shalab Posted January 19, 2011 Share Posted January 19, 2011 The market has had a run up for sometime now - let us do a poll to see how much cash do people have in their portfolios. Link to comment Share on other sites More sharing options...
Myth465 Posted January 19, 2011 Share Posted January 19, 2011 I had up to 18% but am down to 8%. There are a few more small caps I want to take 2% positions in. I am going to sit on my hands for a bit, but there are quite a few bargains out there inmo. The market however is quite expensive and is outrunning the real economy / recovery. We are borrowing from the future and that means someone will have to experience low returns to bring things back into line. My bargains will get cheaper though which makes them less appealing. I think we know how the song goes, just no one knows when. The music is playing, and the girl I am dancing with is cute so.... Link to comment Share on other sites More sharing options...
hyten1 Posted January 19, 2011 Share Posted January 19, 2011 Myth465 my experience has been very different from yours, i am having a very hard time finding bargains, i keep looking nothing seem very good Link to comment Share on other sites More sharing options...
Myth465 Posted January 19, 2011 Share Posted January 19, 2011 I really like these 2 Munger quotes. We look for a horse with one chance in two of winning and which pays you three to one. You’re looking for a mispriced gamble. That’s what investing is. And you have to know enough to know whether the gamble is mispriced. That’s value investing. --- Right now I see enough mispriced gambles which warrant further research. I also believe I own quite a few mispriced gambles. I dont like the track (its raining), but think my horses are above average. I think this is however always the case. If you poke around, there is always something cheap to research or buy. I dont see many screaming buys at 2x CF, but believe there are a good number of deals out there. My winners have come to dominate my portfolio though, and I dont feel like trimming them right now. That will likely prove to be a mistake. --- I am trying to keep these Munger quotes in mind though. ○ Charlie Munger - "It takes character to sit there with all that cash and do nothing. I didn’t get to where I am by going after mediocre opportunities." ○ Charlie Munger - "There are worse situations than drowning in cash and sitting, sitting, sitting. I remember when I wasn’t awash in cash — and I don’t want to go back." Perhaps I lack character, and am simple going after mediocre deals. Link to comment Share on other sites More sharing options...
given2invest Posted January 19, 2011 Share Posted January 19, 2011 Myth465 my experience has been very different from yours, i am having a very hard time finding bargains, i keep looking nothing seem very good Same. There is one stock I like (CLUB) and even that has run big from where I was buying it in the fall. In the fall of 2009 I was able to throw darts and find something to buy. Link to comment Share on other sites More sharing options...
Myth465 Posted January 19, 2011 Share Posted January 19, 2011 A better question may be why do you guys like something. What gets you guys excited about something? We can rattle off tickers all day, but that doesnt seem to offer much value. What are you guys looking for? I remember that one guy who wanted Coke / Pepsi / Kraft at 4-5x current earnings and perhaps projected earnings. Keep dreaming. A man should have standards, but one must be realistic. Link to comment Share on other sites More sharing options...
ragnarisapirate Posted January 19, 2011 Share Posted January 19, 2011 I am kind of surprised that people say there are not bargains out there. Granted, there are a lot fewer than 2 years ago. BUT, there are a bunch of little companies that are trading at under 15x earnings (some, significantly so, ~7x) which, are also sitting on a plethora of cash (their market cap's worth, after you take out their debt)... Were we all spoiled by the recent destruction of the markets? Or am I one of the only people fishing for easy to catch bluegill (IBAL, or, market caps below $20 million), rather than harder to catch large mouth bass (ZINC) or marlin (KFT)? Link to comment Share on other sites More sharing options...
SharperDingaan Posted January 19, 2011 Share Posted January 19, 2011 < 0% until we're through the reporting season. Significantly > 0% thereafter. We prefer to use cash, versus options, to hedge - & do not expect the US to have a happy experience this year (widespread municipal defaults, Hoisington, etc) Our main deciders are the time horizon to get a double, the quality of the investment, whether we are likely to have interim opportunities, & whether we can move up the quality curve. EG: CMP may well double over the next 3 yrs, but it’s highly uncertain, it will probably be a volatile ride, & it is likely to offer multiple entry/exit points between now & then. PDS may well also double over the next 3 yrs, but it is a lot more certain, relatively less volatile, & far better quality. Take PDS over CMP & move up the quality curve. SD Link to comment Share on other sites More sharing options...
