Welcome, everyone, thanks for joining.
We're going to be talking today again about Bill Ackman.
I know we've been talking a lot about Bill Ackman, and I
recently did a video on how to pick stocks, like Bill Ackman.
What I did in that video is I reverse engineered his stock
picking method by looking at commonalities and common traits
and all the companies that he invests in.
All the ones that he buys and sells have many things in common
and that was mostly focused on the fundamentals.
So the things like the ibadah, the free cash.
Low, the share BuyBacks. That dividend is the earnings
per share growth, so on and so forth.
I looked at commonalities. So if you want to see kind of a
precursor to this video, you can go back and watch that one.
I'll link it in the description, but this video is a follow-up on
that one because a lot of people had a common criticism.
They said Joseph, it's good that you're looking at all the
commonalities in the fundamentals, like the ibadah
and free cash flow. But you know, that Bill Ackman
is doing much more research than that.
He's not just looking at some fundamentals and buying the
companies. He understands the business.
He has a whole research team. So we want to see inside of his
head. What is he thinking about when
he's buying these companies? What is he really considering
qualitatively with these companies?
So that's what we're going to be diving into in this episode.
We're going to be expanding across that first video from the
fundamentals and going more into the qualitative side and to what
these companies actually are. Luckily for us.
Bill Ackman just recently released the Pershing Square
Holdings, 2021 annual, Art. And in this, he gives very
in-depth breakdowns and descriptions of specifically
what he values in the companies that he's holding.
So he's sharing a lot of valuable Insight hair.
I read through some of it and I was pretty Blown Away by the
insights that he shares openly. So I want to go through this
dissect a little bit and see what we can learn together
because you might be asking, why am I paying so much attention to
Bill Ackman? Well, frankly, you know,
opinions vary, you may not like the guy.
You may not like his personality, or CNBC
appearances. Or as vocal, opinions on
different subjects, like Ukraine or whatever, I get that some
people don't like his personality, but the performance
speaks for itself, Bill Ackman is an incredibly good investor.
He's one of the best investors alive, the numbers show that if
you look at his performance of his fund, this is net of fees.
Meaning factoring in the 20% performance fees that he charges
plus. The 16% out performance fees, he
charges massive fees in this fund and net of the fees.
He's still destroying the S&P 500.
Look at this performance overall.
These two lines are his performance, that's his fund.
And then you look at the S&P 500 below four hundred and eighty,
four percent Returns versus 1670 percent.
Net of fees that is outperformance to look at it
another way. He's returned 17.1 percent
annualized since Inception. Again, that's net of fees
compared to the S&P 500's, 10% annualized, and that's not
counting in any type of Expense ratio.
So he has blown away, the S&P 500, the results speak for
themselves, and I do think that he shares valuable advice in
this letter. So we have a lot to jump into.
Let's go ahead and get to it. So let's go ahead and start off.
First of all with kind of the framework of how Bill Ackman
views all the macro events going on.
So how he views this through the lens of an investor?
We have the war with Ukraine. He says the war in Ukraine is a
tragedy watching. Innocent people died due to the
political and geographical objectives of 1.
And is something one would hope would have never occurred.
I think most people can agree with that.
Ukraine is putting up a fierce fight and much of the western
world is helping with aggressive, sanctions, military
equipment, and funding. But we need to do more Russia
has horrific actions must be made to be extraordinarily
expensive and punishing for its military and its economy so that
we deter and hopefully eliminate such aggression destruction and
loss of life in the future. So that's a little bit of his
political view on the circumstances in Ukraine.
With Russia, he is he's very much involved in that if you
follow his Twitter, he's constantly tweeting stuff in
support of Ukraine so that's a little bit of politics, that's
where he stands on the issue. He says the economic
implications of the war are significant in amplifying
inflation and energy, Agriculture and other goods, and
services and tempering, the risk appetites of investors and
corporations. The prospects of high inflation
deteriorating growth and the potential for the US and Global
recession have increased significantly.
