Easier or Harder to Find Ideas

[Cunninghamew]

what is deep value investing? Isn't that kind of redundant. Isn't valueinvesting pretty much buying at a discount already. The value part is already kinda redundant.

 

Sorry for the lack of clarification... my investments I normally label as 1 of 3 types

 

Compounders category: example would be TDG... great company / great economics / great management / good tailwinds... but the valuation isn't cheap (at least on face value)... it typically trades for a mid to low single digit free cash flow yield... despite the price I am willing to hold this company and periodically add to it when it becomes reasonably valued

 

Deep value category: this is my terms for stuff that is just ridiculously cheap at face value, but not necessarily a great biz. For example, I might be willing to buy a really crappy house in a crappy neighborhood if the price was just stupid low, but only at a certain price that is super discounted. Examples... I owned yellow media for a time. Despite the management being great, Fiat falls into this bucket for me.

 

Special sits category: I didn't mention this earlier, but sometimes I will put on risk arb plays and/or other investments that are impacted by corporate events. I guess you could also call this event driven.

 

I hope that makes more sense now. Yes it is redundant, but it is simply how I label/breakout my portfolio when I am thinking about it.

 

 

I agree on TDG.  I am thankfully that so far it has worked out even though I bought it a while ago at a somewhat expensive price.  I assume you have also looked at Wesco Aircraft Holdings as they are kinda similar?  Why do you like TDG more than WAIR?

 

Thanks.

 

I actually haven't spent much time looking at Wesco, so I can't give you a thoughtful answer. The honest answer is I didn't compare the two when considering a purchase. However, here is my quick thought (without talking about valuation).

 

Both companies sell and/or distribute small parts that are all over the plane and relatively low cost in the grand scheme of things, which is nice. Additionally, they both get to take advantage of a planes long life cycle by selling and/or distributing replacement parts. That said, TDG is in a better part of the supply chain as they are generally selling product for which they are the sole provider. I don't follow Wesco, but I always thought of them as a distributor or middle man. Net Net I would think TDG should have better pricing power.  You can certainly see large differentials in their margins.

 

So TDG appears to be a higher quality biz that is benefiting from the same structural tailwinds

 

I too had to close my eyes to purchase the shares, because the multiples be it EV/EBITDA, P/FCF, etc did not scream bargain.

 

Hope that is helpful and I would love to hear your thoughts about Wesco and/or any critiques of mine

[ourkid8]

Citi and AIG  are two extremely cheap stocks selling below liquidation value. 

 

Tks,

S

 

I find it puzzling how people are having a hard time finding bargains when Financials are selling below book / TBV... It's almost a no brainer!  There are still many pockets of value but Financials should not be overlooked...

 

Tks,

S

 

What are you looking at? I think SUSQ looks cheap.

[no_thanks]

what is deep value investing? Isn't that kind of redundant. Isn't valueinvesting pretty much buying at a discount already. The value part is already kinda redundant.

 

Sorry for the lack of clarification... my investments I normally label as 1 of 3 types

 

Compounders category: example would be TDG... great company / great economics / great management / good tailwinds... but the valuation isn't cheap (at least on face value)... it typically trades for a mid to low single digit free cash flow yield... despite the price I am willing to hold this company and periodically add to it when it becomes reasonably valued

 

Deep value category: this is my terms for stuff that is just ridiculously cheap at face value, but not necessarily a great biz. For example, I might be willing to buy a really crappy house in a crappy neighborhood if the price was just stupid low, but only at a certain price that is super discounted. Examples... I owned yellow media for a time. Despite the management being great, Fiat falls into this bucket for me.

 

Special sits category: I didn't mention this earlier, but sometimes I will put on risk arb plays and/or other investments that are impacted by corporate events. I guess you could also call this event driven.

 

I hope that makes more sense now. Yes it is redundant, but it is simply how I label/breakout my portfolio when I am thinking about it.

 

 

I agree on TDG.  I am thankfully that so far it has worked out even though I bought it a while ago at a somewhat expensive price.  I assume you have also looked at Wesco Aircraft Holdings as they are kinda similar?  Why do you like TDG more than WAIR?

 

Thanks.

 

I actually haven't spent much time looking at Wesco, so I can't give you a thoughtful answer. The honest answer is I didn't compare the two when considering a purchase. However, here is my quick thought (without talking about valuation).

 

Both companies sell and/or distribute small parts that are all over the plane and relatively low cost in the grand scheme of things, which is nice. Additionally, they both get to take advantage of a planes long life cycle by selling and/or distributing replacement parts. That said, TDG is in a better part of the supply chain as they are generally selling product for which they are the sole provider. I don't follow Wesco, but I always thought of them as a distributor or middle man. Net Net I would think TDG should have better pricing power.  You can certainly see large differentials in their margins.

 

So TDG appears to be a higher quality biz that is benefiting from the same structural tailwinds

 

I too had to close my eyes to purchase the shares, because the multiples be it EV/EBITDA, P/FCF, etc did not scream bargain.

 

Hope that is helpful and I would love to hear your thoughts about Wesco and/or any critiques of mine

 

That is really helpful and a good point about their respective pricing power. I guess the question then is, is WAIR cheap enough compared to TDG to make up for the lower margins.  But, if it is a long term hold you are most likely going to make returns equal to the companies returns, so that does make TDG more attractive even at it higher valuation. 

 

Thanks for explaining you thinking, it was really helpful for me.