Welcome back everyone. This is Part 2 of the Super
Investor portfolio update. If you've missed it, I would
recommend going back one day on this channel and looking at part
one of the Super investors portfolio update.
It's where we look at a lot of great investors, ones that have
beat the market for a long period of time, investors that
manage hundreds if not billions of dollars in assets under
management and we get to see an inside look of what their
portfolios look like. And I think this is one of the
best ways to learn about investing because when you study
anything, whether it's sports or any type of event, you want to
learn from the best. And in most cases, these type of
people are the best of what they do, especially the ones that
have beaten the market for a long period of time.
So in this video we have Part 2, a brand new slate of super
investors to go through and this is a very strong slate.
We have Warren Buffett, the big man himself.
We're going to be seeing what he's been doing with his
portfolio. But then we also have a lot of
other great investors. One of them is named Dev
Cantasaria from Valley Forge Capital.
And Dev has quickly become one of, if not my favorite investor
to follow right now. I think he's phenomenally
intelligent. I think that his decisions are
so well grounded in reality. His results have been market
beating for a long period of time.
And so I am very excited to see his update on what he's doing
with his very concentrated portfolio.
Then we also have Bill Ackman. I really like looking at what
Bill Ackman's doing. He's always making some big
significant bets all the time. So we're going to be checking
out his portfolio. We have Carl Icahn.
This is someone that has come under a lot of scrutiny, a lot
of criticism and the Hindenburg report has done a lot of damage
to his company. So we'll be looking at that as
well. We have Chase Coleman.
Chase Coleman in my mind is very similar to Kathy Wood, someone
that invests in a lot of hyper growth companies, ones that
aren't really profitable right now, but they might be someday.
His portfolio has a tremendous amount of volatility, but we'll
be looking at the positioning that he's doing right now.
Then we have Nelson Peltz, who's an activist investor that bought
a large stake in Disney. He's the one that was highly
critical of the Disney leadership.
He wrote a letter to them outlining all of this stuff
they're doing wrong. He told them to reinstate the
dividend to get cash flow back and all of this great stuff for
Disney. Well, we get to see what he's
been doing with his portfolio and his Disney position.
Then we have David Einhorn of Green Light Capital.
He's one that's a lot more cynical, a lot more
conservative. He's sometimes even bearish on
the market, so be looking at his positioning.
We have Bill and Melinda Gates Foundation Trust.
This is a massive portfolio, $42 billion and they do not joke
around with this money. Bill Gates has a very well
constructed portfolio. So I'm excited to look at an
update on that. We have Daniel Loeb of Third
Point. He's a really smart investor, an
actives investor that has a lot of different companies.
He's usually trading around a lot and he manages around $6
billion. And then finally we have
Christopher Bloomstrand, who I think has a comprehensive
understanding of Berkshire Hathaway.
He has a very good understanding of insurance companies and I
think overall he's a great analysts when it comes to
indepth company analysis. So we'll be looking at what
Christopher Bloomstrand is doing as well.
So we have a very strong slate of investors to look at.
Obviously a lot to dive into in this episode.
So grab yourself a drink, get settled.
Let's go ahead and get started now.
We'll kick things off by starting with Warren Buffett,
the big man himself, who I consider to be the king of
investing the best investor to ever live by a pretty
significant margin. Now, a lot of people focus on
investors that have compounded for a shorter duration of time,
but at a higher speed than Warren Buffett.
And although that's very impressive, I think the real
skill set of Warren Buffett that's highly underrated is not
only his incredible gains over a long period of time, but the
fact that he did so meticulously, without taking any
type of significant risk that could ever destroy his fund, his
company, and hurt his shareholders in the long term.
He never overextended his bets. He never went too far with risk,
and that's so underrated. It's so difficult for investors
to do that. The history of investors that
once had good returns but then they overextended risk.
That's a long list. We have Tiger Global going down
70% in one year, destroying enormous amounts of value, 10
years plus of value destroyed in a single year.
We have the same thing with Kathy Wood and Ark Innovation
dropping 75% / a two year period.
That is value destruction that Warren Buffett never had to go
through. So not only does he have good
returns, but he had good returns sustainably without taking
enormous amounts of risk for 40 plus years.
And that record is it's unbeaten, it's the best record
in the market today. So Warren Buffett I believe sits
there with the throne. I think he's the best value
investor and overall just the best investor to ever live.
