Welcome back everyone. Christmas has come early in the
form of the stock market. Go on up like crazy.
Check this out from CNBC. We have the indices moving right
now. As of right now we have the S&P
500 almost up two percent, 1.87% Right now, the Nasdaq's up 2.2%
and even the Russell the Russell 2000 is making a big move today
in the green up 4 1/2%. Even the Dow Jones, which is
usually a little bit behind, it's still up 1.4%.
So stocks are zooming up and the reason why?
Well, the inflation numbers came in and they were, they were.
I don't know if he called a beat or a miss, but either way it was
way lower than expected across the board.
They beat on everything. We were expecting inflation to
be here and it was a little bit underneath in all categories.
J Pal's doing a great job bringing inflation down so far
without ruining the economy. A lot of people have said that
it's impossible, that it's going to be a hard, difficult landing,
that we have to go through economic destruction, tons of
job loss and maybe we will in the future, but not today, not
today. As of right now, the market is
in the green big time. The bulls are winning this
battle and it's been a pretty exciting morning.
And while this has been happening, I'll give you a quick
glance at my portfolios. We have the story fund.
This is my smaller, little bit more aggressive, a little bit
more volatile portfolio. It's up $15,000 in the green now
just today it is up 1.89%. So right there a little bit
above the S&P 500, a little bit below the QQQ.
But this portfolio has been having an incredible month.
The one month on it is 12 percent, 12% in the past month.
In fact in Netflix, Netflix is up 26% in the past 30 days.
So huge recovery from one of my companies that say 24% position.
And overall if we look at the returns of the Story Fund, we
benchmark it against SPY, it is now within 1% of the S&P 500
right there. The Story fund is this blue
line, the S&P 500 is in red and the Story Fund had fallen
behind. We've made some better
decisions. We've caught back up and now we
are basically neck and neck within 2%.
So it's anyone's game. Now the story fund is in a
position where we can surpass SPY.
If we get more good Netflix reports, more subscriber gains,
more cash flow, as well as Amazon, these two companies
alone will pull this portfolio ahead.
So that's exciting. And then the passive income
portfolio is also having an incredible performance.
It's been doing really well. It's been keeping up with these
gains. Today it's $110,000 in the
green. I think this marks an all time
high. Just today it's up to .1%.
So this more conservative portfolio is making better gains
today. On a big Green Day, VG's up 4%.
On the day, that's pretty big. Costco's up 2% today.
That was a company that I recently visited at Costco last
Saturday, and boy was that a mistake.
Don't go into Costco on a Saturday.
Way too busy, jam packed the entire time in the financial
category. These companies are killing it,
but especially into it. I've been trying to get people
at least interested in looking at into it and I haven't done a
good job. I feel like not a lot of people
have looked at this company, but it's up 4% on the day and I just
bought into this company this year.
I bought into it on a dip. We're already in the green by
$10,000. In fact, I think out of all my
investing positions, this is the fastest 1 to $10,000 in the
green. Now I know during times like
this when the stock market's racing up, when it's in the
green, when we have a lot of momentum, it's really exciting
and I do think it's fun to be a part of it and celebrate the
gains we're making. But this is also the exact
moment when we should be cautious, level headed, rational
when we don't want to get caught up in the FOMO, the fear of
missing out, pulling us into bad investments.
So even though the portfolio's had an incredible performance
this year, it's doing well. I'm going to remain very
cautious and disciplined with my approach looking for reasonable
valuations and companies that I still think have really good
risk rewards. Now that we've seen a little bit
of My Portfolio, I want to change gears and go over some
super investors. It's that time of year again
where the 13 F filings are due, meaning that investors that
manage over $100 million are legally obligated to disclose
their holdings and their positions that they had last
quarter. This gives us unique insight
into what they're holding, what they're buying and what they've
recently sold. And from that we can try to
reverse engineer what their investing strategy is, what
their thoughts are, what's going behind these moves.
So what we have here is a list of super investors that we're
going to be looking at. We have Terry Smith, Chris Hohn,
Josh Tarasov, Michael Bury and Thomas Russo.
These are all incredible super investors and I'm excited to go
through their portfolios. So let's go ahead and see what
we can learn. Now.
The first super investor we're going to be looking at is Terry
Smith. He is the fund Smith investor
from the UK He's very competitive and he focuses on
companies that he considers to be very high quality.
Now quality is ambiguous. What does that mean?
Well, Terry Smith defines quality as companies that have
persistently high ROCE returns on capital employed.
