Marriott and the whores

I don't have a lot of things to hide, because I don't go on the dark web. I don't buy weapons and drugs, I don't look at porno with young kids or animals. 

But I don't like hacking issues.

So, I'm upset about the news about a massive hacking of 500 million guests at Marriott. I'm probably one of them because I've been to a few Marriott over the last 12 months: in Florida, in China, in Denmark and in Norway. I wasn't there with a whore so I'm not afraid of any information about my presence there. But I mind about my fucking credit card and my passport.

And I mind about the fucking reputation of Marriott because that's where their fucking edge is: the quality of their hotels. If we can't trust them anymore, where will all the businessmen with whores will go? To a fucking Best Western or any other fucking hotel.

That's why I sold all my shares of Marriott today. I've seen enough of these fucking hacking issues with Equifax, Facebook and some others. And usually, a lot of shit comes with it (many investments, loss of trust, blah blah blah).

I don't think everything will be quickley forgotten. So, fuck Marriott. 

Who the fuck thought Couche-Tard wouldn't be back?

I don't see how anybody could pass by Alimentation Couche-Tard. The stock is cheaper than it's been for years. And even if there's been a slump for the last 2-3 years, the results of the last 12 months show that the company still delivers. Actually, they don't just deliver, they're still one of the best companies in Canada even if they're one of the biggest companies in this country.

I see very few other examples of companies able to buy other companies, change their model and rise their same store sales. That's the secret of Couche-Tard. They know exactly how to make money. They take a convenience store that achieves just moderate success, they change the recipe and that's now a classic Circle K store that makes a lot of money. 

Dollar Tree has been unable to do that with their Family Dollar acquisition. They paid too much for a chain of stores that didn't perform that well and had a different population as a target. And Dollar Tree still struggles with their acquisition made many years ago while Couche-Tard has achieved a 11% EPS growth during the last quarter, not so long after their huge 4,4 billion US$ acquisition of CST Brands in the summer of 2016. That's fucking phenomenal. 

Achieving such success in such a competitive environment, with such low profit margins (3% for Couche-Tard VS 43% for Mastercard) is something very few people on earth would be able to do. You'll find very very little stocks with such low margins and such a market performance over the long run. 

The executives have recently said that they planned the company to double over the next 5 years. I'm sure they will succeed. For me, there's only a few of my stocks that I'm sure will double before 2024. Among them, there's MTY and Couche-Tard. 

God probably doesn't exists but Alain Bouchard does. That's a good substitute. 

A white guy with European DNA in Toronto

Last weekend, I was in Toronto.

It’s a beautiful city that I never visited before. The city is nice and most people look friendly. The Chinatown stinks a bit, but it's the same smell that in every Chinatown. 

I've met some great people: Mike, the guitar player, Jack the blonde chinese (which is a strange mix), and Leia (or Laya or Leah) the blonde Estonian-jewish girl (which is a strange mix also). If you know them personnaly, salute them for me.

I was mostly in Toronto to meet Robin, Be Smart Rich and some unknown people who read our blogs/Facebook pages.

I'm sure that all the people who came have either found me very boring or antisocial because I was in a fusionate relationship with Be Smart Rich who looked absolutely stunned by my charisma which I responded to by giving him almost all of my attention (70% to him, 25% to Robin and 5% to the others).

Around 10 PM, I was a little tired of being seated and I didn't have anything to say to the people around the table. So, Be Smart Rich and I went out to smoke the peace pipe to reach a higher level of conscience. We walked to a bar called "2 cats" which is a very nice place in Toronto that I've liked a lot. People are older there than in other bars, but they're cool and the ambiance is fun. Plus, the drinks are cheap (4$ before 11 PM). A good indicator of that bar being a nice place is that some guys and some girls came to talk to me (without knowing me, of course), which is something that doesn't happen very often.  

But Be Smart Rich didn't seem to like that place. So, before having some real fun, he brought me to some fucking discotheque ("The Citizen") where the average age was way younger. My mind was somewhere else now but I remember saying that it was a place for barely legal girls. It's the kind of place that I hate: Full of sluts and douchebags. Frankly, I don't remember exactly how the people looked so I may be a little too hard here, but I'm sure that I didn't feel at the right place.