Russia has become an investable. I think that's obvious.
Now, China is not far behind due to their Crackdown on
corporations and high-profile CEOs.
It's a reason to Ali Baba took a huge nose, dive and their tactic
approval of Russia's actions. So China is more on the side of
Russia than the u.s. US companies were already in the
process of restoring and nearshoring their supply chains,
which will accelerate due to the increasing geo, geo, political
and certainty. D globalization is inherently
inflationary. Missionary risk premium should
also continue to rise. So he's setting a bit of the
backdrop. We have War inflation, Rising
tensions with the biggest economic power in the world
besides us, which is China, right?
The biggest Growing Power and then obviously Russia has
completely on investable at this point seems like a bad time to
be investing. Now he says why then you might
ask do, we remain fully invested.
So Bill Ackman is fully invested right now.
Despite all those major headwinds And economic factors
and he outlines two reasons why he says first.
We believe that the business is we own have substantial pricing
power, that's a big thing. They always look for pricing
power. That is the ability to adjust
prices upward without losing customers to competitors and
they also outline. The second thing here, we
believe that are hedges will likely generate substantial
liquidity, that will enable us to take advantage of
opportunities in the event of substantial Market, declines.
So this is something that Pershing Square does and Bill
Ackman routinely does. Let's so far, I've done.
None of. I haven't Minik this Approach at
all. He has Hedges with his portfolio
and like a hedge fund. You should probably try to have
Hedges and protect the downside. That something that investors
are paying them a hefty fee to do.
But this is something that I just don't feel great at.
I don't feel like I understand Hedges and the risk reward and
and kind of how they work. So that's an area that I want to
learn about is how to hedge my portfolio and take advantage of
Market declines. So that is something that I'm
actively learning about and studying, maybe I'll Implement
hedges in my portfolio in the future, but right now I'm just
100% long, I have no Hedges on my portfolio and he says that we
believe that hedging is a better alternative to keeping funds in
cash. While one is waiting for
opportunities, particularly because High interest rates
caused inflation of the purchasing power, and cash to
decline rapidly, which is obvious with inflation at six or
seven percent. Maybe it will go higher, maybe
lower your cash. Is getting eaten up by that
either way. Cash is not a good thing to hold
right now. Now he goes on saying the
industries and businesses in which we have invested in our
highly attractive and well, positioned to withstand negative
externalities negative. Externalities is a fancy way of
saying, outside forces of macro events and wars and competitors
will be withstood by these companies, that is a way that
Buffett defines having a moat, a big body of water.
Around the castle that fends off competitors.
Right? Well, this is another way of
saying, not only competitors but also macro events Wars inflation
and so on, they can withstand negative externalities about 30%
of our Equity. Portfolio is invested in music
and video streaming umg and Netflix.
That's video streaming of Music. 26% is in restaurants and
restaurant franchising, Chipotle, restaurant Brands and
Domino's 15% in a home improvement retailer, you want?
With lows, I currently have Home Depot my dividend portfolio, 10%
in real estate in states with substantial in migration.
That's the Howard Hughes company he highlights here.
That is a real estate company that Pershing Square has, and in
Residential, Mortgages Fannie, Mae and Freddie Mac, 10% in
hotel. Franchises, which is Hilton and
8% in railroad, which is Canadian Pacific.
So, that's a new holding to the portfolio.
We expect the each of these companies will grow their
revenues and profitability is over the long term regardless of
recent events. And the various other challenges
that the world will face over the short intermediate and
long-term. So Bill Ackman is a long-term
investor. He holds companies for 3 years 5
years, sometimes longer be still continues to see value.
He'll hold companies for five years.
Plus what I like about Bill Ackman, when I compare them with
investors, like Arc invest with Cathy wood is although she's had
good returns. I see her trading every single
day with the emails. I get the email updates and
they're just trading in and out of stocks.