That's very similar to high returns on invested capital or
returns on capital. They'll measure basically the
same thing. So Terry Smith is an investor
that will invest in companies like Microsoft.
Because if we go to Microsoft and we look at their ROCE, which
we have measured here right in Qualtrum, you'll notice that
it's very high, 28 percent, 30 percent, 29%.
This is pretty high. If we look at other companies,
for example, like Ford or any airlines or a lot of different
industries, we can look at the ROCE of Ford and it's 7%, ten
percent, 5%, very low. He's never going to buy
companies like this because he doesn't consider this quality.
So let's go ahead and take a look at Terry Smith's portfolio.
We'll bring it up here. And as you can see, it has a lot
of these companies, Microsoft, Meta, Philip Morris, ADP, Visa
and again, all of these have that same metric.
We look at his activity and we filter by what he's actually
changed. His biggest sell is Estee
Lauder. His biggest buy is Marriott.
So we basically sold out of Estee Lauder and he put that
money into Marriott. Let's go ahead and take a look
at each. We're using Qualtrum here.
This website's available to Patreon members.
Now, Estee Lauder has been in the gutter this year.
It's down 51%. It's had a terrible performance.
The revenue has been declining, the free cash flow has gone
negative and the earnings have declined.
I was lucky enough to sell out of Estee Lauder pretty high
because I listened to the earnings reports from the
management and I was not impressed.
I saw so many red flags them talking about troubles in China
then blaming a different factors that are outside of the company
over and over and over again. When I see that happen when a
company point the finger at something else, that's not
something I like to see. So typically I move out of those
companies. We can also see that the ROCE of
the company's dropping overtime which is not a good sign.
So Estee Lauder is a company where the fundamentals are
deteriorating to some extent that is undeniable.
And Terry Smith does not hold companies where the fundamentals
deteriorate. He switches in for companies
with strong fundamentals. So let's go ahead and take a
look at Marriott here, We'll bring it up.
This company has a decent free cash flow, yield, A20, 4PE
ratio. As you know, Marriott's asset
light, they don't really own a lot of their real estate.
They just license their name and their hotel operator.
And we've seen a bit of rebound in the travel industry.
So the cash flows seem to be on track.
They're going back up. It looks like the metrics here
are good overall and if we look at the ROCE of the company, you
notice the exact opposite trend. So this does not surprise me at
all. With Terry Smith, this is right
in line with his investment philosophy.
I think he's doing exactly what he says he'll do.
Overall, his portfolio looks mostly the same.
He still has a huge holding in Microsoft, over 10% and then
every other position is about 7% or below.
He has a little bit of meta, Phillip Morris, ADP, Visa,
McCormick, Pepsi, all these really cash flow positive
companies that have higher ROCE than the index.
This is really what he leans into.
I don't see any problem with this.
I think Terry Smith is doing exactly what he's always done.
Now this next investor, Chris Hohn, I believe is the real
deal. He's one of the top five working
today. He manages A portfolio, get
this, the portfolio size is 28 billion dollars, $28 billion and
he has a total of 9 holdings. So if you want to talk about
concentration, think about concentrating $28 billion into
nine different positions. He's able to do this and he's
able to outperform for a long period of time because he
concentrates into incredibly high quality companies.
He understands these companies inside and out.
So he has a very good risk assessment of what he's buying.
Now let's go ahead and take a look at his portfolio here and
the trades that he did last quarter.
This is it, Q 3/20/23. He sold his entire stake in
Microsoft. This was a 12% position.
This could either be good or bad depending on when he sold,
because Microsoft just went through a massive rally.
If we bring up Microsoft here, let's just take a look at the
past month. It's up 10% in the past month,
so if he sold down here right before a big rally, that was
probably a bit of a bummer. I think he'd be bummed out if he
sold just before this massive rally this month.
And unfortunately with the filings, we don't know exactly
when he sold. So this could be either good or
bad, but my guess is he probably sold it just a bit too early
before this big rally. That would be my guess.
Either way, he still made a lot of money with Microsoft.
This was still a hugely positive holding, outperforming the
index. So he still did well, but he
probably would have done a little bit better by just
holding onto it the current day. If I had to guess why he sold
Microsoft, I think it's almost entirely due to valuation.
Microsoft has done so well for such a good period of time and
the valuation has expanded. So I think that's the reason
why. Now the next things he did was
he sold a little bit of Visa, a little bit of trimming of
Google, a little bit of S&P Global, a little bit of Moody's.
