Author Topic: I want out of investing - options  (Read 3017 times)

muscleman

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Re: I want out of investing - options
« Reply #20 on: November 28, 2019, 04:21:01 PM »
What I'm about to say is probably useless to you given that you like broad diversification, but here goes:

In recent years I've been owning fewer and fewer stocks to the point where I now will usually own only three or four. I made a conscious decision to focus only on "no-brainer" ideas. The kind of idea that I might find only once every three or four years. By "no-brainer" I mean a stock that is a great company or very solid infrastructure like asset that is selling for one-third or less of my estimate of intrinsic value. Waiting for no-brainers means letting a bunch of good ideas go by. When I find the no-brainer idea I will put 30% or more into it. The fact that the undervaluation is so extreme means I can hold it for many years and make high returns the whole way. I usually think in terms of making 10x in 10 years. A single idea like that can replace 10 or 15 more typical value ideas because I'm putting maybe 3x more money into and holding it 5x longer. So I've found it to be a huge time saver on research. It's also more fun in my opinion to focus on only your best ideas and hold them long term. So far, it's working very well.

Out of curiosity, what ideas have fallen into this net since you switched? How long has it been? No need to give current ideas if you donít want to share them, older ones are fine.

I think the questions you are asking are not even that relevant for people owning 3-4 stocks long term. The results can vary drastically among this kind of concentrated portfolios, and people who outperform spectacularly come out to talk and people who underperform keep silent.
I am muslceman. I have more muscle than brain!


no_free_lunch

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Re: I want out of investing - options
« Reply #21 on: November 28, 2019, 04:33:27 PM »
For my Canadian investments I actually want just about anything but the banks and O&G.  Those Canadian banks are going to get wiped out like what happened in Europe. They really don't have a lot of equity relative to assets.  Somehow we managed to avoid a RE crash but if we ever have one they are in big trouble.

There are a lot of good quality small and midcaps that you have never heard of.  Industrials, tech, consumer Staples, the railways, that sort of thing.  That's what I want to own. I am going to find a fund that holds a bunch of those, throw some money in and walk away. 

coc

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Re: I want out of investing - options
« Reply #22 on: November 28, 2019, 04:35:59 PM »
What I'm about to say is probably useless to you given that you like broad diversification, but here goes:

In recent years I've been owning fewer and fewer stocks to the point where I now will usually own only three or four. I made a conscious decision to focus only on "no-brainer" ideas. The kind of idea that I might find only once every three or four years. By "no-brainer" I mean a stock that is a great company or very solid infrastructure like asset that is selling for one-third or less of my estimate of intrinsic value. Waiting for no-brainers means letting a bunch of good ideas go by. When I find the no-brainer idea I will put 30% or more into it. The fact that the undervaluation is so extreme means I can hold it for many years and make high returns the whole way. I usually think in terms of making 10x in 10 years. A single idea like that can replace 10 or 15 more typical value ideas because I'm putting maybe 3x more money into and holding it 5x longer. So I've found it to be a huge time saver on research. It's also more fun in my opinion to focus on only your best ideas and hold them long term. So far, it's working very well.

Out of curiosity, what ideas have fallen into this net since you switched? How long has it been? No need to give current ideas if you donít want to share them, older ones are fine.

I think the questions you are asking are not even that relevant for people owning 3-4 stocks long term. The results can vary drastically among this kind of concentrated portfolios, and people who outperform spectacularly come out to talk and people who underperform keep silent.

Iím not looking to copy his strategy. Thanks.

dutchman

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Re: I want out of investing - options
« Reply #23 on: November 28, 2019, 06:08:32 PM »
no_free lunch, please keep us updated on any good funds your come across.  I'm looking to do the same as you.
Canadian banks dominate most of the big ones.

Rod

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Re: I want out of investing - options
« Reply #24 on: November 29, 2019, 06:21:46 AM »
What I'm about to say is probably useless to you given that you like broad diversification, but here goes:

In recent years I've been owning fewer and fewer stocks to the point where I now will usually own only three or four. I made a conscious decision to focus only on "no-brainer" ideas. The kind of idea that I might find only once every three or four years. By "no-brainer" I mean a stock that is a great company or very solid infrastructure like asset that is selling for one-third or less of my estimate of intrinsic value. Waiting for no-brainers means letting a bunch of good ideas go by. When I find the no-brainer idea I will put 30% or more into it. The fact that the undervaluation is so extreme means I can hold it for many years and make high returns the whole way. I usually think in terms of making 10x in 10 years. A single idea like that can replace 10 or 15 more typical value ideas because I'm putting maybe 3x more money into and holding it 5x longer. So I've found it to be a huge time saver on research. It's also more fun in my opinion to focus on only your best ideas and hold them long term. So far, it's working very well.