Every two seconds, there's dozens of them being sold and
being bought every two seconds. Now compare that with Bill
Ackman, and he's not buying and selling companies every single
day, he waits until they get to good prices.
He buys in, then he holds them long-term.
Now, this next paragraph, I think is interesting.
He goes on to highlight why? He prefers investing in North
America, in the US over the rest of the world.
He explains why he says, while effectively all businesses are
exposed to the global economy, we have chosen to invest close
to home. Our portfolio is North American
Centric with most to all of our company's profits generated in
North America. While the US has its share as a
problems, including a highly litigious business environment,
a complex, regulatory regimen, and political disharmony and
divisiveness. We believe these factors are
substantially outweighed by illegal regimen.
Where the rule of law is generally respected more.
So in most of the other places of the world, limited
corruption, a world-class, Ian defense and a corporate and
Capital Market environment. Where capitalism can flourish we
believe that these attractive attributes will increase in
importance to investors in light of recent events.
Much of the same way the world is d.
Globalizing d. Globalization appears to be
coming to the capital markets. So I think that in terms of
macro events Bill Ackman is not anywhere close to investing in
10 Center Ali, Baba or JD. He does even seem to want to
invest outside of the US at all. I think with the globalization,
he sees more opportunity in the u.s. than anywhere else, and he
spells it out pretty clearly here.
Obviously, with my investment in Ali, Baba, just tanking month,
after month, primarily due to concerns about the government.
I can see his point here. It doesn't really matter how
good your companies are or how good their free cash flow is or
so on and so forth. If investors can't trust the
government, they'll never give it the multiple or the market
cap, or the valuation that it deserves.
If it was a US company, they will give it that.
In that market cap. So, in hindsight, I agree with
him, I'm not making any new investments in the China.
I still have my Ali Baba holding and I'm still holding on to it,
but I'm limiting my exposure outside of the US for the same
aforementioned reasons. And this next paragraph is where
he just really lays out the type of things he looks for.
And this is again, many of the type of things that we
identified. When we did a reverse
deconstruction of his portfolio, we reverse engineered it.
He said, we expect our portfolio companies to continue to Pound
their intrinsic values at even higher rates than before due to
their current reduced valuations.
We believe that all of our portfolio companies will
generate long-term durable growth due to their dominant
Market positions. Substantial, free, cash flow,
generation High Returns on Capital, pricing power and
strong balance sheets. Furthermore, and this is
something specifically that I pointed out.
Most of our companies, use their free cash flow to repurchase
their own shares. So our portfolio companies and
their shareholders are The long-term beneficiaries of their
recently reduced stock prices because again, as the stock
price goes down the share repurchases, carry a lot more
weight. While most investment managers
prefer to report consistent growing returns to their
investors. We prefer to have intermediate
periods of downward volatility as a create opportunities to
plant, the seeds for greater long-term out performance.
And I definitely think that that's not just investor speak.
I really think that he likes these type of periods.
You'll probably be doing a lot of buying into these type of
He's with this pullback so that's kind of him setting.
The foundation of a thought process overall.
Now we're going to start jumping into individual companies.
Let's start off with Netflix before I look at what Bill
Ackman says. With Netflix in full disclosure,
it is one of my largest positions and I'm currently
weigh down on this company. So I'm well in the red on it.
And that's my fault for buying it at a higher price.
I acknowledge that. But I remain very bullish on
this company. I've talked extensively about
the many attributes that I like of Netflix, did I?
It will be a long term, compounder.
I think a lot of the challenges they're facing the issues are
going through will be very short-lived.
So, even after this company, fell substantially in price
because of one bad quarter, their forecast was pretty bad.
I continued to buy more of the company.
I kind of doubled down on it. I increase my position after the
decline. Now, having said that, let's go
ahead and look at what Bill Ackman says.
