and fortune, but not once ever in real life have I ever encountered these "nailed the top" and "got cash and avoided the plunge" people as to substantial net worth. We've had a few come and go in our investment club that I've been in for 50 years. They come in hot and leave frustrated and angry because we didn't have their level of expertise. Yet once they are gone? Hell, they are gone - took their intensity and what's evidently a small pot ----- somewhere else. Yet it - the lower stock quote obsession - dominates...and will dominate. It will dominate passionately. I just watch. My yearly performance is always among the lowest online in every single group I'm reading. And above all I NEVER own the hot stocks! Life is great...if you can stand it.

And your opinion of both ways at present?

gfp can you do both?

Anyone up for sharing sound idea for Japan index ETF?

That's a better model than my psychosis Paarslaars, my stubborn oddball tendency is to obsessively dread and thus avoid investing anywhere others are having success.

Patrick Gallagher is pretty consistent: "We will do well regardless." That's about as deep as I go for the last 30 years as to detailed understanding of the business.

Erie has catapulted into my 3rd largest holding as of recent. I insure with them but that's because I go through my best friend and partner in crime who persuaded me to buy the stock some time in the 2010 era as he sells a lot of insurance through them. Erie was the largest stock purchase I'd ever made until Greg changed my mind on Joe a couple of years ago in the $35 range.

A.J. Gallagher Earnings Show Insurance Brokers Are Anything but Humdrum The broker’s CEO says business isn’t slowing down. By Teresa Rivas July 25, 2024 5:18 pm ET AJ Gallagher’s headquarters in Illinois. AJ GALLAGHER Insurance may have a stodgy reputation, but the returns from A.J. Gallagher are anything but. Its CEO says the insurance broker isn’t slowing down either, despite concerns about premiums and interest rate cuts. On Thursday, A.J. Gallagher reported second-quarter earnings of $2.26 a share, two cents ahead of the consensus estimate, while revenue of $2.73 billion was in line with what analysts predicted. Organic revenue grew 7.7% in the quarter, a period that saw a dozen new acquisitions with a combined $72 million of estimated annualized revenue. That’s a key consideration given how M&A propels profit for insurance brokers. A.J. Gallagher said it has a pipeline of more than $500 million of annualized revenue in potential purchases. Chief Executive Patrick Gallagher spoke with Barron’s Thursday about the results, calling the quarter a “smash hit.” He also says the report shouldn’t come as much of a surprise, given the company’s consistency. “It’s a natural continuation of our incredible number of quarters, years, decades—if you will—of success.” That success has been shared with investors, given A.J. Gallagher’s total shareholder return of 500% over the past decade, he notes. That should provide some comfort to investors worried about a decline in insurance premiums or interest rates. As a broker, A.J. Gallagher doesn’t assume any risk or pay out claims like a traditional insurer. The company gets its revenue from the fees paid as a percentage of premiums. Those have been rising with inflation, but some have feared they will slow down as inflation cools. Likewise, a cut to interest rates would lower profitability, given some of the company’s portfolio of highly liquid premiums and claims is invested in U.S. Treasuries. However, Gallagher says it’s disingenuous to talk about insurance premiums as a monolith, as rates for one kind of coverage often fall as those for another rise. In addition, while higher interest rates do make a difference because the firm holds fiduciary funds, the CEO says he isn’t overly concerned with potential rate cuts, saying “we grew the company quite well for years on zero [and near zero] interest rates.” Likewise, the company’s acquisition strategy means that its pool of funds will continue to grow, yielding higher interest even in the face of lower rates. “I predict we’ll make up for volume we lose by virtue of lower interest rates,” Gallagher says. Those factors ultimately lend themselves to smooth and steady growth. He points to how well A.J. Gallagher has performed over time, even when disruptions like the 2008-09 financial crisis and Covid-19 pandemic occur. Its business will only increase as the world gets riskier, as evidenced by last week’s CrowdStrike outage that highlighted the need for nearly all businesses to carry tech policies—ones that may be beyond the capability of smaller shops who are then more likely to accept acquisition offers from Gallagher. One year ago, Barron’s recommended shares of A.J. Gallagher, citing its long history of market-beating performance and ongoing success in buying up smaller brokers. The shares have gained some 26% since, compared with around 20% for the S&P 500 over the same period. Gallagher says that’s likely to continue, given insurance is the “oxygen of commerce…nothing happens without insurance, you can’t build a building or ship a container without it.” The company’s ‘all-weather model’ makes it particularly attractive during uncertain times, like the recent market slump. Gallagher cites a Fortune 500 executive who recently remarked to him: “I’m beginning to realize that when things are bad they’re good for you.” And what about when times are good? Gallagher asked the exec. “I know, they’re good for you too,” he replied.

Slowly but surely insurance brokers are beginning to get noticed by Wall Street journalism. https://www.barrons.com/articles/arthur-j-gallagher-stock-price-earnings-b592a35e?mod=bol-social-tw

In the early 2000's we had reps from several large institutions come to my little town of Lexington NC to give an investing seminar. We had some pretty "famous" (LOL) investors attend including Jimmy Rogers (Mr. Commodity back then) and Fred Stanback (Warren't best man in his wedding). Banks like First Union (represented in this seminar) were earning 25% returns on equity for good reasons...actually liar reasoning...but still, that's what the financial statements suggested. Mr. Smartass, that's me, stood and questioned bank accounting and... (you guys know full well the "reception" that got me). But, the story since then and the massive crashes, at least to me, is that banking is just one hell-of-a-difficult business, one not getting better but getting worse. That does not mean that in the next few months bank stocks will not go up, it is a statement about the long term road of banking---- that the holes to fall in are so many that almost no one except Jamie can navigate. Imagine JPM without Jamie Dimon. I began my life as a banking and insurance analyst, I respected the road they travel, the grand difficulties of it all and the few and far between good managers that can survive it successfully. It is easy to see why banks aren't in the list. The Bank of Granite, shares of which I inherited 45 plus years ago, was led by John Forlines. A legendary manager, Forlines was honored and asked to stand up by none other that Warren at a late 1990's annual meeting. Forlines had well over 2% ROA and 15% ROE (huge equity to assets ratio from retained earnings). Forlines retired in the early 2000's and his successor, a 30 year top manager of the bank named Charles Snipes, bankrupted Bank of Granite within a very short period of time. Banking 101.

When you rid your mind of those using Berk (read Bloomstran) for self-promotion and those who refer to Buffett in uncle and grandpa terms the path and story of the business in its present form are not the extremes expressed by either side. But the capital outlays and their success/failure - or less polar wording would be preferred if I could think of it - are vividly obvious. With size Buffett almost inevitably goes into a slew of less-than-ideal things to get in down the road of existence. I'm 99% profit in my Berkshire, I'm not going to sell in my lifetime. But others can and probably should based on valuation and even more importantly where in the economic/stock/business performance cycle we are. These cycles by the way, at least to me, and screamingly obvious. That's one of the things barely addressed in online forum posts, that each of us has our own unique place as to lifespan, taxes, estate plan, etc.--- which highly affects our bias as to what to do and when. But these biases should be the starting point for all discussion.