RiskAdjReturn
-
Posts
45 -
Joined
-
Last visited
Content Type
Profiles
Forums
Events
Posts posted by RiskAdjReturn
-
-
nitpicking? intent, stock pick today with 5 yr scorecard.
-
2 hours ago, Malmqky said:
5 years and the goal is to beat the market?
QQQ tbh.
Otherwise I like JOE, but I would feel better over a 10-15 year timeframe. 5 years just ain’t that long. Fairfax is good over the next couple, but 5 is a bit long for me to feel certain about it on the otherhand. Nintendo I would pick if it was a 2-3 year timeframe.
Personally I think outperforming the market should be a 20-30 year thing…trying to outperform over 5 year periods isn’t the best way to approach things.
the 5 yrs is really for me to flush out your best MOIC idea at end of yr 5. ie 1.5x, 2x, etc. I'm not interested in "market timing" a 2024 calendar pop. I want to award the medal 5 years from now, see who is swimming with clothes on then
-
56 minutes ago, ValueArb said:
Munger's great stock was Tenneco. He only had to wait about 20 years to find it. Otherwise forcing yourself to pick a single "great stock" at any moment is a fools errand. Better to find 5 very good stocks and hope the best two overcome the worst one so you beat the market.
fair enough. let me rephrase it, this isn't proving who is good investor. that said, would love to see everyone's best single idea for 5 yr "race"...to see where they have real conviction at the margin . alot of folks portfolios have alot to do with embedded unrealized gains they aren't willing to pay taxes on, rather than marginal "Rebuy" conviction.
-
Taking into consideration entry price (ie great company and future might not mean great stock):
If you are running endowment or childrens trust: you have 1 stock to buy today to prove, 5 yrs out, how good an investor you are, what would it be? I'd like to see folks best idea, risk adjusted (I toggle between credit and equity....I'm allergic to losing capital permanently): we can then dredge up this thread each yr until yr 5 and see the winner. we aren't looking for shiny objects here...but endowment growth!
I benefit greatly from many of you you (some I think miss the boat on concentration though :>) ), and would love to add people and ideas to list.
one qualification: goal is to outperform SP500. consider this endowment would already be indexing money, this is active, 1 stock best idea risk-adjusted (sort redundant to say risk adjusted when its a 5 yr call as no one wants to lag bonds/cash, etc with a bad bet
-
On 12/29/2023 at 10:40 AM, Jaygo said:
Financial wealth is derived from owning assets, true wealth comes from having enough financial wealth to live the life that gives you purpose. Dealraker this is some inspirational stuff. Thank you.
curious how much you invested / saved into the taxable account, vs the starting point balance you reference. curious the compounding effect vs contributions. this is great lesson for my kids
-
can some tell me book value per share (in B term). so can see P/B mult against todays' trading level
i hate how this metric is shown anywhere
-
would love it if those who follow the name closely could try to calibrate where they thing NAV would be, here, today on May 21....unless a CEF, I can't easily tracke the premium to book for Berk. but feel like I need a refresh during the big selloff and of course AAPL fall.
-
10 minutes ago, Dinar said:
Engines are razor/razor blade business, with extremely high barriers to entry. The company is trading at a p/e = 10x 2025 EPS, and will probably grow revenues over time at inflation+ 2-4% and expand margins on top of that. Returns on capital are extremely high. Revenue growth will be driven by increase in the global air traffic, as well as spare parts becoming an increasing proportion of revenue.
thanks...did you mean to say 2025 ? or 2022
-
21 hours ago, Dinar said:
I am long and would buy the following:
L'Oreal
Heineken Holdings
Christian Dior (Holding company for LVMH)
AON
Ashtead
Canadian Pacific
Safran
Floor & Decor
Philip Morris International
New England Realty
Alphabet & Microsoft (I saw that you have it)
Not sure that I agree on BAC, CHTR & UNP.
for my benefit, whats the elevator pitch on Safran?
-
25 minutes ago, thepupil said:
I would argue ownership of Berkshire is very tax efficient. I pay a 4 handle marginal tax rate on any income that touches me.
Berkshire pays 21% on an accrual basis and far lower on a cash basis (because of the DTL). Even if Berkshire paid cash for all its expense, keeping my money in Berkshire would be more tax efficient than pass through vehicle to me. In the past 3 years, Berkshire has booked $268 billion of pretax income, accrued $52 billion of income tax expense (19%), and paid $16 billion of cash taxes (6%). The power of tax deferral should not be underestimated. paying cash taxes equivalent to 6% of pretax income is not that bad. The cash taxes amount to 18% of the last 3 years operating earnings from non insurance subs.
