Author Topic: Compounder ideas please  (Read 7549 times)

petec

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Re: Compounder ideas please
« Reply #70 on: December 04, 2019, 02:26:58 PM »
80% $TQQQ, 20% $TMF and no really ugly bear markets. Could do 20%-25% CAGR.

Less the rollover cost...!


petec

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Re: Compounder ideas please
« Reply #71 on: December 04, 2019, 02:28:13 PM »

What are your best EM and retail ideas?

I'm more of a funds person to be honest.

But going back to the earlier idea of contrarianism, I was reminded of Russia recently.  Cheap and hated (if not quite as much as a couple of years ago).  I've never felt too comfortable with the governance.

While it's the 'one that everyone owns', I'd have thought that Sberbank would have a pretty decent chance of doing well over time.

If you want retail, then I suppose X5 would be one to look at.

At the more obvious end, I find FEET (Fundsmith EM IT) becoming gradually more interesting, whether for owning or inspiration.  The portfolio's been tightened up, and is full of super impressive EM consumer companies.  They've just been too crazily expensive I think, even for their impressive stats.  They seem to be slowly getting a bit cheaper.  I wouldn't expect them ever to be 'cheap' (except in a 2008 situation) as they're just too high quality and profitable, but if they become semi-reasonably priced, they should be no-brainers for the long-term.

Will revisit FEET, thanks.

I also discovered SEDY this week - emerging markets dividend ETF, but what it really opened my eyes to is some optically very cheap Russian companies. Tempted by a small position.

sleepydragon

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Re: Compounder ideas please
« Reply #72 on: December 04, 2019, 02:50:59 PM »

I didn't mention MO.


Indeed not. Sorry!

I mentioned MO.
It’s a compounder because they almost need no capital to run the business and they have the ability to keep raising prices. The cigarettes prices in USA are still very affordable compared to other countries.
They have some debts but those debts were issued due to investments which could be sold.
Although Berkshire won’t invest in tobacco stocks, Buffett had said they are great businesses.
The stock is also ignored by institutions because it’s a sin stock.

no_free_lunch

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Re: Compounder ideas please
« Reply #73 on: December 04, 2019, 06:29:04 PM »
I own MO but am already thinking of selling. I don't remember specifics but they made some really poor acquisitions which causes me to question management capital allocation. Didn't they invest in e cigarettes and marijuana at some really high multiples.  Great business not great management.
« Last Edit: December 04, 2019, 06:30:54 PM by no_free_lunch »

sleepydragon

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Re: Compounder ideas please
« Reply #74 on: December 04, 2019, 07:01:44 PM »
I own MO but am already thinking of selling. I don't remember specifics but they made some really poor acquisitions which causes me to question management capital allocation. Didn't they invest in e cigarettes and marijuana at some really high multiples.  Great business not great management.

True. But I think the earlier PM/MO failed merger put them on the “play table”. Someone, maybe PM, will eventually buy MO and fire the management.
The current stock price is already pricing their investments in JULL to 0.

BG2008

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Re: Compounder ideas please
« Reply #75 on: December 05, 2019, 08:04:06 AM »
I think DuPont falls into this category.  The Dow/DuPont tie up and subsequent separation is playing out.  Specialty chemicals stock prices in general has been very weak this year with volume down 1-3% across the board.  This is a 35% return on capital business trading at 10.5x 2020 P/FCF after adjusting for $3bn of share buybacks in 2019 and 2020.  This is DuPont's specialty business, think almost 30% EBITDA margin businesses that should grow GDP plus 2 once we get back on growth again.  In growth years, they can trade to 20-25x P/FCF.  If we go out 2-3 years and they keep buying back shares or start divesting units.  DD starts to trend down to 9x P/FCF.

lnofeisone

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Re: Compounder ideas please
« Reply #76 on: December 05, 2019, 10:36:01 AM »

What are your best EM and retail ideas?

I'm more of a funds person to be honest.

But going back to the earlier idea of contrarianism, I was reminded of Russia recently.  Cheap and hated (if not quite as much as a couple of years ago).  I've never felt too comfortable with the governance.

While it's the 'one that everyone owns', I'd have thought that Sberbank would have a pretty decent chance of doing well over time.

If you want retail, then I suppose X5 would be one to look at.

At the more obvious end, I find FEET (Fundsmith EM IT) becoming gradually more interesting, whether for owning or inspiration.  The portfolio's been tightened up, and is full of super impressive EM consumer companies.  They've just been too crazily expensive I think, even for their impressive stats.  They seem to be slowly getting a bit cheaper.  I wouldn't expect them ever to be 'cheap' (except in a 2008 situation) as they're just too high quality and profitable, but if they become semi-reasonably priced, they should be no-brainers for the long-term.

Will revisit FEET, thanks.

I also discovered SEDY this week - emerging markets dividend ETF, but what it really opened my eyes to is some optically very cheap Russian companies. Tempted by a small position.

I've had DVYE (the US version of SEDY) on my radar for a while. In my notes I scribbled "no Sberbank?" and curious if anyone knows why wouldn't they hold it given the other holdings. Also, VTB (another russian bank) has (small) exposure to Africa.

jondoug

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Re: Compounder ideas please
« Reply #77 on: December 05, 2019, 04:28:16 PM »
What about the elephant in the room, BRK? Given the under performance in the past few years, the cash drag etc., there is a good chance it could get back to returning 15% plus in the next decade.