What are you buying today?

[Spekulatius]

Bought back some BRKB. I felt like swimming naked without owning some. Also added a tad more GD.

 

Added both of these and a touch of RTX, VZ

 

I abused RTX for a trade, but trying to wrap my head around this,  RTX really is BA with a better balance sheet and less baggage, But it’s still half commercial aerospace and I expect this sector to lose 50% of their revenues probably for a couple of years. It will come back, but the path to get there won’t be pretty for a while. I think a lot of these stocks in commercial aerospace are most likely overvalued.

[LC]

bought some IRM, PM, WFC, T, and a tiny tiny position in SSD the last few trading days.  At about 10% cash.

[sleepydragon]

Sold VNO and bought BRKB

 

[Castanza]

bought some IRM, PM, WFC, T, and a tiny tiny position in SSD the last few trading days.  At about 10% cash.

 

I’ve looked at this company a few times and it’s interesting but long term I find it hard to be confident in their “moat”. Curious what your quick take is if you don’t mind sharing.

[LC]

Referring to IRM? I think so because the other companies I mentioned are well covered here.

 

Long term you are right - but I think this business and its customers are stickier than imagined. Record keeping for banks, lawyers, doctors, real estate, insurance....all the old professions... it's important and usually it's easier to keep paying the storage bill vs. finding alternatives.

 

Some of the ancillary uses of their space (fine art storage) are interesting - and it shows me management is not sitting around doing totally nothing.

 

They are leveraging existing customers and migrating them to digital recording and storage. There's only going to be more and more data. And a lot of these customers have been customers for years or decades. It's easier to keep paying IRM a modest fee (even as the client transitions from paper to digital) vs. an unproven incumbent. I mean, let's say Google or Amazon comes in and sells their datacenter space as a competitor. A couple of things IMHO would discourage this scenario: (1) it's simply not a sexy business, investors may see it as a sign of weakness that Google can't find any opportunities other than competing with hard drive space; (2) these tech companies are innovative but that is exactly the opposite of what a client wants. They want to make sure their records aren't the next ones to be hacked; (3) the tech co's are a bit opaque how they leverage customer data. amazon competing with 3rd party sellers, google leveraging cookie data - again, these clients do not want their data anonymized and analyzed for Bezos's or Zuck's benefit ; (4) history matters here - google may give a great deal now, but what happens in 5 years when they need to continue to show high % revenue growth and the client's annual fees are in goog's crosshair? do you pay the fee or switch to another provider? if you switch, now you have to manage millions of records being transferred, deleted, make sure nothing is corrupted, etc. etc.

 

So ultimately as to the moat - it's a business that is large enough where scale plays a role but small and boring enough to discourage large competitors. I think the overall dynamics of the business are neutral or trending down (data is ultimately cheaper than paper), but I think it's a bit like cigarettes in that it won't ever go away.

 

So I could be totally wrong, I think in the IRM thread I've said as much. I try not to reinvest too much here (but it looks so damn cheap - maybe I'm a sucker), but every quarter it sticks around, my cost goes down. It's a heads I win, tails I don't lose too much - at least IMHO.

[Castanza]

Referring to IRM? I think so because the other companies I mentioned are well covered here.

 

Long term you are right - but I think this business and its customers are stickier than imagined. Record keeping for banks, lawyers, doctors, real estate, insurance....all the old professions... it's important and usually it's easier to keep paying the storage bill vs. finding alternatives.

 

Some of the ancillary uses of their space (fine art storage) are interesting - and it shows me management is not sitting around doing totally nothing.

 

They are leveraging existing customers and migrating them to digital recording and storage. There's only going to be more and more data. And a lot of these customers have been customers for years or decades. It's easier to keep paying IRM a modest fee (even as the client transitions from paper to digital) vs. an unproven incumbent. I mean, let's say Google or Amazon comes in and sells their datacenter space as a competitor. A couple of things IMHO would discourage this scenario: (1) it's simply not a sexy business, investors may see it as a sign of weakness that Google can't find any opportunities other than competing with hard drive space; (2) these tech companies are innovative but that is exactly the opposite of what a client wants. They want to make sure their records aren't the next ones to be hacked; (3) the tech co's are a bit opaque how they leverage customer data. amazon competing with 3rd party sellers, google leveraging cookie data - again, these clients do not want their data anonymized and analyzed for Bezos's or Zuck's benefit ; (4) history matters here - google may give a great deal now, but what happens in 5 years when they need to continue to show high % revenue growth and the client's annual fees are in goog's crosshair? do you pay the fee or switch to another provider? if you switch, now you have to manage millions of records being transferred, deleted, make sure nothing is corrupted, etc. etc.

 

So ultimately as to the moat - it's a business that is large enough where scale plays a role but small and boring enough to discourage large competitors. I think the overall dynamics of the business are neutral or trending down (data is ultimately cheaper than paper), but I think it's a bit like cigarettes in that it won't ever go away.

 

So I could be totally wrong, I think in the IRM thread I've said as much. I try not to reinvest too much here (but it looks so damn cheap - maybe I'm a sucker), but every quarter it sticks around, my cost goes down. It's a heads I win, tails I don't lose too much - at least IMHO.

 

Thanks for sharing your thoughts.