He says, we have long admired, Netflix and had initially
research and analyze the company as part of our investment, due
diligence. On umg, we then updated and
completed our work January. When the stock price decline,
due to disappointing subscriber, guidance much like umg, we
believe that Netflix is well positioned.
As a leading beneficiary of the long-term secular growth and
streaming a high quality business overseen, by a
world-class management. Team Netflix established
subscription video streaming when it launched its service
back in 2007 and over the subsequent 15 years, it has
achieved global scale with 22 million paid subscribers today
in more than 190 countries. So Netflix already has massive
global scale. The next thing he says is a
highly debated point. A lot of people think that
Netflix is growth has kind of tapped out there.
Total addressable Market has already been addressed.
This is where Bill Ackman and I agree and we differ from a lot
of other people here. He says, despite its large
scale, Netflix is still in the early stages of capitalizing on
the decade-long secular growth. In streaming video and
correspondingly. The decline in linear pay-tv
current subscribers amount to less than a quarter of today's
estimated total addressable Market of 800 to 900 million
households. That have either fixed Broadband
access or subscribe to pay TV excluding China.
So even without China without Russia Bill Ackman sees
potentially 800 to 900 million households.
Subscribe to Netflix and again right now.
Are at 222. So they are less than a quarter
of the way there. And again, that's how I view
this company. I think we're in the early
Innings a streaming as well. He goes on to actually Define
the value proposition of Netflix.
So recently we've had a lot of people complain, that Netflix is
Raising prices. They complain.
That Netflix is going to start charging for sharing sharing
passwords in the u.s. to people outside of your household.
There's a lot of people that I think have somewhat valid
complaints, but consider the value proposition.
You're actually getting with Netflix.
He says it Netflix. For his consumers on demand
commercial-free bin, jabal content with ubiquitous access
at a price point. That is Approximately 80% less
expensive than average pay TV package in the u.s. so it's 80%
less expensive than your cable package.
A Netflix subscription is one of the lowest cost forms of
high-value entertainment with cost per hour of Engagement of
about 30 cents. The company is vastly superior
value proposition relative to pay TV and other forms of
entertainment should drive. Substantial pricing power, and
meaningfully increase its penetration across, its
addressable Market over time. So he's basically saying that
Netflix still offers incredibly good value, especially compared
to cable television. The value proposition is
dramatically better and the total addressable Market
continues to grow as the internet and connected devices
become more ubiquitous. Now, he goes on to explain how
well positioned Netflix's in terms of their competition.
We hear about all the competition coming, any Planes
by Netflix, might be better position to handle this
competition than investors are giving it credit for.
He says, Netflix as well position as a dominant market
leader, was several advantages, relative to existing Legacy
Media and Covenants and large capitalization technology
entrance. So the big bad cable companies
with Deep Pockets, and these large media companies that are
now going into streaming. They form a competitive
challenge for Netflix, but Bill Ackman, doesn't think that
that's Doom and Gloom for He thinks that they can handle this
challenge. He says, the company has a
diverse library of content for everyone.
That is replenished at a much faster rate than competitors.
It releases 150 to 200 original content episodes per month. 150
to 200 more than the volume release by Prime video Hulu
Disney and HBO Max combined Netflix is industry-leading.
Subscriber base has enabled the company to establish a very
profitable business while spending more on original
content than the competitors. That is Netflix's flywheel in
action, as the pay TV, cord-cutting accelerates in
mature markets, we believe there will be consumer appetite to
subscribe to multiple streaming services at a time in the u.s.
we estimate that. The wallet share released from
the declining linear pay TV subscriptions which are priced
at approximately eighty dollars per month.
Can easily sustain a streaming bundle of 325 streaming services
per household, which are typically priced around 10 to 15
dollars per month. Offering a significantly better.
Customer experience. So the way that he thinks about
this is pretty simple. Most households have been
spending somewhere around 80 dollars per month on their cable
TV. So if they get rid of the cable
TV and they move over to streaming if they're doing the
cord cutting they'll think of it as well.
