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SlowAppreciation

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    What are you buying today?

    in General Discussion

    Posted

    I love VVI, and have for some time, especially the former Brewster businesses. I'm concerned about two things though, and would be interested in hearing any comments.

     

    The first is where we are in the cycle. I can't shake the idea that this might be a cyclical dressed up as a growth company, and that buying after a big economic expansion might be a mistake. I would love to hear why I'm wrong on this one.

     

    Recent acquisitions don't seem strong to me. AV seems more likely to commoditize  than booth/event management, especially as tech gets cheaper. I would have preferred they continued to outsource. Also, flyover seems like a way weaker attraction than something like the Banff Gondola, so you're diluting the business quality. Flyover has no moat, anyone can buy a motion simulator and rent some space, but the government isn't likely to rent out another mountain in Banff for a gondola. 100% moat vs no moat.

     

    Anyway, would love to hear why I'm wrong on this, as pursuit (why rename it?) Is a business I would like to buy and hold forever.

     

    All good points, and I mostly agree.

     

    Their two businesses are tourism (which is highly correlated to the health of the economy), and corporate events/exhibits (which is highly correlated to marketing budgets, which is also highly correlated to the health of the economy). In short, these are two areas where spending gets cut first during an economic decline. So I do think this business is going to be more cyclical than might be expected. And comps to previous down cycles are hard to come by since the business has changed so much due to acqs and spinoffs over the years. I read one analysis that argued the Pursuit business might even benefit from an economic downturn since it's cheaper/more local travel. Not sure I buy the argument, but I can't say confidently one way or the other. 

     

    I think this is probably a very good company to buy when the cycle turns. Current earnings would be depressed, but it's fairly capital light, and they won't get buried by high fixed costs. Kind of like buying a staffing agency (e.g., Robert Half) during a down cycle. You know earnings will come back.. you may just not know when. And the company can sit there and bide its time until the economy turns.

     

    When I first looked at the company a couple years ago, I thought they were only focusing on growing the Pursuit business. But it looks like they're also accelerating the acqs on the GES side too. Management says the AV space is higher margin, though they've admitted the acq of ON Services has so far under delivered. Time will tell I guess...

     

    I don't think FlyOver is all that bad though. While it's not my style (I hate rollercoasters and rides), reviews on TripAdvisor and Yelp are quite positive, and the returns on it are high. Low upfront cost, low maintenance, pretty much any increase in ticket prices goes to the bottom line, etc. Sure, it may not have a moat like a hotel in a National Park, but if you can make 20%+ returns for 7-10 years, then that's not half bad.

     

    Also, should I start a separate thread for VVI?

    I Created a New 13-F Screener

    in General Discussion

    Posted

    SlowAppreciation, I'm really enjoying this screener. Very well done and simple to use.

     

    One wish list that may be a feature that is far fetched and difficult, if not impossible, to achieve, would be to be able to track the level cash as a holding of the collective portfolio. I believe this would be a wonderful indicator, over time, of the bearishness or bullishness of the group.

     

    Glad to hear that you're enjoying it. I too would love to get the cash levels, but unless these are reported to the SEC (which they're not currently), I have no way of knowing it unless management voluntarily discloses it. Berkshire we know since they're publicly traded (and Markel too).

     

    As my next project I was going to put together a really detailed overview of Berkshire's breakdown (which would include cash levels) but I need to catch up on some reading first after spending the past few months on the screener.

     

    Thanks for the feedback!

    2017 YE intrinsic value versus Market Value

    in Berkshire Hathaway

    Posted

    Warren Buffet said in the last AGM that he thinks he can compound IV for the next 10 years in the 10% range, if interest rates rise a bit.

     

    https://youtu.be/Pwdph0qVb4Q?t=1h11m52s

     

    Under this assumption you can get a 10% compounder for 10-20% discount. Not too bad in today's environment.

     

    Yep, I think this is fair. ~11-13% CAGR moving forward for a very stable company that in some respects I'm more comfortable owning today than a S&P500 index fund.

    2017 YE intrinsic value versus Market Value

    in Berkshire Hathaway

    Posted

    $197/share (current price)

    • $66/share stocks
    • $36/share cash (after taking out $20b for dry powder)
    • $12/share KHC (marked to market)
    • $11/share fixed income
    • $1/share Pfds/Warrants

    = $127/share book - $10/share deferred tax (new rate)

    = $117/share book

     

    $197 - $117 = value of operating businesses

    $81 = value of operating businesses

     

    2016 Earnings operating businesses earned $8.50, so implied multiple on the operating businesses is 9.5x. This seems low, and I think it deserves a higher multiple, which in and of itself would give us a ~15% discount to current prices.

     

    Then factor in if you think BRK will benefit further from lower taxes not just at their operating businesses, but also with their stock holdings. AAPL, WFC, BAC, AXP in particular will benefit. And then do you think the portfolio has more room to run? Berkshire's stock portfolio trades at 19x earnings, whereas the S&P is at 25. Maybe this says more about the market's valuation than Berkshire's, but I certainly wouldn't say Berkshire's stock portfolio is overvalued.

     

    So let's call it $220/share - $240/share.

