valueseek

Tks - I prefer PAX primarily because of higher alt. (PE exposure and history, lower P/DEPS or P/FRE multiple). When they came public in 2021 or so, PAX was the more exposed alt. company (if I remember correctly more than 80% alt. - PE+infra). That has impacted them as the higher proportion of performance based earnings impacted EPS being consistently revised down. With the merger this year VINP is above PAX in terms of overall AUM and the alt. AUM. Curr. contribution to distributable earnings from perf. earnings are around 20-25% for PAX and around 10% for VINP, making VINP earnings more stable in general. Overall, not a lot to choose between the two but my pref. is primarily because of the valuation.

I have followed PAX (and VINP) intermittently from the time they have been public. Results have been choppy in the last couple of years as FRE and DE has had several misses to cons. in the past. Plus the poor Latam sentiment has not helped. They are not as seasoned on expenses, managing earnings as the US peers but the valuation is so discounted vs. the US peers that slight positive execution and sentiment shift should work.

Bumping up this thread. Had been thinking about which investors did well over the last 10 years or so and was much of it identifiable. And if they succeeded (or not) was the reason focus, or being in right names/style at right time, or something else. Of the lot I know Josh did have good numbers, although I am not privy to them. I may have missed a couple or so more. But seems like of the list above, some closed operations, and not many had a great run relative to the markets. If anyone has thoughts here (and the idea of this exercise to identify higher potential funds/individuals for next 5-10 years), would be interesting to hear.

Out of curiosity may I care to enquire @dealraker whether the above poster you might be referring to was Saul forum on motley fool? I know of a few caught up in that one - so came to mind. Thanks.

Great post @longterminvestor. Learn a ton from yours posts :). With the significant increases in rates and exposures in the E&S market, if you have any insights into where we are in the rate/exposure cycle in the E&S market say over the next 12-24 months. And any views you have on the E&S market longer term as well once this cycle normalizes. Thanks.

starter in $APPF

we are 'cautiously optimistic'

Sorry to see this email @parsad. Filled with uncalled vitriol. This site is one of the best ones for reasonable open discussions across the investing landscape! Thanks for all your efforts in managing this.

brilliant. one of the best seen in a while

SAIA, ODFL, XPO are primarily LTL. Down because of slowing in the LTL's, high expectations and higher valuations in the high 20's 30's. TFII is old UPS LTL much less efficient. KNX is the primary TL. TL as a market structure is broken and has been for years with excessive booms and busts in pricing. Here pricing is down significantly.

With the fallout in $KNSL shares, any thoughts on the name @longterminvestor ? Every time you listen to Michael Kehoe, one feels he is a owner operator you want to partner with.

Small $on,$jbht.

Calcium score for over 45 i think

Good. Would you mind elaborating the expiry on those options for cpng? And your strategy of selling options - would you sell 1-1.5 year out options as well if they go up? Thanks

When did Munger blow up? In the 70’s?

All good points. I will just add this to @Gregmal's excellent point, it is very very difficult to really pin point on which valuations are out of whack to the upside etc. Barring the really crazy time of the spac and tech. mania from 2021 it has been hard throughout the last decade in doing this. In late 2022, NVDA touched below $120 or so for around a month - that is some 15 months ago. Estimates are for it to print $20 EPS in 2024 - buyside expect at least 10-20% more. Back in Oct. 2022, 2024 EPS estimates were $5.5 or so. So the earnings power has gone up almost 4 times in last 15 months with stock up close to 5 times. Until a month or 2 ago, stock was also up around 4x from that Oct. 2022 bottom. All it says its very hard. For the analysts who follow it, for most of the company management involved as well - it is very hard. I am not arguing whether this situation for NVDA sustains or shoots higher or lower. Given its stronghold, everyone invested could lay out several reasons it could (CUDA, 95% market share, etc.). While many could say otherwise (GM's very high, pricing will go down as AMD enters, inference foothold will not be as strong as training, etc.). My take has been it is too hard for most investors to forecast. Best is if someone has it to keep holding it or the next best is to not be bothered about it or the next best depending on one's ability is to trade around it - that is what most of the big pod shops do - but one needs focus around this trading strategy imo. Anyways, for individual investor one cannot really have staunch views on such stocks where things keep on changing so rapidly - rather the views need to be updated constantly. @Spekulatius on comparing AAPL with KO in 1998. KO was around 45-50 times forward PE. Since then sales, EPS has grown around ~3,5% resp. Total price CAGR has been 4-5% or so including 2% div. yield. While SP500 has total return CAGR'ed some 7-8% during this time. While AAPL at 28 times is high and all and is not value. If one looks at how iPhone has behaved last few years (with units constant and MSD price increases), and services growing HSD/LDD, overall GM's increasing significantly as service margins are double the product margins, and 3-5% buyback. There are risks to this as well with services regulation, China competition, no real upgrade value of iPhone. Keeping these aside for a bit, if one assumes overall sales increase 4-5%, buyback add say 3-4% with 0.5% from div. yield, one can get around 8-10% and then assume a multiple degradation from say 28 to 20 if the moat still holds over a reasonable period of time. It still could be ~7% total CAGR with not much tax consequence esp. for someone of the size of Buffett - esp. for the size and time of life in Berkshire balance sheet right now vs. back then.