During that time, that poor Robin was left alone with the other people who came to the get together. Eventually, he rejoined us. But we soon lost Be Smart Rich. And even if I was still there physically, I was somewhere else mentally. I was wasted. Robin wanted to go back to "2 Cats" which we should have never leaved in the first place (Fuck you Be smart rich) and while we were doing the line up, I felt dizzy and I had a growing urge to piss and vomit. So I went back to where I was staying because I felt it was the right place to combine both activities. After a little internal clean up, I wanted to change my clothes but someone in the hostel had taken my bag and took it somewhere else. So I couldn't find my clothes. That's how the night ended: with the not glorious achievement of letting Robin down after being let down by Be Smart Rich.

One person fell in love with me (Be Smart Rich) while 9 others probably thought I wasn't interesting at all. So, my only achievement is to have seduced Be Smart Rich but even there, there’s a negative side because I left the day after and surely broke his heart.

Too young to die

I have to confess that if I have wide knowledges about a variety of things, it's because I've read a lot on the throne over the course of my life. I've even listen to some series like Game of Thrones while I was (funnily) on the throne.

But spending so much time in that wonderful environment may have consequences. Hemorroids for instance. And sometimes, hemorroids can bleed.

When you type "hemorroids and blood" on Google, you'll surely find some links about colorectal cancer. Actually, when you type almost any syndrom on Google, you'll find something about cancer. Cancer is everywhere: in little symptoms such as in big symptoms. You have a headache: you have brain cancer. You cough: you have lungs cancer.

So, even if there's been some blood going with my poo in the past (it was hemorroids and some doctor put me elastics to correct that problem), I've had some big concerns about it being a real cancer this time. I'm a little bit of a hypocondriac.

So, I went to see two different doctors over the last month. The first one was expeditive but was formal: it was hemorroids. The second went further. He touched my belly. And he even made the rectal touch to see if I had some mass in the rectum. He saw nothing worrying and he said to me that it was probably intern hemorroids that bleed. But I'll get a coloscopy (a tube with a camera in the ass) in a few months to see if everything is OK. Meanwhile, I'll take some stuff to soften my poo. And meanwhile, I still have pain in the ass, four days after receiving some fingers in it.

Learning things on the throne can be very interesting. But some problems may occur over time if you spend too much time there. When comes blood, then comes worrying and thoughts about your imminent death. What will your family do without you? Why having saved so much money while being on the edge of death? Why leaving this world halfway through? Why haven't done some "Breaking Bad" stuff before dying? Will there be some suffering before dying? Will it be fast? Will it be slow? How many people will spit on my grave? That's not funny at all.

If you want to talk about a similar experience, leave a comment or, better, come to Fynn's of temple bar in downtown Toronto next saturday at 8 PM (november 24th) to talk about that. I'm sure you all read my blog while you take a shit.

You're all guys and real guys only read while shitting.

Market crash

The only reason to be unhappy when the market goes down is to have no peso to invest on the market or to be very close to retirement.

Otherwise, you should be excited because there's so many great stocks available at a nice price.

Personnaly, I'm a bit sad because I don't have that much money left to invest. So, I'm watching the carnage, totally helpless.

Have you seen Facebook? It's so cheap now (given the fact that FB has no debt and is full of money). And there's some super great stocks like Mastercard which is available at about 24 times next year's earnings. Yeah, it's a lot, but for that stock, it's almost cheap.

Plus, the government just announced that the TFSA limit is now at 6000$. It's not a huge difference (500$ more than before) but, it's better than nothing. If the market stays this low up until the first days of january, you may have 500$ more to invest in cheap stocks.

In 10 days, it's gonna be december. I'm thinking more and more about my wonderful idea of busting my TFSA limit. Because, if you can buy something with a 20% discount and you have a 1% penalty to pay, it's not a big deal. For instance, if you invest 6000$ on december 1st in your TFSA, you'll have to pay 60$  to the governement for busting your limit for 2018. 

