What are you buying today?

[Junior R]

4 minutes ago, Red Lion said:

Upgraded my tracking position in CP to a starter position. Thank you @Dinar for bringing this back to my radar. I've been working on the valuation for the last 6 weeks or so, and am comfortable enough here to increase my exposure especially since I've been taking profits on some other positions lately and don't want to be all cash. 

Canadian Pacific Kansas City Ltd? What is the valuation you have come up with?

[Red Lion]

4 minutes ago, Junior R said:

Canadian Pacific Kansas City Ltd? What is the valuation you have come up with?

 

I don't have a specific valuation, it's more that I feel that this is a fair multiple for the combined CP/KSU business if they're able to execute on their synergies/revenue growth/margin improvement goals set out at the investor day. Management is projecting mid double digit EPS growth through 2028. I'm not backing up the truck yet, but I've sniffed around the railroads for years and always end up missing good entry points waiting for a better valuation. 

 

I also think that CP has been selling off on some idea that the Trump Trade is bad for trade with Mexico. I just don't buy that argument at all, I think onshoring will lead to more trade with Mexico and Canada than ever before. 

 

Right now I've been recycling some gains inside my tax deferred accounts and dabbling in a few different ideas as I get more comfortable with them. This is usually my strategy, but I'm trying to diversify away from my favorite subsector (the alternative asset managers) since I've seen what happens to them in choppy markets and it's not pretty. 

[ICUMD]

@Red Lion CP and CNR are excellent companies and valuation is very attractive currently. Id be adding if I had extra funds. Roughly 8% of my portfolio is allocated between the two. 

 

Only wish they paid better dividends, as I like cash flow.

[Dinar]

18 minutes ago, Junior R said:

Canadian Pacific Kansas City Ltd? What is the valuation you have come up with?

According to analysts' forecasts, which I think are too low, the stock is trading at a 6.9% free cash flow yield on 2028 numbers.  For a business that should be able to raise price ahead of inflation and grow volumes, that is way too low. 

Every year that the company hikes price at inflation + 0.5%, it's EBIT grows at inflation + 1%, and free cash flow by around inflation + 1.2-1.3%. 

Every time volumes go up by 1%, EBIT should grow by roughly 1.4-1.7%, given that incremental volumes come with very high EBIT margins, closer to 70%.  Every time EBIT grows by 1.4-1.7%, free cash flow to the equity grows by around 2%.

So if you assume that pricing = inflation + 0.5% per annum, and volume growth = 0.5% per annum, starting in 2029, then you have EBIT growing at inflation + 1.7%, and free cash flow at inflation + 2%+ per annum.

So assuming analysts' forecasts for 2028 are correct, and the company can grow volumes at 0.5% per annum, and pricing at inflation + 0.5% per annum, your forward rate of return should be inflation + 8.6% per annum.

In my opinion, the company will meaningfully outperform analysts' forecasts, and the stock is probably trading at a 9%-9.5%+ free cash flow yield to the equity on 2029 numbers, and will probably grow free cash flow after that at inflation + 2-3% per annum.  You are also getting potential environmental tailwinds for free, and upside from increase in highway taxes. 

 

[Cod Liver Oil]

Adding MSGE to the PE RE bucket.

Edited December 19, 2024 by Cod Liver Oil

[KPO]

STNE 

[brobro777]

Bought some -26% YTD JOE

 

[John Hjorth]

21 hours ago, Spekulatius said:

Yes, that’s it. One of my favorite Blogs ValueAndOpportunity posted about it and bought it a while ago. I did not buy at that time but checked the results and like what I saw.

 

Welcome to CoBF !

 

 

Thank you for the elaboration, @Spekulatius .

[John Hjorth]

1 hour ago, brobro777 said:

Bought some -26% YTD JOE

 

Me too - there is nothing like adding a bit to an initial position being in the hole.

[Junior R]

@Red Lion, @ICUMD @Dinar  Thanks for the responses...Already own CNR ...Will add CP to the watchlist of potential buys

[Junior R]

3 hours ago, Red Lion said:

 

I don't have a specific valuation, it's more that I feel that this is a fair multiple for the combined CP/KSU business if they're able to execute on their synergies/revenue growth/margin improvement goals set out at the investor day. Management is projecting mid double digit EPS growth through 2028. I'm not backing up the truck yet, but I've sniffed around the railroads for years and always end up missing good entry points waiting for a better valuation. 

