stlplace

Category: Investing

  • Did you notice that Warren Buffett bought and sold some home builder stocks recently

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    Not too long ago, I noticed Warren Buffett’s Berkshire Loads Up On 3 Homebuilders.

    And recently, I noticed he sold all of the DR Horton stocks. I am thinking of one reason is their built home quality. See below.

    I saw a bunch of videos on YT after watching the original YouTube video. See below. There are similar quality complaints videos on other builders too. I guess because $DHI is the national biggest builder (in terms of revenue or number of homes being built): it’s not too surprising they have the most complaints (just looking statistically).

    But, I also noticed Warren Buffett and Berkshire Hathaway seems kept the other home builder stock, $NVR (yahoo Finance, company website). I do understand NVR is much smaller than DR Horton. But I also noticed their share price, which is $7390.65 as of today (or the closing price of 02-16-2024). Sounds more like a reputation first kind of company, just like $BRK itself (Why Doesn’t Warren Buffett Split Berkshire Hathaway Stock?).

  • Amer Sports $AS IPO today

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    I don’t have any positions. Note IPO usually stands for “it’s probably overpriced” – this is Warren Buffett’s words, not mine. Last but not least, in the general sports apparel/shoes category, not specialized sports, Nike is the king. And I don’t see any one even Amer Sports‘s parent Anta Sports to shake things up. Adidas tried, and was not successful so far. Btw, Jim Cramer of CNBC also just bashed the stock $AS in this evening (02-01-2024) Mad Money show.

    Amer Sports Ring the bell on NYSE today 02-01-2024 for its IPO
    CNBC reports Amer Sports IPO
    My tweet on Amer Sports IPO $AS

  • Don’t trade the stonks

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    By #stonks, I mean the type of $AMC, or $GME, and in fact, I recall the name or hash tag #stonks was coined by Elon Musk.

    I think $IRBT

    $VFS

    $UP

    $SAVE

    are similar 🙂

    The reason: trading them are just like gambling.

  • Bentley Systems $BSY

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    (Update 04-18-2024) Reuters – Exclusive: Bentley Systems explores options amid takeover interest, sources say

    (Update 02-27-2024) The Q4 2023 results is out. The IR webpage has the conference call. Learned a new buzz word “digital twin” last few days, 1st from the Unity Software (which just had a bad quarter, btw), then confirmed by Bentley Systems. I tend to agree with Reddit on this one. It’s somewhat like everyone is talking about AI or Gen(erative) AI – which made Google to put up Gen AI in its search too. I like substance, not fluff 🙂

    (Original) Some people may know I worked at CAD industry for a while: I actually explained a bit here (search for “my 1st employer”).

    I heard about Bentley Systems many years ago, but until fairly recently, to be precise in year 2020, it came to public market. Here is their IPO prospectus filed in Sept 22, 2020. In last year or so, I traded and still own some of their stocks $BSY (note this class of stocks has less voting power compared to the Bentley families, and this is quote common in tech stocks, btw. More explanation in the next paragraph). And in last few days, the stock dropped quite a bit and I added a bit more in the last few days too.

    Their main competitor includes another former employer of mine: AutoDesk $ADSK. I didn’t stay at AutoDesk as long as the 1st employer of mine. Unlike AutoDesk and many medium sized software companies, Bentley has a small quarterly dividend: 5 cent per share. Note the Bentley families still has the voting power. It’s probably one of the few family controlled software companies in the world. Many software companies are public and has no controlling shareholder: with the exception of Alphabet (Google), Meta Platform, and Hashicorp $HCP etc. Founders usually have control of the company via Dual Class Stock. In a way Berkshire Hathaway has a similar structure too: A share has way more voting power than B share, and Warren Buffett and his family has the control.

    It seems they just exceeded $1 b annual revenue in year 2022 (here are the link to their annual reports in recent years).

    Future and risk factors

    Family control. No check and balance from outside shareholders. Note this is true for many companies. The exception is usually when a stock underperforms the market for a long time, an activist shareholder may emerge, e.g. Nelson Peltz vs. Disney at this time.