I don't read into this too much. When it's less than a percent,
that can mean because they're just they, they have some
withdraws or they have some they, they have some
redemptions. It can mean a couple different
things. So this doesn't spook me out of
these holdings. They're still heavily invested
in them. Let's go ahead and take a look
at his holdings here. Like I said, there's nine
positions, There's really eight that he has a substantial
holding in. So this is concentration.
This is knowing what you're investing in and making
substantial bets. The biggest companies that he's
currently invested in is GE, and he's had this one right so far.
He invested in this company while a lot of other people were
completely bearish on it, and he won.
It's up 76% year to date, so he really won on this one.
So GE has been a massive success for him.
Personally, I'm not touching the company.
I won't touch GE. I don't know enough about it.
I don't necessarily think it's that high quality, but I'm
outside of this industry. I really don't understand it, so
I'm staying far away. Now.
GE makes up around 17% of the portfolio.
The other 30% of it, 31%, are railroads.
We have Canadian Pacific, Kansas City Southern and Canadian
National Railway, around 15% in each of them.
I currently hold Canadian Pacific, Kansas City Southern.
I think the railroad has lower downside.
I think it's a very stable business, high barriers to entry
as well as it produces a significant amount of free cash
flow every single year. Another thing about rail is
there's likely going to be more onshoring of manufacturing with
things being made in Mexico and the US and Canada.
That means more stuff being shipped around within the US and
that's where rail comes into play.
So there are some secular trends working for these companies.
Next up we have Visa. So we have Visa right here.
He doesn't own any MasterCard. My bet's on MasterCard, but I
just as easily own Visa. I view these companies as high
quality tech companies that are data information companies.
They're not just credit card companies, they're not just
financial companies. This is an incredibly high
quality tech focused financial network company.
Next, we have S&P Global and Moody's around 12% in each of
these companies. The credit rating agency in and
of itself is a huge Moat business.
It's very difficult to compete with credit rating agencies.
And then these businesses also have very high margin analytics
businesses attached to them. S&P Global's heavy into data and
indices, Moody's into company analytics.
So again, I think part of these companies are both tech
companies. Next up, we have Google around
8%. That makes sense.
Another wide Moat company, very significant cash flows.
Then we have Thermo Fisher Scientific at 5.8%, another very
strong cash flow company, very wide Moat.
And then we have Ferguson at .29%.
This seems like a watcher position.
It's not meaningful. When I look at this portfolio, I
once again come to the assessment that it's an
incredibly high quality concentrated portfolio.
It's highly likely to outperform the S&P 500 over the next 10
years. Now you may say it's greater
risk because of the level of concentration, but keep in mind
what he's concentrating into and the types of businesses these
are. These are world class
monopolistic businesses. So overall, I once again think
Chris Hone has one of the best investing styles in the market
and I see no red flags right now.
Now Next up we have Josh Karasoff, who manages a $300
million portfolio and he also holds a lot of concentrated
positions. So he only has 9 total holdings.
Now let's go ahead and take a look at what he's done over this
past quarter. We'll look at it here.
We have Spotify as the number one thing.
He sold out of his entire position in Spotify.
Now that's a bit surprising. Let's go ahead and take a look
at Spotify here. Let me bring it up on Qualtrum.
Let's go ahead and take a look at the price action.
I guess what I see here is he's held this company for a while,
so he's been invested in it. And I think he bought quite a
bit and accumulated more shares around this time period.
He was holding it while it was selling off.
I I I think he, he thought it was probably worth more than
that. And then we had this big rally
this year, it's up 112%. So I think that's the reason why
I really think he probably just sold it because it went up this
year and he looked for an exit with the company.
But I still think that's a bit surprising.
Josh Tarasoff doesn't just sell companies to get some gains in
them. He typically tries to hold them
for 5/10/15 years like he's held Amazon.
So seeing him sell out of this company is a little bit
concerning to me. I think it's something where if
you look at Spotify, he may have came up with a problem with the
thesis. When I look at Spotify, I'm
mixed on the company. I think there's substantial
potential upside, but there's also too many challenges for the
company. They're not only facing against
big tech, but they also have a lot of their margins taken by
the music labels, and there's just a lot of competition with
podcasts. So with Spotify, I see a lot
more competition and a lot more margin problem than I do with
Netflix. My bet between the streaming
players is with Netflix. Now the next big change was an
addition to Markel Group. This is a specialty insurance
company. He also added to Brookfield
Corp. This is a popular investment.
