vendredi 29 décembre 2017

My returns for 2017

My picks for 2017 have been the following :
  1. Constellation Software (up 26%);
  2. CGI Group (up 5%)
  3. Alimentation Couche-Tard (up 8%);
  4. Linamar (up 26%);
  5. Knight Therapeutics (down 24%);
  6. Tucows (up 79%);
  7. United Therapeutics (up 4%);
  8. Mohawk (up 37%);
  9. Disney (up 2%);
  10. LKQ (up 33%);
Average return : 19,6%
The returns above are the returns of each stock, without the exchange rate between US dollar and CAN dollar. Given the fact that the canadian dollar rose in 2017 (from 76 cents to 79 cents), the return of each american pick has actually been a bit lower than what’s written up there.
The global return of my portfolio has been similar to these 10 picks (18%). 
The return of the S&P 500 has been : 19% and the return TSX/S&P 500 has been about 5%. The Russel 2000 did about 13%. And the Dow Jones did 25%. There’s probably another index which could be appropriate but I’m a little lost among all these indexes. In my opinion, my portfolio should be compared with the TSX/S&P 500 (because my portfolio is 50% CAN and 50% US) so I’ve beaten the benchmark by about 13% which is very good. Feel free to kneel in front of me. And kiss my feet while you’re there.
Give me one year of good results and here I go: claiming blowjobs and not giving any insights about my Valeant years.  
The stars of my portfolio have been Tucows, Mohawk, LKQ, Constellation Software and Linamar… But let’s not forget Credit Acceptance Corp (up 51%), Novo Nordisk (up 50%) Dollar Tree (up 40%) and Ross Stores (up 23%) since the beginning of the year.
My only bad pick was Knight Therapeutics with a return of -24%. Which reminds me that we should never bet on a speculative stock and if we ever own any of these, it should be a small chunk of our portfolio. I still own Knight Therapeutics but I may very well switch for a business that really makes money in 2018. 
 That's probably the last post of 2017. Happy new year to everyone. For 2018, I wich you a transforming experience like swimming in the Ganges or some crazy thing like that. That's what money is for. 

mercredi 27 décembre 2017

10 lessons learned in 2017

  1. Never buy a stock on the speculation that something could happen (merger, acquisition or whatever);
  2. Best performing stocks are stocks that are making money and which are growing their earnings year after year… but, the most important point is that the free cash flows are growing year after year;
  3. Chuck Akre deserves your admiration;
  4. Sequoia Fund and Giverny Capital are very good too, but a little less than Akre. Forget the rest;
  5. A high PE ratio relative to the market may not be a high PE ratio when you compare it to histoical levels for a high-quality business;
  6. You should buy these “always high PE ratio stocks” when they’re selling for a lower price;
  7. A very large cap may offer great returns and grow much more than 95% of the other stocks (for instance: Google, Facebook)
  8. A nano or micro cap is almost ALWAYS a bad investment. They suck and the people who are talking about them suck too;
  9. Many stocks don’t retain their value. Healthcare stocks are often at risk of losing their value;
  10. When you select your stocks with a lot of caution, among not too expensive (on an historical basis) growing free cash flow stocks, you can do well with at about 80% of your picks. Which is better than almost every investor. 

jeudi 21 décembre 2017

My picks and yours for 2018

Soon, I'll write a review about my picks and yours for 2017.

But, for now, let's take a look at what looks promising to us for 2018. This time, I'll go with only 5 picks and I ask you to do the same, because 10 picks is a lot.

1- Alimentation Couche-Tard (ATD-B.TO);
2- MTY Food Group (MTY.TO);
3- LKQ (LKQ);
4- Credit Acceptance Corp (CACC);
5- Facebook (FB). 

What are yours?

mardi 19 décembre 2017

Bitcoin: LOL

The big hype these days is Bitcoin.

I'm a professional. Before writing something about Bitcoin, I’ve been on Wikipedia to read what that thing is.

I didn’t really understand. LOL. Am I some kind of retard LOL? Or is that cryptoshit some kind of joke only Frank Abagnale can understand? At this point, I suck, as a professional.

On wikipedia, they talk about « crypto currency » and « blockchain » (LOLLLL) and the fact that Bitcoin is not a currency but a good. LOLLLL. A good to speculate may I add.

