Ted SeeksQuality

Inversor que contribuye, y mucho, al hilo de Chowder. También es IF.

Últimamente le estoy dando cada vez más atención dado que se centra en la seguridad y calidad de las empresas a la hora de adquirir y mantener.

Así que le abro hilo propio y voy poniendo sus aportaciones interesantes aquí.


Acerca de SJM

I owned SJM from 9/15/2016 through 5/30/2017 and again from 10/30/2017 through 11/17/2017. The first time I was seeing it as a potential LT holding, which I sold when it started to fail my quality metrics. The second was a ST trade from the start. (Proof that you can make money trading bad stocks just as easily as you can make money trading good stocks – the trick is that it is better to sell at a loss than to get “stuck” with a bad stock.) Combining the two, I lost a total of $5.32. :slight_smile:

SJM is not a stock that meets my investment criteria at this time. It has a Baa2 credit rating, which means I would need to have exceptional confidence in management’s ability to manage the operations and debt to invest at this time. I have that confidence in MKC and CVS, and do not see strong reason to mistrust GIS and T (though I consider those two with some skepticism). Given the nepotism at SJM, and the proven inability to either grow the business or formulate a realistic outlook, I see SJM as having very poor management by the standards of publicly traded companies. I am not going to invest in a weak company with bad management.

Perhaps surprisingly, business at SJM appears to be seasonal? The third quarter (ending January) has generally been the strongest. The second quarter (ending October, just reported) has generally been the weakest. Even their annual numbers can be tricky to interpret, given the number and magnitude of acquisitions involved. They had $900M of FCF in FY18 and (by my calculation) $860M of FCF over the trailing twelve months. More concerning, their revised outlook for FY19 (which is half complete) is now $700M to $750M. They recently sold their baking division to help fund the Ainsworth acquisition, with a negative impact to current cash flow. I find this decline in FCF, and the sharp negative revision, to be alarming. This estimate suggests that their FCF will be the lowest since the Big Heart acquisition – which is now seeing falling sales along with the rest of their portfolio.Their dividend run rate is $386M, I believe, so their payout ratio is a little over 50% of FCF. That isn’t awful, and in fact they were able to pay off a little of the debt this last quarter. Their payout ratio is lower than GIS, for example, which gives SJM a little more financial wiggle room.

That said, the falling FCF is a very bad sign. In the space of less than a year, they have gone from $900M (in FY18) to $800M (the prior outlook) to $700M. Do I hear a bid for $600M? Six months ago, I was looking at $4.7B of LT debt vs. $900M FCF, a ratio over 5x. That is high. Now I am looking at $5.9B of LT debt vs. $700M FCF, a ratio of 8x. That is getting pretty ridiculous!

There are two ways forward:
(1) Improve FCF dramatically. That is easier said than done. If they had annual FCF in the $1.5B to $2B range, their current debt would be affordable. On the other hand, if they had any clue how to turn in $1B of FCF they would already be doing so.

(2) Sell the company. Given the heavy debt load, that would not come at a good price.

The third possibility, which is perhaps the most likely, is for them to circle the wagons by “conserving cash”. That would buy them additional time to figure things out, though it is not by itself a long-term solution. You do understand that “conserving cash” is a euphemism for “cutting the dividend”, right?

With all of the above, consider that I could be COMPLETELY off base. Perhaps there are really good reasons why the cash flow will surge next year or the year after? But the dramatic cut to the outlook suggests to me that this is NOT a well-considered plan, but a rapid deterioration of the business. Work through the conference call and see if there is anything there solid enough to hang your hat on. If not, then be very worried about this one.

You would have to ask Brian (autor de SimpleSafeDividends) why he gives SJM such a high dividend safety score. I would think that a score in the 70-75 range would be more appropriate, and even a score that high depends on having some faith in management.

Su aproximación a riesgo de dividendo

"my approach is to sell if I see a risk of the dividend being cut. Cole’s approach is to sell after a dividend cut. Because of that, he will not sell a stock that hasn’t cut its dividend yet, while I will be out of the stock long before it actually cuts the dividend.

On the other hand, a risk of a dividend cut occurs more often than an actual dividend cut. I may have exited GE, BBL, HCP, and COP before the denouement, but I also exited OHI — which now appears to be recovering. I exited IBM and SJM as well based on similar concerns, and they may yet survive and recover.

