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What are you buying today?


LowIQinvestor

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There are some stocks that seem pretty cheap.  But in terms of using this board as a proxy (which was mentioned above)---I think that's a bit of a mistake.  Most people on this board probably consider themselves value investors---however two different people could have completely independent approaches and still garner good results. As an example Charlie Munger ran an EXTREMELY concentrated portfolio and Walter Schloss ran a VERY diversified portfolio.  However, in retrospect investing with either of those guys would have been a great decision.

 

 

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bought some Mastercard and Visa

 

Hi. If I can ask, how do you think about valuation, especially for MA?

 

take 4 billion of earnings and let them grow like 15% a year. There is a little bit of operating leverage. Marketing for example seems mostly fixed. And SG&A grows much slower then revenue in past years.  So if revenue grows 10-12% a year, earnings could easily grow at least 15 and potentially 20% a year.

 

So I guess it is hard to do worse then 10-15% a year long term on MA.

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bought some Mastercard and Visa

 

Hi. If I can ask, how do you think about valuation, especially for MA?

 

I own MA, and have owned since a month or two after the IPO.  This is one of my few 'moat' companies.  I am just holding on tight.  Valuation might be stretched now, but if you think out 10 years the world will be increasingly digital vs cash based.  MA is going to benefit from this.

 

I prefer MA over V because MA includes Europe whereas Visa does not.  Is this an incredible value play, maybe not here, but I think I'll be happy in 5-10 years verses where shares are at now.

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bought some Mastercard and Visa

 

Hi. If I can ask, how do you think about valuation, especially for MA?

 

I own MA, and have owned since a month or two after the IPO.  This is one of my few 'moat' companies.  I am just holding on tight.  Valuation might be stretched now, but if you think out 10 years the world will be increasingly digital vs cash based.  MA is going to benefit from this.

 

I prefer MA over V because MA includes Europe whereas Visa does not.  Is this an incredible value play, maybe not here, but I think I'll be happy in 5-10 years verses where shares are at now.

 

What do you mean by this? I think I misunderstand you as my credit card is from Visa. We have both here?

 

Nothing today, hoping the US markets go a little further than a lousy 10% decline!

 

ya, well I was kicking myself for not getting in last may, I don't want to repeat that mistake again.

 

 

 

I wouldn't call that a mistake. No called strikes right?

 

Generally for me it's a mistake to do anything so I try to be patient.  ;D I have bought but just not that much. I'd prefer to be at least a little fearful before buying a lot more. A mere 10% move up (or down) shouldn't really change my decision to buy or sell anything.

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bought some Mastercard and Visa

 

Hi. If I can ask, how do you think about valuation, especially for MA?

 

I own MA, and have owned since a month or two after the IPO.  This is one of my few 'moat' companies.  I am just holding on tight.  Valuation might be stretched now, but if you think out 10 years the world will be increasingly digital vs cash based.  MA is going to benefit from this.

 

I prefer MA over V because MA includes Europe whereas Visa does not.  Is this an incredible value play, maybe not here, but I think I'll be happy in 5-10 years verses where shares are at now.

 

What do you mean by this? I think I misunderstand you as my credit card is from Visa. We have both here?

 

 

VISA Europe is separate from VISA.  VISA Europe is owned by financial member institutions not public shareholders.

http://usa.visa.com/about-visa/our-business/visa-inc-and-europe.jsp

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bought some Mastercard and Visa

 

Hi. If I can ask, how do you think about valuation, especially for MA?

 

For MasterCard and Visa I think more in qualitative terms wrt valuation.  They are a very strong duopoly, essentially they receive a royalty on worldwide digital commerce, or act as a tollbooth on worldwide consumption.  I don't have the numbers in front of me, but something like 80% of the world's transactions are still cash or check.  Those will continue to move to electronic over time, and thus these companies have a long runway of growth.  V and MA do not issue cards or extend credit ( unlike AmEx and Discover), they just collect a small piece of each transaction.  They generate lots of cash and have been buying back lots of stock.  I just think here are great businesses to own for a long time.

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bought some Mastercard and Visa

 

Hi. If I can ask, how do you think about valuation, especially for MA?

 

I own MA, and have owned since a month or two after the IPO.  This is one of my few 'moat' companies.  I am just holding on tight.  Valuation might be stretched now, but if you think out 10 years the world will be increasingly digital vs cash based.  MA is going to benefit from this.

 

I prefer MA over V because MA includes Europe whereas Visa does not.  Is this an incredible value play, maybe not here, but I think I'll be happy in 5-10 years verses where shares are at now.

 

What do you mean by this? I think I misunderstand you as my credit card is from Visa. We have both here?

 

 

VISA Europe is separate from VISA.  VISA Europe is owned by financial member institutions not public shareholders.

http://usa.visa.com/about-visa/our-business/visa-inc-and-europe.jsp

 

 

A very smart value investor made the case to me that Visa should be preferred over MasterCard as an nvestment because it does not yet own Europe, and is priced accordingly, but he believes it eventually will.  Time will tell.

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bought some Mastercard and Visa

 

Hi. If I can ask, how do you think about valuation, especially for MA?

 

For MasterCard and Visa I think more in qualitative terms wrt valuation.  They are a very strong duopoly, essentially they receive a royalty on worldwide digital commerce, or act as a tollbooth on worldwide consumption.  I don't have the numbers in front of me, but something like 80% of the world's transactions are still cash or check.  Those will continue to move to electronic over time, and thus these companies have a long runway of growth.  V and MA do not issue cards or extend credit ( unlike AmEx and Discover), they just collect a small piece of each transaction.  They generate lots of cash and have been buying back lots of stock.  I just think here are great businesses to own for a long time.

 

Thanks, I looked at them a while ago and basically came to the same qualitative conclusions. I was just curious to know if there's a certain FCF multiple or something like that you'd be buying at or under..

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Interesting idea, Lance.  I suspect you bought due to discount to NAV which is presumably related to Gross' departure (even though Gross was not the manager of this fund).  But, aside from the discount, how do you feel about the prospects for the fund itself and future NAV growth?  As I understand it, the current PDI holdings are basically a leveraged portfolio of non-agency (low credit quality) mortgages. 

 

I note that Gross himself was buying as recently as Aug 21 @ $32.76.

 

Thanks.

 

 

 

PDI - PIMCO Dynamic Income Fund.

 

Thanks,

Lance

 

BRK7 - yeah, pretty much.  I figured the Pimco selling was overdone.  Along those lines I also bought Allianz (AZSEY) and one of the Allianz convertible bond funds (NCV) during the sell-off on Wednesday.  As far as the prospects for PDI, I'm guessing that interest rates stay low (and may head lower), thus it should do well.  I don't really have a feel for future NAV growth, but was really just looking for something cheap and levered.  I believe you're correct about the holdings.

 

Thanks,

Lance

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Interesting idea, Lance.  I suspect you bought due to discount to NAV which is presumably related to Gross' departure (even though Gross was not the manager of this fund).  But, aside from the discount, how do you feel about the prospects for the fund itself and future NAV growth?  As I understand it, the current PDI holdings are basically a leveraged portfolio of non-agency (low credit quality) mortgages. 

 

I note that Gross himself was buying as recently as Aug 21 @ $32.76.

 

Thanks.

 

 

PDI - PIMCO Dynamic Income Fund.

 

Thanks,

Lance

 

I think non-agencies is one place where you can still get decent carry, and if it's a good manager than capital appreciation too.

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