Share your Portfolio 2023!

[DooDiligence]

1 hour ago, John Hjorth said:

 

Jeff, [ @DooDiligence ],

 

Please admit it - If you weren't stock picking, you would be bored to the hell.

 

 

Very true. But, I have a new 2 week old Elektron Digitakt to keep me busy.

[competitive-advantage]

17 hours ago, Spooky said:

Thanks for the feedback! I made a conscious decision to try and keep close to 50% in CSU starting a couple years ago to try and concentrate in my best ideas and it has been working well. My goal is to move to a portfolio described by Hagstrom in the Warren Buffett portfolio (focus investing) or similar to Nick Sleep (just a three stock portfolio, Amazon, Costco, BRK) and Charlie Munger (BRK, Costco, Li Lu). 
 

I know CSU very well since I work there and generally 50% of my bonus needs to be in shares of the company. Also, given the nature of the company (basically no debt, extremely well diversified, excellent balance sheet) I’m comfortable that this can’t go to zero. Given the growth of the company my allocation was actually getting over 50% but I was able to take my bonus in cash this year to allocate to some other ideas (which is why I have more cash than normal). This portfolio is 100% of my net worth but I’m 37 and have no debt.

 

I like your concentration strategy and I think Constellation Software looks interesting. I don't know so much about the company yet, but what I noticed besides great numbers were: (CSU/Industry)

 

Quick Ratio MRQ	0.54	1.71
Current Ratio MRQ	0.65	2.17
LT Debt to Equity MRQ	67.35%	20.6
Total Debt to Equity MRQ	133.59%	37.04

https://www.investing.com/equities/constellation-software-inc-ratios

 

These numbers would worry me. Are you aware of this and can tell more?

 

[james22]

On 4/22/2023 at 8:46 PM, Spooky said:

I know CSU very well since I work there..

 

Makes it far more risky than a three stock portfolio.

[dpetrescu]

On 4/23/2023 at 5:09 AM, Spekulatius said:

ADSK and TYL competitive advantage is very well known. For once Morningstar and other wide known services like Motley Fool write about them.

Especially with TYL and their relatively slow growth, I would be concerned about getting no return for a decade while the company continues to grow but gets a much lower valuation multiple.

Agreed that their strong competitive advantage is relatively well known, but I think there are some advantages:

 

1. Not as widely know as the obvious big moats like Google, Microsoft, Facebook, Adobe, etc. those big names face legislation, fines, and people objecting against their moat. There seems to be a weekly article about how damaging their “monopoly” is

 

2. Although ADSK’s moat is known, I don’t think the market understands how strong the moat is. I personally think it is beyond Microsoft’s and Adobe’s moat for example. There are multiple decades invested in that software and it has a runway adoption of multiple decades going forward. I use Autoddsk, Adobe and Microsoft software - it would take a lot for me to switch from Word and Excel and Photoshop….but can’t even imagine switching Autodesk, it’s nearly impossible at this point for a lot of projects.

 

3. for both Autodesk and Tyler - they’re both involved in Public Agency adoption. That process - like Munger has said - has such a slow adoption rate - and once adopted it’s a much slower rate of change. Public agencies move very slow and have very high bureaucracy. 

 

That’s why I’m invested. Always looking to be proven wrong!
 

 

[scorpioncapital]

I think you can't compare all moats in a lump sum way. There are very broad moats and very niche moats. The main different as I see it is the expansion potential (the TAM, the growth potential), and the cyclicality risks. 

[Spekulatius]

@dpetrescu thanks for writing this up in a more detailed. I am way more constructive on ADSK than TYL because ADSK's growth rate is higher (mid teens) than TYL. I agree on ADSK's moat. I am less sure about TYL.

[DooDiligence]

15 hours ago, dpetrescu said:

Agreed that their strong competitive advantage is relatively well known, but I think there are some advantages:

 

1. Not as widely know as the obvious big moats like Google, Microsoft, Facebook, Adobe, etc. those big names face legislation, fines, and people objecting against their moat. There seems to be a weekly article about how damaging their “monopoly” is

 

2. Although ADSK’s moat is known, I don’t think the market understands how strong the moat is. I personally think it is beyond Microsoft’s and Adobe’s moat for example. There are multiple decades invested in that software and it has a runway adoption of multiple decades going forward. I use Autoddsk, Adobe and Microsoft software - it would take a lot for me to switch from Word and Excel and Photoshop….but can’t even imagine switching Autodesk, it’s nearly impossible at this point for a lot of projects.

 

3. for both Autodesk and Tyler - they’re both involved in Public Agency adoption. That process - like Munger has said - has such a slow adoption rate - and once adopted it’s a much slower rate of change. Public agencies move very slow and have very high bureaucracy. 

 

That’s why I’m invested. Always looking to be proven wrong!
 

 

 

 

One of my best friends has been an electrical engineer / draftsman for 40+ years. A lot of military design work (runway lighting, radar installations, hangars, etc.) and he's been doing WFH for quite a few years now. Still has to make frequent trips to walk sites but most of the W is FH. He uses AutoCAD and say's it would entail a huge and extended business disruption to try and switch. You might say impossible.