And I think it's going to be very difficult for someone to
beat that record. Now let's go ahead and take a
look at his portfolio today. One thing about Buffett is
although he doesn't overextend risk, he's also not afraid of
concentration. And he said repeatedly that if
you know what you're doing, then concentration is not a risky
endeavor. Concentration is really only
risky if you're not sure of what you're doing.
The risk comes in with ignorance.
So Buffett has an astounding 51% of his public portfolio in
Apple. Now, I do have to give a little
bit of a context here. This is Buffett's public
portfolio, the tradable portfolio on the market.
Berkshire owns an enormous amount, like 90 plus businesses
that they wholly own, meaning they're not publicly traded.
That's not part of this 51%. So if you put Apple in context
of the entire Berkshire conglomerate, the entire empire
that he started, it's a smaller portion.
It make up much less than 50%. Then if you put it with the cash
balance, it's even smaller. So I would not go to the extent
of believing that Buffett would put 51% of his total assets into
Apple. That's not what he's done right
now, but this is still a very significant bet in one company.
Now let's go ahead and take a look at the activity and see
what he's been up to in the past quarter.
We can filter by the percent changes here and we can see that
not that much change. If you added up these total
percentages of what they actually traded in the quarter,
what is this like 2%, maybe upwards of 2 1/2%, not a lot of
trading for a three month period.
And one of the trades was them basically taking the gains from
a merger arbitrage play. Microsoft was buying Activision
Blizzard. Buffett has a long history of
doing arbitrage and what he did was buy a bit of Activision
because he thought the deal would go through.
It looks like the deal went through, Activision stock is
going up and he sold at what I assumed to be a decent profit.
So that was a good trade by Buffett.
Then we have Chevron Corp, He sold a little bit of that .42%
of the portfolio. Mckenzen Corp, they sold 100% of
that, That's .25% of the portfolio.
Then they bought a little bit of Dr. Horton and Occidental
Petroleum added to the energy companies Buffett loves having
his big energy empire. Buffett notably did not sell a
single share of Apple, even after the rising price of Apple.
Apple's up something like 45% year to date, and he didn't take
any gains in the company. A lot of people believe that
Apple right now is overvalued because it's not growing.
Apple's a slow growing company. Last quarter it didn't really
grow its earnings per share all that much and it didn't grow
revenue all that much. So a lot of people are saying
it's foolish to own Apple. It trades at a high P/E and it's
super slow growing. I want to address this claim of
the slow growing Apple. So let's go ahead and take a
look at Apple. Here using Qual Trim insights is
the page that we're going to be looking at, which is a stock
analysis tool that I developed. It's part of the Patreon
membership. Let's bring up Apple here and
we'll look at how slow growing Apple is.
We can look at it annually and look at a bigger timeline.
Here's the slow growing Apple. The revenue for Apple has grown
at 19% over the past two years, and over the past five years the
revenue has grown at a compound annual growth rate of 11.46%.
That's much faster than the S&P 500 as a whole.
So the revenue is not growing slowly.
Another thing that I'd mention is that this is entirely organic
growth, meaning the Apple didn't do any big acquisitions that
added on revenue. This growth is just from selling
more products, increasing prices and having more services.
Completely organic, almost 12% growth over the past five years.
Let's go ahead and take a look at the not growing apple when it
comes to earnings per share. The earnings per share over the
past five years have grown at 21.58% on a compound annual
growth rate. Look at the substantial leap in
the earnings per share. Even last year when it slowed
down after the massive year from 2020 to 2021, they still manage
growth of almost 9%. We can look at the not growing
apples free cash flow. The free cash flow grew at 17%
over the past five years. That's a pretty substantial free
cash flow growth for a company that's supposed to not be
growing. And keep in mind the average
growth rate of the S&P 500 with free cash flow per share is
around 8% per year. That's what the average of the
S&P 500 is. Over the past five years, Apple
grew their free cash flow per share at 23 percent, 23% versus
the S&P 5 hundreds, 8%. This is the not growing Apple.
The reason that people have said that it's not growing is because
of the slowdown in the previous quarter.
But when you zoom out just ever so slightly past one year, you
see the longer term trends of Apple and the company has had a
very strong growth history. My assumption is that Apple will
continue to outperform the majority of other companies in
the market and I believe it will continue to outperform the
market at large. That's part of the reason that I
remain invested in the company and I believe that that
Berkshire is going to do really well with this being a key
holding. So I think it makes sense for
Buffett to continue holding this company when it has such a
substantial mode, a grasp on so many consumers and it has over 2
billion installed devices as of last quarter.
