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Ideas for a 10 year + holding period?


Errold
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Hey everyone,

 

I have debated for quite a while but recently decided to pull out most of the equity in my house that was paid off.  

 

With kids, ideally I want to help them get a house in about 20 years when they are older.  

 

Figure life happens, but a 10 year holding should be a good starting point.

 

Not looking to knock it out of the park, but goal would be a reasonable, ~10-12% return with my current cost of around 3.5%.  Safety more important than returns, as I was also content to just leave it untapped and have my house paid off.  

 

Rather not touch any holdings and less dividends the better, as I live in a high tax state, so my marginal tax rate is close to 50%.

 

Planning on keeping these funds separate from my investment portfolio to keep track.

 

Some current ideas and holdings in my portfolio:

 

BRK (could just dump it all here and call it a day?)

JOE

DIS (bagholder I be, but also a believer)

CHTR

FRPH

KKR

BAC

MSFT/FB -->  Possibly just put a portion into QQQ instead or buy a bunch of FAAMG and some chip/semi's.

UNP 

 

 

Thanks in advance.

 

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I actually almost did the same a year ago. Our mortgage was almost paid off, we only owed about $5k.

 

(Actually the mortgage was paid off and we took out a loan about 10 years ago so we could loan the money to our daughter to buy a condo in California. We then gifted our daughter the max each year to essentially pay off her loan.)

 

I was going to put it all in BRK. If I had done that, I would already be  up about 40% 😕

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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.  

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@boilermaker75 That is a good plan.  My kids are really young, so I am considering tossing them the gift limit each year into their UTMA or something similar, but then I worry what if they turn out fiscally irresponsible lol.  

 

@Dinar Thanks for the list.  A good portion of that is outside my wheelhouse, but Ashtead and CP are interesting.  I have looked at NEN but never made the jump.  As for BAC, been holding forever since it was in the 6-12 range.  Could be bad, but figure, BAC and JPM best banks in the US with modest (hopefully tapers off) inflation and rising interest rates should do fine.  Could be a fault of mine, but I often just let them chug along until I find something wrong with them or something too good to pass up comes along. Same with UNP, been holding since the 90-100s.  CHTR, is definitely a newer holding and less comfortable with than the others.

 

@Gregmal Thanks, I read a lot of what you posted on this site and thank you again for the insight on sunbelt RE, made a pretty penny on APTS.  Even thought about just going down there and buying some sort of housing and renting it out. 

 

Any thoughts on BREIT?  Just wondering if their returns will eventually be squeezed as they have snatched up a lot of the low hanging fruit.  I spoke with their rep and the majority of their dividends at the moment are return of capital, 90%+, but they say it will taper down to 70%+ and they hope to keep it at that level, which makes it slightly more enticing. 

 

Also I do own a bit of MSGS, any reason MSGE > MSGS or vice versus?

 

@ICUMD Yes, with the pullback, would definitely add some google in there.

 

Appreciate all the input!

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MSGE you want to own in addition to MSGS. They used to be the same entity and have synergy/hedge features but mainly both are stupid cheap, hold irreplaceable assets, unlevered, and the E also has a very under appreciated ability to generate cash flow going forward. 

 

No opinion on BREIT. Personally, you couldn't pay me to own a private market REIT bc they pay shit and you can do better in the public markets, even if its just selling OTM puts or trading fluctuations. 

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MKL?

 

3 hours ago, jbwent63 said:

There was an interview by Lawrence Cunningham on the PBS program Consuela Mack's Wealth Track in which Larry spoke at length about Berkshire, and at the end when asked what one stock would you put all your wealth into, Larry's response was "well I guess it can't be BRK, so I choose MKL". Not sure if that is enough of a catalyst to move the stock on Monday, but perhaps.

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I posted a similar thread a couple of years ago that generated some discussion of different names: 

 

 

The one that might be an interesting add here is SBUX.

 

PCYO is sort of the Denver version of JOE, no dividends and likely 10%+ going forward.

 

AER might be interesting. Russia issue punished stock in the short term, long term compounding seems likely.

Edited by bizaro86
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I see that you included KKR, and gokou3 recommended BAM, so let me include BX and APO. I own all 4 of these in a basket (although not as much BX due to its seemingly perpetual premium valuation), and think they should do well over the next 10 years. 

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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?

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34 minutes ago, RiskAdjReturn said:

for my benefit, whats the elevator pitch on Safran?

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.

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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

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23 hours ago, Errold said:

Hey everyone,

 

I have debated for quite a while but recently decided to pull out most of the equity in my house that was paid off.  

 

With kids, ideally I want to help them get a house in about 20 years when they are older.  