 

Here's an old article citing Autodesk estimates (more than just guesses), on pirated users. I'll bet they don't mind an office pirating the software and then getting hooked on it. Efforts are ongoing to convert these businesses to paid subs.

 

https://www.engineering.com/story/seeking-pirate-bootyautodesk-aims-at-6-million-unlicensed-users#

 

Hell, if all they get is 1% = 60,000 subs x $5-$15K /year = $300m to $1B in extra revenue per year.

Edited April 25, 2023 by DooDiligence

[Dave86ch]

My investing philosophy plus portfolio description

 

https://dscompounding.com/2023/04/24/compound-your-energy/

 

 

[DooDiligence]

7 hours ago, Dave86ch said:

My investing philosophy plus portfolio description

 

https://dscompounding.com/2023/04/24/compound-your-energy/

 

 

 

Our holdings may be different (we have BRK + DIS in common), but our ideas are the same.

 

I look at money as a flywheel that spins with the inertia of my productive years. Equities add rpm's by compounding a lot of other peoples efforts.

 

I put very little friction on the machine now but do it to good purpose. Later, when I can't mow the lawn, I'll lean on the wheel a bit more. Meanwhile, it gets stronger while I do very little.

[Dave86ch]

11 hours ago, DooDiligence said:

 

Our holdings may be different (we have BRK + DIS in common), but our ideas are the same.

 

I look at money as a flywheel that spins with the inertia of my productive years. Equities add rpm's by compounding a lot of other peoples efforts.

 

I put very little friction on the machine now but do it to good purpose. Later, when I can't mow the lawn, I'll lean on the wheel a bit more. Meanwhile, it gets stronger while I do very little.

Exactly!

[Luke]

On 4/26/2023 at 10:27 AM, Dave86ch said:

My investing philosophy plus portfolio description

 

https://dscompounding.com/2023/04/24/compound-your-energy/

 

 

Thank you very much for sharing, enjoying the read!

[Dave86ch]

22 hours ago, Luca said:

Thank you very much for sharing, enjoying the read!

Thank you for the time you've dedicated to the article I've written.

[UK]

BRKB, META, FFH, AMZN, JOE. Since year end exited GOOGL and UMG and reduced some META to derisk portfolio vs 2022 end.

 

Edited April 30, 2023 by UK

[LC]

What was your sell rationale on UMG?

[UK]

9 hours ago, LC said:

What was your sell rationale on UMG?

 

Nothing really specific re UMG (or GOOGL), just wanted to derisk portfolio (went into some leverage last year) and choose these two and some META to sell. Recently I also saw some discusion of the posible negative impact by AI on UMG, but I have no opinion myself on this.

 

Edited May 1, 2023 by UK

[DooDiligence]

On 4/25/2023 at 12:05 AM, dpetrescu said:

Agreed that their strong competitive advantage is relatively well known, but I think there are some advantages:

 

1. Not as widely know as the obvious big moats like Google, Microsoft, Facebook, Adobe, etc. those big names face legislation, fines, and people objecting against their moat. There seems to be a weekly article about how damaging their “monopoly” is

 

2. Although ADSK’s moat is known, I don’t think the market understands how strong the moat is. I personally think it is beyond Microsoft’s and Adobe’s moat for example. There are multiple decades invested in that software and it has a runway adoption of multiple decades going forward. I use Autoddsk, Adobe and Microsoft software - it would take a lot for me to switch from Word and Excel and Photoshop….but can’t even imagine switching Autodesk, it’s nearly impossible at this point for a lot of projects.

 

3. for both Autodesk and Tyler - they’re both involved in Public Agency adoption. That process - like Munger has said - has such a slow adoption rate - and once adopted it’s a much slower rate of change. Public agencies move very slow and have very high bureaucracy. 

 

That’s why I’m invested. Always looking to be proven wrong!
 

 

 

Good discussion with ADSK CEO Andrew Anganost on AI and their business model.

 

https://www.bloomberg.com/news/videos/2023-04-25/autodesk-ceo-on-ai-acquisitions-video

 

He see's AI cutting out a lot of the grunt work in getting design projects started.

The pitch seems easy, "pay us more and you get to fire a bunch of people" (years away?)

They're building LLM's & MMM's with customer data using mostly Amazon but also MS services for AI.

Reminds me of Core Labs using customer reservoir data to sell products and services.

Design & lifetime management systems are likely to catch on in the coming years.

 

https://www.autodesk.com/partners/aec-partners/infrastructure

http://extranetevolution.com/2021/02/autodesk-spends-us1-billion-innovyze/

 

CEO says he likes acquisitions into adjacencies (see above: $1B for Innovyze to get into water management), but prefers to develop new products in house using core competencies.

 

Customers all have backlogs that are growing but at a slower pace.

 

Customer migration to cloud services is slow. Jobs can last a decade or more and many prefer to stick with the existing platform and change slowly as project pace allows (like during a recession).

 

Not cheap by any stretch of the imagination.

[Saluki]

I think looking at this in pie format is helpful because it keeps me from stressing about the smaller positions, which won't really hurt me even if they go to zero. 

