mardi 14 novembre 2017

Ce que les meilleurs achètent

You think the market is expensive?

You would never pay more than 20 times earnings for a stock?

Well, you surely don't work for Giverny Capital.

Because the activity of the fund for the quarter ending on september 30th was out yesterday and we could see that they sold NOTHING over the last quarter.

They just added to their existing positions and even to some very expensive stocks on a value perspective.

Let's see the top positions of the fund and the percentage of shares added during last quarter:

1- Berkshire: 19% (+2%)
2- Carmax: 10,4% (+3%)
3- Bank of the Ozarks: 8,6% (+4%)
4- Ametek: 6,6% (+1%)
5- LKQ: 5,8% (+1%)
6- Visa: 5,2% (0%)
7- Disney: 5,1% (+1%)
8- Markel: 4,8% (+1%)
9- Union Pacific: 4,6% (+7%)
10- Wells Fargo: 4,3% (+1%)
11- Alphabet (GOOG + GOOGL): 4,3% (+6%)
...
14- Liberty Media (Formula one): 3,5% (+7%)
...
16- Heico (3,4%) (+7%)

Heico is expensive as fuck. It seems that it's a kind of Precision Castparts. If you pay 40 times current earnings for a stock like this, you gotta have faith in this stock.  But, if you take a look at the performance of that stock since the beginning of 2017, you'll bite your fingers seeing how much money you could have made (from 63$ to 90$, almost a 50% performance).

These guys are pretty good. They know better than many people how to pick stocks that retain their value, which is not an easy task at all. And they know when to pay a premium for a stock.

Let's take a look at some other people too:

Chuck Akre:

Like Giverny Capital, Chuck bought a lot during last quarter. That guy is surely one of the best investors out there. I believe his picks must be studied by most of us because he inspired a lot some great investors like the guys at Giverney (high PE but good ROE with great growing cash flow machines).

American Tower: added 8% to the position
Moody's: added 41% to the position
Mastercard: added 13% to the position
Visa: added 35% to the position
Dollar Tree: added 16% to the position
O'Reilly: added 130% to the position

Warren Buffett:

Apple: added 3% to the position
Bank of America: new position for about 10% of the total portfolio ($hitload of money)
IBM: reduced the position by 32%

Buffett is admitting his mistake with IBM by selling more and more of it. That stock had a huge ROE and a low PE. The market isn't crazy. When a PE is really low, usually, there's something wrong with a stock and it was (it's still) the case with IBM.

The new position in Bank of America is probably a conversion of warrants or some shit. I don't know. Please, check elsewhere to have the correct explanation.

 Lou Simpson:

Allison Transmission Holdings (ALSN): added 46% to the position
Axalta Coating Systems (AXTA): added 12% to the position

I know almost nothing about these stocks. ALSN looks OK, but I'd have to dig much deeper.

Bill Ackman:

The fact that this guy still manages more than 5 billion US dollars amazes me. How the fuck some people still trust him after all the crap he did? Here’s what he does: buy a large stake of a company, TRY to do something to improve earnings (which doesn’t work 50% of the time) then sell almost everything a few years later with some stupid excuse like capital losses for tax purposes (LOLLLL).

Restaurant Brands: position reduced by 32%
Automatic Data Processing: added 403% to the position

What kind of shit will he try to do with Automatic Data Processing now?

samedi 11 novembre 2017

Sequoia Fund's update

Soon, I'll write my usual post about superinvestors, because what they bought lately will be out. It's gonna be interesting to see what they bought in an expensive market.

I'm a little late on this one, but Sequoia Fund's third quarter letter was out about one month ago and it told us the late activity of the fund:

They added to their large position in Google/Alphabet (undisclosed increase);
They slightly increased their position in Jacobs Engineering to about 3% of the total portfolio;
They increased their position in Wells Fargo to 3,2% of the total portfolio;
They initiated a mysterious new position (anyone wants to guess?)

They trimmed their positions in Chipotle, Mastercard, TJX, Waters and Constellation Software bonds. They exited their positions in Croda and Danaher, two stocks about which nobody talks.

Chipotle is still a fucking joke. The stock was selling for about 400$ a year ago and is now selling for about 280$. Bad move, Sequoia. Stay away from whatever Ackman touches,because it transforms into shit. Everybody knew a year ago that it wouldn't be easy with Chipotle. Why trying it anyway?

About 90% of the portfolio is invested and 10% is in cash.

Finally, here's the top 10 holdings:

Berkshire Hathaway: 11,8%
US Treasury bills and cash: 9,7%
Alphabet: 9,4%
Mastercard: 7,5%
Carmax: 6%
TJX: 5%
Constellation Software: 5%
Dentsply Sirona: 4,8%
Rolls Royce: 4,8%
Liberty Media Corp: 4,2%

Whatever I'm saying here, I believe that most of the moves of Sequoia are great and are worth following. Alphabet is a fucking monopoly. It's a huge cap too (720 billion dollars), so it surely won't double over night, but is anyone thinking this stock could seriously be threatened or losing it's ultra dominant position? Plus, they're full of cash. Substract the cash and you'll find that it's not that an expensive stock...

With that top 10, as good as all theses stocks are, do you still believe Sequoia invests mostly in mid caps?

dimanche 5 novembre 2017

Market caps

Every investor has an opinion about market caps. But few people have the same definition of market caps categories.

So, I've made a little journey on Wikipedia and here's what I've found. 

