What are you buying today?

[TwoCitiesCapital]

Added to Altius and Amex.

Bought a new position: HOG

Why HOG? It seems a dying business. Younger people dont buy HOG and current fans are retiring.

HOG sells ~40% of their bikes overseas and the strong dollar is hurting their foreign business right now. International growth is still intact and their domestic growth, though slow, is positive. This has been the case since 2005. Q1 '15 was weak and the stock sold off. The market is taking Q1 as the start of the real decline of the brand and is pricing it at a PE and P/FCF lower than any period over the last ten years aside from 2009.

As for the future of the brand: I'm not sure HOG doesn't have young fans. Their bikes are expensive and young people cannot afford to buy them. The 20 and 30 somethings zipping around on crotch rockets are going to trade them in one day for something comfortable. The 20-30 somethings that give up their bikes will still have a midlife crisis in their 50's and go out and buy a bike. I really cannot think of a brand with a stronger following. I wonder how many hippies in the 60 and 70's were buying hogs? A bunch of those hippies own Harleys now...

This. I've been watching HOG too. I've been reducing leverage in my portfolio for the last 4 months or so and I'm not quite to my goal yet, but if the price of this and American Express keep falling I'll have to re-evaluate my current holdings.

Maybe I can finally redeem myself for not buying it in 2009 when I was looking at it around $13.

[Jurgis]

Yeah, I held HOG around 2008-2009, sold close to lows.

For a small justification, they did change CEO and the new CEO presumably cleaned up the company quite a bit.

Of course now Barron's does a spread on the new CEO and they almost immediately hit a tough patch again.

Currently no plans to buy. I think I'll just say that it's not in my circle of competence.

[CorpRaider]

Added to Altius and Amex.

Bought a new position: HOG

Why HOG? It seems a dying business. Younger people dont buy HOG and current fans are retiring.

HOG sells ~40% of their bikes overseas and the strong dollar is hurting their foreign business right now. International growth is still intact and their domestic growth, though slow, is positive. This has been the case since 2005. Q1 '15 was weak and the stock sold off. The market is taking Q1 as the start of the real decline of the brand and is pricing it at a PE and P/FCF lower than any period over the last ten years aside from 2009.

As for the future of the brand: I'm not sure HOG doesn't have young fans. Their bikes are expensive and young people cannot afford to buy them. The 20 and 30 somethings zipping around on crotch rockets are going to trade them in one day for something comfortable. The 20-30 somethings that give up their bikes will still have a midlife crisis in their 50's and go out and buy a bike. I really cannot think of a brand with a stronger following. I wonder how many hippies in the 60 and 70's were buying hogs? A bunch of those hippies own Harleys now...

I was going to say: To me their fans retiring is good.  That's when it is most worth it to go drop $30K on a bike to cruise your CPA ass around.  I also agree that pretty much everyone on a rice burner or a ducati or BMW would rather have a hog if they had the cash.  I too missed HOG during the recession due to fear (although I bought DFS, WFM, DNKN and UA pretty much at the bottom, but I sold them all WAAAAAAAAAY too early.  Lesson learned, hopefully.  I just started looking at it though and haven't bought any yet. 

Didn't they have some labor problems that got them into trouble in the great recession?

[james22]

I am buying FFH today...

Reflect your belief that is attractively priced? Or are dollar-cost averaging?

I think it is attractively priced… As a very long term investment and if a more difficult environment awaits us.

In case something goes wrong with this global deleveraging, and we actually get to see deflation or a stock market that goes down and stays down for some time (or both), FFH imo might truly succeed in compounding at 15% annual.

If FFH compounds at 15% annual, there is no reason why 10 years from now it won’t trade at the same multiple it is trading today. This of course would mean a 15% CAGR for my investment.

Of course it won’t happen if central banks succeed in resolving our debt situation without any harmful consequences, and if the stock market keeps marching upward undisturbed.

Gio

Thanks, Gio.

I may be anchored on my failure to buy at $500 in Jan (went away for a long weekend thinking I'd a limit order in, returned to find I didn't), but it doesn't seem so attractive today.

I'm open to the argument that any reasonable price is attractive enough for the unique protection FRFHF provides.