The amount of pricing power that Apple has, the levers they can
pull are virtually endless at this point.
So trading at what it does right now, A25, 4PE, I do not believe
it's too expensive for this company and I was not surprised
at all to see Buffett hold on to this one.
And as we go through the portfolio, it looks mostly the
same. And this is typically what good
investors do. They buy good enough companies
that they don't have urgency to sell them quarter by quarter.
So in most cases when we're looking at big portfolios of
good investors, a lot of them like to hold on to their key
holdings for a multiyear basis. Now Next up we have an investor
that's a little bit lesser known, but my goal is to make
him more known because I think that he needs to be known.
His name is Dev Cantasaria of Valley Forge Capital Management.
Now if I had a tear ranking, in fact I plan on doing a tear
ranking list of super investors in the future.
But spoiler alert, Dev is going to be at the very top of that
list He is asked here. He's right there with the top
elite investors and I believe that he deserves to be there.
His investing acumen I think is incredible.
I think that he does deeper dives on companies and
understands them as fundamentals and the future growth of the
company far more extensively than most investors.
One of the most impressive pieces of research was the
business breakdown he did on FICO.
I've never seen a business breakdown like that before.
His understanding and comprehensive knowledge of
companies and doing analysis on them I think is second to none.
His portfolio is highly concentrated in the companies
that I think are the top of the list.
I think these companies are the best of the best and I like
seeing his trades because we share a lot of the same
holdings. So let's go ahead and take a
look at what Dev has been up to recently.
Now consider this. The number of stocks that Dev
holds is 8-8 different positions for a portfolio that's nearly $3
billion. I hear investors saying they
feel a little uneasy with their $50,000 that they have invested,
only investing in 15 companies. Deb here has eight different
positions, and he's managing $3 billion.
That is an immense amount of concentration.
But again, he agrees heavily with Warren Buffett.
Deb's favorite investor is Warren Buffett.
And Buffett says that concentration is not risky if
you know what you're doing. It is risky.
To the investor that is buying things based off of unknowns and
things that they haven't studied.
So Dev has a very good knowledge of every position that he holds
and he concentrates in the companies that have a reduced
amount of operational risk. If we look at his holdings
today, the top one right now is FICO and this company, it has
something special. I've been following this company
for over a year now and every time I look at investing in
FICO, I think I'm going to wait around for a dip in this
company. I'm going to wait around for it
to to just trade down a little bit and this is what the price
chart looks like. Can you spot the dip on this
company? It's up 47% year to date, then
we go past one year and it's up 73%.
We go past five years and it's up 303%.
There's not many time periods where it seems like it's okay to
buy this company because the valuation always trades a little
bit lofty. But FICO has everything that Dev
looks for in a company. Strong organic revenue growth,
strong organic free cash flow growth, strong organic earnings
per share growth. And they do this while having a
very desirable monopolistic position in the credit rating of
individuals. FICO in many ways is the S&P
Global and the Moody's of the individual.
Dev loves these rating businesses where you rate the
creditworthiness of a business or an individual.
So he has a huge investment in the S&P Global, a huge
investment in the Moody's, and a huge investment in the FICO.
Each one of these are creditworthiness rating
businesses. FICO does it for individuals
with your FICO score. Anytime you get a mortgage loan
or you get a auto loan, they're going to run your FICO score.
FICO makes 95% profits when they run that score.
So even though it's like $0.80 or a dollar, almost all of that
is pure profit for FICO. SP Global makes money anytime
they do ratings for major business, any of the debt they
issue and Moody's does the same. So he has really concentrated
his portfolio into all these different rating companies and
the ones that are growing in volume and pricing power.
We look at the next group of companies that he's concentrated
in, which is the duopoly of MasterCard and Visa.
Now MasterCard and Visa are not a duopoly on all payments.
There's lots of different forms of payments.
You can do a Ch transfers, you can do Venmo and PayPal, and
there's lots of ways to move money around.
But MasterCard and Visa have a very favorable desirable spot
and what most people have regard for as the safest payment form,
which is swiping a credit card, having that payment insured and
ran by MasterCard or Visa through their strong network
with all of their protections. You know that your payment can
be disputed if there's anything wrong.
And that security makes it so that they have a very strong
Moat in their business. So MasterCard and Visa combined
make up around 29% of the portfolio.