Out of curiosity, what ideas have fallen into this net since you switched? How long has it been? No need to give current ideas if you donít want to share them, older ones are fine.

I've been investing in stocks for 25 years, usually owning 5 to 7 at any one time. This level of concentration was not by design, but by having a pretty high bar for what I would invest in, usually 1 or 2 simple ideas per year would pass the hurdle. I focused almost entirely on small and obscure Canadian stocks, often special situations. My performance during that time was at or close to 25% per year, with a success rate of about 85% on the ideas I bet on. I can't remember if that ridiculous performance number includes leverage because I did leverage up after the two crashes in 2000 and 2008. Most of the time I was debt free. I don't pretend to be as good as those numbers suggest. I just think the area I was prospecting in--small and obscure Canadian stocks--has been able to offer up just enough really easy deals over the time I've been looking that I could get a good one once or twice a year if I searched enough.

I'm sure I could have just kept doing that, but about 3 years ago I decided to reduce the amount of time I was devoting to stock research. It struck me that over the 25 years I've been doing it, I have identified about 7 or 8 "no-brainer" ideas (one every 3 or 4 years) that I would put 20% into. All of them put up excellent 10 year+ records after that, whether I kept them that long or not, often I did keep them. More "average" ideas I would put in 10 or 15%. I realized that if I had simply stuck to those 7 or 8 "no-brainers" ignoring everything else, and put maybe 30% into them when I found them and held on, I would have done about as well or better than I did investing in the much larger number of "average" ideas I got into. So, in the interest of reducing time spent I've been experimenting with high-grading my ideas to invest in only the no-brainer ones over the last 3 years. Performance during this three year period has been about 25% per year.

My biggest holding by far right now is Dream Unlimited (DRM-T), a diversified real estate company. I bought it at various prices starting around 3 years ago. I think it's worth more than $20, currently trades close to $12, was $7 earlier this year. My average price is about $8. I expect to hold this one for at least another 7 years to make my total holding time 10 years or more. This one big, long term investment will probably replace 10 or 15 more average deals I could have done, so that is where the big time savings will come from.


KJP

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Re: I want out of investing - options
« Reply #25 on: November 29, 2019, 06:40:02 AM »
e spent I've been experimenting with high-grading my ideas to invest in only the no-brainer ones over the last 3 years. Performance during this three year period has been about 25% per year.

My biggest holding by far right now is Dream Unlimited (DRM-T), a diversified real estate company. I bought it at various prices starting around 3 years ago. I think it's worth more than $20, currently trades close to $12, was $7 earlier this year. My average price is about $8. I expect to hold this one for at least another 7 years to make my total holding time 10 years or more. This one big, long term investment will probably replace 10 or 15 more average deals I could have done, so that is where the big time savings will come from.

The wrong thread to ask, but what do you think of the the Dream Global transaction and the seeming move away from third-party asset management (Dream Office restructuring, Dream Global deal, and increasing DRM ownership of Alternatives), which I thought I was the best part of the business?

samwise

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Re: I want out of investing - options
« Reply #26 on: November 29, 2019, 06:46:07 AM »

I've been investing in stocks for 25 years, usually owning 5 to 7 at any one time. This level of concentration was not by design, but by having a pretty high bar for what I would invest in, usually 1 or 2 simple ideas per year would pass the hurdle. I focused almost entirely on small and obscure Canadian stocks, often special situations. My performance during that time was at or close to 25% per year, with a success rate of about 85% on the ideas I bet on. I can't remember if that ridiculous performance number includes leverage because I did leverage up after the two crashes in 2000 and 2008. Most of the time I was debt free. I don't pretend to be as good as those numbers suggest. I just think the area I was prospecting in--small and obscure Canadian stocks--has been able to offer up just enough really easy deals over the time I've been looking that I could get a good one once or twice a year if I searched enough.

I'm sure I could have just kept doing that, but about 3 years ago I decided to reduce the amount of time I was devoting to stock research. It struck me that over the 25 years I've been doing it, I have identified about 7 or 8 "no-brainer" ideas (one every 3 or 4 years) that I would put 20% into. All of them put up excellent 10 year+ records after that, whether I kept them that long or not, often I did keep them. More "average" ideas I would put in 10 or 15%. I realized that if I had simply stuck to those 7 or 8 "no-brainers" ignoring everything else, and put maybe 30% into them when I found them and held on, I would have done about as well or better than I did investing in the much larger number of "average" ideas I got into. So, in the interest of reducing time spent I've been experimenting with high-grading my ideas to invest in only the no-brainer ones over the last 3 years. Performance during this three year period has been about 25% per year.

My biggest holding by far right now is Dream Unlimited (DRM-T), a diversified real estate company. I bought it at various prices starting around 3 years ago. I think it's worth more than $20, currently trades close to $12, was $7 earlier this year. My average price is about $8. I expect to hold this one for at least another 7 years to make my total holding time 10 years or more. This one big, long term investment will probably replace 10 or 15 more average deals I could have done, so that is where the big time savings will come from.