    Likely lower growth or even negative growth in China, both in terms of R&D and end market. This is similar to many west/US tech companies. APAC (Asia Pacific made up about 18% of the revenue, so this is still manageable).

    US recession, or no growth. Possible, but software companies usually sell products in multiple years, eventually the growth will come back, even with the economy cycle.

    Competition. AutoDesk is the main competitor. Also one source said Siemens has 14% stake in Bentley. Also, do you remember MetaVerse?

  • EBITA is bullshit earning

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    The famous investor Charlie Munger used to say unfiltered* and he commented: every time you hear EBITA (Investopedia definition, note sometimes it’s also called EBITDA, where the D stands for depreciation), which stands for Earning before Interest, Taxation and Amortization (and depreciation), you replaced it with Bullshit earnings.

    More cheats, liars and lies

    I have received unsolicited calls from Timeshare, Hilton Grand Vacations to be specific. I politely declined. But those phone calls are relentless sometimes, and eventually I hand up or blocked the calls. Looking back I felt good that I did the right thing.

    By the same token, I think we can do the following replacement. All creative suggestions are welcome.

    ======

    投资 – 投机

    理财 – 赌博，骗局

    信托 – 赌博，骗局

    发财 – 破产

    毕业 – 有时候是失业的意思

    买房 – 有时候是买套的意思

    (Update 01-15-2024) Refer to 鼎益丰 news here and below.

    港交所数据显示，自2023年9月20日开始，荆思源、王梦涛和梁家辉就陆续出售鼎益丰股票，其中梁家辉出售150万股，荆思源出售160万股，王梦涛出售83.2万股。

    ======

    油管的标题党

    我感觉油管的标题有时候跟某城的标题党有得一拼😂 我觉得标题可以改成：上海美女模特移民加拿大前在上海的一些挫折。她在视屏中提到的骗子: 当天财富(P2P理财)的施建祥(新浪；证券时报; wikipedia on Shanghai Kuailu Group; Mr. Shi Jianxiang)现在美国。

    她受到的第二个挫折是在教育产业/企业股票变现前，正好碰到双减政策出台。这个让我想到我买的阿里巴巴ADR股票在蚂蚁金服上市受挫后的暴跌。

    我的理财理念是天上不会掉馅饼: if something is too good to be true – it’s a lie。

    I do like her attitude of “solider on“: which by the way, is also another Charlie Munger life motto.

    *Unfiltered: I think Warren Buffett is more diplomatic than Charlie Munger on criticizing. Warren said this many times: criticize by the category; praise by the name. I believe nobody likes to be criticized. Criticize others is much easier than blame/criticize self: e.g., I just saw this gem “The current situation with my classmates are that I am undoubtedly the only one that has morals…” from a google review (James Lai). And Bill Ackman is not too far behind here too.

  • Zoombies or zoombie companies

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    I came across this term yesterday.

    You may search the Twitter (aka X) for more tweets on the topic.

    And this made me to think two small stock positions I have and I may have talked about them in my blog posts too: LEG (Legget and Platt) and SCS (Steelcase). I just did a bit more search and reading.

    Zombies: Financial Term for Distressed Companies

    Credit ratings

    SCS – Ba2 Moody’s: this is speculative

    LEG – Fitch BBB– : this is the lowest among investor grade

    Interestingly enough, my gut feeling matches the two companies ratings (at least in relative terms)

    Explanation and comparison of ratings

    Corporate credit ratings: a quick guide 

  • Some reflections in my last 2 years of investing

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    I didn’t do well in my last 2 years of investing or trading. I think the overall performance in my main IRA (trading) account, for last 2 years (2022 and 2023) is slightly down.

    This year, I lagged behind the S&P 500 index in terms of performance (mine 11% vs S&P 500’s 25%). And I think one reason is probably I had too many stocks. 

    https://twitter.com/rationalwalk/status/1739984491148619933

    Traded too frequently?

    A related issue is the overall short holding period, and traded too frequently. The last point was a bit subjective, I think one example is I bought $ANSS and hold it for a few days, before it jumped due to the buy out (on the market) rumor. 

