nspo

Loading up on FB and AXP. These prices are abnormal, to say the least. Thinking of adding defensible rails (UNP, CP).

I agree with you. I don't have much of an opinion on their prospects besides having a high level of confidence they'll be larger in 5-10 years. The earnings will, in the short term be impacted and maybe in the medium term revert lower, naturally.

That's a valid point but these current numbers (and near term estimates thereof)are the best we have to work with. This is why one must be comfortable with the business prospects. The numbers I use assume normalized earnings and work from there. I lost you a little bit in the middle there but I'm Italian so capisco.

So let me get this clear. You're saying returns on capital, owner's earnings, dividend yield, and retention rates are garbage in? Is there a donkey button on this board?? I hope others don't subject themselves to this "garbage" I'm seeing. Read the numbers, don't take a cursory view and assume you understand what's being said.

Yeah, far more numbers than a DCF huh?

You also have to consider the compounding of reinvested earnings. The 20PE doesn't live in a vacuum. I have NO idea what the numbers actually are but if they retain 20% and earn 20% on those earnings than they're growing 4%. Then, you have to add in a portion for organic growth. Let's say you're fairly confident that V will grow at GDP. So 4%+3%, you get 7% growth. What's a 20% roic and 3% organic growth worth with an extremely defensible business model? Not sure, but you get 7% for growth, and a cash yield of (20PE =5% yield) 5% yield *80% payout= 4% cash yield. So 7% in growth, 4% in buyback and divs. 11% compounded? Not the worst

It's too hard to come up with an appropriate multiple for growth stocks as the vast majority of their value comes from the terminal value assigned. The way successful investors in the past have gone about it is to use the IRR method, instead. One of the best resources I've seen for valuing growth is to read the Constellation Software presents letter. The valuation model takes into consideration more sustainable ROIC+organic growth and contrasts against the yield and growth in FCF. It's imprecise but that's what makes the game interesting, I guess. :) Check out this attachment for additional insight. Fair_PE_ratio_for_growth.pdf Fair_PE_ratio_for_growth.pdf

These plays should be priced as an option, and therefore sized appropriately. Most people take flights to get to cruise ports.. they don't take cruises to get to flights. So if I were a betting man I'd say that the airlines have a slight advantage in resiliency due to business travelers etc. which will reboot before standard vacationers.

Buying some long-term compounders (an outlook of 5 years or so): FB, Tencent, Baidu, ANTM, Brkb Also, buying businesses that are acquisitive and will use the current climate to influence deal flow: Bery, (maybe MTY), and KKR for now. If anyone else has some defensive rollup ideas, I'd love to hear them.

Dis- Brand loyalty, pricing power, diverse asset base Costco- sticky business, recurring member fees, perpetual growth from giving value back to customers Just speculation ;)

Bought some TCEHY, and ANTM

YES

Well said! Great strategy overall

A fun treasure hunting exercise for all members :)