kab60

I've always been on Team Gregmal, thinking it was idiotic to hold cash as a private investor as I always found stuff to do. And I probably still am, but for like the first time since I started investing, I'm raising some cash. Mainly by selling positions, which had a good run, and might be trading above fair value (I'm selling the flowers). What's happening with oil is fascinating. Every single public producer is focused on ROIC and returning cash to shareholders - not expansion. Oil stock prices probably still have to double, before their cost of capital is appropriate for chasing growth. So it doesn't seem unlikely that oil stays here, or even goes higher, increasing the cost of a lot of stuff. You've got inflation running hot, and you've got rates hikes coming. You have a ton of investors who's gotten complacent thinking that the FED will bail you out. But I wonder if an equity crash won't be better for the real economy. The number of people quitting their jobs, or thinking about quitting their jobs, probably due to wealth effects, is pretty incredible. I think most likely inflation peaks and then returns to a more usual average, while FED hikes and equity mkts do fine as higher rates are also a function of higher growth, so everything will probably be fine. But, for the first time since I started investing, this time does feel different (don't say the words!). I don't like taking directional bets (espescially not on macro, and I'm probably more in camp deflation LT anyway), and it's not like I'm going long canned foods and selling all my stocks (mostly holding Big Tobacco, Berkshire and auto dealers), but I feel okay being a bit on the sideline and seeing how this plays out. Perhaps I'm also becoming a bit of a pussy after a good run. If I don't do dumb shit, I can probably "retire" at age 35.

Thanks, writser. Better lucky than good. If I could, I'd probably try and run my money as you and Hielko, as I think you're among the best from a risk adjusted perspective. But I am not smart enough, nor do I have the discipline, and it would also hurt tax wise. I pay 42% on capital gains, so I have drifted towards GARPy stuff I can hold for a long time. It seems to work reasonably well, as most of my stuff is pretty boring, which means it rarely gets obscenely expensive and forces me to sell. But I've also flipped quiet a bit of sardines in the last two years, more so in 2020, as the amount of opportunities around was just incredible, and I do have a pretty fat tax bill coming up. I agree the current environment isn't quiet as appealing as late 2020, but I do think there are some pretty great opportunities around, which fits my scope. Espescially coming into year end, where there was a lot of interesting selling in names. Which might be due to a lot of people with good returns over the last 2 years, which might've needed some losers to offset their gains (and you had a lot of new retail investors).

Anyone have the link to the 2020 thread? I can't find it. Was up 65% in 2021, which is sorta life-changing. Big bets on auto dealerships, fiber and tobacco going into 2022. I am probably an optimist to a fault, though I mostly dabble in slow-changing and boring industries. So without FED intervention last year, it would've looked very differently. I am more defensively postured atm than before but that is mainly a function of risk/reward and not a big macro call (below returns rounded up/down and somewhat from memory). 2021: 65% 2020: 45% 2019: 23% 2018: -7% 2017: 19% 2016: 45% 2015: 13%

Asbury Automotive is my biggest position and the one I feel most comfortably with over a 3-5 year horizon. I also think it'll do well in 2022 as a strategy update in the beginning of the year should see them increase their LT targets, which probably puts them on a 4-6xPE for a +30 pct. ROE business with decades of DD EPS growth. But to win this contest, something more explosive is probably needed. I think Amyris is interesting - both due to fundamentals as well as technicals (company sold some equity 200 pct. higher earlier in the year, recently sold a convert and bought calls to limit dilution despite strike being 100 pct. above current price). A lot of retails smucks have gotten killed this year as well. Looking at Google trends, some of their new brands seems to have done well in Q4 after a very disappointing Q3, which company cited due to supply chain issues. Amyris is so far from what I usually do, but it seems there's a ton of ways to win both short term as well as longer term and after they raised the convert they've finally gotten their balance sheet in order. Nobody believes the CEO, who has always been overly optimistic, but John Doerr is no idiot and on the board (owns 40%), and if they get near 500m revenue and positive ebitda in 2022 - which is what they guide - I could see this thing explode. Their clean beauty brand Biosannance seems like a home-run. It looks great on Instagram, it's frontpage @ Sephora and the reviews on Amazon are glowing. You could argue 1B value versus a market cap of 1,6B, and then they have a ton of other stuff going on ("synthetic bio platform value", selling molecules/ingredients, covid vaccine, other consumers brands).

Been following for a handful of years as I like distributors but have been very un-impressed with execution (they've had a couple of CFO's) and hated how mngmt always tried to talk performance up despite years of falling margins. I think they could really use an external CEO to come in and take a hard look at everything. Two HQ's seems excessive, not least if you partly compete with frugal folks like Fastenal. Proximity to talent sounds like an awful excuse. Probably convenient for the CEO is more like it. But yeah, don't follow very closely. Take a look once in a while and things just doesn't seem to get better.

Agreed. Don't they still have two HQ's? CEO seems like a joke.

More $ABG, now my biggest position at close to 20%. Portfolio rather boring, balls long Tobacco, Berkshire and auto dealerships plus a bit of fiber telcos, logistics,plastic packaging and an industrial company

I think he's positioned for everything. I generally think rates will stay low for long, and I love Berkshire for their holdings in BNSF and BHE. It gives them an outlet for internal investments at attractive returns. The more I follow Berkshire, the more I love what the old dude has assembled. It's pretty genius and in a 0 rate environment it is pretty crazy to pick up a ~10% return with so little risk.

I already own a boatload. Like 25 pct of my portfolio is in Altria and BTI. It's cheaper, lower risk and with a smaller range of outcomes I'd say, so I sized it bigger. But Swedish Match has more upside on a longterm horizon.

