US shares

[Dod101]

If you could buy just one US share what would it be? The obvious answer I suppose is Berkshire Hathaway but let's exclude it. For long term growth rather than being too concerned about income

Dod

[Lootman]

A year ago I might have said Boeing, but not now obviously. 30 years ago a lot of people would have said Phillip Morris, but it's a dog these days. Things change over time.

A safe pick would be McDonalds because of its global domination of fast food and its defensive nature. Its chart looks great, it yields 2.35% and the share price has more than doubled in the last 5 years in a gradual and non-volatile manner.

My largest position in a US share (aside from Berkshire) is Amazon mostly because it has done so well. But I don't expect to keep that forever. So in the tech world I'd choose MicroSoft which has reinvested itself as a cloud and enterprise company.

An honourable mention to Disney, which has a unique catalogue of products that cannot be duplicated, and which is being re-rated as its streaming service is implemented.

[TheMotorcycleBoy]

I recently bought Microsoft (MSFT) and Disney (DIS). So I certainly really like these firms.

I did a quick drive by research of a few big US firms. I didn't like any of the restaurant/fast foods (either low profitability or astronomical gearing).

I really liked Nike (NKE), but wanted to wait to see if the SP would fall to $77. Alas, it's just done the reverse. A decent jump just now after forecast beating earnings.

https://www.cnbc.com/2019/09/24/nike-nk ... nings.html

Matt

[SalvorHardin]

Disney. Superb intellectual property and tremendous synergies with the theme parks. Plus a bit of streaming excitement.

Union Pacific. Superb moat, oligopoly, favoured geography compared to east coast rails). The only downside is that it is a cyclical business as it is geared to the overall performance of US economy.

Madison Square Garden. Two superb trophy assets (New York Knicks and New York Rangers) which are worth more than MSG's market capitalisation. Downside is an expensive expansion into arenas (Las Vegas Sphere). Controlled by the Dolan family so they've got a lot of skin in the game.

These three plus Berkshire Hathaway and Mondelez International make up my American shareholdings. I've owned BRK and UNP for over 20 years, DIS for 17 via Marvel (which Disney bought).

If you're happy with technology companies I'd take a look at Alphabet (Google) before the rest. It's outside my circle of competence but a lot of people on the American boards whose opinion I value rate it highly.

[gryffron]

If I could only have one I would also choose Union Pacific. Massive moat. Railways can only take more freight as fuel runs out.

Microsoft looks pretty awesome at the moment too. They are onto a real winner moving many of their products onto an ongoing licence fee. In the old days they had to release upgrades to get revenue. Now, it's literally money for nothing.

Right now today though - nothing. US market looks very toppy. If the business community loses faith in Trump, I feel US markets could head South real fast.

Gryff

[Dod101]

Thanks for all these comments. I agree that the US market looks toppy at the moment and will have a think.

Dod

[PrefInvestor]

Agree that US stocks ARE indeed looking very toppy ATM. Tech stocks faltering significantly IMV as can be seen from the fortunes of SMT & PCT that are no way off their highs, 10%+ in the case of SMT. And no help from any dividends of course, even if you can find a stock that pays anything you will lose 15% in withholding tax and likely a 1% currency charge - unless you have a USD account.

Of course at least some of that effect on these UK ITs holding US stocks has been the major gains in the GBP vs the USD, but that has significantly moved back today - GBP 1% down vs the USD. The currency effect is great when its moving the right way - no so great when its not. With a no deal brexit looking to be off the table now (?) this may cause the GBP to strengthen significantly again at some point, damaging the profitability of overseas investments.

As I think Ive said before I have flirted with direct investing in US stocks before and never managed a plus score, too many headwinds and too much volatility for me.

ATB

Pref

[tikunetih]

Right now today though - nothing. US market looks very toppy

I agree that the US market looks toppy at the moment

Agree that US stocks ARE indeed looking very toppy ATM.

With the caveats that my investing opinions are probabilistic (shades of grey, not black/white), that I have strong opinions, weakly held* and will change them rapidly in the face of new evidence, then my view differs from the above mini-consensus....

US markets have arguably been broadly ranging sideways since the start of 2018. Based on the data points (#economic data and behavioural price action) that I've been looking at recently, my current expectation points towards this range resolving to the upside, so new highs, potentially much higher in the medium term.

NB no guarantees, subject to "events", see the caveats above etc...