Does it hurt when you can buy something that should probably be 20% more expensive (1200$ more than the 6000$ you'll pay)? OK, some people will say: It may go lower! Yeah, but everybody should always look at an historical PE before investing. If your stock has a PE substantially lower than it's historical average and the stock has been performant as always in the recent past, I don't see how someone could say it's not a good buy.

If I had 15% of liquidities right now, I'd probably invest everything.

Sadly, I have 0,2% liquidities. I have to sell a kidney. 

Ce que les meilleurs achètent

The last transactions of super rich people living a degenerate life are released these days. Let's take a look at all these crazy party animals .

Warren Buffett:

Buffett mostly bought banks in the last quarter. His transactions are usually boring in my opinion, but it works. He's one of the few investors for which it all steadily goes up. People will probably be very excited about his 1% position in Oracle which will make people say he's now a techno guy. Fuck off. He's so rich that he can't ignore techno anymore. He's in almost every sector. That's all. 

Increased his stake in Bank of America by 29% (now 11,7% of Berkshire Hathaway);

Increased his stake in US Bancorp by 24% (now 3% of Berkshire Hathaway) 

Increased his stake in Goldman Sachs by 38%  (now 1,9% of Berkshire Hathaway)

New buy: JP Morgan (now 1,8% of Berkshire Hathaway)

New buy: Oracle (now 1% of Berkshire Hathaway)

Chuck Akre:

He just very slighlty reduce some positions and he bought Focus Financial Partners (now 1,5% of his fund). It's boring to follow such a quiet portfolio but it shows that Akre knows what he does and is in control. I love you Chuck. 

Bill Ackman:

I only follow Ackman because he's so cocky and so bad at the same time. It's a strange mix because usually, when you're bad, you're not cocky. But Ackman manages to combine both. What a mofo. 

Added 9,4% to his Lowe's position (now 18,6% of his fund)

Added 9% to his United Technologies position (now 13,3% of his fund)

Reduced his position in Chipotle Mexican Grill by 29% (now 18% of his fund)

Giverny Capital (Frank Rochon):

It's probably been a hard quarter for Giverny with stocks like Bank of the Ozarks, Fortune Brands, Mohawk and Dollarama dropping like fuck. I wonder why Giverny seems to copy that much the moves of Sequoia Fund, Thomas Gayner and Buffett. For instance, a few months ago, Sequoia sold their entire O'Reilly position. Now, Giverny sells half of his position. They also bought Credit Acceptance Corp a few months ago and sold everything pretty quickly (Sequoia have kept their position). It's probably one of the best funds in Canada and even North America but why these guys don't have their own personality? 

Reduced the Visa position by 11% (now 5,1% of the american portfolio)

Reduced the O'Reilly position by 46% (now 2% of the fund)

Added 10% to the Google position (now 5,4% of the american portfolio with both classes of actions)

Added 11% to the Littlefuse position (now 2,3% of the american portfolio)

Added 13% to the Fortune Brands position (now 2,3% of the american portfolio)

Added 1300% to the JP Morgan position (now 2,6% of the american portfolio)

New buy: Charles Schwab (2,8% of the american portfolio)

Sold all their Wells Fargo shares. 

 

There's a ton of other transactions made by superinvestors in the last quarter, but most of them don't have any interest at all. They buy shitty stuff. Why can these people buy so much cocaine with so little skills? 

Permanent stocks (new ones)

In august 2016, I wrote something about permanent stocks. A permanent stock is a stock with which you have a romantic relation. You're faithfull to them. You believe in them. You think about them at night. You wanna punch the face of someone saying nasty things about that stock.

At that time, I wrote that my permanent stocks were Alimentation Couche-Tard, CGI Group, Constellation Software, Ross Stores and Dollar Tree.

Dollar Tree went in the trash while all the others are still in my heart.

Some other stocks have entered my heart in 2018, by the moment Dollar Tree was out.

I'm talking about MTY Food group, Boyd Group, Google, Mastercard and Booking Holdings. I see them all as very solid businesses that either operate in a kind of monopoly or duopoly (Mastercard, Google, Booking Holdings) or that are very efficient operators that couldn't get down overnight because they're either very diversified or offer a product that won't fade away (MTY and Boyd).

