lundi 18 novembre 2019

Ce que les meilleurs achètent

Here's another chronique about ce que les meilleurs achètent. 
 I'm not more excited about these investors than I was before, but, once in a while, we find something interesting among their stocks. And, in general, we can see if these investors think that the market is expensive or not (lots of buy, or no buy at all). Small clues to help us make our way through this merciless market.  
Let's begin with Giverny Capital from Montréal. I still like them. They don't do a lot of stupid things. Usually, they're pretty rational and their picks are interesting :
First, they started a new position with Progressive (PGR), an insurance company. It’s an interesting name that I’ve known via some old Sequoia investment letters. A long time ago, Progressive was a very big position for Sequoia (15% in 2006 and I think it was even bigger before that year).
PGR represents 2% of the american portfolio for Giverny. It's a significant new position. I don't like financial and insurance companies anymore, but that's one of the few names I'd be tempted to own, one day or another. But don't take my word as an advice and take a look by yourself.
LKQ is entirely sold. It was a big position for Giverny not so long ago so I guess they gave up on it. Mohawk is also almost completely sold (97% of the position was sold). It’s weird, given the fact that the stock is currently really cheap and Giverny boys have been fans of the stock for years.
Apart from Giverny, what did the others do?
Buffett did nothing significant other than reducing his Wells Fargo stake by 8%.
David Rolfe (the guy who owns almost all the stocks I like) was very active. He reduced almost all his positions but increased his Alphabet stake by 33% and his Electronic Arts stake by 55% and, finally, Alcon by 45%. He started new positions with NVIDIA and CDW. 
Chuck Akre did almost nothing significant except than starting a position in Brookfield Asset Management and adding a lot of shares to his minor Alarm.Com position.  
That good old Bill Ackman increased his Berkshire stake by 14%.
Many investors were very active. I don't understand this hyperactivity. Probably they don't understand it too, because as we all know, most of them improvise.  
And you, unknown investors, did you do something special during the last quarter?

6 commentaires:

  1. As a rule the investors I enjoy following for ideas and comments in general are for the most part…unknown investors but with a good long term track record…

    Stephen Takacsy who is on BNN’s Market Call-in show is particularly good as he thoroughly explains the ideas behind his recommendations. The website for his firm, Lester Asset Management is good as well. I always read his quarterly comments as well as Bruce Flatt’s quarterly letters to the shareholders (Brookfield).

    And no I didn’t do anything in the last quarter (I’m already fully invested). I’m currently having my best year ever (up 40 percent on the year)…I hope the gods of investing don’t strike me down for mentioning that so I will add that last year was my worst year ever (down almost 13 percent).

    I have great respect for Chuck Akre…One great investor down in the states is a guy no one ever mentions…Frederick K. Martin (Disciplined Growth Investors)…He wrote a pretty good book on growth investing called Benjamin Graham and the Power of Growth Stocks: Lost Growth Stock Strategies from the Father of Value Investing.
    All of the investors I’ve mentioned here have a solid long term record and small egos.

  2. Polen Capital initiated stake in MSCI. MSCI looks interesting, a little overpriced, but worth putting it on the watch list, or maybe taking small position here. Value line predictability is 85.

  3. I sold some long-term holdings to get to 30% cash when the yield curve inverted. I started to ease back into the market last month by increasing my Brookfield (BAM.A) holdings.

    I am still almost 20% in cash and might leave that money on the sidelines until the end of the year.

    Currently up 22% in 2019 after -2.3% in 2018.

  4. Hey Gavin, I'd be cautious following Takacsy's recommendations. Lester asset mgmt has under performed the index more years than not. All their returns are right their on the website, they are not very good. Not to mention some of his picks come to mind like Dbox and Flyht Aerospace which have completely tanked. You'd really be better off buying an index etf.

  5. I will be looking into what has changed in the institutional holdings as well re-examining my own holdings in the new year, when I will be able to contribute extra cash to TFSA. I also recently lost my university scholarship and one of my jobs because of provincial budget cuts in Alberta so I do not have much extra money to play with... so much for a "stable" government job.

    Because of the rising prices and some poor Q3 earnings, my current portfolio has dropped TTM earnings yield (including cash interest) below 5% (4 companies have negative PE) so I am a bit weary because that is my "sanity check" portfolio threshold (EQBank cash account, short-term GICs, short-term bond ETFs, etc pay about half of this return risk-free and having this in place several years ago would have helped me avoid catastrophic mistakes like Concordia and Valeant). Still, plurality of my holdings are not anywhere near their 52 week highs (overall portfolio is about 12% below theoretical max) and I am underwater on 44% of my holdings. For reference, Vanguard ETFs for Canada (VCE) and US (VFV) have earnings yield of 7.09% and 4.72%. Small/mid cap companies have very attractive prices compared to the past few years. Long-term, the Canadian stock market has been fairly stagnant, despite of the media hype. I just broke even this July after really sad streak of losses since the first month of buying stocks and still have -54% cumulative performance in my RRSP as of end of October.

    My holdings as of 19. Nov. 2019:
    TSE:HCG 16%
    CASH:CAD 15%
    TSE:EQB 14%
    TSE:CSU 8%
    TSE:MTY 7%
    TSE:ENGH 4%
    TSE:DOL 4%
    TSE:ECN 3%
    TSE:GIB.A 3%
    TSE:LNR 3%
    TSE:LAS.A 3%
    TSE:NFI 3%
    TSE:CCL.b 3%
    TSE:CNR 3%
    TSE:WPK 3%
    TSE:SJ 2%
    TSE:BAM.A 2%
    TSE:RCH 1%
    TSE:ALA 1%
    TSE:BHC 1%
    TSE:CMG 1%
    TSE:CEU 1%
    TSE:BDI 0%
    TSE:CPH 0%
    TSE:BBU.UN 0%

    TTM earnings yield 4.91% (excluding cash 5.38%). [Googlefinance does not have ROE, FCF, etc. and I do not have time to gather the numbers right now so I will omit listing them.]

    Please, do criticize my holdings so that I can learn. I am tempted to finally clean-up my portfolio of its weeds this winter so your feedback would be very valuable.

  6. I have a perhaps stupid question for you guys (it is past 1 AM here):
    Do you anticipate your portfolio will grow in value by ROE*(1-payout ratio)+dividend yield or how do you project your future returns?

    If I had a company with ROE of 20% and it retained all of its earnings and maintained its PE multiple, then it should trade at 20% more next year. If it did not retain all earnings as equity, then we would just get the remainder as dividend instead of equity. I guess that's why Jason Donville used the adjusted ROE/PE as a quick and dirty screening criterion.

    When I run the numbers for a few examples, they do not seem to compare:

    Stock | Expected Return | 5YR Average ROE & PE | 5YR TOTAL Return
    CSU 50.99% 43.13% 33.98%
    ENGH 12.20% 12.53% 16.36%
    GIB.A 18.40% 14.48% 21.31%
    MTY 10.17% 17.46% 10.33%

    Any thoughts? Should I dump ENGH in favour of CSU in the future despite of the larger size and 56% higher PE?

    CSU is the only stock which has compounded in my portfolio but I always foolishly think it is too expensive and never got over that mental block, (instead always wanting to average down into my perpetual losers trading at single digit multiple of free cash flow).