Okonomen Posted January 22, 2020 Share Posted January 22, 2020 Hi, Was just wondering since most stocks trade at ATH, 2019 was a crazy good year etc. What is currently your best wide-moat idea? Mine: Fox Corporation Insulated from the streaming substitution as they focus on live events and is considered a must-have in many TV viewers TV bundles Founders own 40% of stock and has recently announced a 2 bUSD bb = 10% of stock Generates +30% ROIC annually Has low CapEx requirements Strong brand/franchise in the US which is pivoting to digital avenues Growing their local TV segment Low debt Trading at 10% FCF yield Has lots of non-core (partly hidden) assets worth close to 10 USD/share combined (tax asset, ROKU stake, Stars GRoup stake, studio lot, cash) Has huge pricing power towards cable distributors making them capable of growing revenue LSD Main risks: Can't grow revenue like this forever. flow TV is slowly declining founders may do stupid things... e.g. it seems the Murdochs want to some day merge Fox with News Corp As they focus on live news/sports they don't really create content with ever lasting IP like Disney etc. However, they also have great WC as content creation is also capital intensive and requires WC Link to comment Share on other sites More sharing options...
FiveSigma Posted January 22, 2020 Share Posted January 22, 2020 Okonomen, how do you arrive at FCF multiple of 10x? Link to comment Share on other sites More sharing options...
Okonomen Posted January 22, 2020 Author Share Posted January 22, 2020 Okonomen, how do you arrive at FCF multiple of 10x? Deduct non-core assets and assume close to 2 bUSD fcf. However, I haven't taken into consideration some modest stock price appreciation Link to comment Share on other sites More sharing options...
ValuePadawan Posted January 23, 2020 Share Posted January 23, 2020 For the widest moat I'd have to go with Chr Hansen they provide the freeze dried cultures used to make 70% of the world's yogurt and 50% of the world's cheese. Extremely High switching costs because if you change the culture you change the taste and customers don't want their favourite yogurt to change taste. They also have selectively bred bacteria that make yogurt taste sweeter and creamier with less sugar and fat by transforming lactose into glucose in the fermenting process. [https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6339885/] Because the bacteria is a small cost in the making of yogurt and the switching costs are high they can increase prices a lot. Also with all the R&D they do on different cultures of bacteria they are able to come up with new products that no one else has like the example I gave before. In terms of price its not interesting but in terms of moat its huge. Link to comment Share on other sites More sharing options...
BG2008 Posted January 23, 2020 Share Posted January 23, 2020 For the widest moat I'd have to go with Chr Hansen they provide the freeze dried cultures used to make 70% of the world's yogurt and 50% of the world's cheese. Extremely High switching costs because if you change the culture you change the taste and customers don't want their favourite yogurt to change taste. They also have selectively bred bacteria that make yogurt taste sweeter and creamier with less sugar and fat by transforming lactose into glucose in the fermenting process. [https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6339885/] Because the bacteria is a small cost in the making of yogurt and the switching costs are high they can increase prices a lot. Also with all the R&D they do on different cultures of bacteria they are able to come up with new products that no one else has like the example I gave before. In terms of price its not interesting but in terms of moat its huge. Thank you for such insight!!! Link to comment Share on other sites More sharing options...
Jurgis Posted January 23, 2020 Share Posted January 23, 2020 FOXA is narrow moat with negative trend according to M* ;) I would tend to agree. If you want wide moat value stock, buy BRK. If you want wide moat growth stock, buy GOOGL. Link to comment Share on other sites More sharing options...
TheAiGuy Posted January 23, 2020 Share Posted January 23, 2020 Facebook. It’s essentially a monopoly and the CEO is crazy young. It’ll beat the market for the next 30 years. Link to comment Share on other sites More sharing options...
RadMan24 Posted January 25, 2020 Share Posted January 25, 2020 Tesla. ;) Link to comment Share on other sites More sharing options...
Lakesider Posted January 25, 2020 Share Posted January 25, 2020 XRO AU. Just world class cloud accounting software from New Zealand aimed at small and medium businesses. Once you use it you are unlikely to change it, its beautiful. Lots of great features, automatic bank feeds and reconciliations, invoice scanning ect... Their environment allows developers to create apps and sell them to XRO users. Lots of value add on top of the subscription fees. Have taken over AU and NZ, doing really well in UK too. They are starting to penetrate the US, struggled at first but the subscription growth in the US seems to be accelerating. Has been a 3x for over the last couple of years. I got uncomfortable with the valuation and sold recently, but i,m having serious FOMO because i know its a great bushiness. Link to comment Share on other sites More sharing options...
ValuePadawan Posted March 11, 2020 Share Posted March 11, 2020 Now that the market has taken a hit I'm out hunting for high quality businesses with big moats because some are trading at fair prices for once. I was wondering if anyone has any suggestions of where to look? (other than at airlines which I have already picked through.) Link to comment Share on other sites More sharing options...