Nano Cap: market cap under 50 millions dollars
Micro Cap: market cap between 50 and 300 millions dollars
Small Cap: market cap between 300 millions and 2 billions dollars
Mid cap: market cap between 2 and 10 billions dollars
Large Cap: market cap over 10 billions dollars

I think we could add "Mega caps" for a market cap over 100 billions dollars.

For me, the categories look that way:

Nano cap: Suicidal.
Micro Cap: Risky but could be great if you're very selective and you chose stocks with a market cap close to the beginning of small cap category (200-300 millions dollars).
Small Cap and Mid Cap: Best place to look if you're an individual investor.
Large or Giga cap: Blue chips can stabilize your portfolio. It's a good idea to have a few of them on your portfolio, but not too much because amazing growth is usually not there (except for some exceptions like Amazon, Google, Netflix...)


Although market cap is not my first criteria before investing, on a portfolio perspective, I think it's a good idea to balance market caps in a reasonable way, with, of course, a place close to zero devoted to stocks with a market cap under 200 million dollars.

vendredi 3 novembre 2017

Another day of despair

We live amongst pedophiles. I mean, if we can't trust Kevin Spacey, who can we trust? That guy was my favorite movie star for many years and now, we learn that he's some kind of fucking predator, wanting to fuck 14 years old boys.

I'll never be able to watch his masterpieces like K-PAX and Superman returns again. Fuck you Kevin Spacey. But I wish you to be fucked by grown up girls. I bet you'll hate it.

I really want to trust and admire some people but fuck, this world is full of losers and mofos. Half of Hollywood is deviant (pedophiles, sexual predators, assholes). More than half of superinvestors are bad or average. And many people on the facebook page of Robin Speziale talk about stocks on the Venture.

Where are we going?

I hope to be your lighthouse because, frankly, except for me, I don't see who could be your guiding light through all that thick shitty fog.

mercredi 1 novembre 2017

Share a few beers with me

If anyone in the province of Quebec wants to meet me, I want to inform humanity that I will be avalaible in Quebec city and Montreal by the second half of november (november 17, 18, 25 or 26).

So, if you want to meet, share a few beers, talk about anything (investment club, some particular stock or any random shit) just write me a comment, or, better, send me an email and tell me when you'll be available.

Grab that exclusive chance to hear my approximate english!

mercredi 25 octobre 2017

Robin Speziale and Penetrator: together forever

In the fall of 2016, Robin Speziale told me that he wanted to start a hedge fund. I said to him that I'd like to be with him in that project.

When we met, a little bit later in december, we talked about it once again. And Robin told me that he thought that we should start with something easier: an investment club (click on the link for his version of the story).

What is an investment club? You probably haven't heard about it before. And I didn't too.

It's a community of investors that put money together in a fund that is managed without any fees. In other words, Robin and I will work for free for a community that wants to benefit from our investment knowledge. If everything goes out fine, we'll liquidate the club after a year or two and give the money back to every investor (adding plus value, of course, if there's not a market crash). And we'll start something more official where we'll get paid. And we'll get rich because we'll be good. So we'll drive a BMW with heating seats, eventually.

We both have a fascination for the market. Robin has interviewed tens of great investors and has been active on the market for about a decade, such as me. We're both good guys and honest. But we may fuck up. However, along the last 10 years, I haven't a single year where my performance was negative. Always something between 1 and 55% return.

We've learned from the best and made some mistakes that we don't plan to reproduce.

Why should we remain anonymous?

We deserve to be on www.dataroma.com.


Email me: masterpenetrator@hotmail.com



dimanche 22 octobre 2017

Canadian Healthcare/Pharma: shitty sector

Once upon a time, I thought that investing in the sector of canadian healthcare/pharma was the best thing I could do.

In retrospect, I was fucking wrong. Actually, the canadian healthcare/pharma sector is great for only one thing: destroying value.

Let's see how things have been for 10 of the most popular canadian stocks in that sector:

Valeant (15,33$)

Performance last year: -48%
Performance last 5 years:  -72%

Concordia Healthcare (0,72$)

Performance last year: -88%
Performance last 5 years:  -89% (the stock was first traded in january of 2014)

Cipher Pharma (4,49$)

Performance last year: -6%
Performance last 5 years:  148%

Nobilis Health (1,40$)

Performance last year: -57%
Performance last 5 years:  1266%

Patient Home Monitoring (0,33$)

Performance last year: 91%
Performance last 5 years:  306%

CRH medical corp (2,97$):

Performance last year: -52%
Performance last 5 years:  747%

Ceapro (0,59$)

Performance last year: -68%
Performance last 5 years:  1080%

Biosyent (9,84$)

Performance last year: 16%
Performance last 5 years:  958%

Knight Therapeutics (8,58$)

Performance last year: -4%
Performance last 5 years:  124% (the stock was first traded in march of 2014)

Prometic Life Sciences (1,61$):

Performance last year: -50%
Performance last 5 years:  973%

If you take a look at the performance for the last 5 years, most of these stocks look great. But if you look only for the last year, the performance has been awful for most of them. And more than anything else, how could you be amazed by a return of 1080% or 1266% for a stock that is selling for less than 3$?

Most of them are small caps. Should you buy something on the venture or something on the TSX selling for less than 5$? Actually, all of them are selling for less than 10$ except for Valeant which is selling for 15$ (and which was selling for more than 300$ not so long ago).

For me, the answer is clearly a no. Do that only if you're a fucking gambler and I bet that things will sooner or later turn out bad for you if you're that kind of investor.

The only two stocks that are a little safe on that list are Knight Therapeutics and Biosyent. But they're clearly not blue chips.

Take a look at that list. Most of the names there are forgotten even if that list is only 17 years old. That sector is simply not safe in Canada.