 

I also think that CP has been selling off on some idea that the Trump Trade is bad for trade with Mexico. I just don't buy that argument at all, I think onshoring will lead to more trade with Mexico and Canada than ever before. 

 

Right now I've been recycling some gains inside my tax deferred accounts and dabbling in a few different ideas as I get more comfortable with them. This is usually my strategy, but I'm trying to diversify away from my favorite subsector (the alternative asset managers) since I've seen what happens to them in choppy markets and it's not pretty. 

what do you think of CG ...Still under priced compared to the other asset managers

[Red Lion]

41 minutes ago, Junior R said:

what do you think of CG ...Still under priced compared to the other asset managers

 

I don't want to slander CG, and I need to revisit the idea to give it a fair shake. However, I developed an opinion that CG is something of a perennial underperformer in terms of AUM growth and with a greater component of carried interest than its competitors. 

 

This opinion was developed several years back, and I think that proved out to be true over a number of years, but I haven't done a deep dive since 2019 or 2020. 

 

I also decided to exit brookfield and focus more on OWL/KKR/APO/BX. I need to revisit Brookfield and CG again, possibly BAM. 

 

I just have a feeling we might be seeing some significant equity market volatility next year, and I'd like to use this as a position of strength to jump back into my favorites. I am continuing to hold big positions in OWL and APO, but don't feel like they're at super attractive entry points. Yet I wrote that about APO when I started the topic (that it wasn't a great entry point) and it's over doubled since then. I need to stop trading so much, I'm sure it's hurting my returns. 

 

 

[Junior R]

11 minutes ago, Red Lion said:

 

I don't want to slander CG, and I need to revisit the idea to give it a fair shake. However, I developed an opinion that CG is something of a perennial underperformer in terms of AUM growth and with a greater component of carried interest than its competitors. 

 

This opinion was developed several years back, and I think that proved out to be true over a number of years, but I haven't done a deep dive since 2019 or 2020. 

 

I also decided to exit brookfield and focus more on OWL/KKR/APO/BX. I need to revisit Brookfield and CG again, possibly BAM. 

 

I just have a feeling we might be seeing some significant equity market volatility next year, and I'd like to use this as a position of strength to jump back into my favorites. I am continuing to hold big positions in OWL and APO, but don't feel like they're at super attractive entry points. Yet I wrote that about APO when I started the topic (that it wasn't a great entry point) and it's over doubled since then. I need to stop trading so much, I'm sure it's hurting my returns. 

 

 

Thanks I had APO and sold it to early this year for 2025 plan is to let good companies run lol

[bizaro86]

More JOE

[tnathan]

Bought some more NU - this is a special company

[Spekulatius]

8 hours ago, Junior R said:

added pax

I think this is one to watch. it’s probably impacted by the malaise in South America with Brazil, and Mexican equity markets going down the tubes.

[Spekulatius]

I added to LNR, STNE and bought a starter in  BAX and ITM (Italmobilare an currently Italian private equity Holdco)

Edited December 20, 2024 by Spekulatius

[Seoshin]

Finally bought a position in JOE while added to FRPH, CPNG, and DHR

[Junior R]

50 minutes ago, Spekulatius said:

I added to LNR, STNE and bought a starter in  BAX and ITM (Italmobilare an currently Italian private equity Holdco)

also added LNR today

[DooDiligence]

Novo Nordisk.

[WolfofDividend]

Novo Nordisk 

[DooDiligence]

4 minutes ago, WolfofDividend said:

Novo Nordisk 

 

Don't do it because of me. I'm a borderline idiot.

[longlake95]

JOE, MATR

[WolfofDividend]

45 minuti fa, DooDiligence ha detto:

 

Non farlo per colpa mia. Sono un idiota borderline.

Don't worry...Small increase to my position…

[DooDiligence]

42 minutes ago, WolfofDividend said:

Don't worry...Small increase to my position…

 

Me too. I've owned this since 2016 when the Clinton v Trump debate sparked concern over pricing controls. I trimmed last year and basically just put all that cash back in but for twice the shares. I expect we'll see a lot of rips in various sectors as politicians flap their lips over the next 4 years.