What are you buying today?

[Eldad]

Just now, Milu said:

A machine can now do this in millisecond for every company that has financial data on the web. Ben Graham and Buffett had an edge in the early days when you actually had to manually filter through this info and nobody else was doing it. Any body who thinks they have an ‘edge’ by doing something like this is fooling themselves. 

Yes we are all aware. He would still have an edge in being a contrarian that didn’t care what anyone else thought IMO. 

[Castanza]

50 minutes ago, Eldad said:

Yeah I hear you. I am a born introverted contrarian and a CPA by trade if that explains anything.  
 

Sitting in an office by myself finding obscure net nets that everyone else hates and listening to Yankee games on the radio and maybe taking a nap sounds better than CPA work is all I’m really saying. 

 

Ah I gotcha, yeah I can get behind that as an introvert as well. I wfh and wouldn't want to change a thing. 

[Castanza]

47 minutes ago, Milu said:

A machine can now do this in millisecond for every company that has financial data on the web. Ben Graham and Buffett had an edge in the early days when you actually had to manually filter through this info and nobody else was doing it. Any body who thinks they have an ‘edge’ by doing something like this is fooling themselves. 

A lot of times we forget that the legends we look up to were forward looking thinkers in their own times. Nothing wrong with romanticizing but sometimes we certainly look at it with rose colored glasses or get too caught up in the past. I will say Buffett has been relatively adaptable to the future but more so with his commentary than his investments. 

[73 Reds]

16 minutes ago, Castanza said:

A lot of times we forget that the legends we look up to were forward looking thinkers in their own times. Nothing wrong with romanticizing but sometimes we certainly look at it with rose colored glasses or get too caught up in the past. I will say Buffett has been relatively adaptable to the future but more so with his commentary than his investments. 

The principles on which value investing are based have not changed and likely never will.  What constitutes "value" is always changing.  And in today's world you do need an edge.  it can be in the form of a niche, location, unique methodology, selective knowledge not commonly available to the public at large, or even massive focus on one single stock, i.e., Viking and Fairfax.   What almost never works (unless you're seeking market returns) is following everyone else.  Yet even that often outperforms a lot of folks who think they know better.

[rosemontseneca]

ADM GPK TXT

[nsx5200]

22 hours ago, crs223 said:

I prefer the paper/mail subscription.  With the flip of a page, i’m looking at the next company… working in the spirit of Buffet: “Start with the A’s”

If you really want to be more of a contrarian, you would flip from somewhere in the middle, as the A's have probably been picked through first, and second order thinking would have the Z's to be picked through, leaving you with.. somewhere in the middle.  Unless you do a 3rd order thinking, leaving you with... random order.

 

Whatever you pick, enjoy your treasure hunt!  It is a real luxury to sit down with your favorite drink, and some reading to keep your mind occupied and fed.

[Hektor]

On 5/7/2020 at 5:29 PM, KJP said:

Huntington Ingalls Industries.

@KJP Do you still own this? Are you buying today

[thowed]

Nibbling at Lotus Bakeries.  Still expensive, but I think the management are top-notch & brands outstanding.  Asian factory opens next year, and they have land capacity to expand other factories.

[KJP]

3 hours ago, Hektor said:

@KJP Do you still own this? Are you buying today

 

No, I sold quite awhile ago.  I grew concerned about the long-term viability of the types of ships they build in light of autonomous underwater drones, hypersonic missiles, etc., and have not followed it since.

Edited February 6, 2025 by KJP

[Hektor]

1 hour ago, KJP said:

No, I sold quite awhile ago.  I grew concerned about the long-term viability of the types of ships they build in light of autonomous underwater drones, hypersonic missiles, etc., and have not followed it since.

[Spooky]

On 2/4/2025 at 9:26 AM, DooDiligence said:

Left wing rag? Murdoch's spent a ton of capital training you alt-righties, and given enough time I'll bet he could flip your head any direction he wants.

 

It's sarcasm since a certain poster called it a left wing rag. I don't feel good about sending my money to Newscorp but it gives me another viewpoint on everything happening right now.