Here’s the price of Bitcoin over the last 2 years (in canadian dollars):

December 31th 2015: 519$
December 31th 2016: 1277$
And now, 2017...
July 14th 2017: 2460$
September 25th 2017: 4974$
November 4th 2017: 9600$
December 5th 2017: 15 000$
December 15th 2017: 24 900$ (LOLLLLLLLLLLLL)
December 19th 2017: About 23 500$ (LOLLLLLL)
If you had bought that cryptostuff one year ago, you would have made almost 25 times your money. It's completely crazy.

I have to admit that, even though I understand jack shit about that scam, I’d really like to borrow a Delorean at the nearest Carmax and go back at the beginning of 2017 to put 100 000$ on Bitcoin. 

But I’d sell everything today.

lundi 18 décembre 2017

The quality of content

I've never seriously thought about investing in Netflix. Yeah, the business is great, but the numbers aren't that great. That stock's valuation is mainly related to the amount of members.What I wrote last february still applies. The numbers have changed, but overall, it's not a logic investment at all.

However, I really believe that this business is a quality business. Have you seen how great are the series on Netflix? Many great series are there, but many great series are exclusive on Netflix!

Stranger Things, Black Mirror, Dark, Atypical, Mindhunter, Narcos, House of cards and many many more. In fact, many people would read what I'm writing here and say that I've missed a lot of great series. The point is that it's very hard to produce a very good serie or a very good movie and Netflix has achieved to do it a lot of times.

Just go checking on to see the best TV series of all-time. You'll see that many of them are on Netflix and some of them are exclusively on Netflix.

I'm not that much a TV guy. If I'm seduced like that by such quality, I believe that Neflix is going to do very well in the future.

Disney may arrive in the business (and I'm a shareholder of Disney), but with such a great quality, I don't think it's gonna be easy to compete. Well, Disney has a shitload of great franchises. But Netflix has built something great before the others, so they're way ahead for now.

I still don't plan to invest in Netflix. But if I'd do, it would be the first time of my life I'd invest in a stock because of the quality of it's products (and a lot of people agreeing with me on that subject) instead of after taking a look at some numbers.

dimanche 10 décembre 2017

Portfolio review (december 10th, 2017)

Please, enjoy that last portfolio review like you're used to watch once in a while.

The game is that, if you want to start an investment club, a hedge fund or anything similar like a sect, you have to keep a certain mystery about what you're doing. Otherwise, nobody has an interest to join you because you give them everything they need. People want magic and mystery. Not honesty.

Keeping 20 stocks in my portfolio is still my goal. So, when I buy a new stock, I have to sell another one, which is sometimes heabreaking. But that's how it goes. There's only place for 20 stocks in my heart. Heart is obviously a synonym of portfolio.

I know the market can't continue to go up forever like that. There's surely gonna be a crash sooner or later. But so far so good. I'm still becoming richer and richer, month after month. And, steadily, things improve. You reach a point when you have a third of a million dollars and, with the historical performance of the market, your portfolio may grow by 30 000 or 40 000$ every year without any effort. That's almost enough to leave your job. That's almost enough to say "fuck you" to everyone and everything if you want it. And that's the most wonderful feeling in the world.

For now, it's only the beginning of such a feeling. But I can feel it coming. I can feel it coming in the air tonight Oh lord.

That being said, there's been a little clean up in my portfolio lately. I've sold a few stocks since september. Not because I didn't like them but because I've found something better.

Here's my portfolio, on december 10th 2017:

Cash: 8,6%

Alimentation Couche-Tard: 7,2%
CGI Group: 6,6%
Constellation Software: 5,9%
MTY Food Group: 5,6%
Tucows: 5,3%
 Hardwoods Distribution: 3,4%
Knight Therapeutics: 2,6%
CCL Industries: 2,3%
Enghouse Systems: 2,1%

Ross Stores: 6,7%
Dollar Tree: 5,8%
Bank of the Ozarks: 5,7%
Novo Nordisk: 4,9%
O'Reilly: 4,7%
LKQ: 4,7%
Priceline: 4,6%
Credit Acceptance Corp: 4,2%
Disney: 3,2%
Mohawk: 3,2%
Middleby: 2,8%

Average ROE: 28
Average FWD PE: 18,6
Average Beta: 0,8

mercredi 6 décembre 2017

Share my wisdom with you, once again

The market is more and more expensive every day.

Here's a strategic move I've made. Well, it looked strategic to me, but in a few months, I'll be able to see if it's been really strategic or just a useless move.