I'm spending $15 a month on Netflix.
I can add on Disney Plus for like 8 bucks a month I can add
on HBO Max for 15 bucks a month, I can add on Discovery or Warner
Media or whatever Showtime right?
I have all these subscriptions. Services and even together, they
don't even add up to 80 bucks. I'm still saving money.
And the Assumption here is I think a safe assumption is that
among the three to five streaming services?
The average household will have Netflix is probably going to be
one of them. It'll probably be one of the
streaming services you continue to have.
So this is just part of his thoughts on Netflix.
So of course Bill Ackman doesn't just look at PE ratios, he
doesn't just look at the free cash flow.
You does in-depth analysis on every company that invests in
and that's something that I've been trying to promote the
people for a long time. You're buying a company with a
business model and products and employees and Leadership.
You're not just buying charts and graphs, right?
You can look at the charts and graphs but you have to plug it
into the company and when you put those together that makes
it. So you can form a well-rounded
story. You actually have an entire
investment thesis there. So this is what Bill Ackman is
doing. He has all the numbers, he has
all the qualitative research, he puts that together to create an
investment thesis. Along with Netflix, he goes on
to show some of the unique qualities of this company.
He goes on to say that Netflix has the lowest churn rate by a
wide margin among streaming services.
That means people don't cancel Netflix all that often.
They cancel other streaming services, much more frequently,
highlighting its core position as an anchor, a utility like
service of any streaming bundle. Netflix is retention in the u.s.
its most competitive market. Has remained consistently stable
at an industry high levels, despite the launch of Of several
new competitors. And this is what management of
Netflix has been trying to highlight look, we have tons of
competitors now and people aren't canceling Netflix here.
That is a very positive thing. They're not signing up quite as
fast in the rest of the world, but the churn rate remains very
low in the u.s. Now, the international markets
are the earlier stage growth markets where Netflix has an
even more formidable first mover advantage and a significant
competitive position in local language content, only Netflix
has unique and proven track. Record of elevating Regional
Productions, like squid game, Casa de papel Lupin to a global
cultural Zeitgeist. So they're the only ones that
have been able to do that. So far, other companies, like,
Disney can really only Market what they make in the u.s. to
the rest of the world. But Netflix is creating things
outside of the US and marketing, it all over the place.
And that is something that has so far been unique to Netflix,
as Netflix is business, has achieved scale its operating
profit margins. Have increased from 4%.
Point four percent in 2016 to 21% in 2021, over the last five
years, Netflix has held content spend per subscriber constant.
Despite growing overall content spend by 23% per annuum.
So they have spent twenty three percent per year, more on
content at the same time. The company has increased prices
by 7%, annually, resulting in a dramatically improved,
subscriber unit economic. So a lot of people are upset by
these seven percent. Increases but they are getting a
23% increase in content spend. So the proposition actually
improves, he says, from the customers perspective, Netflix
is value proposition has become better each year as the growth
in the volume of new high-quality content has
comfortably exceeded price increases.
We believe that the combination of continued subscriber growth.
And pricing power will allow the company to leverage its growing
content, spend over an even larger future subscriber base,
which will drive Anshel future margin expansion and provide
better value. Proposition to its subscribers
each year. That's a continuation of the
flywheel that we've talked about.
And this is where he finishes up on Netflix.
He highlights the price coming down while every fundamental of
Netflix is basically improving. He says the opportunity to
acquire Netflix at an attractive.
Valuation emerged as investor concerns over Management's,
short-term guidance exacerbated by recent Market volatility.
It led to substantial declines in the company's share price.
A 47% increase in Revenue. Approximately eight hundred
basis points in margin expansion and a vastly improved free cash
flow profile over the last two years as of March twenty.