But while I expect central banks to fail, I do also expect Fairfax will drop initially with the market before the realization it is what Fairfax is positioned for.

I'll likely wait like netnet and hope for your buy to drop the price.

[james22]

I also agree that pretty much everyone on a rice burner or a ducati or BMW would rather have a hog if they had the cash.

No.

Only the many (not everyone) on Japanese cruising bikes might rather a Hog if they'd cash, but not Ducatis or BMWs.

(Ducatis are for many on Japanese sport bikes and BMWs for many on Japanese touring bikes, if they'd the cash.)

[kfh227]

Since FFH was mentioned, I'd like to make a statement.

I am 38 right now.  25 years till retirement.  My wife and I have a Roth-IRA (and other retirement accounts through our employers).  In our Roth-IRAs I decided to start buying companies like Berkshire, FFH, etc and stop trying to do better than the likes of Prem Watsa (in retirement accounts ).

So, 2-3 months ago my wife's account had a bunch of FFH placed in it.  I dollar cost averaged into mine.  And next year, I am thinking that FFH will be placed into both.

25 years from now, I don't see why FFH would not be a $100B+ company.  That's modest though.  It's $15B today.  I figure it should be in the $200B+ area by then.

[merkhet]

Since FFH was mentioned, I'd like to make a statement.

I am 38 right now.  25 years till retirement.  My wife and I have a Roth-IRA (and other retirement accounts through our employers).  In our Roth-IRAs I decided to start buying companies like Berkshire, FFH, etc and stop trying to do better than the likes of Prem Watsa.

So, 2-3 months ago my wife's account had a bunch of FFH placed in it.  I dollar cost averaged into mine.  And next year, I am thinking that FFH will be placed into both.

25 years from now, I don't see why FFH would not be a $100B+ company.  That's modest though.  It's $15B today.  I figure it should be in the $200B+ area by then.

That seems reasonable. $225B in 25 years implies a CAGR of around 11.5%.

[kfh227]

That seems reasonable. $225B in 25 years implies a CAGR of around 11.5%.

I think I calced that at a 15% CAGR, it would be around $500B.

I added an image to my post showing what compounding at 11% will do in 25 years (ignoring inflation).  I guess that would be something like 14% compounded including inflation.

[CorpRaider]

I also agree that pretty much everyone on a rice burner or a ducati or BMW would rather have a hog if they had the cash.

No.

Only the many (not everyone) on Japanese cruising bikes might rather a Hog if they'd cash, but not Ducatis or BMWs.

(Ducatis are for many on Japanese sport bikes and BMWs for many on Japanese touring bikes, if they'd the cash.)

Yes.  The crotch rocket gets old after you turn thirty.  I had a Ducati , pretty much solely because I could get it for $12 grand versus $16 - 20 for a similar used hog at the time and it wasn't as embarrassing as a rice burner.  I also had a 600cc honda CBR when i was a baby.  Got married an now I drive an SUV....

None of the others are aspirational bikes, at least in the states.  Finally, no posers in America who have never owned a bike, go and buy Ducati gear to wear just for the brand associations. 

[james22]

I also agree that pretty much everyone on a rice burner or a ducati or BMW would rather have a hog if they had the cash.

No.

Only the many (not everyone) on Japanese cruising bikes might rather a Hog if they'd cash, but not Ducatis or BMWs.

(Ducatis are for many on Japanese sport bikes and BMWs for many on Japanese touring bikes, if they'd the cash.)

Yes.  The crotch rocket gets old after you turn thirty.  I had a Ducati , pretty much solely because I could get it for $12 grand versus $16 - 20 for a similar used hog at the time and it wasn't as embarrassing as a rice burner.  I also had a 600cc honda CBR when i was a baby.  Got married an now I drive an SUV....

None of the others are aspirational bikes, at least in the states.  Finally, no posers in America who have never owned a bike, go and buy Ducati gear to wear just for the brand associations.

Really?

Because I'm 51, been riding for over 40 years, commute daily, tour twice yearly, and take a (track) class about every other year on Japanese sport bikes, plan to go European when I'm back in the US full-time, and I'd quit tomorrow if I had to ride a Hog.