    Berkshire 13F

    in Berkshire Hathaway

    Posted

    Here's the portfolio if you want to take a look:

     

    http://minesafetydisclosures.com/individual-investor-portfolio

     

    Bottom graph is pretty neat. Two comments: it might be nice if it was zoomable/resizeable; I think you should draw new positions differently. The most obvious is the AXP/KHC transition. IMO, you should go from 0% KHC in 2015Q2 to 18% KHC in 2015Q3 as a blue triangle. Right now you are drawing this as green AXP area which looks quite misleading and incorrect. The mouseovers show correct intervals, but the overall visual is quite broken.

    Anyway, just a comment.  8)

     

    Good luck.

     

    Yeah I agree. Unfortunately I'm somewhat beholden to how the tool I'm using formats it as there isn't a ton more I can do to adjust it—they only give you so much control.

     

    But there's definitely more that I can do to the graph to make it more easily readable, and I'll continue tinkering and improving it.

     

    Appreciate the feedback. Please keep it coming

     

    Would the tool work the way we want it if you put in 0% KHC in 2015Q2 into the data? I.e. explicit value of KHC 0 for that date?

    If exact 0 does not work, it might be possible to put in 0.0001% KHC in 2015Q2 (though exact 0 would be better/nicer). Yeah, both of these might require massaging a data a bit before passing to the tool.

     

    Anyway, just some thoughts how to get around the tool limitations. ;)

     

    Problem with that is then it throws off when a position is New or has been exited. Additionally, it'd be a pain in the ass to implement but I'll see if there are some other workarounds I can come up with.

    Berkshire 13F

    in Berkshire Hathaway

    Posted

    Here's the portfolio if you want to take a look:

     

    http://minesafetydisclosures.com/individual-investor-portfolio

     

    Bottom graph is pretty neat. Two comments: it might be nice if it was zoomable/resizeable; I think you should draw new positions differently. The most obvious is the AXP/KHC transition. IMO, you should go from 0% KHC in 2015Q2 to 18% KHC in 2015Q3 as a blue triangle. Right now you are drawing this as green AXP area which looks quite misleading and incorrect. The mouseovers show correct intervals, but the overall visual is quite broken.

    Anyway, just a comment.  8)

     

    Good luck.

     

    Yeah I agree. Unfortunately I'm somewhat beholden to how the tool I'm using formats it as there isn't a ton more I can do to adjust it—they only give you so much control.

     

    But there's definitely more that I can do to the graph to make it more easily readable, and I'll continue tinkering and improving it.

     

    Appreciate the feedback. Please keep it coming

    I Created a New 13-F Screener

    in General Discussion

    Posted

    1. Why does anyone care about portfolio P/E, ROE, etc? These are company metrics and aggregating them into a portfolio metric is IMO close to meaningless. Assume my portfolio is a company X that currently loses money, GOOGL and FCAU. What is the portfolio P/E of this and is it meaningful in any way? Not to me really.

     

    Well sure, but just like looking at the P/E of a company and calling it a day isn't really telling you much, the same goes for an investor's total portfolio. So yeah, if a company takes a bath or doesn't report a lot of GAAP earnings like a Charter or Liberty or Amazon, then that's going to inflate the P/E even though it may not represent actual intrinsic value. This shouldn't be a surprise to anyone though.

     

    But I think it's interesting to see that someone like Chuck Akre is comfortable having a higher total portfolio P/E than someone like Buffett is.

     

    When you get into investors like Howard Marks or Klarmann, P/E loses it's relevance. But that's the same when looking at the P/E of specific companies too. 

     

     

    2. Related to above: how do you average P/E, ROE, across companies? Do you account for position size, market cap, what? Or do you just simply average? (Academic questions somewhat, since I still think 1.)

     

    I'm simply taking the total value of the portfolio (based on current prices), divided by the total look through earnings (shares x EPS). Same approach for all other metrics.

     

    3. Sorry to say, but I don't trust FCF calculation of even Morningstar and they are probably the best in doing it. I would not trust FCF calculation of random website at all. Mostly because FCF calculation really depends on what you subtract to get FCF and there's no agreement on that.

     

    And that's why everyone should still do their own due diligence. What you consider true FCF is going to be different from what I consider true FCF even if we have the same exact data and info to go off of.

     

    I can't go in and massage the #s for each company to determine what I think is their true FCF, so the best way to handle it is just do CFO-CapEx. Everyone is free to make their own adjustments from there.

     

    FWIW, I'm using Morningstar data for the FCF calc.

    I Created a New 13-F Screener

    in General Discussion

    Posted



    One thing I like looking at on Dataroma is the portfolio history of a "guru" at a glance. They have a nice screen with all quarters of portfolio history with a total size of portfolio, and positions sized from biggest to smallest (without % sizes though). I wonder could that screen be improved to add the weighting of the actual position size?
     
     
    I was thinking the same thing
     
    how about something like this:

    Works better for portfolio's where you don't have lots of smaller positions, ie. search for Allen Mecham. I would say it's a graph that's worth including.

     

    Yeah I need to work on the filter... will probably limit it to top 15 positions in a given quarter or something like that.

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