PBV has been higher 92% of the time.
fully agree with div…
right in front of our face!
I hope WEB is buying back a ton
going back how far?
I hope WEB is buying back a ton
He tends to limit the purchases to around 5% of daily volume, it seems.
Volume was about 50% higher Friday and today than it averaged in the previous month.
If he was buying 5% on those two days, maybe $170m worth?
Hmmmm…Dutch tender…
Jim
5 Likes
“Hmmmm…Dutch tender…”
that would be cool but doubtful
I never understood why he hasn’t arranged an
Accelerated Share Repurchase (ASR) with an Investment Bank. Apple and others have done so.
Fees I would surmise.
Also, QQQE is starting to fall into the 58-62 range for those looking to diversify. Of course, the value of the companies in the index have likely have gone too. But still a better entry point, no?
As someone who is insanely overweighted in BRK.B, I need some counterbalance. I have a slug of GOOGL, MKL and QQQE but wouldn’t mind adding something else that will survive the next decade? APPL? (but I feel that’s a bit like tricking myself since BRK.B covers it as well.)
SD
1 Like
Is there an online source that can easily depict by table or graph the % of time BRK is above or below PBV, over certain periods, as Div has reported in his OP?
What about some Carmax, CostCo or Dollar Tree? Hard to argue they’ll evaporate.
Is Costco (COST) finally in a less-overvalued range? I’ve looked at it before but it was always too expensive. I have a tiny slug of KMX and LKQ. I’m noticing my recent purchases of MKL are still above what I paid, so not yet a deal.
SD
Is Costco (COST) finally in a less-overvalued range? I’ve looked at it before but it was always too expensive
COST at $400 or so looks attractive, at $450 I would hold off.
tecmo
…
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<< Also, QQQE is starting to fall into the 58-62 range for those looking to diversify. Of course, the value of the companies in the index have likely have gone too. But still a better entry point, no?
As someone who is insanely overweighted in BRK.B, I need some counterbalance. I have a slug of GOOGL, MKL and QQQE but wouldn’t mind adding something else that will survive the next decade? APPL? (but I feel that’s a bit like tricking myself since BRK.B covers it as well.) >>
I’ve bought QQQE.
Y’all may recall my post a while back asking if it was in a reasonable price
range. I agree with Mungo that GOOGL will likely outperform, but QQQE is
something that I can just hold for the next 10 years without watching it too
closely, and I needed an alternative to cash, bonds, and ever more BRK.
-Rubic
3 Likes
PBV has been higher 92% of the time.
I fact it’s been higher all day today even!
I think every rounding method rounds a 1.216 to 1.22, not 1.21. Some rounding systems will differ when it’s 1.215, but even then you can say it’s higher than 2.1
I have today’s low at 280.10, and book value (last known) at 230.31, do you guys have differing data?
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I have a slug of GOOGL, MKL and QQQE but wouldn’t mind adding something else that will survive the next decade?
You could look into Carmax (KMX), currently at $88.81.
I’m a big fan of double digit growth when it includes the bottom line, not just the top line.
And the price seems attractive, even if there is a slowish year or two.
If looking at the balance sheet, which looks heavily leveraged at first glance, bear in mind that the bulk of the debt is non-recourse.
That’s made up of completed car loan securitizations that have to be reported as consolidated, but aren’t the company’s liabilities.
I like this one as a long-termer.
For those who like the deepest bottom of the value barrel, Bread Financial Holdings (BFH at $43.65, previously Alliance Data ADS) is trading at 3.63 times consensus 2023 earnings.
Credit card issuer primarily for store loyalty programs.
And 2.68 times Value Line’s estimate of earnings 3-5 years from now–if that were true, earnings by then would exceed your cost basis today.
I am of course way underwater on this one, but hope is everlasting even if the market value of my position isn’t.
Some people say they like to wait for a really cheap price, but when they see something really cheap they assume something is really wrong and won’t touch it.
More of a trade than a marriage.
Jim
15 Likes
For those who like the deepest bottom of the value barrel, Bread Financial Holdings (BFH at $43.65, previously Alliance Data ADS) is trading at 3.63 times consensus 2023 earnings.
Credit card issuer primarily for store loyalty programs.