Moody's, S&P Global and FICO combined make up 60% of the
portfolio. So between those two groups of
companies, you have the huge majority of his portfolio.
It's comprised by the credit rating businesses and the
payment processors. Every one of these companies has
desirable operating trades. They have low amounts of CapEx,
low amounts of research and development, low amounts of
stock based compensation expense.
They are tollbooth companies. They have incredibly good
network effects. They're incredibly difficult to
compete with and they sit on these busy roads running this
tollbooth between all the credit markets and between all the
payment processing market. So these companies have very
desirable positions and great economics wide motes and they
attract investors that seek quality investments which is
what DEV does. Now another company that I own
that DEV has as well is into it. He has this as a 7% position and
I believe that Intuit is highly underrated from retail
investors. Most retail investors I think
don't like Intuit because of negative association into it's
the TurboTax company and I hate taxes.
I don't like TurboTax, I don't like dealing with it because of
that negative association. I don't like into it.
Into it is QuickBooks the accounting software.
Nobody really loves accounting. Accounting software is not
exciting, and the only people that really have much to say
about quick books are the people complaining about the different
problems they have with it. So the problem with Intuit, I
believe, is many investors look at this and they look at the
products. They're not exciting, they're
not sexy. They turn investors off from the
company when really what you have is a dominant company in
the market with the franchise of products that have incredibly
long runways of growth and into its free cash flow per share
growth has been astounding. So I think that into it is
underrated. I don't think it will ever be a
very popular stock online, but it's one that I feel very
comfortable holding right now. Now I can filter by the biggest
changes to his portfolio in Q2. The first one here is he sold
entirely out of Adobe. This was a 3.6% position.
So it was a meaningful position as portfolio and Adobe does fit
a lot of the characteristics that Dev looks at, organic
growth, pricing power, very efficiently made products.
But I believe there is one thing Adobe did to probably make him
sell out of it and I believe that was the Figma acquisition.
Adobe paid a lot to buy a company called Figma.
It's around four years worth of free cash flows to pay for it.
And I know that investors like Dev do not like these type of
defensive acquisitions. If they're going to buy a
company and they're going to do an acquisition, they want it to
be an offensive acquisition, something that they're doing
because they want to grow the company, but they don't
necessarily have to be doing. Adobe felt pressured into buying
Figma as defense to protect their Moat from a potential
invader. That is a very defensive
acquisition. And I think that Dev looked at
that very negatively. The next big change that Dev did
was he really bumped up his S&P Global Stake, adding another 18%
to it, which is 3.57% of his total portfolio.
So S&P Global is already a second largest holding.
He's up on this company hundreds and hundreds of percentages, but
he added another 18%. And I think this is a great
lesson and avoiding anchoring bias.
Even though Deb is up substantially in S&P Global and
he's owned the company for around 10 years, he's still
buying more. He doesn't care.
He still thinks it's a good value, so he doesn't have the
price anchored to his previous buy in price.
Now another company that he sold completely out of is Autodesk.
I'm not as familiar on this company.
I know that it's basically ubiquitous with many careers
unavoidable. In my opinion, it feels a little
bit familiar. Or similar to Adobe.
They both are required for certain types of careers, but it
looks like he dumped that one as well, sold his entire position.
Now the next one is a new entry to his portfolio.
He bought a new position which I know this one is going to make
many retail investors happy because a lot of people are
already in this company, which is a SML, the semiconductor
company. Now I've heard about this one
for a long period of time, people have told me, Joseph, you
need to add a SML to your portfolio.
It's the perfect fit, it's monopolistic, it has pricing
power, it sits at the very top of the food chain.
It has all the structural power and position in the market.
And so far I haven't, I haven't been close enough to buying this
company, but the fact that Dev can't Assaria added this one to
the portfolio, I think is a big validating factor that this one
must have passed all of his screeners, all of his research
to be added even as a small position.
So right now this one is a very small position compared to his
other ones, but I think it's very positive and meaningful
that this one was added to the portfolio.
Another one that he added to was a ZPN.
This was an existing holding, but he added slightly to it,
just .68% of the portfolio. So it's still a very small
position. I think overall this portfolio
is strong. I think it's 10 out of 10 now.
Next up we have Bill Ackman. He's another super investor that
runs a very concentrated portfolio, only holding 8
positions and he has a $10 billion assets under management.
So this is a lot of money into a small amount of positions.