No approach will be perfect. I would rather err on the side of caution, and miss some rebounds, than hold through the entire ugly mess. I totally understand that Cole prefers the other approach, and it may work well for him. Each investor must decide for herself what her system dictates in this situation.In this instance I have chosen to go with GIS rather than SJM. The credit quality and issues are similar, but at this time I have greater faith in GIS being able to pull out of it. I’m sure others differ, or prefer to hedge their bets by owning both. Or neither. :slight_smile: "

"One of the problems in analyzing stocks is that people tend to focus on principle rather than the numbers, and can easily end up applying the principles at the wrong times to the wrong examples.

I pulled EBITDA (TTM) and Debt (ST + LT) numbers from Morningstar for six different Consumer Staples companies to illustrate this principle. Four of the six carry a BBB credit rating. People have raised questions about five of the six. The last is considered the “gold standard” for stability.

Keep in mind that this is a superficial analysis. Because I am working from TTM EBITDA, any recent acquisitions that shift the needle will affect the results. Finding solid EBITDA projections is a little trickier to do on a consistent basis, so I will leave that exercise to your own due diligence rather than attempting to get it right here…

PG is the gold standard of quality in the sector. It carries an Aa3 credit rating, and has not used leverage to nearly the same extent as its peers. It has $16.8B EBITDA vs. $31.3B total debt, for a 1.86 Debt/EBITDA ratio. This is very strong. In fact anything under 3x is strong!

GIS is at the other extreme, with a Baa2 credit rating and $15.6B debt vs. $3.1B EBITDA for a 4.97 ratio. The Blue Buffalo acquisition may boost that EBITDA a little going forward (I believe only the latest quarter includes the acquisition), but it isn’t immediately going to move the needle by much. They are going to need growth to dig out of this debt hole, especially since their dividend eats up 37% of EBITDA. I am comfortable with GIS only as long as I anticipate 5% forward growth. If that stalls again for an substantial period of time, they are in trouble. I consider this speculative quality, because they don’t have much margin for error.

KHC has 4.83 Debt/EBITDA and a dividend representing 46% of EBITDA. The debt is not significantly different from GIS (keep in mind that this is a superficial analysis) but the higher dividend leaves them even less wiggle room. I do not follow KHC closely, as it fails my quality checks.MKC has 4.85 Debt/EBITDA, but a dividend that is just 26% of EBITDA. The difference between this and the two previous is that the dividend is lower – and thus EVEN WITHOUT GROWTH they have the cash flow to aggressively address the debt burden. Of course it doesn’t hurt that their projected EPS growth is a solid 8%. They may presently hold a similar credit rating, but I have a very high degree of confidence that they will resolve this within the next 1-2 years and return to A-grade credit.

SJM actually has a little less debt than the others, just 4.33x EBITDA. Moreover, the dividend is just 27% of TTM EBITDA. The concern there isn’t so much the debt (which is admittedly substantial) but the deteriorating outlook. FCF is projected to drop by 15%-20% from FY18 to FY19, and while the impact on earnings may be smaller, a DECLINE in earnings can start to push the debt ratios into the danger zone. I want to emphasize that the major concern isn’t the debt. It is the debt combined with operational weakness. They could survive operational weakness if they had less debt, or they could survive the debt if they had stronger results. It is the combination that is potentially deadly.

People often cite “debt concerns” at KMB, but that is in my opinion foolishness. If you are looking at debt metrics for KMB that cause you concern, then toss those debt metrics because they are meaningless in this situation. KMB has a Debt/EBITDA ratio of 2.37, thus despite a 44% Div/EBITDA they EASILY have the financial flexibility to manage that debt. They do carry a little more leverage than PG, but the other four listed have literally TWICE the debt burden that KMB does.

Similarly, T has debt of just 3.5x EBITDA, much of it with very long maturities. Their debt is not a concern. The concern is that FCF is only half of EBITDA, and thus the payout ratio is pretty high. Because their debt is not unreasonable, they don’t actually need much growth to manage this. They do need to avoid shrinking earnings. A risk, but not a concern at this time.

If you want scary numbers, check out CVS – Debt/EBITDA of 7.12!!! Of course they just closed the Aetna deal, so that will bring the ratio down immediately. I would put them in a similar category with MKC – elevated debt but the financial flexibility to bring that down quickly as long as they don’t hit too many road bumps.

