What are you buying today?

[Sharad]

MO and PM

 

Thanks

Lance

 

+1

 

BTI as well.

[vince]

Spek, just curious, how many hours have you spent reading/analyzing Chtr specifically?

[Spekulatius]

Spek, just curious, how many hours have you spent reading/analyzing Chtr specifically?

 

I spent probably about 90min total, if that. Its compounding a bit, since i have been following it a bit since 2015,mostly as part of my Malone holdings, which I since sold. The way I do it, when something peeks my interest, I start to read up on the competition and study one or more competitors stock as well. I often like the competitors more since they fall more into a style box. In this case, I found that I like CMCSA. I do agree that CHTR could deliver higher returns, but I think there is lower risk in CMCSA.

[Shooter MacGavin]

PATK.  Anyone done any work on this name?  would love to compare notes.

[kab60]

Bought some SAVE, ADS and Lion Rock Group lately

[vince]

Spek, not trying to change your mind or process and not saying how I do it is better.  But I think the average investor would get a WAY BETTER feeling/understanding/grasp of the specifics of the business if they spent more time on it.  Again, not saying this is better but besides reading k's and q's I spend probably 40-50 hours reading transcripts of conference calls and presentations (and actually much more with Chtr cause its a large percentage of my assets).  And then at least another 15-20 hours researching and drilling down into things that mgmt said during the calls.  I personally could never get a proper feel, or understanding of the business, or management just from studying the filings.  I do agree there is a knowledge compound effect but that really just helps me get thru all the info quicker.  It does not give me that (having a hard time defining the overall grasp that I get) overall specific understanding  and confidence that comes with reading lots and lots of what mgmt says.  Dont take this the wrong way but I could tell you didnt do the reading on Chtr based on your questions and comments, and thats why i asked.  Again, Im sure some people do extremely well and are smart enough to get it without doing the reading (maybe you are, I am definitely not) but I believe that most of my ability and pretty good results come from that aspect.  Anyway, not really any of my business but just wanted to share something that others may find useful.

[John Hjorth]

vince,

 

Here is the topic for further CHTR discussion.

[Cigarbutt]

vince,

 

Here is the topic for further CHTR discussion.

 

With all due respect, this may be a very relevant topic.

 

I'm a slow learner and can get frustrated at times when, after spending such a long time on an issue, problem or investment thesis, I come to the conclusion that there is no actionable/investable end-point, while, at the same time, somebody else, with greater and different talents would have been able to form a correct opinion after only a brief analysis.

 

There was an interesting discussion before about the issue of fact gathering activities before pulling the trigger.

www.cornerofberkshireandfairfax.ca/forum/general-discussion/reading-10-ks/

[writser]

Personally I doubt that after 50 hours of research you encounter a footnote in the 1983 annual report that will radically change your mind. At that point you probably made up your mind anyway, consciously or not. The extra work might cause you to feel an (unwarranted?) confidence in your holdings and the risk of the excessive research is that you start feeling emotionally attached to your positions and/or lose yourself in details - i.e. you'll turn into the guy defending Valeant by referencing to the moisture content of their foot creme as demonstrated by an article in Housewives Illustrated while the whole company is burning down. Or the guy immediately saying 'why don't you short it?' and 'maybe you should do 70 hours of research first' when somebody asks a question.

 

For me the ideal investment is something where the thesis can be explained in like 30 seconds and then I'd need like 5-10 hours doing some research to confirm the thesis is correct. If I can't figure out in 10 hours if something is cheap I'd rather move on. Difference in style I guess. Also I'm lazy.

[CorpRaider]

Pretty sure the behavioral and finance academic research indicates that is likely to be the superior approach (less likely to pound in your conclusion and generously slather the availability and confirmation biases on your brain), but I don't feel like spending the time to look up cites.  ;D

[LowIQinvestor]

RCII

It will be sold in Q2 8)

[BG2008]

Personally I doubt that after 50 hours of research you encounter a footnote in the 1983 annual report that will radically change your mind. At that point you probably made up your mind anyway, consciously or not. The extra work might cause you to feel an (unwarranted?) confidence in your holdings and the risk of the excessive research is that you start feeling emotionally attached to your positions and/or lose yourself in details - i.e. you'll turn into the guy defending Valeant by referencing to the moisture content of their foot creme as demonstrated by an article in Housewives Illustrated while the whole company is burning down. Or the guy immediately saying 'why don't you short it?' and 'maybe you should do 70 hours of research first' when somebody asks a question.

 

For me the ideal investment is something where the thesis can be explained in like 30 seconds and then I'd need like 5-10 hours doing some research to confirm the thesis is correct. If I can't figure out in 10 hours if something is cheap I'd rather move on. Difference in style I guess. Also I'm lazy.

