Great Companies

[robertbanking]

Hello you very wonderful and intelligent people that make up this forum, i sincerely hope things are going well for you.

I have continued to learn about value investing this year through books and courses. I am extremely grateful to the amazing people on these forums who have answered my questions, you are all wonderful. I kindly wanted to ask what Small Cap to Medium Cap stocks, you might have on your watchlist or invested in please? I generally look for stocks with little debt, high cash flow production and high operating margins as a few requirements. If anyone could kindly share anything they are interested in that they feel has excellent growth over the next few years please it would mean the world to me and i would be forever grateful. I am always on the lookout for new stocks that could have growth like Amazon stock did in its early years. It would help give me ideas and i could do some research on the stock.

Sending you lots of good wishes and i truly hope you become massively successful, you deserve it. Have a fantastic weekend and all the very best.

[Urbandreamer]

I've been at it some 30+ years and over that time I have changed.

Now I tend to seek investments where I can ask someone else to do the grunt work. The likes of Investment trusts. That means my examples maybe useless as serious suggestions for today.

However here are a few that I do remember fondly.
ARM. I got in early when it split from Acorn and sold during the dot com crash. It was a great company, but it's now mature and very dependent upon the mobile phone market.
Vestus. Again I sold too early, before widespread investment in wind farms.

More recently I invested in Keywords Studios. They provide "picks n shovels" services to the computer gaming industry. I still hold, but AI may erode their business. I have heard of AI being used to dub films.

My holding in Hill & Smith is still doing well. They seem an old industry, galvanizing metal. However it's road safety metal. They are doing well in the US as it needs significant investment in that area.

[vand]

Hello you very wonderful and intelligent people that make up this forum, i sincerely hope things are going well for you.

I have continued to learn about value investing this year through books and courses. I am extremely grateful to the amazing people on these forums who have answered my questions, you are all wonderful. I kindly wanted to ask what Small Cap to Medium Cap stocks, you might have on your watchlist or invested in please? I generally look for stocks with little debt, high cash flow production and high operating margins as a few requirements. If anyone could kindly share anything they are interested in that they feel has excellent growth over the next few years please it would mean the world to me and i would be forever grateful. I am always on the lookout for new stocks that could have growth like Amazon stock did in its early years. It would help give me ideas and i could do some research on the stock.

Sending you lots of good wishes and i truly hope you become massively successful, you deserve it. Have a fantastic weekend and all the very best.

You are asking the wrong questions, frankly.

A great company doesn't necessarily make a great investment... no matter how long you are willing to hold it.

If you want to develop your active an investor mindset, I would recommend reading Howard Mark's book "The Most Important Thing" - you have to think differently to the general perceived wisdom. One of my favourite quotes from Marks is:

“No asset is so good that it can't become a bad investment if bought at too high a price. And there are few assets so bad that they can't be a good investment when bought cheap enough."

It really is all about the price.

[Urbandreamer]

You are asking the wrong questions, frankly.

A great company doesn't necessarily make a great investment... no matter how long you are willing to hold it.

If you want to develop your active an investor mindset, I would recommend reading Howard Mark's book "The Most Important Thing" - you have to think differently to the general perceived wisdom. One of my favourite quotes from Marks is:

“No asset is so good that it can't become a bad investment if bought at too high a price. And there are few assets so bad that they can't be a good investment when bought cheap enough."

It really is all about the price.

I'm not too sure of that myself. SURE price is hugely important, but great companies held for a long time can make great investments.

I'm not talking spectacular returns, the next Apple or Tesla. I'm talking the likes of Unilever or Diagio. Defensive investments that have made good returns for years. Indeed there are fund managers who claim that you pay them to sit on their hands rather than sell holdings in such companies.

However the OP doesn't seem interested in that sort of company, so I didn't mention them.

[vand]

You are asking the wrong questions, frankly.

A great company doesn't necessarily make a great investment... no matter how long you are willing to hold it.

If you want to develop your active an investor mindset, I would recommend reading Howard Mark's book "The Most Important Thing" - you have to think differently to the general perceived wisdom. One of my favourite quotes from Marks is:

“No asset is so good that it can't become a bad investment if bought at too high a price. And there are few assets so bad that they can't be a good investment when bought cheap enough."

It really is all about the price.

I'm not too sure of that myself. SURE price is hugely important, but great companies held for a long time can make great investments.