Chowder talks about good debt and bad debt. I don’t like that characterization, preferring instead to think in terms of manageable debt and dangerous debt. The difference between the two often comes down to operational strength. In each of these cases, if you are confident that revenues and earnings will grow, the debt will not be a problem."

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Este párrafo lo copio de Ruindog , que ya lo puso en el hilo de compras empresas USA.

"Just updated a bunch of lines on my watch list, so they are all now less than three months old. Things don’t change rapidly, so that is usually good enough. Some values by sector:

Consumer Discretionary: T, DIS, LOW/HD

AT&T is an outstanding value, however they are also in a weak debt position. I believe they can sustain the debt and their dividend going forward, but they need to get it right without serious missteps. This is a STRONG BUY, but paired with a caution on quality. Consider appropriate limits on your exposure to this risk.

Disney is a top-quality company that appears to be picking up some earnings momentum again. It is trading at 15.6x forward estimates, making it relatively cheap. The dividend isn’t much, however I would anticipate 50% price appreciation (and dividend growth) over the next five years. A high quality growth stock that I consider a STRONG BUY for the combination of quality, growth, and value.

Lowe’s and Home Depot are both trading down, perhaps on macro fears? HD trades at a modest premium to LOW, but I believe they have earned that premium. The choice here (one, the other, or both) should depend on your opinion of their outlook and earnings momentum. I would consider each a BUY, albeit with exposure to economic cycles. (You could say the same of Disney, however I feel that Disney enjoys a wider moat than any retailer.)

Consumer Staples: GIS

This is not the sector where you should be looking for bargains right now. General Mills is very cheap, but it is also facing high debt levels and weak growth. There is some chance that they will be forced to cut their dividend in the next couple years, though I expect and hope that they will pull through without that need. I would consider this a BUY, but with position-size limits due to quality concerns.

You could also make an argument for SJM, if you believe in their operations. It is undeniably cheap, however I lost faith in their management’s ability to operate the company in 2017 and nothing I have seen since has changed that opinion.

If you aren’t looking for bargains, and simply hope for predictable returns from high-quality companies, then consider SYY, KMB, CL, PEP, and PG. I expect that all will generate steady returns in the 5%-6% range (and that is assuming some P/E compression).

Health Care: CVS/WBA, JNJ

The drugstores remain a tremendous bargain. These are both strong operations, albeit in a competitive and changing business environment. Pick your horse and ride it patiently, as I don’t expect the market to suddenly embrace either one. It will take a couple years to really know how their initiatives are unfolding. STRONG BUY, but you have to be comfortable with the operational risks.

JNJ is trading at 17x forward earnings, which is a solid value for a top-quality company. It is always a BUY in my book unless it is badly overpriced — which is not the case at this time.

Industrials: ETN

The value in this sector depends on where you believe we are in the economic cycle. There are plenty of companies that MIGHT generate solid returns over the next few years, but the entire sector will get hammered if we hit a recession. Given the cyclicality of earnings, I am not interested in paying more than 16x forward earnings in this sector at this time. ETN is hardly the strongest company, but trading at 13x forward earnings it has a bit more margin for error. I consider it a BUY.

UTX could be a buy at this price, but that position is in lockdown until we get some clarity on the three-way split, likely not until 2020.


This is the sector where I see the greatest potential at this time. Like the Industrials, they are sensitive to the economic cycle, however the P/E valuations are much lower.

IBM is shockingly cheap, at just 9x earnings, however they are working through a challenging transition with a management team that has struggled to operate the business successfully. Do they finally hit gold with Red Hat? Or is this their Apotheker moment? I cannot recommend IBM, and sold out of the stock myself, but I cannot deny that it is a good value IF management is even half way competent.

AAPL trades at 14.5x 2018 earnings, and continues to project solid growth. Their Services business is HUGE, and has the potential to carry the company forward even as growth in device sales eases. I see this as a top quality stock trading at a very good value, with an expectation of double-digit returns over the next five years. STRONG BUY

INTC is working through well-publicized challenges, and is trading under 11x earnings. This is a cyclic business, but they are financially strong and the industry leader. I am very comfortable locking in a full position at this price. STRONG BUY

QCOM is probably an excellent value here, but there are earnings quality and litigation risks that dampen my interest. It would be a BUY or perhaps even more, except that I see other companies in the sector that I like better.