Now, one thing I'll mention is that this shows his US holdings
and he does have some international holdings as well,
like a Universal Music Group. So this doesn't represent his
entire portfolio, but this is the majority of it.
Now when you look at what Bill Ackman has been doing over the
past quarter, we can see the changes right here.
The biggest one is a reduction in Lowe's.
Now Lowe's has been a holding that he's held for over 10 years
now. It's a company that he's been
very bullish on for a long period of time and his thesis
has played out. Lowe's has beat Home Depot over
the past decade in total returns.
So he's done really well on this company.
It's been an outperformer of the market.
But what we're seeing now is a lot of weakness in new home
projects. Home Depot just reported their
earnings report and Lowe's and they both say that people are
starting to cut back a little bit on home renovations and
backyard projects and different things like that.
A lot of them say that it's higher interest rates impacting
that. So these companies have been
going through a little bit tougher of a time this year.
So it doesn't surprise me to see him pull back on Lowe's a bit.
This was a 25% reduction, which is 5.36% of the portfolio.
He also reduced Chipotle ever so slightly.
Now, I don't know exactly when he sold this position, when it
was above $2000 per share or around $1900 per share.
He reduced it ever so slightly, 7%, which is 1.49% of the
portfolio. After that, he has Alphabet as a
major holding. He increased the position size
by 1.46. Now after that, the trades are
so small that I don't think they're meaningful.
Now we look overall at his US portfolio, we have as his
largest position Chipotle. And this is a company that I've
recently been buying in a small stake in because I believe
Chipotle is a really great company.
Looking at the fundamentals, the unit economics, the growth plans
and overall how much cash flow this company generates quarter
after quarter. I think it's a highly scalable
company, has great operating leverage.
It has a very long runway of growth and I think the story is
still on for Chipotle. I assume a lot of future growth
in the company over a long period of time.
I think there could be some weakness in the upcoming
quarters going into 2024 with the slowdown of the economy.
But if you're looking at a longer timetable, that's usually
not a huge concern. And then his second largest
holding is Restaurant Brands International, which is the
parent company of Burger King and Tim horton's and a number of
other brands. So he really has a concentration
into the quick service restaurant category.
And he previously made a lot of money in Starbucks.
So that was another restaurant company that he did really well
in. Bill Ackman is really good with
restaurants. He has a very high success rate
with them. Almost every restaurant that he
invests in is not only a money maker, but it's one where he
typically beats the S&P 500 with.
So these companies have been great.
Overall, in my opinion, I think that Chipotle is a much better
brand quality than Burger King. I like the positioning a lot
more, but regardless, he has a high concentration into these
quick service restaurant companies.
Then in 3rd place, we have Lowe's, The reduction of 25%
takes the position of the portfolio down to 15%.
After that, we have Hilton Worldwide, which I think is
another great company, very good economics, very good brand value
and it's kind of a licensing company.
So that one seems like a really strong one.
In his portfolio, we have the Howard Hughes holding.
This is 1 where he has a lot of special deals and things that he
can do by the size of his fund that retail investors can't
mimic. But Howard Hughes Corporation is
always a significant position in his portfolio.
Then we get to Canadian Pacific. He's owned this one previously
and he bought it again. It's now an 11% position.
He's very bullish on the acquisition they did, the big
merger and the leadership of the company.
He believes it will generate growing free cash flows and I
agree with him on that assessment.
And then after that, we have the combined Google and Google, the
different types of shares. That's a combined 12%.
So Google Now is actually around his fourth largest US position,
very meaningful position. And of course, I think Google's
a great buy right here. So I think that Bill Ackman is
taking a very conservative but good bet with Google right now.
Overall, I really like Bill Ackman's portfolio.
It's concentrated into a group of great companies that I think
overall have low downside risk. They generate growing free cash
flows. They have very strong business
models. So I can see why he would want
to own each of these companies and many of them.
He's had stellar returns in which Chipotle, for example,
he's up over 5X on this position.
So I think that he's doing a great job.
I think that he's likely going to have market beating returns.
Now Next up, we have some controversy with an investor
that I both love and hate called Carl Icahn.
Now Carl Icahn and Bill Ackman, who he just went over.
They're not buddies, they're not friends, and they've had some
incredibly explosive drama on CNBC in the past.
If you haven't seen that, you'll just have to look up the old
clips. But they've had calls and
different things where they bet against each other.
Carl Icahn short squeezed Bill Ackman's investment into
Herbalife, and it's a whole long story.