Of course, there's the fact that Berkshire needs to return its earnings via divvy to me or i need to sell (both of which trigger tax at my level) in order to monetize Berkshire.
I solve that through borrowing against it rather than selling and do not foresee having any reason to sell, particularly given the diversification and business quality (unless it became egregiously overvalued)
I understand what you are saying regarding holding stocks in a C Corp is presumably tax inefficient because there are two layers of tax. But this isn't a high turnover mutual fund of stocks w/ C corp tax treatment. Very large portions of the portfolio of businesses are permanent or quasi permanent holdings. If one has a long term time horizon and doesn't intend to sell, holding Berkshire is very tax efficient at both the berkshire and investor level. Just look at the gross sales over the last 3 or so years. Buffett is selling $15-$16B / year on a $350B stock portfolio and $600-$800B portfolio of businesses; my own personal turnover is far higher. There iwll be some turnover, but Berkshire is not forced to sell anything because of $140B of cash and $30B of operating earnings.
in theory, I think your idea of tax inefficiency has merit. in practice, i don't think it does.
I hear ya. Kinda like the margin idea here to get liquidity in lieu of selling berk (given the diversity/ballast nature)....what's your % advance max against your position that you used as a guardrail? ie whats % of berk holding would you "access" for personal liquidity without feeling aggressive
-
24 minutes ago, thepupil said:
please see BNSF's 10K. $6 billion of net income after tax.
average FCF for last 3 years is ~$5 billion. BNSF has had higher capex than depreciation. how one views that is dependent on how one views the attractiveness of the overall returns.
this is critical infrastructure of the US of A.
at what multiple do you think BNSF should trade?
Thanks for clarification on it being after tax thats good
on the mulitple... I am not familiar enough with the earnings stability/cyclicality of rail, though I see your UNP comp mid 20s. So yeah that gets you your 2.4x ish. I take it the earnings power is very stable, repeatable, and has growth trajectory, to trade over 4 percent FCF yield ( unp)
-
pupil, good stuff. BHE is a blackbox to me. unclear if that is, fundamentally, a good or great business. regulated, with cost recovery, constant churning of capex, etc. who knows. the cash flows / earnings don't really jump out and wow me, net of all the capex that is plowed in.
let's focus on rail for a second: first, I think we need to tax-affect the $6 of "Earnings" don't we?. but before doing that...$6 on 46B of book. that's 13% ROE. let say capex and depreciation wash, such that earnings = FCF. unclear if that is really good assumption though. capex required to "run in place" may be higher than depreciation. Just saying, cash flow don't lie. thats a 13% ROE on book. if tax affected, you are closer to 10%. sure some premium to book may be warranted, but this isn't a high ROIC business.
-
thanks...yeah that's an interesting thought process on the accrued taxes. I prefer backing it out fully but that's the credit investor in me. I see it as no different than long term debt, etc. because at end of day, I want to know that the asset value I'm buying, has a {xx] embedded tax bill. its just a question of NAV purity for me, and from there I can do my puts and takes. its of course pretty inefficient to own stocks in a c-corp for public investors, so I want to be intellectually honest about the fundamental reality of it
-
thanks pupil, you are tracking my argument at least.
first: to some in this thread: for a big chunk of asset value here, at fmv, you are paying 1.4x that "nav" or "book" , whatever term you prefer. in the US, one buys a mutual fund, or etf, or stock, at "1x nav"......for Berk's same apples, one is paying 1.4x
then the focus shifts to how much "juice" or suppressed value there is on the operating assets side of house, which are you paying 1.4x accounting book for, to help compensate paying 1.4x for berk's securities and cash.
the math is the math, dispassionate, objectve, etc.
pupil.....come agin on the aapl 84%? in my mind, the gross fmv for apple and of course offset by the accrued taxable gain liability on books. but that is still 1x aaple in the nav nav captures the tax liability)
on the operating assets side....I still maintain, prima facie, that if the operating earnings, relative to Berk's operating asset book capital (bnsf, bhe, etc) isn't attractively high ROE then the "juice" isn't most most think, unless earnings power is suppressed in gaap earnings relative to intrinsic value, in some unique way vs other companies.
value of float: how much can I make on $140B a year, with regulatory on restrictions of usage (stocks/cash etc). let's say 4% after tax which is me being nice in today's interest rate environment. that's $5.6 Billion of earnings from the "free float business".....put that in div discount model, at say 6% discount rate. that's $93B of value that is hidden and should be added to Berk. I concede this. (one can play with assumptions)
I appreciate the conversation, thanks all.