CSCO isn’t as beaten down as some, but I like their market position. They have largely worked through their own business transition, and appear to be moving forward with a solid dividend and steady growth from here. It is a BUY for those who put quality and dividend ahead of deep value.

I also like MSFT very much, though it is very hard to assess because it is going through a rapid growth phase.

The other sectors? I’m not good at valuing them, so I won’t insult you by offering a half-baked opinion. Will leave that to those who understand them better!"

Aquí sus resultados este año y anteriores.

A tener en cuenta que en su operativa también usa opciones principalmente CALLS sobre empresas que ya tiene y ve tendencia alcista.

No está mal teniendo en cuenta que la mayoría de aquí tenemos la cartera rojo tomate ?.

"YTD performance for all financial accounts: +6.65% (bumps higher when I close out each quarter)

One-year performance: +7.43%
Since 1/1/14: 7.78% annualized
Since 1/1/11: 10.03% annualized
I reset Quicken at the start of 2011, so I don’t go any farther back than that…Limited to our retirement accounts:
YTD performance: +7.46%
One-year performance: +8.37%
Since 1/1/14: 8.59%
Since 1/1/11: 10.68%

Our planning spreadsheet plans on 7% total return, so all is good! Big gains on PG, big loss on IBM, MSFT up, AAPL down? Doesn’t matter in the end – only the bottom line is important. Much noise boiled down to one important number.

For those of you who focus on income, our dividends are up by 9% and we still have a month to go! Interest income is up by 5%, which will increase further when I close the quarter and the year."

"Case study for this morning is inspired by a blurb in the news feed:
"Shares of United Parcel Service Inc. ( UPS ) sank 4.8% and FedEx Corp. ( FDX ) dropped 4.7% in morning trade Tuesday, to lead all 20 of the Dow Jones Transportation Average’s components in losses, after Morgan Stanley analyst Ravi Shanker cut its price targets on the package deliverers, citing concerns over competition from Amazon.com Inc.'s ( AMZN ) Amazon Air.

"You hear a lot of strident voices here exclaiming, “ignore the noise”. There is some truth to this, but I would argue that mantras like that tend to shut down critical thought. Do you really want to be depriving yourself of that when investing?

The reduced price target is definitely noise. I look at the price targets from Morningstar and Value Line, publications that do a good job of explaining and supporting their reasoning, and of putting the numbers in context. I do not pay any attention to price targets from anybody else. You’ll drive yourself crazy if you do.On the other hand, the THEME of this particular blurb is more than a one-day blip and reaches back several years. If you own either FDX or UPS, you are aware that Amazon (the dominant e-tailer) has been building out a fleet of both long-haul and last-mile cargo delivery, reportedly at lower cost than the major carriers.

How much of a threat is this really? That’s where the critical thought comes in. It would be foolishness to dismiss it entirely. This is a major customer, with experience in logistics, making a well-funded push that is in direct competition with your services. For now I believe Amazon Air is merely in-house, but once it is built out they could potentially offer it to others as well. Even if they don’t, items sold or fulfilled by Amazon are a significant fraction of the shipping stream.I have owned UPS in the past (break-even), but sold out of the position in December 2015 and January 2016 on these concerns. It stopped making sense to me as a long-term investment, and I’ve never been good at calling the price swings. FedEx has been stronger in recent years, but may eventually face the same squeeze? Their business mix is a little different, though I haven’t looked at them carefully.

Now I’m not saying you should buy or sell on this announcement. Nothing in the analyst report is really news. This is a story that has been developing over the last three years, if not longer, and will continue to develop over the next three years. Think long term and think critically, and if you are comfortable with the risks then go ahead and “ignore the noise”. If you have concerns about their business model, then still “ignore the noise” but act on those concerns.

It is a tricky balance. You don’t want to be reacting to every news blurb that comes down the feed, but you also want to monitor the health and future of the business. Distinguishing between the two isn’t always easy, and repeating a mantra doesn’t help in that."

Aquí se habla acerca de DGTR y DG (grandes almacenes de rebajas). Es interesante porque primero habla Ted y luego Chowder.