It goes without saying that I would love to share a moment with the CEO's of these companies. Everybody knows that very rich people spend their time doing some very degenerate stuff like doing coke and make 3 weeks orgies with gay people with AIDS. When you're that rich, you can't do what other people do. You have to reach another level, and usually it's a level besides or over the law. So, perhaps that some of these CEO's do that kind of stuff. Actually, when I take a look at the picture of an highly respected CEO, I always say to myself that this guy has probably a lot of sperm in the ass.

But that's what makes them excellent. So, what's wrong there?  

Very high growth stocks

There's different growth stocks.

There's growth stocks that don't make money and that operate in a sector where everything has to be proven but for which there's a lot of excitation  (ex: cannabis stocks).

There's growth stocks that don't make money. Their sales are growing a lot but they don't earn profits (ex: Shopify, not so long ago).

There's growth stocks for which sales are growing or users or consumers, but they don't make a lot of money (ex: Netflix).

There's growth stocks for which sales are growing a lot, such as earnings (ex: Five Below).

All of these kind of stocks are usually selling at a very high PE ratio. You'll be very lucky if you can find one of them at a PE ratio under 25. Actually, some of them don't even have a PE ratio because they don't have earnings. LOL. Isn't it funny?

No, it's not. 

I keep a place in my portfolio for some high growth stocks, but it's not a large place. When these stocks disappoint, the reaction of the market is merciless.

It's a question of balance. When you have one of these high PE stocks in your portfolio, you should compensate with a lower PE stock.

Let's take a look at The Trade Desk (TTD): a new stock that's selling for a crazy price (about 100 times 2018's earnings).

Pros:

• They operate in e-commerce (ad buyers), which is a nice sector;
• The company doesn't carry debt. It's a major pro because if you're looking for a sustainable growth, a large debt would make it much more difficult;
• These last quarters, the company has achieved an incredible growth rate of about 50% each quarter. That's fucking crazy; 
•  Their return on equity is over 20, which is great for such a young company.

Cons:

• You need an incredible growth rate to get that stock at an intesting price. Actually, the growth rate should be 100% per year to make it affordable in my opinion (let's see the evolution of the PE with a growth rate of 50%): 
• 2018: 100
• 2019: 68
• 2020: 45
• ... You have to look for 2022 to find an attractive PE, which is too far for me;
• Datas about the stock are only avalaible since 2016. It's a major con and only young investors may not pay attention to that very important (lack of) information;  

I think that TTD is an interesting stock. But the short track record should be the reason to stay away for a moment. Another way of keeping an eye on it may be to put 1% of your portfolio in that stock and watch how it goes. Or look elsewhere. For instance, you could get Five Below with a PE twice lower and similar EPS growth (but lower sales growth). 

On the throne

Robin Speziale has written a new book. It's called "Capital Compounders" with a long subtitle: "How to beat the market and make money investing in growth stocks". 

Your life is limited. You have only a few decades left to live now (if you read this blog, you're probably in your 30's or more, so, probably something between 2 to 5 decades to live). That's not so long. And perhaps you currently have a cancer that's not been discovered yet (which is something that I have in mind most of the time), so bad surprises are just around the corner. And if it's not a cancer, maybe your girlfriend will leave you. Or you'll lose your job. Or your kids will need special help because they will have special needs. You'll surely fall into one of these categories sooner or later. And it's gonna occupy your mind full time.

That's why you have to be interested about your finances right now, when you're in a situation where you're not too distracted about other problems. But first, you have to know as much as you can about the stock market to do the right moves. And you have to invest that 1000$ you've managed to save during last month. Because when you'll be 60 years old, it will be too late. 

So, you have to read about the stock market even if it's boring as fuck. Incredibly boring. Yeah, You'd rather be back from work, lay down on the couch, drink a beer and watch that fucking drama crap "This is Us" on Netflix with that fucking enormous 400 pounds girl.But it won't get you anywhere. They're all fictional characters. But the weight of that girl is not fictional.

So, you should read the new book by Robin. And invest your money following his advices. Because you'll float when you'll be liberated from financial preoccupations.

We all float down here.

