Tidbits

[Spekulatius]

8 minutes ago, dwy000 said:

It's the societal equivalent of lottery tickets but with a more gradual take rate. And less community reinvestment. 

You would think that sports betting competes with lottery tickets or crypto but it really competed for wallet share with stock market investments. It really says a lot about how these households make financial decisions.

 

I think sports betting should be taxed more to discourage it.

[Saluki]

 

I heard that Jose "Pepe" Mujica has cancer.  He's quite the character.  Unlike populist leftist presidents like Lula in Brazil who talk a good game while taking millions in bribes, this guy walked the walk, He lived in little farm house and gave most of his salary away.  He didn't want a presidential jet, opting instead to use the funds for medivac helicopters to help the rural people get emergency access to the hospitals in the city. 

 

Foregoing the Presidential motorcade and driving to the office is VW Beetle, and getting rid of bodyguards for his 3 legged dog, Manuela, it seemed like an affectation for show.  But he really was who he said he was.  After his term in the presidency ended, he was elected to congress and still commuted everyday with his 3 legged dog. When she died, he retired from politics. 

[UK]

https://www.reuters.com/world/us/worlds-largest-3d-printed-neighborhood-nears-completion-texas-2024-08-08/

[Sweet]

nice list of banks with growth rates of revenue and eps over a 1-7 years 

[Spekulatius]

Since we are discussion LIDL in another thread, I guess most people don’t know that LIDL owns also a cloud business that they started from scratch.

https://www.irishtimes.com/business/2024/08/23/how-lidl-accidentally-took-on-the-big-guns-of-cloud-computing/
 

Almost $2b in revenue according to this article. Would be funny if LIDL comes at Amazon AWS with “Your margin is our opportunity” .

Edited August 28 by Spekulatius

[Hektor]

It will be amazing if they can do to cloud what they did to retail :)

[Sweet]

Wow, never expected Lidl to be an up and coming cloud provider.

 

Such a shame for us investors that it’s private, they’ve had enormous growth.

[Sweet]

Does anyone have any useful reading / primers to valuing real estate companies.  Sometimes I look at these companies financial statements and it means nothing to me.  Cheers.

[Spekulatius]

I found this short video about budget airlines demise interesting. This Wendover  Productions YT channel has many pretty well thought out clips on various topics.

 

[valueseek]

On 7/21/2024 at 2:04 PM, dealraker said:

I think, and my older age thinking (I continually increase the omissions and mistakes in my thinking - and particularly my writing - as I age) may be in error here, that there is some degree of mental advantage infused to your (an investors) brain via holding ownership of businesses for a long time.  What I mean by this is that you do get some insight as to the probability that this or that business is one of sustainable good outcome.  Although I've never really owned tech stocks (I have owned Google for about 20 years) as a whole my long term (40 years plus) returns both in tax and tax free accounts have been pretty steady and over 14%.

 

That 14% has mostly been enabled by owning a few good businesses that were never sold.  But at the same time there's a lack of really poor performers in these portfolios and I think that comes from the knowledge (and/or luck) from owning the better stocks in the portfolio and getting some insight to what makes business have some sorts of long term sustaining traits.

 

I watched an investor who had outrageously grand results for the 2015 to 2021 period, a guy who had bought into the SAAS theme...and he'd basically gone online to promote/interact with his followers, I think with good intentions.  I've made a few posts on his site, quickly he blocked me (I wasn't rude) and within a short period of time literally his entire model was imploding all over the place- even given his earlier wild success (and continued to implode as he went into rapid buy/sell mode on multiple entities not related to his original SAAS mandate).  So in the end he still had good returns since his beginning of 2015 (that he sited in every post he ever made) but literally hundreds if not thousands who took on his method got the downside of his obvious low probability investing style.  Often these late-comers were losing 3/4's of their savings in their retirement accounts and trying desperately to think rationally about what to do was obviously traumatizing to this bunch.  I have had a few write to me outside the site who lost over 80% of their investments based on this investor they become enchanted with.  

 

The way I invest, or at least my perspective of it, is basically "and idiots guide of how to almost guarantee you don't do poorly."  This list in the link that Spek has posted, I do own quite a few of these stocks - my starting point wasn't 1925 but about 1975...and still these businesses did very well and continue to do so.  I have bought a few more of these along the way.  All of them have poor periods of return, growth and success isn't linear.  Instead of bailing out in the poor periods I've chosen just to observe.

 

But in the end, even without the 80-some percent of my portfolio that is either Berkshire or insurance brokers I'd easily be able to retire for decades comfortably with the "other" stocks I inherited in 1975.  That inheritance of those stocks I mention, leaving out the 80-plus percent of the Berk/brokers (I bought all my broker stocks later in 1994), was about $30,000 so it wasn't some huge figure.  But today it is a huge figure, or at least to little ole me it is huge.

 

And yes there are long periods of either low or no success, no returns whatsoever.  

 

Rambling.  

 

 

Out of curiosity may I care to enquire @dealraker whether the above poster you might be referring to was Saul forum on motley fool? I know of a few caught up in that one - so came to mind. Thanks.

[dealraker]

28 minutes ago, valueseek said:

Out of curiosity may I care to enquire @dealraker whether the above poster you might be referring to was Saul forum on motley fool? I know of a few caught up in that one - so came to mind. Thanks.

Yes valueseek.  

[Spekulatius]

On 9/2/2024 at 8:53 PM, dealraker said:

Yes valueseek.  

Yeah, Saul’s thread on MF is the quintessential embodiment of FOMO.