 

The concentration on some of the bigger ones though, is concerning me lately.  I'm not Bill Miller who can hold 90% of his personal portfolio in Amazon and just let it ride for 20 years.  BRK is a great company that I've owned for more than a decade, and so is Google, but I've been thinking of trimming them if they get past 25% of my portfolio.  30% would definitely be too much for my tastes. Maybe trimming BRK and adding to FFH, or trimming GOOG and adding to something else techy? 

 

 

[gfp]

You look at that pie chart and worry about the concentrated positions and I look at that pie chart and wonder what the point is of having so many of those tiny positions at all?  If you don't like which positions became the big ones, by all means trim them if you are uncomfortable.  But having a lot of money in your very best ideas is not a bad position to be in.

[Spooky]

4 minutes ago, gfp said:

You look at that pie chart and worry about the concentrated positions and I look at that pie chart and wonder what the point is of having so many of those tiny positions at all?  If you don't like which positions became the big ones, by all means trim them if you are uncomfortable.  But having a lot of money in your very best ideas is not a bad position to be in.

 

Agree. Looking at the pie chart made me realize I had a lot of 1% or less positions that didn't make any sense. I decided to consolidate / simplify even more. All you need are 6-8 well selected stocks to have the benefit of diversification.

[gfp]

what tool are you using to produce those pie charts?

 

[Saluki]

17 minutes ago, gfp said:

what tool are you using to produce those pie charts?

 

 it was a pain, but I did it with excel.  I copy/pasted the positions from my brokerage account, which needed reformatting (ugh), then I added a column that figures out percentages. Then click on the "Insert" tab, and on the top of the tool bar there will be a bunch of options for bar or pie charts. 

[SoonParted]

OK here goes.  I don't feel knowledgeable enough to have large positions--largest single stocks (FFH, BUR) are 6-7%.

 

Brookfield (52% BN, 37% BIP, 11% BAM)
Burford
Fairfax Financial Holdings
Odet
Constellation Software
Berkshire
Thermo Fisher
Nelnet
Energy Transfer
FRP Holdings
Grupo Aeropuertario del Centro Norte
Apt. Invest. & Mgmt.
New England Realty
CVR Partners
Veris Residential
Volkswagen Pfd
Basic Fit
Avid Biosciences
Textainer
Monarch Cement
KKR
Fairfax India
Clipper Realty
Lumine
JD.com
Converge Tech. Solut.

Mexico Nearshoring Basket (6-7% total: GMexico Transportes, Promotora y Operadora de Infraestructura, FIBRAHotel, FIBRA Mty, FIBRA Macquarie)

[Saluki]

On 5/3/2023 at 1:21 PM, gfp said:

You look at that pie chart and worry about the concentrated positions and I look at that pie chart and wonder what the point is of having so many of those tiny positions at all?  If you don't like which positions became the big ones, by all means trim them if you are uncomfortable.  But having a lot of money in your very best ideas is not a bad position to be in.

 

After the Berkshire AGM (where Uncle Warren explained how AAPL is not a 35% position, b/c their investments include their operating businesses) I decided not to trim the big ones anymore, because as a percentage of my total assets, which include my work provided 401k and future pension, and my home in my city and condo in Florida, it's really not that big a position at all.  And yes, some of the big ones that slowed down in the past (like Fairfax) and I didn't sell eventually came back strong and if I sold, knowing I still liked the future prospects, just to keep a certain allocation like 5% each for 20 companies, then the returns would be less lumpy, but they would be less overall too. 

 

As to the small positions, I do see your point and I didn't have a good answer. But in reading the Joel Tillinghast book, who outperformed the market for two decades and had 800+ positions in his fund, he explained it better than I could. Something can look really cheap, or have huge potential for growth, but it's not a sure thing, so putting a huge part of your net worth is not optimal. But a smaller position is a way to start to participate and you can add to it as the picture becomes clearer or your faith in management improves. 

 

Maybe researching the smaller positions keeps me busy and therefore I don't do something foolish like trim the big positions? Maybe the big positions aren't attractive except for brief periods every few years and I feel uncomfortable sitting on cash or buying my biggest conviction ideas at prices that are unattractive currently but will still do okay over time? 

 

Thinking of those small positions as a percentage of my total net worth/assets makes the allocation even more questionable in some ways though.  Viewed through that lens, they are so small that they are basically just going to Vegas and playing the nickel slots.  Just thinking out loud, but I appreciate the feedback. 

[gfp]

Thanks @Saluki that was a good answer

[james22]

On 4/2/2023 at 11:09 PM, james22 said:

40% BRK

 

25% Small Value (VSIAX)

10% International Large Value (VTRIX)

 

10% Energy/Utilities (VGELX)

5% Infrastructure/Gold (VPMX)

 

10% Cash

 

Took 5% from SV and created a 5% position in Vanguard's Information Technology fund (VITAX).

 

Late to the runup, but the chances of an AI bubble seem (just) likely enough.

 

And an index fund seems more likely to capture one of the few AI "superstocks" than any I'd pick.

 

http://www.efficientfrontier.com/ef/900/15st.htm