"Ready for this morning’s case study? Let’s take a look at Dollar Tree (DLTR). I owned it for one (profitable) month in 2012, at which point I decided it wasn’t my cup of tea. I also owned competitor Dollar General (DG) from 9/16 through 5/17, also minimally profitable. As I’ve said before, I’m not a big fan of retail, and the closest I’ve come to a LT position in a retail stock is CVS. (Definitely a LT position, but only half retail.) So take that with a grain of salt? Other people are very happy in the sector, and can invest with confidence, but I have never found it attractive for more than a short-term trade.

Chowder has often talked about the defensive nature of “dollar stores”, and he has a point. They are discounters, attractive to those on a tight budget, and thus strongly recession resistant. The upscale retailers will lose business when money is tight, but the discounters may actually see increased traffic.

I believe Chowder owns DG in some/many of his portfolios. DG has traditionally been the biggest of the dollar chains, though its credit rating has often been subpar. It did not reach investment grade credit (Baa3) until 2013, and even today is at a very marginal Baa2, just two steps above junk grade. The stock has generally done well, though, with five-year gains of 84% (plus a small dividend) vs. 53% for SPY. Not exactly knock-your-socks-off performance, but its business has been healthy.

Dollar Tree was always smaller. Their own path to growth was far more conservative, with minimal debt. In fact their “current assets” (essentially cash and inventory) exceeded their TOTAL liabilities through January 2015. I don’t believe they even HAD a credit rating, as there is no point in that exercise when you are using so little credit. Still, the results were there. For the five years from 7/1/10 to 7/1/15, DLTR was up 244% vs. 175% for DG and 79% for the S&P500. The credit discipline forced them to practice “smart growth”, in my opinion.

The picture changed in 2015, when Dollar Tree acquired Family Dollar in a $9B deal. (I believe Chowder talked about this deal, though I’m not sure whether he liked it or not.) Moodys immediately initiated a Ba3 (three steps into the junk range) credit rating on the debt issue that DLTR floated to fund the acquisition. Still, that immediately brought their store count up to that of Dollar General. An aggressive move, but “smart debt”?

In fact it hasn’t worked out so well for them, to the extent that Family Dollar was recently termed a $9B “albatross” for Dollar Tree. While the Dollar Tree stores continue to perform respectably well, Family Dollar performance is lagging badly. Nor has the acquisition been positive for the stock. Since the acquisition closed in July 2015, DG had gained 40%. The S&P500 has gained 33%. DLTR is up just 8%, and does not even pay a dividend!

A “shopping experience” comparison of DG vs. DLTR suggested that they have taken a different strategy, with DG positioning itself somewhere between convenience stores and Walmart in the shopping hierarchy, a smaller footprint appropriate to smaller communities (if not a full-service supermarket). DLTR appears to have positioned itself as a “cheap junk” outlet, with empty shelves, trash left in the aisles, and a generally shoddy feel. But possibly a good place to get a bargain on seasonal merchandise? That difference surely plays into the operational performance of the two chains, though it is harder to say how the Family Dollar acquisition might have impacted that picture?

DLTR may be pulling out of this? Their revenue was up 50% from 2016 to 2018. Their operating income doubled. Just as important, their LT liabilities have dropped by a third! They were upgraded to Baa3 credit in March, and thus are out of the “junk debt” range after just three years. If they show even a little operational strength, they should be poised for another upgrade soon. Retail businesses generate fat cash flow – albeit also with ongoing capex. On a TTM basis they have $2.6B of EBITDA, $2.0B of OCF, $1.2B of FCF. Their current LT debt of $5.0B ought to be manageable on those numbers (their other liabilities, largely accounts payable and deferred liabilities that are carried interest-free, are exceeded by current assets).

Now that they have gotten the debt under control, perhaps they can return their focus to operating and growing their business? Cash flow is the lifeblood of companies, and when you suck so much of it off into debt service, then other aspects of the business can grow anemic. My guess is that this is what has hurt them over the last few years – they bought their growth, but at the cost of deteriorating quality and customer experience. Now they have to fight to regain that ground.

In conclusion, I do not either recommend or caution against DLTR. They do not meet my investment criteria, due to credit quality and my dislike of retail. Nonetheless, they are inarguably cheap on a P/E basis, both compared to the broader market and compared to their closest competitor, DG. Debt-funded acquisitions are not free, and the cost is often paid in the years immediately following the acquisition, however we are getting far enough away from this acquisition that the debt pressure should be easing. It is at least worth a careful look if you are interested in owning that segment."


"While you and others focus on the numbers, the numbers are always changing. I’m focused on the story.