 

My CHTR thesis is something along the line of:

 

Some business' replacement value is very real and compounds over time.  This is typical of businesses that require a lot of blue collar construction labor, materials cost, political zoning, scale, and right-of-way.  One way of looking at CHTR is kind using a railroad analogy.  No one in their right mind today will go out and build another railroad.  It simply can't be done.  Railroads has structural advantage over trucks (although self-driving cars may erode or even usurp this advantage) due to lower cost.  You can't go through towns etc because they are not the wilderness anymore.  They are populated and you can't use eminent domain and get all the politics lined up to build a railroad.  My thought is that you can't do that with cable today either.  Imagine going to residents and say "I'm going to dig up your roads and bring in all this loud noise etc" to build a competing network"  Please give me permission to do it.  Also where do you find the labor?  Apparently we don't have tough blue collar guys left who knows how to work with their leathery hands.  We have a bunch of wimpy millenials these days.  They have no efficiency in digging ditches etc.  What this all implies is that as time goes on and populations get denser and more buildings get built and the roads gets traveled more, it becomes ever more difficult for people to go out and dig up roads and climb up poles and connect coaxial cables or lay down fiber optics.  This is a true case of a replacement cost being real, tangible, and compounding over time.  The 5G stuff that could be a threat, if I remember correctly from my "physics of waves" in college.  Basically, lower wavelength can't penetrate buildings unlike long radio waves.  So you need lots of little antennas and you need lots of power.  If you want to build it from scratch, how do you get access to buildings?  How do you get permission to mount stuff on buildings, light posts etc?  Where do the labor come from?  What if YOU ARE the cable company.  You have the access point already.  You are sending a tech out to repair something already.  I think these are overwhelming structural advantages that only compounds over time.  This implies price hikes over time.  If I learned anything about owning real estate in a land constraint location (NYC) is that if you're able to pass through 3% price increases a year and you leverage your assets the right way, everything else takes care of itself.  Rant over.   

[Liberty]

IMO being right or not is more about focusing on the right things than about how long you look at something, so that can be done relatively quickly, especially with experience that helps you filter out the noise.

 

Spending a lot of time getting comfortable with something is more about building confidence.

 

If you've just spend 90 minutes looking at something and then buy, you'll probably be shaken easily by volatility/bumps in the road. If you know the company, management and industry very well and understand the various dynamics at play, it'll probably be easier to hold for the long term and actually benefit from a correct initial analysis.

 

My 2 cents.

[Spekulatius]

Spek, not trying to change your mind or process and not saying how I do it is better.  But I think the average investor would get a WAY BETTER feeling/understanding/grasp of the specifics of the business if they spent more time on it.  Again, not saying this is better but besides reading k's and q's I spend probably 40-50 hours reading transcripts of conference calls and presentations (and actually much more with Chtr cause its a large percentage of my assets).  And then at least another 15-20 hours researching and drilling down into things that mgmt said during the calls.  I personally could never get a proper feel, or understanding of the business, or management just from studying the filings.  I do agree there is a knowledge compound effect but that really just helps me get thru all the info quicker.  It does not give me that (having a hard time defining the overall grasp that I get) overall specific understanding  and confidence that comes with reading lots and lots of what mgmt says.  Dont take this the wrong way but I could tell you didnt do the reading on Chtr based on your questions and comments, and thats why i asked.  Again, Im sure some people do extremely well and are smart enough to get it without doing the reading (maybe you are, I am definitely not) but I believe that most of my ability and pretty good results come from that aspect.  Anyway, not really any of my business but just wanted to share something that others may find useful.

 

I knew what was coming when you asked that question.

 

While I think you may be correct, in some ways, there are many ways to skin the cat and approach investing. I do know quite a few people who have never done a "Deep dive" that you are describing and who have done quite well. I have done OK too most of the time, and if not, it wasn't because I was didn't knew enough, it was because follow common sense.

I am a "hobby investor". I work my job as a professional in a specialized field that has nothing to do with finance. Playing the stock market has been one of my "hobbies" since 1982. Since it is a hobby and a profitable at that, I am spending maybe 5-6 hours/week on this, bunt t sometimes very little for many month, if I don't feel like it and there doesn't seem to be much to do. I have also become lazier over time. I certainly don't have the time to spent 50h + on a single stock, especially, since i run a diversified portfolio as an insurance against my negligance.

 

I invest based on heuristics and I am aware that those have limitations. I look at a few quantitative measures as a mental checklist

 

1) Is this a good business

2) Is the stock cheap

3) Is management capable and honest

4) Is the stock safe (from permanent impairment)

5) Are there more headwinds or tailwinds going forward

 

That's pretty much it. I don't try to be extremely correct. I think it is quite easy in most cases to see if the business is "good" or bad. I also think it does not take all that much to find out if it is undervalued. It can be quite difficult to determine the headwinds or tailwinds in the future and this last one has been a recent addition of mine. I want to see at least 4/5 of these criteria being checked of before investing and I prefer a balanced scorecard over one that just emphasizes one (like cheapness). In most cases, if you are approximately correct on above, you should do OK.