Second twenty twenty-two Netflix is share prices down
approximately 45%. So all these fundamentals
improve dramatically but Netflix is stock price Falls 45% from
its recent highs and its trading below.
Its February twenty twenty P, pandemic, share price, that's
pretty incredible. And I think Think that's, of
course why he jumped in, although we expect some
near-term variability, in the company's quarterly growth and
profitability. We are confident in Netflix's
long-term Outlook over the next decade we estimate.
The company can achieve double-digit, annual revenue,
growth significantly expanding its operating profit margins and
grow. Its earnings per share by more
than 20% per year. 20 % EPS growth for over 10 years.
Moreover, the company is now cash flow positive which over
time will enable capital. Turn through share BuyBacks, he
loves the share Buybacks. In the coming years, we believe
Netflix is current valuation represents.
A meaningful discount to intrinsic value for a business
of its quality and exceptional growth potential.
So that is Bill ackman's, commentary on Netflix and I
think that fits very well with the Bill Ackman checklist.
He looks for brand value pricing power.
He looks for margin expansion, a company that will eventually
become very free, cash flow positive and do Buybacks in the
coming years. He looks for good leadership.
If you look for a company with a wide moat that can fend off
competitors, he highlighted qualitatively, all of those
things in this description. So, of course, Bill Ackman,
looks at both the numbers and he looks at the qualities of the
company and I think that Netflix does make sense in his
portfolio. Now, the next one that I'll
highlight is Canadian Pacific Railway.
This is a brand new investment in Bill ackman's portfolio.
And at first, I really didn't know how this one fit in.
I was a little bit confused by it.
I thought maybe this is like a Commodities play.
He's investing in companies. Like Netflix and Domino's and
then a railway seemed quite random, but it does highlight in
one of the paragraphs here. I think the core reason why he's
investing in this company. He says Canadian Pacific has
been the fastest growing North American class.
One railroad with an average organic growth rate of 6 percent
over the last five years in December Canadian.
Pacific closed the acquisition of Kansas City Southern which we
believe will be a transformation on value-creating transaction.
I think this is the primary reason the Acquisition of KCs
positions Canadian Pacific to be the only North American rail,
right. Railroad with a direct route
from Canada to Mexico and it will result in significant
revenue and cost. Synergies KCs is rail network is
at the center of the North American rail system.
Linking Mexico to Major markets in the midwest.
The southeast regions of the United States, the see pkcs
combination will connect six of the seven largest metro regions
in North America, in Direct route and offer unparalleled
speed and service for customers Canadian Pacific.
Currently owns KCs through a voting trust which entitles
Canadian Pacific to full economic ownership of the
company but does not permit Canadian Pacific to take
operational control of the railroad until it receives
regulatory, approval of which pending merger application.
We expect this approval to occur by the end of the year.
I think this is the big reason he sees this acquisition.
Position as having all sorts of synergies, and he thinks that
this will create a better value proposition.
So I think that this event is why he decided to jump back into
it, but it does highlight one other thing.
And this is another thing that I tried to highlight that Bill
Ackman, always, does he buys companies when they trade down
below their historical valuation.
He says Canadian Pacific's years have recently traded at a
discounted valuation relative to history and its peers.
When companies become Discounted relative to their long-term
history and their companies that he likes that he thinks has good
qualities. That's the time that he
typically jumps in on him. So when I looked at this
overall, I see it as one, good thing happening to this company
that he thinks will have a lot of good.
Synergies on top of a company. That is well insulated from lots
of competitors and threats because it's a railway, it's
more like a utility company. Plus, it's trading at a discount
and all those factors. I think make it attractive for
an investment for Bill. Ackman.
Now the last one. I want to highlight is another
new investment in a company that I'm currently invested in, which
is Domino's Bill Ackman, recently purchased Domino's
right around here, and it traded up like crazy, right?
It went up 50 percent, then it traded right back down.
And since it traded down so much, I had this company on my
radar for a while, I wanted in on it.