Myth465 Posted January 19, 2011 Share Posted January 19, 2011 I am kind of surprised that people say there are not bargains out there. Granted, there are a lot fewer than 2 years ago. BUT, there are a bunch of little companies that are trading at under 15x earnings (some, significantly so, ~7x) which, are also sitting on a plethora of cash (their market cap's worth, after you take out their debt)... Were we all spoiled by the recent destruction of the markets? Or am I one of the only people fishing for easy to catch bluegill (IBAL, or, market caps below $20 million), rather than harder to catch large mouth bass (ZINC) or marlin (KFT)? I agree. I think people want top tear companies at less than 5-6 CF (look at WDC, subtract the cash). We are value investors - There are plenty of Ugly Betty type companies going through some stress which are cheap on current, past, and future cash flows). These companies are at 5x - 7x CF and some are even growing. There are even top notch large caps which dominate their industry trading at less than 10X CF after taking out cash. You cant tell me Google, Apple, and MSFT arent cheap. They arent for me, but should deliver great returns for someone at some point. Link to comment Share on other sites More sharing options...
hyten1 Posted January 19, 2011 Share Posted January 19, 2011 Myth465 i hear ya, i agree (i actually bought wdc when it hit 25 or so), maybe i have been spoiled by the last few years. i can definitely find plenty of quality companies trading at 10x CF i guess i am looking for even better deals. hy Link to comment Share on other sites More sharing options...
Myth465 Posted January 19, 2011 Share Posted January 19, 2011 Myth465 i hear ya, i agree (i actually bought wdc when it hit 25 or so), maybe i have been spoiled by the last few years. i can definitely find plenty of quality companies trading at 10x CF i guess i am looking for even better deals. hy I bought leaps on WDC around $27 and I am quite happy. The market is rather strange. We had a great quarter and she sells off. I have 2 years though. If I had the cash I would buy the whole company. Its as close to a no brainer that I have seen in a long time. The short thesis is silly and dead wrong. I have like a 3% position though due to other ideas being out there. I feel you too, companies in my world are worth 10x CF to 15x CF depending on growth. So mega caps at 10x CF dont excite me. One can still however find 5-10 WDCs out there and that is all one needs. Link to comment Share on other sites More sharing options...
Guest Bronco Posted January 19, 2011 Share Posted January 19, 2011 Anyone here follow Energizer? They have some big brand name products, trade at a reasonable FCF multiple, and have a growth strategy that utilizes acquisition. Bad balance sheet. I have been buying a little lately. Also Doctor Pepper and Molson Coors I have always liked at the right price. Link to comment Share on other sites More sharing options...
ragnarisapirate Posted January 19, 2011 Share Posted January 19, 2011 I remember looking at WDC when it was in the teens, and passing for others, mainly, BH, of all things... I am shocked that it is trading at under 10x year out earnings. Thanks for bringing it to my attention. I am thinking that some Jan 2013 call options might be a good addition to the SHLD leaps that I have. Out of question, what is the short thesis? I mean, you take the cash out of the company and your effectively paying 5 billion for a cash generating machine. That does seem like a no brainer, as Myth says. It almost seems like they would have to try to wreck the company. Why hasn't someone tried to buy them out? Link to comment Share on other sites More sharing options...
Myth465 Posted January 19, 2011 Share Posted January 19, 2011 They tried to buyout Seagate and an LBO was tried with Seagate but they couldnt agree on price. The thesis is laptop and desktop sales will fall due to sales by Tablets, Smartphones, and Netbooks. All use SSD or flash. Many also believe SSD or Flash will assault the laptop and desktop markets. WDC has clearly stated that Data is stored somewhere and every file on the internet is stored in 6 different places. Data will continue to be digitzed and video downloads will require hundreds of thosands of servers and millions of hdds. People arent replacing devices. They are adding extra devices and many of these devices require additional storage. SSD is fast, but is not cheap. INMO there will be a place for everyone. WDC has a presentation which breaks alot of this down, and thinking about this has me considering more research on LVLT. How many HDDs do you think Netflix needs to digitize there entire library? Then how many will they need for backup and redundancy purposes? Then how many do you think they need to support 20 million customers? Then how many do you think they need when people will only accept blueray? ---- The only issue is the cash on the books is overseas. Management appears smart. I would like them to use the cash to buy an Asian SSD or Flash producer. We have 2 years for this to play out and I believe WDC will generate at least $800 million to $1 billion in FCF (they did $500 million in CF in Q4). If nothing happens I will exercise my options and probably look to buy more shares. Like I said if I had $4 billion I would buy the company. Link to comment Share on other sites More sharing options...