But recently, after all of that drama of Carl Icahn sticking it
to Bill Ackman, Bill Ackman is having the last laugh because a
research company called Hindenburg Research, which is a
short seller, did this extensive research on Icon Enterprises,
the corporate Raider throwing stones from his own glass house.
The claims that he makes in this research analysis are extremely
damning. Icon Enterprises is an $18
billion market cap holding company run by a corporate
Raider and an activist investor, Carl Icahn, who along with his
son Brett on approximately 85% of the company.
Our research has found that I EP, which is a ticker symbol of
IT units, are inflated by 75% plus due to three key reasons.
I EP trades at a 218% premium to its last reported net asset
value, vastly higher than all comparables.
We've undercovered clear evidence of inflated valuation
marks for I EP's less liquid and private assets.
And then three, the company has suffered additional performance
losses this year to date following its last disclosure.
That's just the premise of it. This research by Hindenburg is
so extensive. Just look at the bullet points.
This is the summary of the research and it goes on for
dozens of dozens of pages of damning evidence about what
they've been doing, the way that they've been conducting their
business, the valuation of it, and so on and so forth.
If we look up IEP and the stock price performance, we can see
that they've ran into some trouble after this report.
It went from $50 per share down to $30 per share, then from $30
per share all the way down to $23 per share.
So year to date, his company has lost 54% of its value.
That is damaging, damaging when you make a lot of money by
diluting shareholders and selling off those shares.
At Inflated Values, we can see the massive amount of shares
outstanding increase, the massive amount of dilution the
IEP was doing. So the fact that the share price
is down 50% means that when they sell these shares, they're
getting half as much money. Now this has obviously been a
tough year for Carl Icahn, but Bill Ackman, on the other hand,
I believe is thoroughly enjoying himself watching the destruction
of IEP. He tweeted out right as this was
happening, a quote from Wall Street, which says quote on Wall
Street, if you want a friend, buy a doc.
So Bill Ackman is getting the last laugh here.
Now, even though I disagree fully with a lot of the ways
that Carl Icahn conducts himself, and I agree that in
many cases he is a corporate Raider, he comes in and he just
destroys companies to extract value out of them.
So in some cases, he has a very adverse effect on the long term
of a company, and I think that that's dangerous.
But in other cases, I do like activist investors that will go
in and they will get executives that are lazy and not doing
their job to actually start doing their job.
And I've seen some examples where I think that he's had a
net positive effect on companies.
So it's neither all good nor all bad.
I think some of the stuff Carl Icahn does is positive, but I
think some of what he does is largely negative.
And I think that the valuation of his company dropping by half
is more than warranted. When I looked at the
fundamentals of this company, I agreed with Hindenburg Research.
Overall, I like some of the drama that comes from Icahn and
some of the things that he says. I like some of the stories he
tells, but I would never recommend investing in his fund
or IEP. I look at the company's
fundamentals and I think it has a substantial amount of
problems. So this is one that I would stay
far away from now. Next up we have Chase Coleman of
Tiger Global. Chase Coleman has been known to
be one of the most aggressive tech investors.
Entire Global has had phenomenal performance since the inception
of its fund all the way up to 2021 and we know what happened
at 2021. Interest rates going up rapidly
more than we've seen in the past decade, caused a cascading
effect of massive devaluation and multiple contraction.
For lots of tech companies, Chase Coleman like Ark Invest
was one of the funds that had utter devastation caused to
their fund During this time period, it dropped
substantially, 70% in a matter of months.
So 10 years of Alpha were wiped out in a matter of months.
And This is why I say there's a lot of fund managers that are
good for a short amount of time, five years or 10 years, but the
real test is going past entire economic cycles.
All different environments, being able to weather, all
different interest rate environments and recessions and
different factors in the market really proves how good an
investing strategy is. Now when we look at his trades
overall, this is one of the firms that trades a lot based
off of technicals and valuation and momentum and lots of
different factors. So when I look at this, I don't
take any of these buys and sells ersonally.
I don't look at them as assessing the intrinsic value of
the company over the next 5 to 10 years.
I look at this as largely algorithmic or momentumbased
trading. For example, he sold a lot of
Amazon, a lot of Google. He sold a lot of MasterCard, the
entire position. But then he also bought more
NVIDIA. He's buying NVIDIA at today's
price. So you could try to dissect
everyone of these trades, but I think a lot of them are based
off of momentum of these companies.
