Where to put new money today?

Investment Analysis Clubs Saul’s Investing Discussions
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Since it’s a quiet/boring day, maybe this will spark some discussion…

If you had $50,000 cash right now, what would you do with it?

With the recent run-up, it seems that things are already “high” (I didn’t say “too high”). Counter-pointing that, bonds are so poopy right now, stocks look better, so they may keep running even without strong corporate earnings (non-buybacks) to bolster them. Still, the piper has to be paid, so fast forward a year, or two, or three… and we know things will have to dip or dive. Probably, anyway.

I’m generally a long-term investor (though I have been known to exit to capture some big wins, or prevent some bigger losses if the story changes significantly), so I’m looking for thoughts and other ideas.

I’ve had my eye on a few I’d like to buy that I don’t already own (LGIH, ECL, SIVB to name just a few), but haven’t found the right combination of conditions… yeah, yeah, I should have just bought and not worried about that 20 cent price diff…

For context, my wider portfolio is already pretty well-diversified: biotech/medical (AMGN, REGN, GILD, GSK, ABMD, UNH, etc.), consumer (HD, KR, CALM, BUD, PEP, SBUX, SKX, NKE), tech (AAPL, NVDA, ATVI, PYPL, MSFT, SWKS), financial/insurance (JPM, UBS, DFS, MET), media/entertainment (NFLX, DIS), semiconductor (NVDA, NXPI, AVGO), energy (XOM, NGG, SEDG). Some of those are obviously down (hard), but most are positive, so I guess I’m looking for the next “cycle” to buy into. Or a strong argument that I should hold the cash because xxxxxx.

Discuss.

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hlygrail: Since it’s a quiet/boring day, maybe this will spark some discussion…

If you had $50,000 cash right now, what would you do with it?

I have been contemplating this question myself as I had fallen into the trap of bemoaning the lack of good opportunities like we had in February and after brexit.

I like INFN. I know this is likely to be an unpopular sentiment. But I am taking a very close look at the company right now.

Two stocks I am keeping a careful eye on but I don’t think right now is the best time to buy:

UFCS - They will never meet “Saul Criteria” because insurance is a more slow and steady business, but they have a great track record of managing risk and providing stockholder value. But right now the price is too high.

BLL - They have gone through a long stagnant period which looks to be turning around. If so, this could be a good time to get in, but I need to look closer. This is another company that may not meet “Saul Criteria” but nonetheless has a lot of potential.

When I don’t have a specific idea of where to put money, I tend to just stick it in an index fund (I use vanguard funds VFIAX [S&P 500] and VSMAX [small cap index]). I see this as being a win-win no matter what happens and have been extremely happy with the results.

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Even if things are already “high” I find it hard to believe that out of three to five thousand securities on offer one can’t find three or five that are on “sale” for whatever reason.

“Eagles don’t flock,” you have to catch them one by one. My eagle catcher is a wish list of 50 or so stocks. You seem to have a similar list:

I’ve had my eye on a few I’d like to buy that I don’t already own (LGIH, ECL, SIVB to name just a few), but haven’t found the right combination of conditions… yeah, yeah, I should have just bought and not worried about that 20 cent price diff…

Agreed, there comes a point where you “over-think” trades so you miss some good stuff.

I’ve had my eye on a few I’d like to buy that I don’t already own…

Sometimes the best are ones you already own.

Denny Schlesinger

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My last two purchases have been HAIN ($38.20) and BOFI ($18.18). I’m looking at WFM, CMG, and SKX. I’ve never considered myself a contrarian investor, but at these valuations, those are the companies I’m looking at.

My cash cushion is pushing 20%, which is higher than I like it to be. I’m 27 and consistently adding - each monthly addition is about 1% of my portfolio total - so I’m definitely looking to deploy some money. I understand the market could stay irrational for awhile, so I started forcing myself to buy whenever my cash cushion reaches 25%, whether the market falls or not (stole this concept from TMF1000).

If I can’t find anything super attractive, I’m thinking I can always dump some money into BRK-B, which seems to be pretty cheap right now. Maybe DIS too.

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My screens tell me firmly that no company with credentials is at a fair price. I certainly do not dilute the criteria when that happens.