    This is subjective because in my Robinhood account, in which I do trade most frequently, I got 49% YTD return which matchs $APPL performance YTD, and is about twice as good as S&P 500 index fund. I wish I have put in more money into my Robinhood account – which I will do it in the new year.

    Going forward 

    I am going to put >= $10k on a stock: put eggs in a few baskets and watch them carefully. For existing stocks, I’ll ask: if the position is over 10k, should I keep it? If the position is less than 10k, should I add more? If yes at what price. Keep this new mind when initiating a new position too. #majorsThoughtsOnStock #newYear #newMindset

    I put it in a tweet too: 

    Also, I am going to be more patient. Easily said than done on this, but I am going to try. I think the mindset of long term investing goes like this: we don’t know or it’s very hard for us to know in advance whether an investment (a stock) will work out or not. But given time, and if we do our homework, we got a better batting average. And if we can live longer enough, this snowball effect (compounded interest) will help the asset grow. 

    Also a direct reason, is I that I missed some former high flyers this year. 

    My 2024 picks

    I am looking at $JAMF and $PYPL now. I have a little bit of both at this time. And I may add them as time goes.

    https://twitter.com/chasingthevig/status/1630714064023465985

    My comment: the +30% growth in 4Q20 till 3Q21 seems mostly pandemic driven – think school adding devices for virtual learning. Btw, my daughters’ school district use Mosyle – it seems Jamf is a more expensive and comprehensive product (Jamf vs Mosyle). I used Jamf while at Mercy for my MacBook (remember I had a special command to get around the fact that I was not admin). I am not sure what MDM software I used while at MasterCard and Ascension.

    My comment: Mac is usually a more secure OS compared to Windows. I don’t remember we had antivirus (or end point protection) software back in year 2014 using Jamf. And at Asc I recall they installed Blackberry Cylance. A comparison between Cylance and Jamf.

    More on MDM software

    Years ago (in year 2012) I heard about Mobile Iron, which was bought by Air Watch, which was in turn bought by VMWare (and VMWare was recently bought by Broadcom).

    Also: jamf vs intune

    Microsoft Intune, now Company Portal app, it seems right now I used it more like #BYOD (bring your own device) instead of #MDM (company owned device, MDM stands for mobile device management).

    company portal vs intune (reddit; Microsoft learn)

    Paypal is in the payments industry. This article explains some of the competitors. I recall PayPal did paid a hefty sum for the Honey coupon site acquisition. Not sure if this works out or not. Other competitors in this arena include ebates (Rakuten.com) and Dosh, plus credit card offers such as Amex and Chase. This is a very competitive market.

    Some more thoughts – no silver bullet

    I don’t think there is a silver bullet or a multi-bagger, at least not for me. Most likely I will continue to plug along, trading the stocks that I have some success in my past trading. Again I will learn from other people including Warren Buffett, but I won’t mimic other people.

    Update 01-07-2024: I got another idea, that’s Zoom $ZM. I heard from my younger daughter’s violin teacher that he taught lesson to kid (family) travelled to Indonesia during the holiday break. We did one lesson with him during last year too when my 9 year old was sick. From 1st look, Zoom stock is very cheap now. I understand the growth may not be there because we passed the pandemic growth.

  • Year end tax moves and my thoughts on personal finance and investing

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    Some friends asked me about the year end tax moves, such as the tax loss selling etc. Here is a good article on the topic – Tax-Loss Harvesting: What It Is, How It Works. My take on tax: this is at least secondary maybe even more down the priority list. The No. 1 priority in the personal finance/investing is don’t lose your money. Ideally we don’t want any type of loss. Tax loss is applicable only after we lose the money during investing. If we don’t have loss in the 1st place, would it be better?

    But I do appreciate the mindset of 亡羊补牢。Or salvage whatever we can (not exact translation).

    Another question is what to contribute if we need to contribute to the regular IRA account. The latter is an easier question. The deadline to fund IRA is actually usually the tax day (the middle of April), so we still have time. As to investments, I only recommend the S&P 500 index funds and I explained it more here.