When I look at Chase Coleman's portfolio, I think that it's a
little too unpredictable and I would never want to invest in a
method that has 70% drawdowns when the rest of the market goes
down 16%. I think largely that's
indicative that what you're doing is too risk prone and you
should rethink your strategy. Now Next up we have Nelson Pelts
who is another investor that runs a large fund, $3.8 billion
in assets under management and he also has a concentrated
portfolio until only eight positions.
You'll notice that many of these investors that do ample research
and understand the risks associated with their companies,
they're willing to concentrate into a small amount of holdings.
That level of confidence comes from studying the history and
the risk factors of the business.
So when I look at Nelson Peltz, I really appreciate a few things
that he does. One of the things that he did
that I really enjoyed was his involvement in Disney.
If you recall Disney going through their terrible string of
decisions by hiring Bob Chapeck and then firing him and then
blaming him after they picked him to be the CEO bringing back
Bob Iger and the company just seemed to lose its way over the
past couple of years. Nelson Peltz came in and he was
a voice for the shareholder to tell the board that they're
screwing up. They don't have things figured
out. They need to reduce their pay
until they get this company back on track.
They need to start paying a dividend again.
They need to really get Disney back into profit mode and to
have a vocal activist, someone that comes in and can speak on
behalf of the shareholder, I think was very necessary.
Now if we look at his portfolio, we can see the changes he's made
and there's not many 2 to 3% turnover for the quarter.
He reduced his Ferguson position by 6%.
He added to Disney a 9% addition to Disney and then he sold a
tiny amount of Wendy's. So there's the trades.
Mostly what he did was reduced Ferguson and bought a bit more
Disney. If we look at his portfolio
construction, it's concentrated into four different companies.
The first one is Janice Henderson Group, which is a
asset management company. Then we have Ferguson, which
we've seen before in a couple other super investors
portfolios. They are a plumbing and heating
supply company and from what I've seen, they're described to
be the monopoly of that company. They control the distribution.
They have the most products. They really have a good superior
position in that market. So it's interesting that he has
such a huge concentration in that company, but it shows that
he sees something special there. The next company is Disney.
We know his thesis on that because he outlined it in his
activist investor letter. Then we have Invesco, which is
another asset management company.
So not much change for a highly concentrated portfolio.
As far as Nelson Peltz is concerned, he likes the stuff
that he owns and he continues to own it.
Now Next up we have David Einhorn, who is an interesting
investor. He recently came out with an
interview that made a lot of headlines because he basically
said that things are so bad that value investors or investors in
general may never recover from what's coming.
So he's predicting a lot of doom and gloom.
Now, of course, that impacts your psychology and the way that
you invest. If you have a very bearish view
on the economy or the overall trajectory of the world, then
that does factor into your investments.
And you can see that with his portfolio.
Now looking at his overall portfolio, he holds a lot of
companies that I'm not familiar with.
This is a long list of smaller companies, but they have a
common theme. Many of them are in energy and
they're in home building or related categories.
And if I had to guess what he's trying to do here, I think it
would be very defensively related to low valuations and a
shield from inflation. He's trying to protect his
investors from inflation that he's probably predicting.
So that would be my assumption with the portfolio.
But granted, I don't know his overall strategy.
So this is just my guess. Now Next up, we have Bill Gates.
Now Bill Gates, I believe, is an underrated investor.
A lot of people consider him brilliant for starting Microsoft
and how difficult that business was to start and run and grow to
the behemoth that is today. But you have to give him credit
for his investing acumen. Bill Gates is just smart all
around and he's very smart with protecting his assets that he's
worked really hard to acquire. When we look at the holdings
here, he has 31% in Microsoft. Now you might say there's a
little bit of bias there, but I think that that makes sense.
Bill knows Microsoft more than probably anyone, so he knows the
quality of this company. And plus, even from an unbiased
third party perspective, Microsoft is one of the most
stable cash producing companies in the world with a credit
rating better than the US government.
So when I look at Microsoft, it makes sense that 31% of the
value of this portfolio is in that company.
The next one we have is Berkshire. 20% right there.
We have over 50% of the portfolio concentrated into
these two companies. And then he added to this
position last quarter. So the top two companies are
what I consider to be bulletproof.
And then Company #3, I also consider to be bulletproof.
Canadian National Railway, I believe any Class 1 railroad
within the US and Canada is an incredibly resilient business.
