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Rule #1 Stocks | Phil Town


michitche95
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Hi Guys, I am starting a thread here in order help each other and collect ideas on "Rule #1 Stocks" that are currently on sale (50% or 60% intrinsic value).

For those who don't know Rule #1 stocks are described in Phil Town's books (Rule #1 Investing and Payback Time).

 

Cheers!  ;D

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  • 3 weeks later...

Hi michitche95,

 

Great to hear that you seem to be on-board with Phil Town's Rule1 Strategy.  I have read his books (Payback Time, Rule1 and his co-authored book with his Daughter Danielle Town, InvestED - also a great read) and have really picked up his strategy.  He also has a podcast with over 300 episodes that I have listened to which have really been a big help in understanding some of the nuances that he doesn't really get into in any of his books.  I highly recommending listening to them, especially if you have a long drive to work!

 

As for some of his stock positions, he was really on a buying spree since the COVID crash last year, and even somewhat before then.  Some of his put options and positions included, but weren't limited to, CF Industries, Boeing, Bank OZK, Gildan, SRG (although he has unloaded a bit since the CEO and CFO left the company), just to name a few.  You may be able to still pickup a few of these stocks near, or still below the sticker price.  You can also find his positions detailed exceptionally well in StockCompounder's YouTube videos by Brad here:

 

 

In these videos, Brad details his positions based on available SEC data or other information that Brad has picked up from others.  Phil has also recently started his Rule1 Fund (about a year and half ago I think) and Brad was able to track down a few of the shareholder letters which are a good quick read and also gives some insight behind his holdings and options.

 

I've really come to like his approach, but also am struggling with holding for long term.  That seems to be the biggest challenge with value investing in my opinion and is something that I'm trying to learn more and more as I implement the Rule1 strategy.  I've been investing since last year and so far has been a success, but at the same time, the market has had a huge run since March 2020 last year so really I'm trying to make sure I stay grounded and realize that almost anyone could have bought any stock and have easily made 30% since last year!

 

Hope this helps and good luck with the research and really understanding the companies you are buying! I also agree with you that the hunt seems to be more difficult than the actual research and interpretation of Phil's 3Ms and the financial analysis.

 

Cheers,

 

 

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Are his ideas on par with the great Whitney Tilson? I hope Phil has the next NFLX.

 

LOL I occasionally see ads for "investing legend who bought NFLX at $3" or whatever featuring Tilson. And cant help but chuckle thinking, "isnt this the guy who blew up his hedge fund shorting stocks like NFLX and TSLA?"....

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Are his ideas on par with the great Whitney Tilson? I hope Phil has the next NFLX.

 

LOL I occasionally see ads for "investing legend who bought NFLX at $3" or whatever featuring Tilson. And cant help but chuckle thinking, "isnt this the guy who blew up his hedge fund shorting stocks like NFLX and TSLA?"....

 

Good question....I haven't followed Tilson although I do see the reference to closing his funds due to underperformance, so I guess he wasn't that great at it! As much as I have learned from Town, his brand does have way too many ad's in my opinion.

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Hi michitche95,

 

Great to hear that you seem to be on-board with Phil Town's Rule1 Strategy.  I have read his books (Payback Time, Rule1 and his co-authored book with his Daughter Danielle Town, InvestED - also a great read) and have really picked up his strategy.  He also has a podcast with over 300 episodes that I have listened to which have really been a big help in understanding some of the nuances that he doesn't really get into in any of his books.  I highly recommending listening to them, especially if you have a long drive to work!

 

As for some of his stock positions, he was really on a buying spree since the COVID crash last year, and even somewhat before then.  Some of his put options and positions included, but weren't limited to, CF Industries, Boeing, Bank OZK, Gildan, SRG (although he has unloaded a bit since the CEO and CFO left the company), just to name a few.  You may be able to still pickup a few of these stocks near, or still below the sticker price.  You can also find his positions detailed exceptionally well in StockCompounder's YouTube videos by Brad here:

 

 

In these videos, Brad details his positions based on available SEC data or other information that Brad has picked up from others.  Phil has also recently started his Rule1 Fund (about a year and half ago I think) and Brad was able to track down a few of the shareholder letters which are a good quick read and also gives some insight behind his holdings and options.

 

I've really come to like his approach, but also am struggling with holding for long term.  That seems to be the biggest challenge with value investing in my opinion and is something that I'm trying to learn more and more as I implement the Rule1 strategy.  I've been investing since last year and so far has been a success, but at the same time, the market has had a huge run since March 2020 last year so really I'm trying to make sure I stay grounded and realize that almost anyone could have bought any stock and have easily made 30% since last year!

 

Hope this helps and good luck with the research and really understanding the companies you are buying! I also agree with you that the hunt seems to be more difficult than the actual research and interpretation of Phil's 3Ms and the financial analysis.

 

Cheers,

 

Thanks for the mention xasm! Ruger showed up in the magic formula recently which I thought was interesting. Tilson must be one of those smart guys with an IQ of 150 who thought it was 180 ;)

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  • 5 weeks later...

Facebook!

Edit: Brad Kaellner just uploaded a comprehensive and insightful review of Phil’s recent Q4 purchases. I am assuming the widget on Rule1 website is outdated (or alternatively I have no idea what I am talking about) because some of the picks don’t seem to pass the Rule1 formula model

 

 

Brad’s analysis:

 

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Facebook!

Edit: Brad Kaellner just uploaded a comprehensive and insightful review of Phil’s recent Q4 purchases. I am assuming the widget on Rule1 website is outdated (or alternatively I have no idea what I am talking about) because some of the picks don’t seem to pass the Rule1 formula model

 

 

Brad’s analysis:

 

Amusingly enough Phil doesn't always follow the Rule1 Formula Model :)

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This guy is running a mutual fund now? 