Viking Posted January 19, 2011 Share Posted January 19, 2011 Here is the news clipping from WDC's earnings release yesterday: "BANGALORE, Jan 18 (Reuters) - World's No. 2 hard-drive maker Western Digital Corp (WDC.N) surprised investors with its quarterly results, indicating hard-drive sales remained robust, but warned excess inventory could hurt third-quarter sales. The company's shares, which have been among the worst performers on the S&P 500 index .SPX in 2010, rose 5 percent after the earnings beat expectations but pared most of the gains on the weak sales outlook. Western Digital expects third-quarter revenue of $2.20 billion to $2.25 billion compared with analysts' expectations of $2.27 billion. "Despite a reduction of about 2-3 million hard drives in the PC supply chain, there is still an inventory in excess of 6-8 million units in the PC manufacturers pipeline," Chief Operating Officer Timothy Leyden said in a conference call. The inventory warning indicates that Western Digital could see a return of the supply glut that hit its results in mid-2010. Link to comment Share on other sites More sharing options...
Guest Bronco Posted January 20, 2011 Share Posted January 20, 2011 Myth - I have a hunch that your $4B is only a matter of time. Link to comment Share on other sites More sharing options...
Myth465 Posted January 20, 2011 Share Posted January 20, 2011 Myth - I have a hunch that your $4B is only a matter of time. Bronc I would be happy with 1/100 or 1/1000 of that lol. I may get another chance to double down if we have another 5% day. Either that or pair it with Seagate. INMO all of the earnings info is noise. WDC has been warning for about 6 months, and over delivering. What does it matter if they have revenues of 2.2 billion vs. 2.27 billion. If they earn $800 million - $1 billion in FCF on their EV value and can do so for the next 3-4 years then everything else is everything else. The industry is also likely to continue consolidating. At some point we will have only 2-3 major players. I dont understand why you would want Seagate though when you can buy WDC, anyone have any insights. Link to comment Share on other sites More sharing options...
hyten1 Posted January 20, 2011 Share Posted January 20, 2011 segate is stronger on enterprise side, but i like wdc better due to their lower cost and valuation/cash Link to comment Share on other sites More sharing options...
Myth465 Posted January 20, 2011 Share Posted January 20, 2011 segate is stronger on enterprise side, but i like wdc better due to their lower cost and valuation/cash I thought about that but WDC has been eating their lunch for years, and is now focusing on enterprise. I only want to big boy if he is not likely to stay the big boy. A shrinking number 1 means they are losing market share. Also I love the consumer side of WDC and have been using there live devices for a number of years. 1/3 of the value guys hate tech, 1/3 of them seem to talk about WDC, and the other third seem to talk about Seagate. I dont get the Seagate one because WDC is cheaper and everyone agrees is better managed. Link to comment Share on other sites More sharing options...
bargainman Posted January 21, 2011 Share Posted January 21, 2011 Speaking of hard drive companies, here's an interesting article on innovation and what ends up driving companies out of business by missing the next wave of innovation... http://www.businessweek.com/chapter/christensen.htm Link to comment Share on other sites More sharing options...
alertmeipp Posted January 21, 2011 Share Posted January 21, 2011 anyone used up some cash in last couple days? the index holds up well - but some of stocks got killed.. 10% - 15%. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted January 21, 2011 Share Posted January 21, 2011 The music is playing, and the girl I am dancing with is cute so.... Like I said if I had $4 billion I would buy the company. Sounds like you are trying to get past first base. Link to comment Share on other sites More sharing options...
Guest Posted January 21, 2011 Share Posted January 21, 2011 The music is playing, and the girl I am dancing with is cute so.... Like I said if I had $4 billion I would buy the company. Sounds like you are trying to get past first base. hahahaha. ;D Link to comment Share on other sites More sharing options...
Myth465 Posted January 21, 2011 Share Posted January 21, 2011 The music is playing, and the girl I am dancing with is cute so.... Like I said if I had $4 billion I would buy the company. Sounds like you are trying to get past first base. Alert I kinda wish I had one of those lower boxes checked. Its the worst of both worlds, a pullback in my stocks and a flat market. I am hanging on to what little cash I have right now though. I may buy more FBK if she keeps selling off. I have enough oil and gas, and may get more WDC if we loss another 10-15%. --- Ericopoly you are on a roll between this and that AAPL thread. Unfortunately I find myself stuck on first base quite a bit (In more ways than one lol). Link to comment Share on other sites More sharing options...
alertmeipp Posted January 21, 2011 Share Posted January 21, 2011 Myth.. I will pass on FBK.. got too much of it. We are on the same boat, my SPY short and puts didn't help me much at all this time. But still seeing tons of values in my holdings if the econ keep recovering. Link to comment Share on other sites More sharing options...
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