[EBITDAg]

AMTM

[Spekulatius]

2 hours ago, Hektor said:

HII is just a glorified welding shop that happens to produce ships and submarines for the Navy.

 

Its not a well run shop either.

Edited February 6, 2025 by Spekulatius

[Hektor]

12 minutes ago, Spekulatius said:

HII is just a glorified welding shop that happens to produce ships and submarines for the Navy.

That's an interesting take. They seems to be a monopoly/duopoly in most of their lines. Did Covid kill them? Looks like inflation too could be a problem for them.

[Spekulatius]

2 hours ago, Hektor said:

That's an interesting take. They seems to be a monopoly/duopoly in most of their lines. Did Covid kill them? Looks like inflation too could be a problem for them.

They are actually a monopoly for aircraft carriers. These take 5 years to build. I think the contract sr basically time and materials with some escalators for inflation etc. The design come from Navy eggheads and most high tech companies like the power plant from other suppliers like LMT, Raytheon, BWXT etc.

 

So if they are off too much on time (hours worked ) most likely due to delays then it starts to eat in the contractors margin at some point. I think COVID-19 has to do with it,  but these shipyards are union shops and those seems to have an easy time with this outfit.

I think GD’s Electric Boat operations are better run.

[Hektor]

19 minutes ago, Spekulatius said:

They are actually a monopoly for aircraft carriers. These take 5 years to build. I think the contract sr basically time and materials with some escalators for inflation etc. The design come from Navy eggheads and most high tech companies like the power plant from other suppliers like LMT, Raytheon, BWXT etc.

 

So if they are off too much on time (hours worked ) most likely due to delays then it starts to eat in the contractors margin at some point. I think COVID-19 has to do with it,  but these shipyards are union shops and those seems to have an easy time with this outfit.

I think GD’s Electric Boat operations are better run.

They also seem to have a staffing problem, unable to recruit and retain people. Not sure why. On the flip side, Navy seems to back them. It will be interesting to see if DOGE will go after them on this sector.

[crs223]

1 hour ago, Hektor said:

They also seem to have a staffing problem, unable to recruit and retain people. Not sure why. On the flip side, Navy seems to back them. It will be interesting to see if DOGE will go after them on this sector.

 

They lost all the older good workers during COVID.  They tout their backlog as as asset... but it's really a manifestation that they cannot hire any good employees (IMHO).

 

One thing they do have: US will want to compete with this: https://www.csis.org/analysis/threat-chinas-shipbuilding-empire

[Spekulatius]

9 hours ago, Hektor said:

They also seem to have a staffing problem, unable to recruit and retain people. Not sure why. On the flip side, Navy seems to back them. It will be interesting to see if DOGE will go after them on this sector.

Yes, they don’t pay enough to retain employees, plain and simple. I think their old contracts implied labor rates that are not realistic any more. COVID-19 was a factor as it increased wages far more than historical norms.

 

I do think that this looks attractive here, the Navy needs ships. Doge may go after them but this is not something that can be fixed with a few mouse clicks.

 

I think I buy a few shares despite not liking the business. I think management also needs to be refreshed here, they share a large part of the blame.

Edited February 7, 2025 by Spekulatius

[Milu]

19 hours ago, thowed said:

Nibbling at Lotus Bakeries.  Still expensive, but I think the management are top-notch & brands outstanding.  Asian factory opens next year, and they have land capacity to expand other factories.

Been on my watchlist for a long time but just can't get my ahead around the price people are willing to pay for essentially a delicious biscuit company.

[thowed]

@milu I understand - I followed it for so many years feeling the same.  I basically capitulated...

 

Slightly inspired by members of this board, I now very occasionally make valuation exceptions for Exceptional companies.  Basically this, Hermes and maybe a couple of others.  Where there's a family in charge & they execute brilliantly.  Companies like this shouldn't be cheap.  But for me they work as a basket in my portfolio.