Were most of your no brainer ideas in real estate?

samwise

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Re: I want out of investing - options
« Reply #27 on: November 29, 2019, 06:48:56 AM »
For my Canadian investments I actually want just about anything but the banks and O&G.  Those Canadian banks are going to get wiped out like what happened in Europe. They really don't have a lot of equity relative to assets.  Somehow we managed to avoid a RE crash but if we ever have one they are in big trouble.

There are a lot of good quality small and midcaps that you have never heard of.  Industrials, tech, consumer Staples, the railways, that sort of thing.  That's what I want to own. I am going to find a fund that holds a bunch of those, throw some money in and walk away.

Banks have full recourse. They will most likely be fine in a real estate crash. I believe losses in the 1990 crash were < 10 bps. Yes their mortgage books probably donít grow much, and multiple to book might compress, but this is not an existential crises.

Rod

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Re: I want out of investing - options
« Reply #28 on: November 29, 2019, 06:57:11 AM »
e spent I've been experimenting with high-grading my ideas to invest in only the no-brainer ones over the last 3 years. Performance during this three year period has been about 25% per year.

My biggest holding by far right now is Dream Unlimited (DRM-T), a diversified real estate company. I bought it at various prices starting around 3 years ago. I think it's worth more than $20, currently trades close to $12, was $7 earlier this year. My average price is about $8. I expect to hold this one for at least another 7 years to make my total holding time 10 years or more. This one big, long term investment will probably replace 10 or 15 more average deals I could have done, so that is where the big time savings will come from.

The wrong thread to ask, but what do you think of the the Dream Global transaction and the seeming move away from third-party asset management (Dream Office restructuring, Dream Global deal, and increasing DRM ownership of Alternatives), which I thought I was the best part of the business?

That transaction surprised me. I didn't realize that DRM had such a large embedded incentive fee in Dream Global. They also have the same deal with Dream Industrial, 15% of gains on properties sold. Industrial trades at $14 now with a book value of $9.40. If you assume the market value of their buildings is reflected by the $14 price, then DRM has about $100 million of embedded incentive fees in Industrial, or about $1 per DRM share. I don't know if Industrial will get bought out, but that $100 million is a real asset for DRM and it's growing.

I think they are having some trouble growing the asset management business through the publicly traded REITS at the rate they would like, so they are going to pivot to private equity funds like Brookfield does. I think they have a good shot at this, given their performance track record is good. If they can build up private equity funds then I expect their asset management earnings can grow for a very long time.

Rod

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Re: I want out of investing - options
« Reply #29 on: November 29, 2019, 07:01:15 AM »

I've been investing in stocks for 25 years, usually owning 5 to 7 at any one time. This level of concentration was not by design, but by having a pretty high bar for what I would invest in, usually 1 or 2 simple ideas per year would pass the hurdle. I focused almost entirely on small and obscure Canadian stocks, often special situations. My performance during that time was at or close to 25% per year, with a success rate of about 85% on the ideas I bet on. I can't remember if that ridiculous performance number includes leverage because I did leverage up after the two crashes in 2000 and 2008. Most of the time I was debt free. I don't pretend to be as good as those numbers suggest. I just think the area I was prospecting in--small and obscure Canadian stocks--has been able to offer up just enough really easy deals over the time I've been looking that I could get a good one once or twice a year if I searched enough.

I'm sure I could have just kept doing that, but about 3 years ago I decided to reduce the amount of time I was devoting to stock research. It struck me that over the 25 years I've been doing it, I have identified about 7 or 8 "no-brainer" ideas (one every 3 or 4 years) that I would put 20% into. All of them put up excellent 10 year+ records after that, whether I kept them that long or not, often I did keep them. More "average" ideas I would put in 10 or 15%. I realized that if I had simply stuck to those 7 or 8 "no-brainers" ignoring everything else, and put maybe 30% into them when I found them and held on, I would have done about as well or better than I did investing in the much larger number of "average" ideas I got into. So, in the interest of reducing time spent I've been experimenting with high-grading my ideas to invest in only the no-brainer ones over the last 3 years. Performance during this three year period has been about 25% per year.

My biggest holding by far right now is Dream Unlimited (DRM-T), a diversified real estate company. I bought it at various prices starting around 3 years ago. I think it's worth more than $20, currently trades close to $12, was $7 earlier this year. My average price is about $8. I expect to hold this one for at least another 7 years to make my total holding time 10 years or more. This one big, long term investment will probably replace 10 or 15 more average deals I could have done, so that is where the big time savings will come from.

Were most of your no brainer ideas in real estate?

No, just Dream Unlimited and Morguard. Though there have been some really good microcap real estate bargains over the years. Those weren't long term holds, however.