nspo
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Posts posted by nspo
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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.
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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.
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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.
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Yeah, far more numbers than a DCF huh?
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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
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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.
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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.
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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.
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Dis- Brand loyalty, pricing power, diverse asset base
Costco- sticky business, recurring member fees, perpetual growth from giving value back to customers
Just speculation ;)
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Bought some TCEHY, and ANTM
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Ventured out into the wild today. The wife and I took the kids to Prudential Center to see the Jurassic Kingdom Dinosaur Show. I literally would have bet 10-15% of my portfolio on seeing dozens of folks wearing masks. Or signs of something. Shockingly, there was absolutely nothing. Full house. Not one single mask, which is odd because around the NJ/NYC area, you always see the random couple folks with masks, even when theres nothing going on. If I die in a couple days I'll let you guys know. Definitely time to short then.
The idea that people are in Disney phase doesnt really seem to make sense to me. We live in an electronic world. Every single person has a cellphone/computer/tablet. Everyone is glued to their devices. Every place you turn this week, there is coverage, and an overwhelming amount. Does this mean this cant change? Of course not. It very easily could. But to act as if people just haven't gotten wind of it and when they do, the behaviors will change, at least to this point, isn't true, IMHO.
Next up, on the subject of news flow and continued positive tests. Sure, I get it. But at the same time, how much of this is baked in? Do we(although I joke about it) really believe that the market just shed 12% because we have 70 cases here in the US and that the next 100 or 1000 incrementally take off a similar or greater amount? Or has this precipitous decline factored in some of the things folks like Viking have mentioned here about futures waves of further cases? How much? Where is the equilibrium point and where is the pendulum now?
Also, I do think, after reviewing a lot of stuff this weekend, the stuff similar to what Liberty has posted is indeed, on a FACT BASED perspective, the most relevant and rational.
Further, if it is true China knew about this in December and canned it so as not to disrupt the New Year and festivals, dont we have to look at the timelines? Mass exposure occurred first week of January. Chinese cases erupted 2-3 weeks later. The big whammy was all the folks who travelled through there and went back home. Maybe they left weeks 2-3 and now spread first/second week of February. If this is reasonable, the arent we kind of at the turning point of when these things should go ballistic? Massive surges? Except these massive surges are hundred and in a few cases, thousands of folks... "Oh but they arent testing everywhere" is at first sound. But eventually people and symptoms get to see the light of day in most countries. Surely, if there are thousands, or tens of thousands, we'd be starting to hear about them soon? Or, maybe the evidence Liberty linked is possibly a little more accurate than all the fear driven news feeds.
Brings me to my next point. Both good and bad, there is SOOOO much misinformation going around its absurd. People arent drinking Corona beer. People are buying masks. People are supposedly afraid of catching it yet at the same time running to Costcos which are busier than during Thanksgiving week!
Million dollar question to me, if this, on a results basis, is less than or equal to the regular or flu, is this warranted? What are the odds it gets there. Given this broke out in December and you literally had a government make the decision to let tens, maybe even hundreds of thousands of folks congregate and celebrate and gather, for the entire week! incubate the fuck out of this thing, and then go on their way, AND THEN take action, with the resulting fall out in the central location being 75k illnesses and 3k deaths? Do we really see any other nation approaching these numbers, with a multi week head start in terms of knowledge, and all this time to prepare? Again, I dont think so.
Now joking...havent companies like Boeing already determined the cost of a life is like $200K? So right now we should be at like $600M but instead we've lost 6 trillion or whatever and tomorrow stacking up for another 1,000 points down because like two dozen people died over the weekend and the US added 6 cases....please. Fear, panic, chaos. Thats what this is. Is it warranted. Eventually we'll find out. To me, 2018 was significantly scarier because there was no real reason for the crash. I spoke to my brother who is a doctor. He basically said, use common sense. Wash your hands, use sanitizer, avoid close contact with strangers and especially sick people. From an internal perspective, the approach is basically similar to the flu. Funny also, a friend who does a lot of work in genetics basically said the same thing that was said earlier in the thread; no one with a promising career in biotech wants to work on antibiotics or vaccines...the financial incentives just dont make sense. But eventually someone will hang a big enough carrot whenever a large enough problem arises, and wouldn't you know, they figure stuff out.
YES
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Turtle Creek's strategy is reminiscent of Allan Mecham's--both of them carve out a group of superior companies from the market. In the case of Mecham, I believe it's about 100, and with Turtle Creek it's 25. Going by memory, Mecham tries to own the cheapest 10 or 15 from his universe at any given time and rotates them as valuations change, while Turtle Creek owns their whole universe, but adjusts the weightings. The Turtle Creek approach is essentially the same as Mecham's, but less bold.
I think the concept of identifying a universe of superior companies, following them long term, and getting to know them intimately is a great strategy. For individual investors it would be enough to find 10 or less and then just own the cheapest 4 or 5. And as a small investor, you could dredge up your own Top 10 from amongst the smaller and illiquid companies so you are not dealing with the well-followed, large cap compounders like Costco, for example.
Well said! Great strategy overall
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A fun treasure hunting exercise for all members :)
What are you buying today?
in General Discussion
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Loading up on FB and AXP. These prices are abnormal, to say the least. Thinking of adding defensible rails (UNP, CP).