 

With regard to Lotus, I like that they are also diversifying from the core & their Natural Foods division is very impressive - the brands have rapidly become middle-class staples in the UK & I can see it spreading. 

[Milu]

14 minutes ago, thowed said:

@milu I understand - I followed it for so many years feeling the same.  I basically capitulated...

 

Slightly inspired by members of this board, I now very occasionally make valuation exceptions for Exceptional companies.  Basically this, Hermes and maybe a couple of others.  Where there's a family in charge & they execute brilliantly.  Companies like this shouldn't be cheap.  But for me they work as a basket in my portfolio.

 

With regard to Lotus, I like that they are also diversifying from the core & their Natural Foods division is very impressive - the brands have rapidly become middle-class staples in the UK & I can see it spreading. 

Ya I've been quite tempted too. I love everything except the price, and I have been one of those people who have made a number of valuation exceptions that have paid off in the past. Not sure whether to push my luck or not. Doing something like a 1-2% position and letting it ride might not be the worst idea.

Edited February 7, 2025 by Milu

[Kizion]

21 hours ago, thowed said:

Nibbling at Lotus Bakeries.  Still expensive, but I think the management are top-notch & brands outstanding.  Asian factory opens next year, and they have land capacity to expand other factories.

Did the same thing, unfortunately only today. Thought about a position a couple of times during 2024. 
 

As a Belgian and lover of all Lotus products, this is something I just need to have in my portfolio. Price is demanding but nothing that reasonable growth cannot overcome. Still new markets to conquer and current markets to expand. They also keep finding new product offerings based on Biscoff (spread, icecream, mixed with chocolate, …). Still remember well the start of the spread (2007 apparently), which was invented by a participant to a TV show where people had to pitch their “invention”, which was the spread (until that moment people just put some biscoff cookies between slices of bread). 
 

My favorite way to eat biscoff is to dip it in icecold milk, let it rest for 2-3 seconds (to allow it to become a bit soft and absorb the milk). 
 

By the way, if you like tiramisu, you will like it even more when you replace the normal cookies by biscoff. 

Edited February 7, 2025 by Kizion

[Paarslaars]

Gonna give that tiramisu a try.

 

That said, there is a lot of growth already factored into the stock price and on the earnings call they said they do not have the capacity available at the moment to fill the demand. You are paying > 50 times earnings here...

[Hektor]

11 hours ago, crs223 said:

One thing they do have: US will want to compete with this: https://www.csis.org/analysis/threat-chinas-shipbuilding-empire

Yeah, I doubt the US nuke powered carriers and subs are going anywhere anytime soon. 

[Kizion]

26 minutes ago, Paarslaars said:

Gonna give that tiramisu a try.

 

That said, there is a lot of growth already factored into the stock price and on the earnings call they said they do not have the capacity available at the moment to fill the demand. You are paying > 50 times earnings here...

Once you tried the tiramisu, I don’t think you will ever go back. 
 

It’s definitely a demanding valuation - on short term they are indeed supply restricted (until 2026) but this should be partly compensated by higher ARPU (less promotions) in mature markets. In 2023 they had a 10% volume increase, however a 20% sales increase thanks to 10% price uplift. I’m not saying they will reach a 20% sales increase in 2025, however the pricing power gives me comfort. Knowing that chocolate snack alternatives have a cost headwind and will also try to push it on the consumer, it will give Lotus the possibility to also increase prices slightly. 
 

If you compare it with Nestle or Mondelez, they don’t show any organic growth (or growth at all) and are valued at 20x earnings. 50x earnings for a 15% earnings grower seems reasonable. Growth should come from entering new markets with Biscoff (e.g. India, Australia, …), increase in consumption of existing Biscoff customers and further growth of their healthy snack business. 
 

I would think Nestle or Mondelez would love to take over Lotus at current valuation. However it’s not for sale. I like the thought that I can own a brand like this (just as I also would love to own Nutella or Lego). 
 

My goal is 8% yearly return, that I estimate to be possible with Lotus. 

Edited February 7, 2025 by Kizion