And now it's traded down to just around like eight ten percent
from his buy-in. And I decided to take the jump
into this company with my passive income.
Portfolio. So that's a dividend portfolio.
Domino's fits really well into that portfolio.
But that's kind of the story with dominoes so far with Bill
Ackman. He says, that our investment in
dominoes was off to a strong. Start with shares up, over 50%
from when we made our investment, in March, through
the end of 2021 driven by robust, operating results.
And a late year Omicron driven rally at the stay-at-home stocks
most of these gains disappeared in the first few months of this
year with Domino stock price declining 29.
Percent through the end of March, 22nd.
In addition to the broad Market sell-off especially in higher
growth companies. We believe that their recent
stock price weakness is attributable to an ongoing
slowdown in same store sales growth that begin in.
The third quarter of 2021, Domino's has a long history of
defying the Skeptics and outperforming following brief
periods of weakness and we believe that this time is no
different. So the big problem with Domino's
was slowing same store sales growth.
That's what investors became concerned about.
He says, the recent deceleration is driven primarily by driver
shortages due to the current state of the US Labor Market,
which is acutely, impacting the delivery business, that
comprises two thirds of sales. While driver shortages have led
to shorten hours and customer service challenges at many
locations. The company is taking corrective
action by conducting a full assessment of the driver labor
market, launching new hiring and Training Systems and eliminating
time-consuming in-store tasks So basically, Domino's is on top of
this, they know that driver shortage is a challenge.
They're taking all sorts of action to fix this.
He says it in light of high inflation and labor food costs
Domino's. Recently.
Refresh its core mix-and-match delivery offers by raising the
price point from 599 2699 and adding new products to the
offer. Now he says, we estimate that
this one dollar increase will be a several percentage Point,
Tailwind to same store sales growth.
So just increasing these items from 89 2699, when you're
selling this, much stuff will increase the same store, sales
growth, by several percentage points, without taking into
account, any positive benefit to ticket that Domino's has
historically seen from new product additions.
This is the first time, the company has ever increased the
prices on this offering and over 12 years.
And we continue to believe that Domino's customer value
proposition remains exceptional product Innovation and peak
level of advertising funds and the return of key promotion.
Should provide additional Tailwinds to sales growth.
So Bill Ackman believes that Domino's traded down in price
because same store sales slow down but he thinks it will be
very short-lived. He thinks that Domino's is going
to re-accelerate, same store sales, right back to where
they've been for the past 12 years, and this will be a
short-lived blip again. This is another point where I
agree with them. I think it's a great company.
That's attractively valued. He says, Domino's, currently
trades at a mid 20s, multiple of four turnings a compelling
valuation, given its leading position.
Ian in the quick service restaurant.
Pizza category enabled by its own Crown Jewel.
That delivery infrastructure. That is something that really no
other company. I know of no other quick service
restaurant has quite like dominoes the high certainty
nature of the business and its mid to high-teens long term
earnings growth. We are pleased that the company
is taking advantage of its depressed share price by
continuing to repurchase shares consistent with its
long-standing policy of returning excess cash to
shareholders. And of course that's something
that Domino's They do massive amount of share BuyBacks.
So as the price Falls, you know, dominoes themselves is a big
buyer of the company so that's all I'm going to highlight from
this letter but I think that paints a more well-rounded
picture. So you have part 1 of how Bill
Ackman. Pick stocks, the fundamentals,
the share BuyBacks, the dividends it trading below,
historical valuation, but this gives you a view of more of the
qualitative aspects. He really does deep dive
Research into every single company so that he understands
the business inside and out and I think that's what you have to
do. If you're Investing large
amounts into individual companies.
You need to know what you own. So I'm going to be following
Bill Ackman. I'll continue to look at his
portfolio as well as many other great investors and you learn
about more of that hair. So, I hope you enjoy it.
I'll see you in the next one.