 

There are other reasons why I don't like spending to much time on a single investment. I believe spending too much time will leave to the fallacy, that you believe you know much more about the business than you actually do. If you spent 50h on a single investment, you most likely still have not had an inside look in any of these companies, spoke to an employee or manager and you certainly don't know how the sausage is made. But at least in my case, I found that if I spent that much time, the "sunk time syndrome" often works against me and I feel I need to do something when in fact it may not be warranted. So I might buy a stock, just because I spent so much time on it, not because it is better than another stock in an unrelated business. That has lead to some malinvestments for me in the past.

 

But the biggest reason not to do this is because at least with some experience, going broad beats going narrow and I feel is not detrimental to investment returns, but avoids the nail and hammer syndrome.

[Cigarbutt]

Maybe this should go in a different thread.

To keep John quiet: I bought a new BBQ today.

 

It seems that we, as a group, would have difficulty defining a clear distinction between investment and speculation.

 

Also, most here seem to be value investors but investment styles and holding period horizons vary tremendously. As the Graham-and-Doddsville list suggests, there are many ways to obtain superior results.

 

However, what works for one may not be adequate for the other and vice-versa.

 

Perhaps an interesting way to appreciate this is to take the perspective of the value-universe investors looking to obtain high ROE numbers on their portfolios:

 

ROE=PM*AT*EM

 

Let’s leave leverage aside because that’s another decision. In terms of time spent and relatively speaking along the spectrum, you may try to obtain high returns by focusing on asset turnover at the expense of lower net profit margins. Or you may try to obtain high returns by focusing on profit margins at the expense of lower turnover.

 

I would add that one has to periodically compare to some kind of benchmark. If you are happy with the results (ie if you can differentiate between value and price), I would say that, apart from minor adjustments, one should just carry on. Probably important to remember the potential biases associated with one’s ROE profile though.

 

Despite this, we can still learn from each other.

 

From my point of view, thinking of writser’s comments, a lot of time can be saved using filter mechanisms that reject automatically most possibilities. And to echo Liberty’s comments about confidence, in the past, I have often used a concentrated investment profile and this has been associated with significant time commitments especially when averaging down. :)

 

For the first time, I have been able to write a shorter answer than Spekulatius (barely).

 

[vince]

Spek, you picked a good year to start your hobby.  I agree with and am aware of the potential negatives of "too much" analysis but in my case, at least so far, seem to support my process. At 46, I get to do this full time having resigned from Deloitte 5 years ago.  After spending 10 plus years saving and investing I was heavily concentrated in one stock who's price basically went sideways from 2011-2013 while they levered their clean balance sheet and bought back loads of shares. Every quarter their per share earnings would increase 20-30 percent, the stock would go down, I would continue studying and buy more (wanna take a guess? same industry).  Anyway, good ending and of course, possibly erroneously,  I attribute that success and others to the amount of reading and thinking and confidence that I developed with mgmt's based on what they said and what they DID.  By the way, my process is telling me that CHTR (Gliba, Lbrda) is very high probability to, within 3-4 years, deliver my next 70-100 percent (this is only 3rd stock in 10 years where I acquired that level of confidence) and I have simply allocated accordingly.  Notice how the return is not dramatic.  But its the high probability with very low chance (imo, and I could well be wrong) of significant impairment (in that 3 year timeframe) that allows a concentrated bet and a fantastic financial outcome.

[John Hjorth]

...To keep John quiet: I bought a new BBQ today ..

[ ; - D ]

[Lance]

MMM

 

Thanks

Lance

[EricSchleien]

MMM

 

Thanks

Lance

 

Why?

[scorpioncapital]

ROK seems to have dropped like a rock, nibbling a bit more.

[Liberty]

ROK seems to have dropped like a rock, nibbling a bit more.

 

I see what you did there.

[Spekulatius]

Since it went on sale today,  decided to purchase a first lot of CHTR and LRBDA. I agree it’s thr narrative here - communication toll road at 9x EBITDA that will likely benefit from secular tailwinds including 5G. I also added a bit more CMCSA as well - same idea really.

[james22]

MMM

 

Thanks

Lance

 

Why?

 

Curious, myself.

[DooDiligence]

MMM

 

Thanks

Lance

 

Why?

 

 

Curious, myself.

 

BTFD  ;D

[gfp]

EUROB - EuroBank at 91-91.5 euro cents is my jam today.  as they say, this could be their year..