I see it passed around retail investors all the time.
Brookfield's talked about like the Canadian Berkshire.
They invest in a lot of infrastructure projects, just
like Berkshire owns a lot of utilities and energy.
Brookfield is a high quality company that's compounded for a
number of years. So this is what his portfolio
looks like. He still has the significant bet
in Amazon. He's held this company for over
10 years. It's his claim to fame.
What he changed was he added more to Brookfield, Markel and
Alphabet. So those are the three he added
to as well as a little bit more to Burford Capital.
But overall his portfolio looks mostly the same.
The only real change here is selling out of Spotify, which
after this rally, I don't think is entirely unexpected.
I think Josh Tarasaw's portfolio looks good, but ultimately it's
not my favorite one. There's some companies that he
holds from time to time that I think are questionable.
Next up we have Michael Bury, who at this point needs no
introduction. So let's go ahead and take a
look at his trades this last quarter.
And I'll say the same thing I say every time that we look at
Michael Bury's trades. I think there's little value.
In fact, I think there's very little in looking over his
trades in terms of wanting to mimic them, because I think that
Michael Bury overall is one of the most difficult people to
actually follow what he's doing, what he's doing with his
portfolio. You can't follow him.
It's just impossible. I mean, look at the trades he
did just in the past three months.
He sold entirely out of dozens of companies.
There's like 25 companies that he sold 100% of.
So you can't track this. You're not, you're not going to
be able to make the same trades at the same time he does.
And then he added to another dozen positions.
Right now he seems to be making a bet on booking holdings.
We bought into that with a 10% position.
He bought into Nexstar Media Group.
He also seems to be buying into Chinese e-commerce websites,
Alibaba and JD. If there's any common theme with
Michael Bury, the one thing I do notice with most of his
holdings, especially the bigger ones, is they typically trade at
incredibly low valuations. He's a value investor where he
tries to buy the companies nobody else wants to touch.
So he's buying into Chinese e-commerce companies as they're
doing terrible. Nobody else wants to invest in
them and he does the same thing with a lot of companies.
So that's really the only commonality is ultra low
valuations with this holdings. Next up we have a value investor
called Thomas Russo. He manages around $9 billion in
assets. But I do like his investing
strategy. He invests in companies that
have significant cash flows. They typically have very stable
business models and he aims for a 12% annualized return.
He's a bottom up investor that likes investing in companies
because of their fundamentals and he's also long term.
In fact, if we look at his trades this last quarter, this
is what it looks like. His single biggest trade is a
1.36% move. That's it.
He literally changed almost nothing.
Most of these trades are entirely insignificant, less
than .10%. So I like that he's just holding
on to his company's changing nothing and doing the thing
you're supposed to do, buy into good companies and let them have
time to compound. Now let's go ahead and take a
look at his portfolio. The type of companies that he
buys into. Again are very consistent, high
cash flow companies we have at the very top, Berkshire, so that
gives them some exposure to Apple by virtue of Berkshire's
holdings. That is a 14% position.
So he does have a level of concentration there into his top
conviction. Then we also have more Berkshire
down here, so another 6% totaling this out to a 20%
position. It's a top heavy Ortfolio Next U
we have Google, Makes sense, we have MasterCard there.
That makes U around fifty of his Ortfolio between these three
ositions and then we have Nestle, another very wide Moat
company. After that it starts breaking
down into 7% positions and you can see further down the list he
has companies like Visa, Comcast, JP Morgan.
He has quite a bit of Netflix and after position around 20 he
has very insignificant positions.
I think he does this by keeping a couple shares of companies
that he previously bought into. So this is overall kind of his
trading history. But when I look at Thomas
Russo's portfolio, I see a very conservative defensive
portfolio. It's mostly concentrated into
companies that are incredibly resilient, very wide Moat.
So I don't think he's taking a lot of risks with this $9
billion. I don't see anything substantial
happening to Berkshire or Google or MasterCard or Nestle.
Those are pretty safe bets. I like Thomas Russo's portfolio
and I think his performance speaks for itself.
He's earned roughly a 13% annualized return.
That's difficult to do for a long period of time.
So he has a strong portfolio and a market beating performance so
far. His investors should be happy
now. That's the update so far, but
this is just part one. Make sure you're subscribed to
the channel with the Bell notification on so that you get
future updates throughout the week.
I'm going to be reviewing more and more super investors
portfolios and I'm picking out all the top super investors
you'll want to know about, so make sure to subscribe.
There's more to come.