I've sold a "class C" free cash flow stock to buy two "class A" free cash flow stocks. These two stocks had better ROE and a similar or a little higher forward PE ratio, plus a better growth. However, these two stocks have a forward PE ratio lower than their historical PE ratio for the last 5 years. So, they're cheap on a relative basis while Stella Jones is expensive on a relative basis (about 26 times current earnings and 21-22 times next year's earnings).

The market is riskier than it's been. I don't want to sell everything and everybody who's got a brain says it's not a good idea to sell a good business because the market is expensive. But I want the best quality, because the best quality does better than the rest in a recession or in a period of growth.

I still think Stella Jones is a good business. It's better than 80% of what is avalaible on the market. But I've just thought that my Stella Jones position could be splitted in two smaller positions of higher quality stocks.

In other words, the stock market is expensive on a relative basis. Many stocks are expensive on a relative basis. But there's some expensive stocks (PE between 20 and 30) that have always been expensive and which are less expensive right now than they've been in the past.

It's probably better to buy stocks that have always been expensive than stocks that have rarely been this expensive.

Obviously, you could come up with a great example to invalidate my post.

Please take note that I'm probably not thinking about the stock you think about.

samedi 2 décembre 2017

The power of the balloon

Since 3 or 4 years, each december, I'm crashing at least one holiday party to which I'm not invited.

I go there with a friend. We dress well and we go to the biggest reception halls in the city to infiltrate some big corporate event and try to dance and talk with employees like we were colleagues.

When people ask in which department you work, that's the tricky part: you have to imagine something vague but precise enough to look credible. Small talk is the best thing to avoid pitfalls.

Friday night, we've been to a big insurance company event. The kind of event where there's about 1000 people invited, so it's easy to be incognito. The party wasn't wild enough for us so we stayed there for only about 30 minutes. But before leaving, I saw that there was a lot of big balloons in the place and many people left the party with a balloon. So I took one and we left.

I walked on the street with my big balloon (about 1 meter tall) floating 3 meters above me. Everybody was looking at us. I felt like I was some fucking celebrity. I felt invincible.

So, we went to another place, maybe 500 meters away and we penetrated in some dentists party. We went to the dance floor with my big balloon (which, this time, was the only balloon in the place). Here I am, putting the sandbag of my balloon in my back pocket, on the dancefloor with about 100 dental hygienists and dentists around me and my balloon, 3 meters above. I'm the superstar of the place, because nobody can stay indifferent towards such a big black balloon.

And, let's admit it, when you're a guy at such a party, everybody believes you're a dentist and you earn 350 000$ a year. So, a substantial part of the girls would probably like to fuck with you, even if you're not their kind of guy. I saw that strange look on the faces of many dental hygienists (interest not towards how you look but towards what you represent). But maybe it was just the power of the balloon. 

After about 2 hours, we decide to leave and go back to the first party. Sadly, the party is almost over and the place which included about 1000 people a few hours before is almost deserted. About 30 people are on the dancefloor and that's all. We talk with a few people, and we leave once again.

However, before leaving, I take with me the only big balloon that remains in the place. So, we now own two big balloons. We feel even more indestructible.

And we go back to the dentists party. And that party is almost over too.

Now, it's about 2 AM and we know that holiday partys are probably over everywhere. So we go to a bar. Because bars close at 3 AM in Quebec.

Once again, I take my balloon with me. I'm having it with me on the small dancefloor even if it's way too small for such a big balloon (20 people and the dancefloor is full) and the ceiling is way too low. But I don't care. Tonight, the balloon rules the world and has to be respected everywhere. Respect for the balloon.

I ask the barmaid for a sharpie pen to write on my balloon that it's my birthday party. After writing down a few words, Some people come to me, asking me to sign the balloon. And I ask some other people to sign the balloon. I end up with about 20 people signing the balloon.

At 2:40 AM, one of the waitress comes and ask me why I have this balloon. I tell her it's because it's my birthday. She tells me that I can have a free bottle of sparkling wine. And she doesn't ask for my ID. She just assume that the balloon is a valid proof of birthday.

So, I get my free bottle and share it with my friend and some people around.

Don't ever doubt about the power of appearances.  That balloon taken at some party and brought to other places brought joy, excitement and even fascination . The impact of the uniform and the appearances is a big weakness of human condition.
My golden balloon with some signatures.