 

The ghist of his approach is that he needs to catch the momentum train just a bit before the crowd does, which means the follower who trail his decision are likely to hold the bags. He does rapid fire trades with fairly concentrated positions into momentum names like CELH and needs to get out at the first hint of trouble , many times just a few month later.

 

Its not easy to do what he does.

Edited October 17 by Spekulatius

[Sweet]

 

Others might not, but I like Aswath’s analysis.

[Sweet]

Quite a few surprises on this list:

 

[LC]

Interesting to see the valuation differences between those companies. 

 

And Diamondback Energy - anyone familiar with this biz? Seems like the an oddball there.

[Sweet]

7 hours ago, LC said:

Interesting to see the valuation differences between those companies. 

 

And Diamondback Energy - anyone familiar with this biz? Seems like the an oddball there.

Only insofar as I recall it being one of the better run oil companies from my days investing in that sector.  Large footprint in Permian I believe.

 

Edited October 3 by Sweet

[Spekulatius]

So e interesting posts from Ryan Telford “quant”. About 10% of all 10 baggers end up having negative returns:

 

[Ulti]

https://eig.org/wp-content/uploads/2024/09/Great-Transfermation.pdf
 

interesting fleshing out of us government transfer of money … how it’s growing; areas of the country where transfers are rising the most, etc

[changegonnacome]

On 7/7/2024 at 9:38 PM, nwoodman said:

Cheers,  I couldn’t get Spirax to work until the share price is in the range £55-65.  Even then you start to make up narratives around future growth.  I do like the STS and Watson-Marlow businesses but not at any price.  To get near today’s price (£85.80) you start putting on some egregious sales multiples:

 

Valuing each division separately (using 2023 revenue and a revenue multiple): Steam Thermal Solutions: 910.1m * 4 = £3,640.4m Electric Thermal Solutions: 378.5m * 3 = £1,135.5m Watson-Marlow: 394.0m * 5 = £1,970.0m Total: £6,745.9m Less net debt: 6745.9m - 763.4m = £5,982.5m Per share: 5982.5m / 73.6m shares = 8128p per share

 

Operating Profit Margins

1. Steam Thermal Solutions (STS): 2023: 24.6% 2022: 23.8% Change: +80 basis points
2. Electric Thermal Solutions (ETS): 2023: 15.6% 2022: 15.6% Change: No change
3. Watson-Marlow: 2023: 23.8% 2022: 32.8% Change: -900 basis points

A crude estimate on net margins:

 

The group's adjusted effective tax rate for 2023 was 25.5%.

1. Steam Thermal Solutions (STS): Revenue: £910.1m Adjusted operating profit: £224.0m Estimated net profit: £224.0m * (1 - 0.255) = £166.9m Estimated net profit margin: 166.9 / 910.1 = 18.3%
2. Electric Thermal Solutions (ETS): Revenue: £378.5m Adjusted operating profit: £59.2m Estimated net profit: £59.2m * (1 - 0.255) = £44.1m Estimated net profit margin: 44.1 / 378.5 = 11.7%
3. Watson-Marlow: Revenue: £394.0m Adjusted operating profit: £93.7m Estimated net profit: £93.7m * (1 - 0.255) = £69.8m Estimated net profit margin: 69.8 / 394.0 = 17.7%

Watchlist for this one.

 

Watching this too.......keeps dropping....getting to £67 now......minus 34% year to date......great company, lousy price the last couple of years.....

[Spekulatius]

Mc Master-Carr. One of the best in class e-commerce companies:

 

 

[Saluki]

"To update a famous calculation, if automobiles had advanced since 1960 at the same rate as computer chips, we would all be coming to work in cars that cost a penny, went 2000 miles an hour, and got great gas mileage -- about 1000 miles to the ounce." TJ Rogers (in 1992). 

[Spekulatius]

$GPC down ~20%. Haven’t seen that for a while with such a stalwart. It actually starts to look attractive.

 

Edited October 22 by Spekulatius

[Saluki]

 

This is an interesting clip from the long podcast with Ackman and Lex Friedman.  

 

A few lessons can be distilled from this.  The Herbalife short, like most shorting, is a bad idea.  And if you saw the Herbalife documentary, he seemed to be getting his ego involved in the trade because of his grudge with Icahn. 

 

He admits that drug companies are very difficult to predict earnings and cash flows, but decided to invest in Valeant, and then stopped watching it, assuming it was in good hands. This would be disastrous. Buffett likes to talk about the one foot hurdles vs the 6 foot hurdles.  It reminds me of one of the best soccer players on our team in high school.  His girlfriend was in the stand and he tried one of those Pele kicks where you somersault backwards and kick the ball in.  He missed what could have been an easy goal.  Our coach told us "you don't get any extra points by doing it the hard way."  Peter Lynch made 15x his money in Dunkin Donuts.  KISS. 

 

As his fund grew, an hour here and there personally meeting with big investors, added up to hundreds of hours that he was marketing and not working on his investing. Think about WINning.  WIN = What's Important Now. 

 

His very public struggles prompted Elliot to try to take advantage of the situation by exploiting the discount to NAV that his fund was trading at by shorting his concentrated book and buying his shares and trying to force him to liquidate and distribute cash.  Only a loan from JPM (based on a good working relationship with them) helped save his company.

 

He's seems much more humble in this clip, but now is on CNBC again and publicly backing Trump. It seems like his ego is the lawn that needs trimming once in a while. 

[UK]

https://www.bloomberg.com/news/articles/2024-10-24/maurizio-cattelan-s-duct-taped-banana-could-sell-for-1-million-at-sotheby-s?srnd=homepage-europe

[DooDiligence]