And 2.68 times Value Line’s estimate of earnings 3-5 years from now–if that were true, earnings by then would exceed your cost basis today.
I am of course way underwater on this one, but hope is everlasting even if the market value of my position isn’t.
Some people say they like to wait for a really cheap price, but when they see something really cheap they assume something is really wrong and won’t touch it.
More of a trade than a marriage.
Jim, I’m curious if you have an explanation for why BFH is trading at such a low valuation. Is there an existential risk to the business that is being priced in? I see from the latest annual report that the dividend has declined from $2.52 in 2019 to $1.26 in 2020 to $0.84 in 2021, and no shares were repurchased in 2020 or 2021. That does not exactly breed confidence. On the other hand, I see from the latest quarterly report that they authorized, and then quickly implemented, a stock repurchase program to acquire 200,000 shares earlier this year when the stock was trading quite a bit higher. I’m wondering if this is a classic Ben Graham-style cigar butt.
As always, thanks for your thoughts. I really appreciate the time and energy you spend posting on this board.
Thanks,
Andy
4 Likes
Hey Jim,
Regarding KMX, do you have any concerns that there might be disruptions in credit markets that impair their ability to securitize loans?
One of my worst investments was a company that securitized student loans (FMD). It’s certainly quite a different situation than KMX, but the company basically evaporated overnight when their securitization business became no longer viable due to a number of reasons, one of which was turbulence in the credit market.
Thanks,
jeff
1 Like
Jim, I’m curious if you have an explanation for why BFH is trading at such a low valuation.
No, not really.
If I had a good idea, I wouldn’t have bought in way above this price.
Random observations:
They aren’t in the business they were before, having sold one division and spun off another unit*.
Then they bought a company about a year ago, Bread, then changed their name to the target’s name.
With each action, headline revenues and earnings dropped, of course. Nobody likes that.
They are credit card issuers, so they get a lot of worries about card defaults. But like banks, cyclical credit losses are part of the business.
They lost one big client a while back (BJ’s Wholesale)
So at the very least it’s likely they are somewhat misunderstood.
Not a fast growth story, but they make a lot of money, and it is generally expected to rise, not fall.
So in that sense it’s ostensibly better than a cigar butt. But it is certainly priced like a cigar butt.
My main objection is that management are so wrapped up in the insular spin and marketing world they seem unable to speak in English, just something between jargon and Klingon.
Their simple top-level description of their business:
"Bread Financial Holdings, Inc. is a leading provider of tech-forward
payment and lending solutions that services customers and consumer-based
industries across North America. Through omnichannel touch points…"
There may well be information in management presentations, but my stomach can never make it to the end.
Jim
- the spinoff is now Loyalty Ventures LYLT, main business running the remarkable Air Miles loyalty points system in Canada.
That is trading at about 1/7 its spinoff level at the start of November, 2.75 times estimated earnings next year.
Investors really hate these folks!
3 Likes
Regarding KMX, do you have any concerns that there might be disruptions in credit markets that impair their ability to securitize loans?
One of my worst investments was a company that securitized student loans (FMD). It’s certainly quite a different situation than KMX
Not so much.
The main difference is that they also make money by selling cars, and sourcing loans for other lenders.
By contrast FMD (on which I lost a little money too, as it happens) was 100% dependent on securitization.
In the case of Carmax, if the securitization market closed, it would mainly have the effect of leaving
their current batch of loans on the balance sheet, then as that maxed out, slowly make them stop new own-name lending.
But there are still cars to sell, and other lenders to offer loans, so business would continue.
It would just be somewhat less profitable for as long as the refi market was closed, which is not an existential threat.
The other risk is large number of defaults in the case of a bad recession:
first, that is not nearly as big a problem as you might expect, as so much of the headline debt is non-recourse, as mentioned.
If the borrower defaults, it’s (generally) the investor in the securitization who takes the hit.
For the still meaningful minority of loans that they are on the hook for, they do what everybody else does in the US: they repossess and resell the car.
They are ideally placed to move it again; they’re car sellers, not a bank.
People do tend to like them. No lemons, as they sell those at auction to other dealers.
Fixed prices and low markups.
Jim
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