What are you buying today?

[CafeB]

"initial lot" of FMX. I don't understand why they have been buying U.S. distributors and what that might say about re-investment opportunities in Mexico and Latin America.

 

MSM

 

FIS, FISV

[KPO]

3 hours ago, CafeB said:

"initial lot" of FMX. I don't understand why they have been buying U.S. distributors and what that might say about re-investment opportunities in Mexico and Latin America.

 

MSM

 

FIS, FISV

I also bought FMX several times in March of 2020 and still hold it. I’d be interested in your thesis if you don’t mind sharing. 

[Monsieur_dee]

Prosus 

[WFF]

1658.HK

[gfp]

Berkshire Hathaway today

 

edit, in the end it was Berkshire Hathaway, Atlas Corp, Cliffs, and Marketwise.  Sold some Progressive to fund some of it.

Edited November 30, 2021 by gfp

[spartansaver]

BABA Leaps 100 strike

[lnofeisone]

MSGE, VZ, DIS starters.

[CorpRaider]

Just nibbling.  CMCSA, DIS, USB, EBAY

Edited November 30, 2021 by CorpRaider

[CharlesMunger]

Berkshire at the close (down 2% while Apple 3.5% up)

[Spekulatius]

Bought some DISCK in various accounts. Also a starter lot of PSMT.

[lnofeisone]

Starter in KNOP. Will probably go to 50% of position if it hits 10. 

[gfp]

4 minutes ago, lnofeisone said:

Starter in KNOP. Will probably go to 50% of position if it hits 10. 

 

Wow I haven't followed this one since selling out.  Was once a big position for me.  Is today's move because of a seeking alpha article?  

https://seekingalpha.com/article/4472692-knot-offshore-partners-stock-distribution-cut-might-happen

[lnofeisone]

26 minutes ago, gfp said:

 

Wow I haven't followed this one since selling out.  Was once a big position for me.  Is today's move because of a seeking alpha article?  

https://seekingalpha.com/article/4472692-knot-offshore-partners-stock-distribution-cut-might-happen

That's the only thing I found. Though looking at their schedules, 2022 is going to be bumpy. The management is conservative and has been shareholder friendly in the past so it's worth to me buying some here. I should note that this has been one of those trades I've been doing over the years. Buy sub-15, sell at 20. 

[fareastwarriors]

APTS, JBGS, MSGE

[maplevalue]

MRG (TSX)

[matthew2129]

More ATCO plus a pinch of SVXY at the close to keep things spicy 

[Lance]

CLPR

 

Thanks

Lance

[CafeB]

On 11/29/2021 at 7:43 PM, KPO said:

I also bought FMX several times in March of 2020 and still hold it. I’d be interested in your thesis if you don’t mind sharing. 

Convenience stores can be good businesses and can be even better in developing markets, to the extent that they have greater "strategic importance" than they would have in developed markets--as elaborated by www.notboring.co/p/femsa .

 

Strong family ownership provides stewardship in a part of the world that I don't know much about.

[Gregmal]

CLF, CLPR, CLI and AIV

[Spekulatius]

1 hour ago, CafeB said:

Convenience stores can be good businesses and can be even better in developing markets, to the extent that they have greater "strategic importance" than they would have in developed markets--as elaborated by www.notboring.co/p/femsa .

 

Strong family ownership provides stewardship in a part of the world that I don't know much about.

how do you think about FMX valuation? Optically it does not look cheap and part of it is due to holding structure (47% KOF and ~14.8% Heineken ownership). The owners see very little of these cash flows.

[CafeB]

31 minutes ago, Spekulatius said:

how do you think about FMX valuation?

The position is really only a placeholder. I am interested in learning more about investing in Mexico and Latin America.

 

For now I defer to Cook & Bynum [ https://www.cookandbynum.com/wp-content/uploads/Cook-Bynum-03.31.21-Semi-Annual-Report-FINAL.pdf ]: "Using current market prices/values for its Heineken and Coca-Cola FEMSA stakes (which are themselves modestly undervalued), FEMSA’s retail stub currently trades at 9x 2021 enterprise value-to-EBITDA and 16x 2021 enterprise value-to-EBIT. This is an attractive valuation for a retailer that is largely immune from e-commerce and has the potential to grow earnings well into the double digits for the next ten years at high returns on capital."

[NotSoWise]

I have pretty bad experience with LATAM countries via LILAK and TIGO, the extra growth potential does not offset extra risks IMO. Dont plan to invest there anymore (and countries they operate are above average for LATAM):

- you have political risks (Chile riots, Venezuela, Nicaragua, Bolivia, etc), high inequality within societies

- in some countries you have currency risks (not pegged to USD)

- in some places you have significant climate risks - hurricanes, droughts, etc

- poor countries deal worse with: recessions, pandemics - the declines are much worse (e.g. CHTR was flat during peak pandemics or even grew, LILAK had some declines - prepaids, SMEs, etc)

- some corruption

- organized crime

 

So for me the "extras" and lower valuations do not compensate for much more risks which you dont have in USA/ EU.

[Spekulatius]

1 hour ago, CafeB said:

The position is really only a placeholder. I am interested in learning more about investing in Mexico and Latin America.

 

For now I defer to Cook & Bynum [ https://www.cookandbynum.com/wp-content/uploads/Cook-Bynum-03.31.21-Semi-Annual-Report-FINAL.pdf ]: "Using current market prices/values for its Heineken and Coca-Cola FEMSA stakes (which are themselves modestly undervalued), FEMSA’s retail stub currently trades at 9x 2021 enterprise value-to-EBITDA and 16x 2021 enterprise value-to-EBIT. This is an attractive valuation for a retailer that is largely immune from e-commerce and has the potential to grow earnings well into the double digits for the next ten years at high returns on capital."

 

16x EBIT is not cheap at all for Mexico imo. On top of that, I think the holdings of KOF and Heineken need to be discounted as it is deadwood in a sense. A 20% Holding discount at a minimum is appropriate for indirect stock holdings.

[KPO]

8 minutes ago, Spekulatius said:

 

16x EBIT is not cheap at all for Mexico imo. On top of that, I think the holdings of KOF and Heineken need to be discounted as it is deadwood in a sense. A 20% Holding discount at a minimum is appropriate for indirect stock holdings.

I’m showing about 5X TTM EBITDA for the remainder, and I believe KOF and Heineken are close to fair value currently. I view this as reasonably priced, but not cheap, exposure to Latam through a fairly steady business. It was a fair bit cheaper when I bought, but I’ll hold here for the geographic diversification. That said, I am scratching my head at the distribution acquisitions in the US, but this hasn’t yet been material to their business. I’ll continue to monitor though. 

[fareastwarriors]

CLPR and APTS 

MSGE too 

Edited December 2, 2021 by fareastwarriors