KCLarkin Posted March 11, 2020 Share Posted March 11, 2020 Now that the market has taken a hit I'm out hunting for high quality businesses with big moats because some are trading at fair prices for once. I was wondering if anyone has any suggestions of where to look? (other than at airlines which I have already picked through.) Finally starting to see a few good companies get cheap (most of these are narrow moat -- wide moat businesses are still very expensive): Gildan - death of events is going to kill their printwear business for a few years but this is trading at prices first seen in 2007. QSR - not sure why this is selling off. People are still going to drink Tim Hortons! Lot's of debt though. And 3G is on a major losing streak. ULTA OTEX BKNG - Cheap, but I think it will get much cheaper MSM - distributor's FCF is countercyclical DIS GOOG - ad revenue is going to get slaughtered due to travel, etc. But large cash hoard... TRIP - wide moat, bad business. But will not recover for a long time... I am still raising cash, but starting to get in the buying mood. Edit: done raising cash. Starting to look for bargains in the carnage. Link to comment Share on other sites More sharing options...
Jurgis Posted March 11, 2020 Share Posted March 11, 2020 V, FB, GOOG. EXPE, BKNG for adventurous. BRK for conservative. Link to comment Share on other sites More sharing options...
KCLarkin Posted March 11, 2020 Share Posted March 11, 2020 One area to look at is companies with very high cash levels and high FCF (potential for capital returns and M&A). Let me know if you see any selling cheap. Google is getting closer but would like to see this closer to $1000. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted March 11, 2020 Share Posted March 11, 2020 One area to look at is companies with very high cash levels and high FCF (potential for capital returns and M&A). Let me know if you see any selling cheap. Google is getting closer but would like to see this closer to $1000. PKE Link to comment Share on other sites More sharing options...
rb Posted March 11, 2020 Share Posted March 11, 2020 Thing is never cheap but SCI is pretty moaty. Link to comment Share on other sites More sharing options...
jeffsreng Posted March 11, 2020 Share Posted March 11, 2020 Pier 1 Imports Inc 8) -- I'm studying this business to increase my competitive moat. Link to comment Share on other sites More sharing options...
Jurgis Posted March 11, 2020 Share Posted March 11, 2020 Pier 1 Imports Inc 8) No sh!7! They are still in business? Must be wide moat! 8) Link to comment Share on other sites More sharing options...
LC Posted March 11, 2020 Share Posted March 11, 2020 Look for monopolies/oligopolies: (Sorry these may not all be "great ideas" i.e. buy them today, but just dumping a bunch) Visa MA as discussed at length MSFT certainly Bloomberg (lol) Adobe has a pretty decent moat Verizon/ATT in the wireless service industry; Comcast if you extend to wired The railroads, UNP as the pure play or Berkshire Berkshire of course you get top shelf insurance operations Disney in the entertainment/storytelling genre Mcdonalds in terms of fast food The Canadian banks are pretty moaty Nike I argue has a moat in various functions (one being talent acquisition) Paychex/ADP are semi-moaty in the payroll processing space. Especially for largeCo's. Amazon/Walmart have quite the moats Link to comment Share on other sites More sharing options...
sleepydragon Posted March 11, 2020 Share Posted March 11, 2020 Mega Banks (wfc, bac, jpm) Cigarettes (MO, PM) Defense (GD, RTN) BRK Goog Intel TSCO BNKG Link to comment Share on other sites More sharing options...
Spekulatius Posted March 12, 2020 Share Posted March 12, 2020 Now that the market has taken a hit I'm out hunting for high quality businesses with big moats because some are trading at fair prices for once. I was wondering if anyone has any suggestions of where to look? (other than at airlines which I have already picked through.) Finally starting to see a few good companies get cheap (most of these are narrow moat -- wide moat businesses are still very expensive): Gildan - death of events is going to kill their printwear business for a few years but this is trading at prices first seen in 2007. QSR - not sure why this is selling off. People are still going to drink Tim Hortons! Lot's of debt though. And 3G is on a major losing streak. ULTA OTEX BKNG - Cheap, but I think it will get much cheaper MSM - distributor's FCF is countercyclical DIS GOOG - ad revenue is going to get slaughtered due to travel, etc. But large cash hoard... TRIP - wide moat, bad business. But will not recover for a long time... I am still raising cash, but starting to get in the buying mood. Edit: done raising cash. Starting to look for bargains in the carnage. No compounders brothers’s portfolio is complete without MA and/or V. Defense : LMT, to a lesser extent GD ( which I own a little of) Airbus: commercial aerospace - BA got its wings clipped AMZN - #1 in , cloud service MCO, SPGI - Financial plumbing The combo UTX/RTN looks pretty good too, if P&W ever gets the geared turbofan engine to work well Link to comment Share on other sites More sharing options...
Uccmal Posted March 13, 2020 Share Posted March 13, 2020 Facebook. It’s essentially a monopoly and the CEO is crazy young. It’ll beat the market for the next 30 years. Yep. And 60 B cash. In 20 yrs we will be bowing to Lord Zuckerberg, the first private sector trillionaire. Link to comment Share on other sites More sharing options...
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