The book is good and interesting. It features a lot of advices from Robin which should be read. There's also some articles written by great bloggers like Penetrator and Be Smart Rich...

So, you should read that book. However, for me, the masterpiece of Robin will always be Market Masters, because there's an incredible load of work behind that book and tons of interviews with the greatest investors from Canada and some others not so good from some other countries (Bill Ackman). I recommend that book first and foremost. Then, the new book would be a great addition, after that one. 

Anyway, both books deserve to be on your throne. 

Buying something with 100 billion dollars

When you have 100 billion dollars on hand and you're Google, you can't buy random stuff because you operate in a specific sector.and your purchase will be judged severly if it's too creative. But when you're Berkshire, you don't have to respect any kind of logic because you already own candy shops and railroads.

So, with about 100 billion dollars, what could Berkshire Hathaway buy? (100 billion dollars = about 20% of the value of the holding). 

The last big acquisition of Berkshire was Precision Castparts for 37B dollars, on august 10, 2015 (2 years and a half ago). What were the characteristics of that stock? 

1. A company with a huge moat (parts for aeronautics)
2. A stock with a fair PE on an historical basis (about 18 times next year's earnings which may look expensive, but for Precision Castparts it wasn't that expensive even if Buffett said it was expensive)
3. A highly predictable stock
4. A stock with growth prospects

If Buffett wants something that will have some impact on Berkshire, he probably won't buy a small or medium cap stock. So, even if Francois Rochon has said in the past that Carmax (KMX) would be the kind of stock that Buffett would buy, with a market cap of about 12B$, it wouldn't make a big difference on Berkshire.

So, let's speculate…

I believe Buffett will buy a big company (50B$ and more) that experiences some slowdown and is thus avalaible at a cheap price. Buffett rarely buys expensive stuff. So, here's a list of cheap medium or large caps with highly predictable earnings. I suggest a few not-so-large-caps because I think they're very cheap at the moment and they fit with Buffett's style. Carmax is among them.

Booking Holdings (BKNG): Forward PE = 19       predictability = 80%

Marriott (MAR): Forward PE = 19                         predictability = 60% (a little low for Buffett)

Cognizant (CTSH): Forward PE = 14                      predictability = 100%

NVR Homes (NVR): Forward PE =12                    predictability = 80%

Mohawk (MHK): Forward PE =11                         predictability = 80%

O'Reilly (ORLY): Forward PE = 18                          predictability = 100%

Carmax (KMX): Forward PE = 14                          predictability = 95%

 

I know that Buffett very rarely buys outside of the US, but here's two canadian stocks which I believe would fit with Buffett style and that are not that expensive.

Couche-Tard (ATD-B): Forward PE =  15      predictability = 85%

CCL Industries (CCL-B): Forward PE = 17     predictability = (not on Value Line but good anyways)

Buffett won't gamble with something that's not 80-100% predictable (according to Value Line). I'm sure that all the stocks above are liked by Buffett.

Feel free to add some ideas.

Coming to Toronto

When I was young, I read in one of my school’s book that Toronto was the most cosmopolitan city in the world. It was full of people from everywhere. It was so different from where I come from, which is a small city in the suburbs where everyone is white and everybody speaks french.

With 2 billions people or so, Toronto is an exotic place for me. Full of yellow people who speak Italian and practice sodomy. Everyone knows that cosmopolitan cities have wild sexual practices.

So, I’m a bit excited because it’s official: I will be in Toronto on November 24th. With my special friend Robin Speziale. And you, yellow and black and blue people from Toronto. Because smurfs are surely from Toronto. It’s so cosmopolitan.

Do you want to get drunk with Robin and I? If you’re interested, we invite you at a bar which I don’t know which is called « Fynn’s temple of bar » on 489 King Street west. If it’s a shitty place, feel free to tell it to Robin and make him feel bad because he’s responsible for that choice.

Let’s get there around 8 PM and let’s drink all through the night. Don’t be shy to come alone. I’ll know nobody except for Robin.

You’ll all be impressed by my French accent. I promise you. And if you don’t give a shit about me, you’ll have plenty of other people to talk to.

November 24th
8 PM
Toronto Downtown
You and me
Beers and dance