No index - region, country or sector - is cheap. Oh, contraire, as they say in Quebec.

So it is a very good time indeed to sell a bit of something, repair the roof or reduce the mortgage or give the children a little present.

Or take a holiday! Or help get the harvest in. Don’t struggle against it.

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Well, at least that’s confirmation of my dilemma… other than adding to positions I already have (which I’ve done recently w/ ATVI, SKX, SWKS and probably a few others I’m not thinking of), nothing really jumps out as a great opportunity, while the majority strike me as more likely to take a loss in the mid-term.

I guess I just sit on the cash pile (~15% right now, and I made up that $50K just for discussion purposes) for now, and wait for better opportunities.

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hlygrail, A thought: Great Opportunities are easy to spot in hindsight but tend to look like boring hard work in the moment, or even appear as outright bad luck and misfortune. Wait around for that Great Opportunity and you may find looking back you’ve already missed it.

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Yeh I have been comfortable selling in the UK and building a cash cushion larger than I usually would operate with. In the US I had built a cash cushion harvesting gains in LogMeIn, PN, LinkedIn and am looking to harvest Grub, Abiomed and Skyworks but found an opportunity to grab some holdings I had been contemplating for a while - Hubspot, Silver Spring, Mitek.

I would definitely consider topping up on Criteo and possibly Hain as well as Community Health Systems and maybe Fortinet.

If you think Oil prices have turned then there could be some real bargains there such as KMI and LKQ and some of the oil majors, PXD & EOG and services companies.

If you are prepared for some risk then Lending Club could be good for further gains if it returns to growth. I’m up 25% on this but am watching it closely and it has a lot of risk.

I’m stalking Ituran and Atlassian as well as Twilio, Essent, Allergan & EBIX.

Some folks are interested in MSG.

Saul’s Signature Bank looks great value (as do IBNK and BOFI).
And then there is Denny’s beloved ROSS which just keeps going up.

Ant

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If you think Oil prices have turned then there could be some real bargains there such as KMI and LKQ and some of the oil majors, PXD & EOG and services companies.

I’m long LKQ (new all time high today). It’s auto parts, why do you associate it with oil?

Denny Schlesinger

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My most recent purchase was to buy more SKX and more SHOP.

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Sorry I meant your Holly Frontier. Also like LKQ which is an SA pick.
Ant

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you mean “au contraire”…

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I’m skeptical about LKQ, based on their being a rollup that could start falling after the rolling up is done and the results are tallied. The other thing is anecdotal evidence I heard from someone who worked for one of their acquisitions, John’s Auto Parts in Blaine, Minn. It’s no longer there. He was pretty happy working there before the acquisition, and it was a pretty prosperous place back then, a large lot selling salvaged parts, plus new ones and equipment and tools. His impression was that LKQ didn’t know what to do with it. If they had left it alone, a la Berkshire Hathaway, and added the synergy of offering LKQ brand aftermarket parts, it could have worked out fine. I don’t know the details, though.

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I’m skeptical about LKQ, based on their being a rollup that could start falling after the rolling up is done and the results are tallied.

A very smart observation and one I agree with. Consolidators stop growing fast at some point which is a good point to exit. Mr. Market pays for growth and does not care if it is organic or by acquisition but once growth stops the P/E ratio starts to compress fast. LKQ should have a few good years before that happens.

Genesee & Wyoming Inc. (GWR) is another consolidator I’m watching, they are buying up short haul railroads. GRW provides enough data to figure out how much of the US market they control which helps in discovering the exit point. The reason I have not bought GWR is that their carloads are still falling. I’m looking for the bottom of the commodities markets. The biggest hit is to coal hurt by both political action and low oil and gas prices.

If they had left it alone, a la Berkshire Hathaway, and added the synergy of offering LKQ brand aftermarket parts, it could have worked out fine. I don’t know the details, though.

Very few consolidators are able to manage in the style of Warren Buffett and his diverse conglomerate is very different in nature from a single market auto parts business. In any case, it is useful anecdotal evidence to keep in mind. PepsiCo International bought my uncle’s food factory in Venezuela and bankrupted it. The production manager lamented: “With your uncle I produced marmalade. With PepsiCo I produce reports.”

Denny Schlesinger

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