Author Topic: How much cash do you have?  (Read 2516 times)

no_free_lunch

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Re: How much cash do you have?
« Reply #20 on: November 07, 2019, 10:46:24 AM »
This is great Kab.  Thanks for posting.

I came so close to LNR back when it was below $40 but just didn't pull the trigger.  It is still cheap on FCF basis but it's hard having seen the run-up.   Maybe I will have another look.

Already own MO and MOTR.

I will have a look at ULTA.  It doesn't seem cheap at all but I will do some digging.


kab60

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Re: How much cash do you have?
« Reply #21 on: November 07, 2019, 10:55:11 AM »
This is great Kab.  Thanks for posting.

I came so close to LNR back when it was below $40 but just didn't pull the trigger.  It is still cheap on FCF basis but it's hard having seen the run-up.   Maybe I will have another look.

Already own MO and MOTR.

I will have a look at ULTA.  It doesn't seem cheap at all but I will do some digging.
Ulta isn't at all cheap like the others, but here you might be getting a GREAT business at a very good price if what they experience is temporary. I took my bet, but I'd say the range of outcomes is bigger, because it will get slaughtered if problems are secular rather than cyclical.

I'm finally in the green on Linamar today. Bought at 52, doubled at 37 and bought more on the recent dip to 35 (30 pct. position at one time). I hate anchor bias and it effects me all the time, but like with Berkshire you've got BV compounding, so you get $8 of BV a year. So arguably not a lot more expensive even though the price has gone up.

Won't post anymore about the positions here, sorry about the offtopic.
« Last Edit: November 07, 2019, 11:01:55 AM by kab60 »

KJP

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Re: How much cash do you have?
« Reply #22 on: November 07, 2019, 12:13:36 PM »
I still don't understand why so many people (if their time horizon is long) prefer cash earning 0 when one can buy decent/good/great businesses at +10 pct. FCF yields, but obviously there's a lot of variables involved (if one can live the sweet life off the existing portfolio, there might be no reason to risk something you need for something that woudn't improve quality of life).

I keep what is (for me) a large amount of cash because the earnings from my labor are very lumpy, infrequent and uncertain, so a large amount of cash prevents me from ever having to sell for liquidity, rather than fundamental reasons.   For similar reasons, if I have X assets today, having .25X in assets next year would have a much greater effect on my life than having 1.75X in assets next year.  I also have a limited amount of time to devote to investing, so I'm not particularly nimble with buying and selling and do not expect to sell before any large market decline.

I'm also not aware of many great businesses currently selling at greater than 10% FCF yields that aren't levered up to their eyeballs, but I also look almost exclusively at US companies.  Can you name 5 or 10?
I don't wanna sidetrack this, but you recently had a bunch of UK car dealers - Vertu and Motorpoint - which I'd rate at decent/great respectively - trading at some very solid FCF yield despite a tough environment. After the current runup I prefer Cambria which I'd also argue is good+ and VERY cheap. Last month you had MO around 10 pct. yield. ULTA is only 5 pct, but then analysts expect 10 pct. EPS growth. My favorite is Linamar though. 2/3 endmarkets are in the gutter, so you get to buy a good/great industrial busines below book value led by management with a crazy good track record AND around a 18 pct. FCF yield despite a tough backdrop.

Or if you don't mind leverage and serial M&A there's Berry at some +15 pct. FCF yield.

One can definately argue some of these have warts, but I've never found as many compelling setups than during 2019. I've only invested since 2015, so I might definately be the bagholder here, but even Berkshire looks cheap. And has looked cheap all year. With a multiyear horizon I really don't see how one loses when we get around 1,3xbook.

Thanks for following up with specific names.  It helps understand what you mean by quality, which varies person to person.

TwoCitiesCapital

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Re: How much cash do you have?
« Reply #23 on: November 07, 2019, 03:46:14 PM »
Only about 5% in true money market, but I have other positions that I view has having similar optionality as hedges

10% in short-term bonds funds
5% in intermediate treasuries
3% in leveraged mortgages (a la NLY)
And 0.5% in index out options

Also moved 15% out of equities and into IG corporates. Not a true hedge, but probably less volatile to the downside than equities will be.