 

Figure life happens, but a 10 year holding should be a good starting point.

 

Not looking to knock it out of the park, but goal would be a reasonable, ~10-12% return with my current cost of around 3.5%.  Safety more important than returns, as I was also content to just leave it untapped and have my house paid off.  

 

Rather not touch any holdings and less dividends the better, as I live in a high tax state, so my marginal tax rate is close to 50%.

 

Planning on keeping these funds separate from my investment portfolio to keep track.

 

Some current ideas and holdings in my portfolio:

 

BRK (could just dump it all here and call it a day?)

JOE

DIS (bagholder I be, but also a believer)

CHTR

FRPH

KKR

BAC

MSFT/FB -->  Possibly just put a portion into QQQ instead or buy a bunch of FAAMG and some chip/semi's.

UNP 

 

 

Thanks in advance.

 

I’ve always approached these “if you could only love one” questions through the lens of identifying a company that can’t be displaced. It seems like every start-up is a tech company these days, so I don’t know if I’d fish in those waters. If you think in terms of a company that has little emerging competition, geographic diversity, product diversity, and customer diversity, the one I’d go with is IFF. Their products are also a small component of their customer’s end product cost structure, so they should be less impacted by inflation than most companies. It does have a modest dividend and it’s a bit pricey at the moment, but you could buy a starter position and add over time on dips.  I honestly think the only way to screw up this company is through bad balance sheet management, which does happen from time to time.
 

Much of what I said about IFF applies to WM & RSG, which I also like, but probably wouldn’t buy at the current quote.

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16 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.


The other thing, even though SAFRAN is more than just an engine manufacturer, i think with SAFRAN one could have gotten a far more focused play on the massive 737MAX + A320NEO backlog than the General Electric where that CFM/LEAP focus was diluted in a sea of unwanted assets. 

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I'll have to take another look at MSGE, thanks.

 

BAM - held and sold, not ever quite comfortable with it.  Probably due to my lack of understanding.  BX, yes, I could add that mixed in with KKR.

 

Did nibble a bit on PYCO. DPZ I do hold but regret not buying in size in the 200s.  During that time I actually tried opening a DPZ, but could not get my foot in the door, even had someone willing to work at one of their stores for 1 year to get into their management trainee program.  Big mistake on my part, if I was willing to devote 350k to opening a DPZ, should have been more than willing to devote a sizable amount to the stock.

 

RTX, have indirect exposure to them already, so no need to buy their stock.  Unfamiliar with the other 2, will take a peek.

 

I am one of those that loves COST, but always too expensive for me.  But 10 year holding, probably not a bad idea to just bite the bullet and pay the price.

 

Use to hold MKL, I do hold DVA, and ASML I have been poking around, but seems a bit expensive.  Still a bit of a cheapskate sometimes.

 

IFF - mentioned before i'm horrible at understanding consumer/luxury goods.  Agree on WM & RSG though.

 

Refi should be done in a few weeks.

 

Maybe I should title this account CoBF portfolio?!??

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42 minutes ago, Xerxes said:


The other thing, even though SAFRAN is more than just an engine manufacturer, i think with SAFRAN one could have gotten a far more focused play on the massive 737MAX + A320NEO backlog than the General Electric where that CFM/LEAP focus was diluted in a sea of unwanted assets. 


Actually. Larry Culp new 2024 product: GE Aviation pure-play stock, will make GE more attractive than SAFRAN from 737/320 exposure point of view (valuation asides)

Edited by Xerxes
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23 minutes ago, Xerxes said:


Actually. Larry Culp new 2024 product: GE Aviation pure-play stock, will make GE more attractive than SAFRAN from 737/320 exposure point of view (valuation asides)

How good is the razor blade model of the razor sales creates a loss and blade sale is uncertain and years later and is akin to selling insurance in way. I state this because the engine manufacturer needs to guarantee certain performance metrics (engine hours, uptime) and is on the hook if the engine does not perform. That happened to Rolls Royce and it cost them dearly. This is not Gilette where both razor and blades are cheap items and Gilette does not guarantee anything.

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I think where RR really faltered was their accounting practice where they book earnings on those long term rosy forecast today and reevaluate those assumptions. 
 

they had a CEO in the mid-2000 who really pioneered this at RR which really planted seeds of its demise. No different than GE Power.

 

I cannot talk in details of accounting practices of P&W and GE Aviation when it comes to aftermarket (I don’t know them). My guess would be that they stayed away from aggressive accounting. 
 

same for Boeing and Airbus. Boeing had a really funny way to account for its development cost (against projected production volume into the future), while Airbus was the more conservative. 

 

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