* https://bobsutton.typepad.com/my_weblog ... nions.html

# too much for me to expand on here, sorry!

[Dod101]

I like the Bob Sutton comments and have for years tried to emulate them. If I buy in the US it is likely to be Disney because I just love the moat. It would also be LTBH. I have no interest in trading in and out of US shares any more than UK ones. I will certainly leave it until Brexit is resolved one way or the other on one off currency grounds but since the Second World War the US Dollar has gone only one way against sterling and I see no sign of any great change in that.

Maybe though I should just keep it simple and buy another IT investing in US stocks. Re Pref's comments on Scottish Mortgage, I am totally relaxed because SMT has always been volatile; it is par for the course and in the process has made me a lot of money, at least in percentage terms.

Dod

[PrefInvestor]

Re Pref's comments on Scottish Mortgage, I am totally relaxed......

Hi Dod, Well I don’t think I am ever totally relaxed about anything really !!.

ATB

Pref

[PrefInvestor]

I recently bought Microsoft (MSFT) and Disney (DIS). So I certainly really like these firms.

Matt

Hi Matt, So how is the US investing thing going, GBP tanking must be helping - but what about the stocks themselves ?. I know it’s early days but seems to me that the US markets have been particularly off colour of late !. Personally planning a few more TRIG myself rather than putting money into any of those US hot potatoes !.

ATB

Pref

[Wuffle]

Given the BH reference in the original post, anyone fancy one of their rare cock-ups?
Kraft Heinz is a bit like Unilever or Nestle to my uneducated eye but has behaved quite differently.
A full-on clueless punt this, no research whatsoever beyond stumbling across headlines generated by what is still a multi billion dollar company.

[TheMotorcycleBoy]

I recently bought Microsoft (MSFT) and Disney (DIS). So I certainly really like these firms.

Matt

Hi Matt, So how is the US investing thing going, GBP tanking must be helping - but what about the stocks themselves ?. I know it’s early days but seems to me that the US markets have been particularly off colour of late !. Personally planning a few more TRIG myself rather than putting money into any of those US hot potatoes !.

ATB

Pref

Hi Pi,

The US stuff is going good for me right now, I do believe. My DiS purchase was slightly mistimed since I believe some baddish news hit the press soon after our purchase. Not showstopping, but enough to take the edge off the SP, and besides I'm less concerned about a temporary paper loss, than I am about a genuine change in the underlying business. However I think this firm has a strong future with the moat like appeal of the theme parks and massive amount of quality audio-visual content.

Re. MSFT I believe the current CEO has vision. I have read several of his reports and I'm impressed with the substance of his thinking. Being a computer programmer and having several colleagues even more nerdy than me, I spent a lot of time with folks chatting about the prospects of MSFT's tech and I feel very satisfied with our purchase. So whilst I believe any big drop on the US markets will temporarily hit DIS, I think MSFT will weather any storm.

I'm also trying to buy a "trainer stock", e.g. Nike or Adidas. I discussed this profusely here:
https://lemonfool.co.uk/viewtopic.php?f=93&t=19389

Finally I'm restricting myself re US stocks to in addition to possession of a strong business model, also to those that are cash rich, and under PE=30. The last bit is the most challenging!

Matt

[flyer61]

Have to agree on Microsoft. It is my biggest holding, triple A rated, long growth runway, growing dividend etc etc. My US holdings are loosely based around Fundsmith and Smithson holdings. My second biggest holding is Sabre Corporation. Others in the pot include Disney, Illinois Tool Company, Activision Blissard, 3M, ADP, Estee Lauder, Johnson and Johnson, Kimberley-Clark, Pepsico and United Technologies. Decided that my retirement income could not be based on sterling producing assets alone. My experience of the last 40 years is of governments letting sterling devalue to solve their problems.

I would not pick Kraft Heinz...a cereal poor performer for a whole host of reasons. If you want a punt pick Facebook. A true money machine but an absolute nightmare for society. That argument is for another board!

Thanks to SalvorHardin I found Seeking Alpha, it has plenty of information on all these stocks.

For the record my US REITS are Apple Hospitality, Lexington Realty Trust, WP Carey and Stag Industrial Inc

[SalvorHardin]

Given the BH reference in the original post, anyone fancy one of their rare cock-ups?
Kraft Heinz is a bit like Unilever or Nestle to my uneducated eye but has behaved quite differently.
A full-on clueless punt this, no research whatsoever beyond stumbling across headlines generated by what is still a multi billion dollar company.