 

He doesn't even publish his own personal track record.

 

I think that information is available online. He has done pretty well

 

I've looked in the past but to no avail. Can you provide a link please?

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This guy is running a mutual fund now? 

 

He doesn't even publish his own personal track record.

 

I think that information is available online. He has done pretty well

 

I've looked in the past but to no avail. Can you provide a link please?

 

I haven't seen Phil's performance record Paul. He's playing the "social proof" card and playing it well.

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Sure! Brad recently created content on this:

 

 

This look likes he's just talking about the mutual fund that he just started within the past year or so. The guy is in his 70s and we're talking about his performance over the past year?

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Correct me if I am wrong, but weren't you able to follow the companies in his most recent portfolio? If so, you'd see their shares are all up.

 

There could be various reasons why it's challenging to find information about his previous partnership online. I don't know; could it be taxation? Or maybe other regulatory concerns that make him less eager to make this info widely available? Who knows

 

At the end of the day, Town has millions under management and is a survivor of the 08 crash. That makes him better than most high-performing managers.

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Correct me if I am wrong, but weren't you able to follow the companies in his most recent portfolio? If so, you'd see their shares are all up.

 

There could be various reasons why it's challenging to find information about his previous partnership online. I don't know; could it be taxation? Or maybe other regulatory concerns that make him less eager to make this info widely available? Who knows

 

At the end of the day, Town has millions under management and is a survivor of the 08 crash. That makes him better than most high-performing managers.

 

Was he even managing money for people in 2008?

 

Is his mutual fund even around anymore? I can't seem find much of anything on it. Looks like he was offering his services for the low, low price of almost 2%.

 

RULRX

 

https://ruleonefund.com/wp-content/uploads/2020/12/Rule-One_Prospectus_07292020.pdf

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Correct me if I am wrong, but weren't you able to follow the companies in his most recent portfolio? If so, you'd see their shares are all up.

 

There could be various reasons why it's challenging to find information about his previous partnership online. I don't know; could it be taxation? Or maybe other regulatory concerns that make him less eager to make this info widely available? Who knows

 

At the end of the day, Town has millions under management and is a survivor of the 08 crash. That makes him better than most high-performing managers.

 

Was he even managing money for people in 2008?

 

Is his mutual fund even around anymore? I can't seem find much of anything on it. Looks like he was offering his services for the low, low price of almost 2%.

 

RULRX

 

https://ruleonefund.com/wp-content/uploads/2020/12/Rule-One_Prospectus_07292020.pdf

 

I believe so, but there isn't much info on his previous experience other than a youtube video posted in 08. I guess like many other things in life, caveat emptor!

 

I don't interpret the absence of this info to mean he is an unscrupulous person.

 

If you read his books and follow the podcast with Danielle, you'll notice he mentions several companies now up 300 to 500 percent.

 

P.S., If possible, would you share insights on the importance of management fee? I am interested to know why the low fee is a potential red flag for you?

 

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Correct me if I am wrong, but weren't you able to follow the companies in his most recent portfolio? If so, you'd see their shares are all up.

 

There could be various reasons why it's challenging to find information about his previous partnership online. I don't know; could it be taxation? Or maybe other regulatory concerns that make him less eager to make this info widely available? Who knows

 

At the end of the day, Town has millions under management and is a survivor of the 08 crash. That makes him better than most high-performing managers.

 

Was he even managing money for people in 2008?

 

Is his mutual fund even around anymore? I can't seem find much of anything on it. Looks like he was offering his services for the low, low price of almost 2%.

 

RULRX

 

https://ruleonefund.com/wp-content/uploads/2020/12/Rule-One_Prospectus_07292020.pdf

 

As a Buffett cloner, I'm sure that 2% was performance based ;)

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Correct me if I am wrong, but weren't you able to follow the companies in his most recent portfolio? If so, you'd see their shares are all up.

 

There could be various reasons why it's challenging to find information about his previous partnership online. I don't know; could it be taxation? Or maybe other regulatory concerns that make him less eager to make this info widely available? Who knows

 

At the end of the day, Town has millions under management and is a survivor of the 08 crash. That makes him better than most high-performing managers.

 

Was he even managing money for people in 2008?

 

Is his mutual fund even around anymore? I can't seem find much of anything on it. Looks like he was offering his services for the low, low price of almost 2%.

 

RULRX

 

https://ruleonefund.com/wp-content/uploads/2020/12/Rule-One_Prospectus_07292020.pdf

 

I believe so, but there isn't much info on his previous experience other than a youtube video posted in 08. I guess like many other things in life, caveat emptor!

 

I don't interpret the absence of this info to mean he is an unscrupulous person.

 

If you read his books and follow the podcast with Danielle, you'll notice he mentions several companies now up 300 to 500 percent.

 

P.S., If possible, would you share insights on the importance of management fee? I am interested to know why the low fee is a potential red flag for you?

 

 

2% is an incredibly high fee for a mutual fund. How many funds have beaten the s&p 500 with that level of fee? I can't think of any at the top of my head.  I'm not saying this guy is "unscrupulous." Though that fee structure might just be.

 

Mentioning several companies that are up a few hundred percent isn't that hard. Did he invest in them? Were they large holdings? When did he buy them? If he bought in a year ago, there are a lot of those. If he bought someone 30 years ago and then that isn't all that impressive.

 

I mean, he has between $500,000-$1,000,000 of his own money in the fund. He is a "guru" and he can't even put a $1 million in it???

 

I am saying that, in my opinion, he's a better salesman than investor.

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