    The 529 plans I setup for my girls

    I have a fairly small 529 plan for my girls, which I started shortly after they were born (see my blog post one, blog post two, and blog post three).

    With the enhancement of the 529 plans by the law passed by congress in the recent years, it becomes a tool for retirement as well. Read this for more details.

    The thing I taught my 13 year old the other day, is the 12/6 compounded interest rule (snowball effect), an investment that grows 12% annually, in 6 years it will double. From 2010 to 2023, since I invested in S&P 500 index fund, and the S&P 500 index did well since 2010, the money I put in quadrupled. It was a small amount of money. But the compounded interest concept is important and we saw it in action.

    Another thing many working people can consider is the HSA account. I heard it has even more benefits for retirement compared to the 529. So something to read about, think about and do something about 🙂

    My free tips on PF and investing

    Like many good things in life, don’t rush it. Take the time, savor the moment, think it through, before jump into the market and make big moves: Rome is NOT built in a day. So was the business empire such as Berkshire Hathaway, or the GPU, AI chip designer nVidia. They are built in decades.

    Hindsight is 20/20

    Look at the about 1,137% or 11 times gain of $CVNA. Below is the YTD chart of Carvana vs CarMax ($KMX), Tesla ($TSLA) and S&P 500 index. But the million dollar question is: who bought and hold the $CVNA this year (until today)?

  • The 4 right hand men of Warren Buffett 巴菲特的四大金刚

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    油管：my Youtube 2022 video for BRK HQ video below (narration mostly in Chinese)

    Charlie Munger

    We know Charlie Munger (Wiki) passed away recently, and he was the vice chairman of Berkshire Hathaway: he had some influence on Warren Buffet’s investments over the years, including See’s Candy, Coca Cola and so on. Here is the free online book Poor Charlie’s Almanack (you can purchase the paper versions through the links here). Also, the last interview before he passed away with CNBC’s Becky Quick (1 hour 42 mins, YouTube link here). I still think Warren makes most investments decisions independently. though.

    If you like to have a quick look, I listed some shorter videos of Charlie Munger’s classical moments here.

    四大金刚 (google; baidu baike, Wiki) is a common idiom in Chinese, and I think it may be suitable to describe the current top 4 men who works for Warren Buffett. And I assume they take over most of what Warren does today, should Warren decides to retire.

    Top Two (Duo)

    Greg Abel (Wiki): current Vice Chairman of BRK, responsible for all non-insurance operations, which also means he is in charge of the BRK Energy (formerly Mid-America Energy), BNSF Railway, many manufacturing and retail operations ranges from BH Home Service (real estate agents), Brooks Running, Clayton Home, Diary Queen, to ISCAR, Nebraska Furniture Market (NFM), Net Jets, See’s Candies, to Oriental Trading, Squish Marrow and so on. Note there are many business people may have not heard of. As of now, Greg will be the CEO of Berkshire Hathaway when Warren Buffett retires, in addition to his curent Vice Chair title.

    Ajit Jain: current Vice Chairman of BRK, responsible for all insurance operations, companies such as Geico (car insurance) to reinsurance business.

    Warren asked Greg and Ajit to be on the stage in last few years’ annual shareholder meeting, and they answered relevant questions in their portfolio. This is a good move. I think also, once Charlie slipped his tongue during an Q&A, and he said Greg will keep the culture (or something similar). So the world knows Greg is the CEO heir apparent.

    Investment managers (also a duo)

    Ted and Todd are two former hedge fund managers that Warren Buffet hired about 15 years ago (exact date please refer to their Wikipedia links below, or you can google it). Quite a few people including $BRK.A and $BRK.B shareholders would question Warren Buffett’s age and they are worried what if Warren suddenly became incapacitated or die. Who is the heir apparent. This is a tricky question or problem, because very few hedge fund managers would give up their career, at the same time would basically be prepared when this inevitable happens. It seems in Ted W. and Todd C. Warren found the perfect duo for this job. This is somewhat like the duo of Warren himself and Charlie.

    Berkshire began buying Apple stock in 2016 under the influence of Buffett’s investing deputies, Todd Combs and Ted Weschler.