Memories are shorter esp. in the semi space. If one looks at the guidance of these management teams back in 2018, it will be clearer eg. NXPI, etc. Or ADI that is very well regarded more recently. Or MU from 2022-2023 when it was regarded by most investors that the commoditized nature of the industry has gone away due to supply side rationalization. Anyways, but some credit to them that most have been managing the inventory situation much better than in the previous downturns.

on the point about LEAPS, @ERICOPOLY on this forum has had some tremendous success in deploying the warrant and LEAPS strategy in the previous decade esp. on bank stocks. I went back and studied several of his posts. My very crude basic in LEAP's is buying mostly for stocks that are just incredibly cheap by most parameters and there is just a lot of fear/etc. around those names, buying the longer dated - 2 year out if they are 10-20% or lower on the strike price (new are generally available in Sep.), choosing the strike price generally around the trading price, and rolling over 1yr-6 months before expiration. Have only used this sparingly thus far - JPM back in 2015-2018 time frame, and $C just this Oct. Have worked out pretty well thus far. But sizing has been particularly poor.

this is one interesting book. Definitely a thumbs up.

RIP! I listened to the Acquired episode just yesterday. First time famous personality death feel sad.

There's a change in this interview Todd Finkle probably lied about Buffett telling him using DCF to value businesses. Anyways, for most businesses, DCF is the way transactions are done in the world. They are done on multiples eventually but it is an output from the DCF. Again, it is not to be said that one uses DCF he/she has forgotten to do much of the other things (diligence, knowing the industry, quality of business, management, etc.). Also, one can get a dcf on anything but one of the key metrics tends to be ROC in an operating business. All such metrics can be easily gotten ahead or from the DCF (for eg. ROC - NOPAT+DnA-maint. capex/Net ppnE, accumutaled dep., non-cash int. bearing liabilities). Buffett is on another planet. he has 70-80+ years of experience. Maybe after the first 1-2 decades, one doesn't need any calc. Also, depends on the inv. understanding and philosophy that keeps on evolving over time for most. Starting with a sub 15PE and some growth, all things equal starts off with a 10%+ return - so there are always different methods for everyone. I think having a consistent process is important at least for me yet turning as much rocks possible. DCF can be used to come at the market expectations of most operating businesses. I am in all probability rambling so will stop.

I have used it as a check - more reverse one. To Vinod's point, I remember Buffett pointing several times the value of a security being the discounted cash flows. The minutia of details and assumptions and a standard process are for everyone to get to. With multiples, there is some kind of DCF embedded in anyways. Every situation is different - so there are a variety of industries (eg. banking) and asset situations (real estate), where DCF is not the norm. generally. DCF would just be a tool - imho more in stock analysis is about one's experience, psychological makeup, decision making and pattern recognition.

@xerxes. You are right. Last 20 years, NOC, LMT bought back some 4%, 3% of sh. outst. annually. While RTX increased sh. count by 2%. That explains most of the delta in the annual stock performance bw. NOC/LMT and RTX. Other difference is the margin expansion at NOC has been at a faster rate in the last decade from a lower starting base of margins. Vs. RTX margins are reasonably at the higher end. Anyways, at these levels with a longer time horizon, HSD-LDD kind of total annual returns seem very reasonable - a lot more buybacks than in the past would need to move them higher as sales and margins are not going to be the drivers here.

I recently did the exercise with RTX. Went to the last 20 years, when the stock traded at lowest valuation vs. say past 3-5 year history, the overall stock return to date (obv. impacted by the curr. forward PE multiple as well), was 9-10% per year or so. So not bad but not what I would have guessed. Last 20 years RTX EPS growth has been 7%. So I agree, RTX looks good here for medium long term but harder to get north of 10%+ for longer holds. Just my guess. The UTX deal may have messed up some of the numbers but I tried accounting for it. LHX on the other hand had grown much more than RTX over the years through various acquisitions. Going forward, EPS growth may be higher here. Anyways, looking at 10-20 year PE multiple charts, defense stocks go through bouts of lower and higher PE's. 2018 their PE's went to astronomical levels being compared to cons. staples. - that is how the 23+ times forward PE multiples were being justified. PE multiple collapsed to 11-12 times in 2020 as defesne spending outlook shrunk with Democrats win. 2022 - the Russian Ukraine increased the PE to 18+ times. Since then the PE's have been coming down. The defense businesses are different than core manufacturing businesses as in the margins dont keep on expanding much but the defense businesses generally are quite capital efficient - dont use a ton of capex and govt. subsidizes some of the R&D. Anyways, buying them below 15 times PE has worked out well generally with 8-12% annual returns depending in the time period.

Wow… stopped listening to Bass several years ago… but this is news that he was long Chargepoint… quite hilarious if it is true that he were long this