Dollar General is the largest discount retailer in the US by number of stores with over 14,600 neighborhood stores in 44 states. It provides products that are frequently used and replenished such as food, snacks, and health and beauty aids. The company helps shoppers: ‘Save time, Save money, Every day.’

Dollar General expects to grow annual net sales to $30 billion by 2020, which would represent a 50% increase over 2015 levels and 7%-10% annual net sales growth.

Dollar General has put up 28 consecutive years of same-store sales growth as of 2017. The firm continues to add new stores to its portfolio and plans to add as many as 900 in 2018 in addition to the remodeling of 1,000 stores and 100 relocations. The company lost the battle for Family Dollar’s assets to Dollar Tree, despite a higher offer. It may have been a blessing in disguise.

Dollar General sees the opportunity for an additional 13,000 locations across the US, many of which will be developed as small format stores with less than 6,000 square feet. These small format stores enable the firm to optimize merchandise mixes in each store and reduce occupancy costs. Such growth initiatives are expected to help drive its 2020 sales goal.

>> Dollar General has put up 28 consecutive years of same-store sales growth as of 2017. <<<
Are you kidding me? 28 consecutive years! That's an Aristocrat of same-store sales growth. ... I'm sticking with the story. With those growth numbers I expect them to be able to handle the debt and grow the dividend.

Expected earnings growth at 16.9% at FAST Graphs? This is a growth company.

For you total return people, my son’s first position in DG was on 11/16/15 and is up 83.17%. … I wish all of our positions were performing as well.

His second purchase was on 12/03/15 and is up 61.47%. … The total position is up 71.19%.

I’ll stay focused on the story, the story isn’t changing, the numbers will"

Acerca del fondo de seguridad. Lo deja bien claro. Muchas veces se ha hablado de dinero que puedas no necesitar en 5 años, aquí va más lejos: 10 años.

“Investable cash gets invested. Cash that can’t be tied up for ten years is NEVER put at risk in the market. Trading around a position is great, but never put money into the market that you might need within the next decade. Doesn’t matter how great the company is, there is never a guarantee of short-term gains.”

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Acerca de GIS, ahora que está < 40% y RPD 5%.

"I would not describe the GIS dividend as “apparently safe”. I might describe it as “probably safe” or “not immediately threatened”, but they don’t have enough margin for error to declare the dividend safe. Even SSD, which in my opinion is overly generous with many of its ratings, has (or had) GIS at 70. That is not a high score!

It is a Defensive business, but that merely means that it isn’t likely to be slaughtered in a recession. It does not necessarily mean that the business is bulletproof. Chowder reminds us that defensive businesses with a BBB+ or better credit rating rarely encounter dividend cuts – but GIS does not have a BBB+ credit rating, so that doesn’t apply at this point.

GIS has deteriorating brand strength and thus very limited pricing power. The strong consumer brands make money by selling their products at high markups. Their gross margin in the most recent quarter fell to 32.8%. As recently as 2011 it was at 40.0%. Keep in mind that this is in a growing economy! They aren’t lowering prices out of the goodness of their heart. They are simply unable to raise prices without losing customers. (Correction – without losing even more customers than they already are losing.)

A similar business, SJM, recently reported disastrous results and slashed their outlook by 5% EPS and 10% FCF. We don’t know that the same dynamics will impact GIS, but until proven otherwise you have to wonder. Rising material and shipping costs? Continuing weak pricing power? Falling volumes? This is NOT buying into strength. This is not an accidental high-yielder. This is a turnaround story that pays you to take on risk. I call it a turnaround story, because if their operations continue in the same direction that they have for the last five years, they will run into very serious trouble (dividend cut, forced sales, etc.).

You need to consider their business dynamics carefully. Do you believe in their turnaround plan? Do you believe in the future of their products? Then go ahead and extend further into this name. Just always invest within your risk tolerance. This is one of the riskiest stocks in my portfolio."

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Ufff, diez años de pasta en el fondo de emergencia. Creo que poca gente de los que invertimos por aquí lo cumplimos, por no decir nadie. Lo más extendido igual es un año o por ahí, no lo sé. Quizás para USA puede valer al tener esos salarios tan altos, y aún así.

Un saludo.


¿Se sabe cual es la cartera de Ted?

"Unlikely to see a bear market without a recession. Recessions are bad for earnings and dividend growth. So while market swings are not a concern, a bear market isn’t good for anybody but the shorts.