    Ted Weschler: Ted got a bit unwanted attention from his personal IRA investment. But his performance speaks louder than his words. Quote Wikipedia: in 2012, Weschler joined Buffett at Berkshire Hathaway, a year after Todd Combs joined as Berkshire’s first investment manager. As of 2019, he managed $13 billion of the equity portfolio and $8 billion in pension funds.

    Todd Combs: in addition to his investment duty (along with Ted), note Todd is also the CEO of Geico (and technically for that role he reports to Ajit). Here is a picture of Todd during “invest in yourself 5k” during the annual Berkshire Hathaway shareholder meeting. Here is a picture of Ted, Todd and Tracy Britt Cool during that run. Note Tracy used to work for Warren as well, and she started to work on her own investment partnership in recent years. Maybe someday she will come back to BRK: if the right opportunity arises.

    Board

    Howard Buffett, Warren’s older son, plans to take over the Chairman role when Warren retires. Susan Buffett, Warren’s daughter, and a few others will be on the board. They may need to add one or 2 board seats because Charile used to be a board member.

    One thing it’s interesting is Warren likes #pairProgramming, or #pairWorking, because he has two pairs of magnificent managers for CEO and investment managers job.

  • My recommendations for investments in 401k

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    That is the S&P 500 index funds. This is similar to Warren Buffett’s recommendation. He actually has more recommendations beyond stocks or bonds.

    Anyway, I think for most people who are still in the wealth accumulation stage (I think most people before retirement is in this category), low cost stock index funds, plus some low cost specialized stock funds (value, growth, small, mid, large caps) that has a track record, are the ways to invest. I have both in my 401k accounts. And I usually look at them once a year, and do some rebalance (mostly very small adjustments) as I see fit. I do this for my HSA and 529 plan too. The latter 2 are much smaller than my 401ks. But I feel HSA is overlooked by many people and I am also aware of some new changes to the 529 plan (and they are good changes).

    有朋友问我401k的投资选择：我一般推荐S&P 500 index funds. 过去十年/二十年 S&P 500 index return 有可能比历史上的9.81% 还稍高一些，应该是可以beat inflation 的。工资不一定，我2000年第一份码工工作工资是$56,000, 现在圣村entry level 的software engineer 大概给个六万或稍多一些。那时候一个新的Camry LE 大概不到两万，现在要三万。当然硅谷大厂的码工收入要高几倍：entry level 也是如此。做OpenAI 等相关热门行业的更高。

    但是反过来说如果2012 年买了一万块钱的$NVDA 或者$TSLA, 我觉得我拿不到现在。买准股票和长时间一直拿在手上都不容易。

    还有就是不一定非要买magnificent 7 stocks, 其它一些市值小一点股票也有长时间不错的：比如$CMG, $MA, $MCD, $MNST, $SBUX 应该还有不少beat S&P 的。当然loser 更多. On this note, we need to be careful on IPOs and SPACs. Think $BHIL.

    My own stupid mistakes on my 401k and IRAs, and turnaround

    At one time, probably year 2010 till 2013, I converted my 3 small 401k accounts to an IRA account at Vanguard, then I traded stupid stocks (yes they are stupid stocks looking back), such as Arch Coal (I worked for the company in 2011 and 2012), Alpha Natural Resources (also a coal company) and also “the one time smartphone wonder” Palm. Long word short, I probably lost half of the money when I did all this. Luckily I found out my stupidity and decided to change my strategy. I was able to turn around from year 2017, the pivotal point was actually in year 2015, when I started trading on the Robinhood platform. I know my favorite person or investment great Charlie Munger dislikes the Robinhood (for encouraging frequent trading, basically make it more like a lottery or gamble). But for me personally no trading fees plus some trading that has a purpose or a theme works better for me (I hold a stock from a few days to a few months on Robinhood).

    So in other words, if I’ve put the money from my three small 401k accounts into $NVDA or $TSLA stocks and hold them all this time, I would be an IRA multi-millionaires. But I am just happy with my turnaround and my S&P 500 index like performance. Expectations, expectations and expectations, are the key to happiness 🙂