-
1 hour ago, adesigar said:
So what you are saying is that BRK at 1.4xBook is expensive and SPY at 4.43xBook is cheap.
lol. no.
go think about it some more :>)
-
1 minute ago, cubsfan said:
^^ It's an interesting idea thinking you can recreate BRK just buy picking a bunch of low NAV stocks.
Just think, Buffett's whole career reduced to that!
no, not low nav stocks....just talking about buying stocks at spot (ie spy at market price)....vs paying for berks net asset at 1.4x
-
1 minute ago, gfp said:
So your bet is SPY outperforms BRK going forward. Got it, Thanks
not sure why you are getting chippy. I just don't beleive ~ 1.4x a fairly marked to market nav is a good price, compared to paying 1.0x for other diverse stocks and 1.0x for cash, to replicate berk at moment. the apple concentration is also not something that is attractive at 1.4x
-
Just now, gfp said:
So not a single "ticker" or "name" to share with us amateurs?
here's one: spy
-
57 minutes ago, ValueMaven said:
1.4x BV on a BV that is CLEARLY massively understated ... hmmm ... also how about a biz that is generating a durable $25B+ in Operating Earnings. @RiskAdjReturn
Try again...
well, pretty much anything at spot market prices (1.0, not 1.4x). yes it has operating earnings you are trying to cash a check that's already been cashed. the book value of the businesses that generate those earnings is in the nav. sure the cost may be understated some from his purchase price + goodwill + capex....but it isn't so suppressed. otherwise we would see massive ROIC/ROE. rather we see solid ROE + then market price appreciation in holdings. on those $25B in earnings, let me know what you think the book value associated with those businesses is....it's probably $150B or so. ie, its in there..and you are paying 1.4x for it..
look, I like the name at the right price, but now isnt the right price...and with aapl being so much of the basis?? well, I can create aapl at 1.0x with fresh tax basis
-
7 hours ago, nwoodman said:
But what value do you place on Buffett being on the end of the phone when it inevitably starts to ring. No crystal ball but this could morph into a liquidity event in a heart beat.
https://www.zerohedge.com/markets/traders-brace-chaotic-fx-market-open-ruble-set-collapse
this is way overdone. look at Fed in march 2020. that was the fat pitch for Berkshire but it never happened when Powell became the backstop. furthermore, Berskshire has alot more public equities than cash!!!....
really, this ticker is overhyped. I would like it at maybe a little over nav. but seriously, why pay for a passive chunk of AAPL at 1.4x the price you can buy apple yourself. and why pay 1.4x cash you can create yourself? etc
-
paying 1.4x a concentrated mutual fund nav basically, with maybe only "suppressed" value in nav coming from energy and rail carrying cost accounting. sure the zero cost float has some intrinsic value, but in low rate environment, not so much...
good luck!
-
19 hours ago, Mephistopheles said:
Lukoil and Gazprom, small positions. Cost of production (in rubles) is low and sales (in dollars) is high. With oil prices where they are, I can't imagine the world banning Russian oil. And with their economy collapsing, I also can't imagine Russia blocking exports, it would be suicide for them. Question is will the govt confiscate the dividends/earnings from non-Russian shareholders.
yes...the question you ponder at the end is sorta the point. I do not see how folks can invest and talk of "cheap" and valuation etc when these paradigms are not US/SEC/shareholder value oriented contexts at all
-
2 hours ago, Gregmal said:
PCYO
gregmal, is there a thread on the board on this name/thesis?
-
34 minutes ago, muscleman said:
Up about 18% in the stocks account. Up about 60% regarding my real estate down payments. I've been aggressively moving money out of stock account to buy real estate since Biden got elected as I believe we are getting a repeat of the 1970s when the stock market would go flat and real estate would go through the roof, so I wanted to go all in on real estate but did not find that many bargains.
I don't have any stocks right now and I maintain the view of the repeat of a dot com bubble top. When it crashes, I think even more money will flow to RE.
Moving forward I expect housing market in the US to go up by 20% a year for the next 3 years. If this happens, my real estate down payments would go up by 80% a year for the next 3 years while collecting a small amount of cash flow.
when you analyze the real estate investments in terms of "down payments" (ie the equity "check"), is the financing non-recourse or recourse? on recourse financing, such as one's personal resi, really best to think of in terms of total value (not the home equity). if you are making bets with non-recourse financing, that's fantastic and kudos to you
What are you buying today?
in General Discussion
Posted
can someone tell me what the tax impact of owning via ADR (ntdoy) as US investor..is there foreign tax drag ?