Keep in mind that if this is the start of a bear market, it is still in the early stages. Think 2007. There were signs of weakness in the summer that year, but I was still treating it as a buying opportunity. The dividend cuts, job cuts, and earnings weakness didn’t show up until 2009 for the most part… Maybe late 2008? Bear markets do not begin with the dividend cuts."

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Si he leído bien se refiere a invertir solo el dinero que no vayas a necesitar en 10 años, no tener 10 años de gastos en liquidez.

Cierto, gracias. Son cosas parecidas aunque no son lo mismo. De todos modos, nadie sabe lo que va a necesitar en diez años. Eso es mucho tiempo y pueden surgir imprevistos gordos.

Un saludo.

Me parece un poco wishful thinking pensar saber que dinero vas a necesitar o no en 10 años.

Muy bueno todos los aportes Luis G.

Muchas gracias

Hola Vash. Ocasionalmente la pone, pero como Chowder suele borrar comentarios frecuentemente para mantener la fluidez del blog (dice que cada mes borra unos 1000 comentarios), se borra.

Rebuscando, tengo una captura de pantalla que hice el 26 de septiembre. Como soy incapaz de poner gráficos, transcribo (espero te sirva):

"Keep in mind that all of the numbers bellow are according to my personal household accounting methodology, lumping taxable and retirement accounts, and accounting for tax-deferred accounts at 75% of nominal.

  • Individual equities ex. REITs and Utes: 54%
  • Equity funds 9%
  • TIAA Real Estate Account 3%
  • REITS 3%
  • Utes 4%
  • Fixed income plus equities covered by-in-the-money Calls: 27%.

The 3% that is in the REIT is split evenly between O, VTR and WPC, with roughly a half position in SKT.

The 4% that is in Utes is split evenly between D, NGG, NEE, SO and WEC. Thus none of these positions are individually more than 1% of household financial assets. I own more individual tickers than I do in other sectors, because I feel less qualified to make conviction picks here.

As for the individual equities (not counting shared covered by ITM calls):

  • Overweight positions: JNJ (10%), DIS (7%), AAPL (6%), MDT (5%).
  • Max positions of 4%: MMM, SYY, KMB, PG, HON, UNP, CVS.
  • Full positions of 2-3%: UL, IBM (Vendida posteriormente y añadida a INTC), MKC (también vendida esta semana), NKE, SBUX, ITW, UTX, VFC, HRL, DEO, ETN, NVS, XOM, NSRGY, INTC, T, CSCO.
  • Partial position of 1%: RHHBY.

I will consider trimming of an overweight position if it is fully valued, or a Max position if it is substantially overvalued. In several cases the (remaining) shared are held in taxable account, however, and thus not eligible for trimming. Not interested in paying CG tax to follow silly portfolio rules!.

The full positions are eligible to be built in size, depending on value and forward prospects. I will only cut a Full position if I have serious quality concerns."

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"When people talk about valuation, they are often misinterpreted, misquoted, and belittled for poor cause. I wonder sometimes why people feel the need to talk trash about others in the first place. Shouldn’t we be working our own portfolio strategy rather than worrying about somebody else? Disagreement is one thing. I disagree with Chuck Carnevale on some valuations, because my approach differs from his. I disagree with Brian Bollinger on some safety ratings, because I am more sensitive to certain risks than he is. But as much as possible we should strive for respectful disagreement. When it comes to understanding and using valuations, I fear that the tone of the comments can get pretty negative, with people who do not understand valuation speaking critically out of ignorance.

Perhaps the biggest issue is that the details of the numbers get lost in the label. For example, somebody might say that PG is “overvalued” (I had a professional advisor tell me that a month ago), because it is a slow-growth company trading at 22x trailing earnings and 21x forward earnings. That might be true in some sense, yet what is appropriate for this company? Perhaps 20x FFO? Or 19x FFO? Certainly no lower than that, at least for my portfolio goals and style. PG is at worst 5% to 10% overvalued, hardly an extreme case, and none of us would trade a long term core position on a valuation excess so slight!