[LC]

Yes and just for sizing purposes - it is currently a 7% position - started around 5%, went up to 10% as I bought more, now down to 7% due to market price declines and me allocating a greater % of funds elsewhere.

 

If the price were to run up (or the rest of the portfolio were to drop dramatically in relation) I would certainly trim a fair bit to offset my cost basis, also I think I need to keep it at-or-under a 7.5% position due to the uncertainty around the core business.

[lnofeisone]

Added to WFC, CLMT, started PGRE

[james22]

A little BRK.

[kab60]

Motorpoint PLC

[Mephistopheles]

WFC $25 strike leaps Jan 2022 at $5.15

[clutch]

couldn't resist BPY.UN...

[arcube]

WFC $25 strike leaps 2022 at $5.15

 

Are these Jan 21, 2022 expiry?

[Mephistopheles]

WFC $25 strike leaps 2022 at $5.15

 

Are these Jan 21, 2022 expiry?

 

Yes, I'll edit

[arcube]

WFC $25 strike leaps 2022 at $5.15

 

Are these Jan 21, 2022 expiry?

 

Yes, I'll edit

 

Thank you.

[arcube]

WFC $25 strike leaps 2022 at $5.15

 

Are these Jan 21, 2022 expiry?

 

Yes, I'll edit

 

Mephistopheles  - Do you mind sharing your thoughts on the size of this position and how you allocate?

[KJP]

Comcast

General Dynamics

Alexander's

[Spekulatius]

Comcast

General Dynamics

Alexander's

 

I also added GD  and TRV and restarted CMCSA and ORI.

 

Strange disconnect in the Market, some stocks go to the moon, others into the doghouse.

[HalfMeasure]

Comcast

General Dynamics

Alexander's

 

I also added GD  and TRV and restarted CMCSA and ORI.

 

Strange disconnect in the Market, some stocks go to the moon, others into the doghouse.

 

It seems there is no tolerance for owning things that "aren't working" (e.g. anything going down is broken), and no tolerance for not owning things that "are working" (e.g. FOMO). Everything feels very momentum driven, whether business/fundamental momentum (businesses doing well must certainly keep doing well) or merely price/sentiment momentum (stocks going up must certainly continue to go up).

[Mephistopheles]

WFC $25 strike leaps 2022 at $5.15

 

Are these Jan 21, 2022 expiry?

 

Yes, I'll edit

 

Mephistopheles  - Do you mind sharing your thoughts on the size of this position and how you allocate?

 

Sure. I have a mix of common and options. Bulk of it is common with some options at strikes 25, 27.5, 30. Options like <1% of portfolio. I bought today because WFC is near the lows from March, and cost of leverage was only about 10% + dividends. Meanwhile the stock is at like 75% of TBV. Depends on how this crisis plays out, I thing the banks are very well capitalized. Govt will never let them fail.  Zero or negative rates for long would hurt. Everyone says we will have same rates or lower for long. People act like we will never see high rates again but I don't think we can ever be so sure.

[arcube]

WFC $25 strike leaps 2022 at $5.15

 

Are these Jan 21, 2022 expiry?

 

Yes, I'll edit

 

Mephistopheles  - Do you mind sharing your thoughts on the size of this position and how you allocate?

 

Sure. I have a mix of common and options. Bulk of it is common with some options at strikes 25, 27.5, 30. Options like <1% of portfolio. I bought today because WFC is near the lows from March, and cost of leverage was only about 10% + dividends. Meanwhile the stock is at like 75% of TBV. Depends on how this crisis plays out, I thing the banks are very well capitalized. Govt will never let them fail.  Zero or negative rates for long would hurt. Everyone says we will have same rates or lower for long. People act like we will never see high rates again but I don't think we can ever be so sure.

 

Thank you.

[kab60]

More BRK

[Ballinvarosig Investors]

I have been buying Markel. Never thought I would be given a chance to get it at a cheap price again, but here we are. Looks like it's slightly better value than Berkshire to me as well.

[Broeb22]

I have been buying Markel. Never thought I would be given a chance to get it at a cheap price again, but here we are. Looks like it's slightly better value than Berkshire to me as well.

 

Some on this board hate FRFHF/FFH, but what are your thoughts on MKL relative to FFH? Do you just like the S&P500 plus portfolio returns Markel delivers better than the deep value dumpster-diving Prem prefers? FFH seems pretty cheap right now too, and I've considered adding to my baby position.

 

There is a whole lot more pessimism built into FFH right now because people don't believe the investment results will be good going forward. From 60% of book, they don't have to be great to get a decent return in the equity. But I think investing is hard, and Prem is fundamentally a good investor who made a couple large bad bets (particularly deflation hedge which might have become pretty valuable around now) which really dented performance. If you back out the losses from that large bet, results are only mediocre since 2010.

[clutch]

There is a whole lot more pessimism built into FFH right now because people don't believe the investment results will be good going forward. From 60% of book, they don't have to be great to get a decent return in the equity. But I think investing is hard, and Prem is fundamentally a good investor who made a couple large bad bets (particularly deflation hedge which might have become pretty valuable around now) which really dented performance. If you back out the losses from that large bet, results are only mediocre since 2010.

 

A couple? NO.