It's going to have a very difficult time losing
substantial amounts of money. The risk return on these are
very high. And then after that you have
another company that's considered largely to be another
bulletproof company, Waste Management.
This is a basically necessary utility company that people
cannot survive without. His portfolio, by and large are
these four companies, and Bill Gates once again does the same
common theme. He shows that the huge majority
of his invested capital, all of this money which he's carefully
accumulated over decades of time, and that he considers to
be incredibly important, that he wants to protect.
He feels good about putting it into four different positions, a
huge level of concentration. Now.
Next up we have Daniel Loeb of Third Point, another activist
investor. Now, they started off with a
very strong start, beating the market for a long period of
time. But then after around 2010,
2011, the returns have mostly been around the S&P 500.
So we're looking to see a recovery and outperformance from
Daniel Loeb. Now if we look at his trades of
the most recent quarter, I can see a lot of cells here.
Right off the bat. He sold his largest holding, the
whole thing, Colgate, the toothpaste company.
This is a very defensive company that he bought into with 14% of
the funds assets and that one's gone now.
This was a company that's gone nowhere since he bought it.
The stock price is essentially flat, so no gains being made
there. I think it was a bit of a waste
of a position. Now he also reduced Google, so
we reduced that one by 70%, which I think is interesting and
confusing. I think that Google still
maintains a decent valuation, so obviously he had better things
to do with that cash he sold entirely out of Salesforce.
That one doesn't surprise me because Salesforce has raced up
60% year to date. And then he also sold United
Healthcare Group. That's another one that he
completely exited the position. Now what did he buy?
He bought a lot of Amazon, increase that one by 8%.
Then we have TSM. He bought into that.
He bought more NVIDIA. When I see people buying NVIDIA
at these prices, I have to believe that they're part
momentum trader. This follows the theme of Daniel
Loeb. He's another one where I
wouldn't take it too personally if he buys a company that you
own or he sells a company that you own because he trades in and
out of position so quickly. I don't think that he's looking
at the longterm intrinsic value of every company as much as
doing a lot of value trades, quick run ups and companies and
some momentum trading. His portfolio is more
diversified than most super investors.
He holds a lot of these smaller watcher positions and he has a
lot of two and 3% position. So he's on the other side of
things. He does like the level of
diversification. Now finally, we have Christopher
Bloomstrand with Semper Augustus.
Now Christopher Bloomstrand I think is a great follow on
Twitter. You should find his account and
follow him because he does these tweet storms where he breaks
down the financials and different aspects of a company
and he has a great way of looking at them.
He has a lot of insights on different businesses.
Now when we look at his portfolio, you'll notice that he
holds Berkshire as around 30% of his total portfolio.
A lot of people are critical because they say why don't you
just invest in Berkshire directly.
I think that's a valid criticism, but what Christopher
does is he knows Berkshire so well.
He's able to read the report really indepth and understand
the valuation of it. And he's always trying to add to
this position at a 20% or greater discount.
That's when he likes to get new investors funds into Berkshire,
so he'll hold cash or he'll invest in different companies.
Once Berkshire goes 20% under intrinsic value, then he adds to
that position. Now if we look at the amount of
activity over the past quarter, there's a lot of small trade,
some rebalancing in the portfolio.
If we look at the biggest ones here, he added to Dollar
General, that one is in a decline right now, so he's
adding to that one. Then he also added to Mercury
General Group 4.31%. Now looking overall at the
portfolio, I would say that there's a lot of high quality
companies. They trade at usually low
valuations. He likes to buy companies that
are cheap. They have good cash flows and
high free cash flow yields. So you'll notice that throughout
the portfolio, but I'd also say that it's very conservative.
And I think that if you're investing in a portfolio like
this, you're likely not going to have dramatic outperformance of
the S&P 500. It'll more be in line with the
S&P 500, maybe marginal outperformance, but relatively
low downside. So I believe overall the
portfolio construction is very conservative.
But I really do like looking at Christopher's letters, his write
ups, his tweets, because I think he has a ton of knowledge to
share with others. Now that wraps up Part 2 of the
Super Investor update. I'm going to be doing an update
on My Portfolio in similar fashion to these super
investors. So if you want to see that, make
sure you subscribe to this channel and the other channel,
my main channel under my name. If you haven't subscribed to
that one, make sure you are because I believe that's where
I'll be doing the update on My Portfolio.
That's all for now. I hope you enjoyed and I'll see
you in the next one.