Swedish Match

I'm an idiot, forget what I said Edit: Removed my comment, no need to cutter with nonsense.

I think that's always a good idea. Shouldn't buy stocks unless you can cope with at least a 50 pct. drawdown. If you're worried about a temporary drawdown, stocks are probably a bad idea. If you didn't buy hand over first in March 2020, I'd really question whether or not holding cash and trying to time the market increases your expected returns. With smaller amounts of money and +40.000 listed stocks around the globe, there are always bargains to be had. If you're worried about inflation, higher rates etc. I think there are still a ton of things to do. I understand if you're retired and need regular cash coming in, that it's more tricky. But even some resilient dividend payers are looking like good value at the moment despite low rates. There's big tobacco, but you could also put together a handful of decent/good business in HK trading around NCAV with 7-11 pct. yields. Even in NA you can easily find decent stuff with pretty fat yields (midstream assets, telcos, some BDC's like TSLX). Another way to cope with the effects of a big drawdown is investering in resilient businesses where mngmt has shown they buyback stock when it gets cheap - hell or high water. That way you know the company is working for you despite being fully invested. Einhorns pick, BHF, has quite the track record - trading at like 0,2-0,3xBV and buying stock during the depths of the pandemic. If I had to guess, I say markets keep grinding higher. It seems like all the smart people are bracing themselves for a crash. There is this huge wall of worry. Which to me probably increases the odds of things moving higher, though things going lower would be better for long term expected returns. Personally I think the current market is pretty nuts, but I don't think my own portfolio is. When possible I've shifted into more defensive names with what I expect to be better risk/rewards (I'm pretty big in Berkshire, Big Tobacco, fiber telcos and auto dealerships (resilient fuckers).

All in the last week: Bought more ABG (took from aprox 5 to 12,5 pct. position since announcement of Larry Miller deal). Bought new stakes in CNSL, DISCK and APTS (APTS smaller one at 3 pct.)

$ABG and $MO

Yes, I get that there are capital requirements, but as you said, they sit on large (unrealized) gains this year. I had expected them to start monetizing some of their stakes and buying back shares already, not least as they finally hit homerun on some of their commodities plays and perhaps shouldn't risk overstaying. Probably another negative feature of their invesment strategy is taking large positions in somewhat illiquid garbage, so without checking the volume I suppose it's harder for them to blow out of positions without tanking the prices and having to flag it.

It seems like there's a good probability that Fairfax might be substantially undervalued. It also seems like the range of outcomes as well as downside is pretty low if they just keep it simple, which is something I look for if taking a big position. Now, for various reasons I much prefer Berkshire as a longterm holding, but this does seem like at least a pretty good trade as just not doing dumb stuff should eventually lead to a change in sentiment. But why aren't these guys monetizing their equity portfolio to buy their own stock hand over fist?

Can to put some words on your thesis?

Asbury Automotive just did a 3,2B acquisition the other day as well. And it seems Van Tuyl is back in the game again - buying dealerships on his own after leaving Berkshire Hathaway... (https://samacharcentral.com/larry-van-tuyl-back-in-car-dealership-game/)

Yes. It has been 40 years of bad headlines and ever increasing FCF/share for Altria. I think the current valuation look almost too good to be true, not least considering the broader market and potential for inflation, but I feel like I might be missing something big. It's almost too easy if it's just headline risks and ESG turning investors away. I often find those two points to be bad excuses for underperformance, but I can't really figure out a scenario where one loses money on MO longterm from these levels (I think the biggest risk is dumb capital allocation, and even that seems to have been derisked with some sounds decision recently - selling wine biz, launching (small) buybacks).

MO, ABG... Not a lot excites me here

I wonder (but am too lazy) to calculate what the returns would be since Q1 2020. But I'm reminded of the unfortunate timing whenever I see names like Auto Nation just thundering updwards. A lot of his holdings have done really well. Auto Nation, Wayfair - even Berkshire, Jefferies and Spectrum Brands have been working, while Alliance Data Systems and Cimpress aren't doing too bad either. Hopefully his LP's sticked around for some time.

Planetel SpA, small Italian fiber telco which IPO'd in december. Insiders didn't sell a share and own most of the stock. User growth of 20 pct. in 2020, ebitda up 35 pct. y/o/y, long runway for growth and massive margin expansion yet trades at 6,5x21 ebitda versus local peer Intred which is closer to 14x. Analyst has it at 4,4x2022 ebitda. Potential multibagger with a combination of revenue growth, margin and multiple expansion.

this is exactly the dynamic I'm very worried about. best case flat for a decade or small return for high valued stocks even if Inflation should help the m. it would seem one still wants to own these companies but only on a rolling basis as multiples compress and the masses get bored of watching paint dry or not finding it financially rewarding. in disgust they may move to steady bond income, and then stocks would be great buys. it happened in the 80s. time had a cover page "the death of equities". in today's version I can imagine reddit and the robinhooders just totally silent. Tobacco stocks. Fabolous businesses, very cheap. Does great in inflationary environments as it's about as asset light as it gets and has huge pricing power. BTI at a 12 pct FCF yield ATM, good growth, expects to do 40b FCF over 5 years. 65b for the whole thing today. I think it's the biggest bargain in large cap space after Altria ran up. Have 20 pct in total in those two. Not because I expect inflation, but I like a free kicker.

This is the Clover Corp in AU that refines and sells natural oils? Yes. I like the long term story but also thought the stock was way oversold and set up for a large rebound prior to earnings. It's up 50 pct from the lows, so narrative might shift faster than I thought.

Bought Clover Corp, Jungfraubahn Holding and a small slice of Dominos in the last week. All around 3 pct. And 9 pct in BTI.