KraftHeinz is a company that I keep an eye on. Its shares look tempting, on a PE of 10.6 yielding 5.75% (before withholding tax). The sort of numbers that would cause HYP investors to pile into if it was quoted in London, but it's a "nasty foreign share" (read that using Gollum's voice from "Lord of Rings") so they won't touch it. Its shares have fallen from a peak of almost $97 in February 2017 to $27.84 today, having been absolutely hammered in February 2019 after writing off $15.4 billion in respect of the Kraft and Oscar Meyer brands and cutting its dividend by 36%.

KraftHeinz has major problems and has been spectacularly mismanaged in the last couple of years. 3G Capital, the Brazilian-American investment fund that manages KraftHeinz, have gone too far in cutting costs, especially advertising where you have to keep reinforcing the "share of mind" amongst the consuming public. 3G has also removed a lot of the "institutional memory" of the company by getting rid of too many long-serving managers, especially in Pittsburgh (Heinz' base), and replacing them with the sort of people that management consultancies love to employ - highly credentialed yet lacking in common sense. Weak brands, falling sales, it's a falling knife that could be turned around. "Could" being the operative word.

KraftHeinz's portfolio of brands are not what I would call "top tier" (unlike Unilever and Nestle). When Kraft split into Kraft Foods and Mondelez International, IMHO Mondelez kept the vast majority of the top tier Kraft Foods brands. I owned shares in Kraft at the time it took over Cadbury, selling them shortly after the company split into Kraft Foods and Mondelez International (Kraft Foods bought Heinz to form KraftHeinz in 2015). I still have the Mondelez International shares, and made a fairly substantial topup in January 2019.

“Kraft Heinz is in a worse position than many other consumer packaged goods companies because it has got a very weak portfolio of brands. They are not delivering the level of growth that’s needed in this sort of market,” GlobalData Retail managing director Neil Saunders said.

https://uk.reuters.com/article/us-kraft ... KKCN1QA2W1

KraftHeinz is well discussed on SeekingAlpha. From time to time it pops up on the American Motley Fool's Berkshire Hathaway board because Berkshire has a huge stake in it (below I've linked to a thread from last April).

https://seekingalpha.com/symbol/KHC?s=khc

https://boards.fool.com/sort-of-ot-kraf ... e#34190871

Warren Buffett says Berkshire overpaid for Kraft Heinz
https://uk.reuters.com/article/uk-berks ... KKCN1QE2D1

[richfool]

I get my US exposure through Global G&I IT's plus NAIT and to a lesser extent MCT. Thus I dont have to worry about picking the right stocks or about taxation issues.

[Dod101]

Thanks for these most interesting comments SalvorHardin. You are obviously well informed and follow the US market. It is a bit late in my investing career to be attempting the same and maybe I should stick with ITs which have a decent US exposure. A number of mine do have that already of course but maybe I could find one more or less dedicated to the US.

On Kraft Heinz, but for the BH holding, I would not give it a second thought because it is not the sort of management that I would be interested in. The culture seems to be all wrong.

Dod

[PinkDalek]

On Kraft Heinz ... The culture seems to be all wrong.

You don’t like their yogurt?

[monabri]

My wife has just sold some unwanted items on Ebay.

The ebay fees were high but PayPal fees were just crazy. They get away with it so would PayPal be a consideration?


I'm actually interested in Far East markets but this would be through the likes of HFEL (income, divi growth) and Baillie Gifford Pacific Horizons (PHI) and Fidelity (FCSS.)..the latter hopefully for long term growth.

[TheMotorcycleBoy]

Another thing I like about the US firms is that I find them to be better reported than the UK ones. My glasses maybe rose-tinted as I've only recently started analysing Yanks, and all those I've looked at (and probably ever will) are big companies, so others here with more experience may well differ.

However I find the annual 10k statements very informative and detailed, and the annual reports I've seen so far, seem to actually give more contextual news and info. relevant to the year, rather than a lot of the bumpf in UK reports, which often comprises of silly powerpoint slides and graphics, which they could have just summarised in a single sentence.

Additionally all the Yanks I've seen so far (I don't know if this is *always* the case), post quarterly earnings updates, so that one is usually very up to date with the current state of affairs.

Matt