Consider in contrast my approach to managing my MKC position. After building a large holding in July 2017, I trimmed in June/July at (net options) $109 when I was looking at a fair value around $100, then again in October at $140 when I was looking at $105, and finally finished off the position at $155. (Weighted average sale price net options of a little over $135.) While the initial trim was on a slight overvaluation, the second and third sales came at what I see as a 30% and 50% premium to fair value. Remember that valuation is a RANGE (I tend to envision that range as ±15% or so). and where you fall within that range depends on how much you want to own that particular company. I’m willing to buy certain companies, PG and MKC included, at a 10% premium to fair value. I’m never willing to buy at a 30% or 50% premium.

The second issue is the time frame involved. Valuation is based on the numbers, and as Chowder says, the numbers change daily! My valuation estimates rarely change dramatically overnight, but they tend to climb gradually one quarter at a time. But the price? That can jump or fall 10% in a week! I sold out of KO in my IRA on 8/19/16, because I felt it was “dead money” and “overvalued”. The former indicates that I was expecting P/E compression to offset limited EPS growth. The latter indicates a P/E that was higher than could be justified by the growth rates, around 23x forward earnings. In fact, both pronouncements proved correct. Adjusted earnings increased roughly 10% from 2016 to 2018. The shares appreciated just 6% over the two years following my sale, while the S&P500 was up over 30%. And the P/E valuation at the end of that period was well below what it was at the start, ESPECIALLY on a forward basis – because now it is looking for some real growth in the near future.

So KO was dead money and overvalued, at the time, but that changed a few months ago. If you were interested in the stock and watching the valuations, you would have re-established the position earlier this year and missed essentially nothing. Even now, after the price has moved higher, it has lagged the S&P500 since the date of my sale. So what is your time frame? Proclamations of “dead money” are typically looking out a few quarters, perhaps a year or two. Is that your typical holding period? If so, then it can be an actionable statement (if accurate). But if you are an investor who buys and holds for decades, then dismiss that kind of stuff as “not my game”. The numbers change, quarter by quarter and year by year. If your outlook is substantially longer than that, then you can’t worry too much about the numbers.

The third issue is that we need to understand that different investors have very different goals and tactics. This is frequently a huge blind spot for people! You’ve heard people insist, “If your goal isn’t to beat the total return of the S&P500, then why are you investing in individual stocks?” HELLLOOOO!!! That is a question that presumes the answer. :slight_smile: Similarly, those who are focused on dividend income to the exclusion of all else will build a different portfolio from those who are looking for total return. Those who are comfortable diversifying risk will choose differently than those who insist on uniformly high quality across the entire portfolio. It is foolish to presume that your personal goals and biases are shared by those you are talking to!

An example of this is WHR. I initiated a small position on 10/11/2018, proclaiming it to be a short-term trade, then exited on 11/12/2018 while still affirming it as a bargain value. It isn’t a stock that fits my portfolio goals at this time, except perhaps as a quick trade. Other investors may have been buying more at the same time I was selling – and despite trading in opposite directions, I was NOT betting against them. I was simply executing my portfolio strategy in support of my goals.

So understand that “valuation” depends on what you are looking for. If you are looking for a high-quality defensive company, then PG is not overvalued at this time. It pays a strong 3.0% yield, which should grow faster than inflation over the next decade, with minimal idiosyncratic risk. On the other hand, I’m only expecting a 4%-6% annualized return over the next five years. If you are looking for a stock that will deliver a 10%+ return, this likely isn’t your puppy. Only way to get a 10% return out of PG is to trade the swings (and trade them correctly), and this would not be the correct entry point for that tactic.

Know your goals. Embrace a strategy that supports those goals. Execute that strategy. Find others whose strategy shares at least some commonality with yours, and sift through their thoughts to glean whatever useful input you can, knowing that it will never all apply to you. And feel free to disagree, but try to disagree respectfully, in full knowledge that your personal approach is just as wrong for them as theirs is for you."

Acerca de JNJ tras el varapalo del viernes.

"JNJ is a great company. It is trading at or below fair value today. They will weather the litigation concerns, one way or another. I’m not concerned. If you like the company, then go ahead and buy. Can’t imagine why anybody wouldn’t want to own it, but everybody has to decide that one for themselves.

The cost basis for our original shares of JNJ is under $30. If I could go back to being 28 again, maybe I would buy more? But I can’t, and JNJ won’t see those prices again. Today is is trading between $130 and $135 – still a good price on a great company.

So what’s stopping people? It is already twice the size of our next-largest oversized position, and even so I’m wishing I could make room in my portfolio to add more!"