lundi 1 août 2016

Investing like Warren Buffett

For about a week, there's been a huge amount of russian visitors on my blog. Yeah, there's been about 1740 russian visitors over the last week VS about 1150 canadian visitors. I don't understand what's happening. Is it related to my "russian whores" mentions? I don't know. And if yes, I wouldn't understand either.

Is that a silly joke? Like some single russian guy hitting 1740 times my blog, using some wicked devices just to play with my emotions and give me the illusion that I'm a superstar in the country of Ivan Drago?

******
Back to the main program:

We, at Bullshit Capital, invest like Warren Buffett.

We, at Scrotum Investing, filter stocks the same way that Warren Buffet does.

Fuck you. Too many people evoke Warren Buffet name and actually don't act like him at all. If you invest like him, just fucking reproduce his portfolio via Dataroma! Don't invest in AIG or in Netflix, telling us that you invest like him. Fuck you again. 

To understand what is it to invest like Buffett, let's take a look at his 8 biggest positions that represent about 80% of his portfolio:

1- Kraft Heinz (19,9% of the portfolio)

Average ROE last 5 years: 22 (the ROE has been lumpy in the recent past because of the merger between Kraft and Heinz)
Forward PE: 22
EPS growth last 5 years: Negative (hard to evaluate because of recent merger between Kraft and Heinz)
Beta: ?

2- Wells Fargo (18% of the portfolio)

Average ROE last 5 years: 13
Forward PE: 11
EPS growth last 5 years: 13%
Beta: 0,9

3- Coca-Cola (14,4% of the portfolio)

Average ROE last 5 years: 26
Forward PE: 22
EPS growth last 5 years: -8%
Beta: 0,5

4- IBM (9,6% of the portfolio)

Average ROE last 5 years: 85
Forward PE: 11
EPS growth last 5 years: 3%
Beta: 0,8

5- American Express (7,2% of the portfolio)

Average ROE last 5 years: 26
Forward PE: 12
EPS growth last 5 years: 9%
Beta: 1,2

6- Phillips 66 (5,1% of the portfolio)

Average ROE last 5 years: 19
Forward PE: 13
EPS growth last 5 years: 46%
Beta: 1,4

7- Wal-Mart (3% of the portfolio)

Average ROE last 5 years: 21
Forward PE: 17
EPS growth last 5 years: 2%
Beta: 0,2

8 - US Bancorp (2,7% of the portfolio)

Average ROE last 5 years: 15
Forward PE: 12
EPS growth last 5 years: 13%
Beta: 0,8

Let's see the numbers for this global portfolio of 7 stocks (please, note that Kraft Heinz is excluded because of the recent merger between Kraft and Heinz and the lack of accurate numbers).

So, the following numbers are calculated with 7 positions that count for 60% of Buffett's portfolio.

BIG 7:
Average ROE last 5 years: 30,2
Forward PE: 14,3
EPS growth last 5 years: 8,1%
Beta: 0,83

I'm not a maniac enough to calculte the same numbers for Sequoia Fund, Lou Simpson, Bill Ackman, etc. You see, I have a fucking feeding bottle to give to my baby each 2 hours and some other tasks to do, like riding a bicycle along with my almost 7 years old son to take him from my Iphone, listening to his crazy child programs on Youtube. So my research ends here. But the question is still there: Who really invests like Warren Buffet?

Me. Oh yeah, me. The average ROE and the forward PE of my portfolio is about the same as Buffett. I haven't calculated my average Beta but it's surely under 1. And the average EPS growth over the last 5 years of my portfolio is surely better than 8%.

So, I can say that I invest like him.

But wait, I don't have 128 billions dollar to invest. And I don't invest mainly in blue chips.

So, I don't really invest like him.

But I'm more like him than a lot of those fake analysts that appear on BNN or anywhere else.

5 commentaires:

  1. Buffett does not accurately describe his own style of investing. He considers himself a disciple of Ben Graham. Francis Chou is more of a disciple of Ben Graham.

    One other HUGE advantage that Buffett has over anybody else is the BILLION$ in insurance premiums that he can use to make money (he pays off on the insurance DECADES later). The insurance business is a huge part of Buffett's success. The rest of us do not have the use of money for decades.

    Your style of investing is similar to Buffett. High ROE and low p/e with a strong business franchise.

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    1. Yeah, GEICO explains a good part of his success. You're right.

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  2. Buffett does not accurately describe his own style of investing. He considers himself a disciple of Ben Graham. Francis Chou is more of a disciple of Ben Graham.

    One other HUGE advantage that Buffett has over anybody else is the BILLION$ in insurance premiums that he can use to make money (he pays off on the insurance DECADES later). The insurance business is a huge part of Buffett's success. The rest of us do not have the use of money for decades.

    Your style of investing is similar to Buffett. High ROE and low p/e with a strong business franchise.

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  3. Hahaha you are very right. I mention so much of Buffett in my blog but I don't really invest like him. I changed my investing style from dividend oriented investing to high ROE companies with less leverage. Some exceptions here and there but I am slowly changing my composition of portfolio one by one.

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    1. It's hard to wake up and to realize that you're wrong. But when it happens, I usually make good decisions.

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