I'm not talking spectacular returns, the next Apple or Tesla. I'm talking the likes of Unilever or Diagio. Defensive investments that have made good returns for years. Indeed there are fund managers who claim that you pay them to sit on their hands rather than sell holdings in such companies.

However the OP doesn't seem interested in that sort of company, so I didn't mention them.

DGE and ULVR are solid companies but no better than reasonable investments at their current price because they have already been through their aggressive growth phase. It's difficult to grow when you become the biggest fish in the sea - and the last decade of returns doesn't disprove that. They've been OK, but nothing spectacular. Of course if you hold them another decade you are likely to see continual compounding, but I wouldn't be confident that they'll beat the wider market.

[Urbandreamer]

DGE and ULVR are solid companies but no better than reasonable investments at their current price because they have already been through their aggressive growth phase. It's difficult to grow when you become the biggest fish in the sea - and the last decade of returns doesn't disprove that. They've been OK, but nothing spectacular. Of course if you hold them another decade you are likely to see continual compounding, but I wouldn't be confident that they'll beat the wider market.

To be blunt ULVR went through it's growth phase before I was even born. Which was actually my point. I'm going to assume that you know, but for others:

Lever brothers made soap. Yes soap for the world! The flooded the world with soap, saving countless lives through simple hygiene. They were the "Apple" of their day. However they are STILL a solid company, now having added food products to their brands and having merged with a Dutch company.

DGE was Guinness. As in the Guinness book of records. They were also United distillers. They flooded the world with booze and that's what they still do. Whisky, Tequila, beer, vodka it's what they still do.

Companies like this ARE the market. Hence of course they can't beat it. Again, that was where I was disagreeing with you. If the market itself is a good investment, then good companies in it also are.

I do think that I pointed out that I didn't think this sort of company was what the OP was looking for, my post was a reply to your claims.

[vand]

DGE and ULVR are solid companies but no better than reasonable investments at their current price because they have already been through their aggressive growth phase. It's difficult to grow when you become the biggest fish in the sea - and the last decade of returns doesn't disprove that. They've been OK, but nothing spectacular. Of course if you hold them another decade you are likely to see continual compounding, but I wouldn't be confident that they'll beat the wider market.

To be blunt ULVR went through it's growth phase before I was even born. Which was actually my point. I'm going to assume that you know, but for others:

Lever brothers made soap. Yes soap for the world! The flooded the world with soap, saving countless lives through simple hygiene. They were the "Apple" of their day. However they are STILL a solid company, now having added food products to their brands and having merged with a Dutch company.

DGE was Guinness. As in the Guinness book of records. They were also United distillers. They flooded the world with booze and that's what they still do. Whisky, Tequila, beer, vodka it's what they still do.

Companies like this ARE the market. Hence of course they can't beat it. Again, that was where I was disagreeing with you. If the market itself is a good investment, then good companies in it also are.

I do think that I pointed out that I didn't think this sort of company was what the OP was looking for, my post was a reply to your claims.

yes.. I am not sure we're actually disagreeing about anything.

The system of capitalism generally works by older company eventually being replaced by newer and even better companies... if you want to chase those upcoming new companies then a) it's not really value investing, it's growth investing, and b) there are plenty of people who do it - I am not sure their long term returns are any better, and at worse they can be disastrous, and they are often higher risk (see ARKK, or slightly less worryingly, SMT.L).

Frankly, my view has always been... if you have to ask, then you are probably ill equipped to find out. There are no magic formulas for how to make good investments, and indeed having disagreement is what makes a market.

[Urbandreamer]

[Frankly, my view has always been... if you have to ask, then you are probably ill equipped to find out. There are no magic formulas for how to make good investments, and indeed having disagreement is what makes a market.

I suspect that we do mostly agree. However I think that those who ask are best equipped to find answers. Sure there is no formula to it. If there were we would all do it! However asking, research and practice, have worked for me.

I loved the high risk, blue sky, investments that I use to do. I just now lack the energy and subcontract the work.

PS, my SMT.L is still in profit. Up 102%, though I did sell a chunk approaching the top at £10.51 and £13.60. I keep thinking that, were I to have the funds, I should buy some back. I also recently bought SSIT.L Early days, but I'm currently up 26%, though it had dipped to a 30% loss soon after purchase.

[vand]

[Frankly, my view has always been... if you have to ask, then you are probably ill equipped to find out. There are no magic formulas for how to make good investments, and indeed having disagreement is what makes a market.

I suspect that we do mostly agree. However I think that those who ask are best equipped to find answers. Sure there is no formula to it. If there were we would all do it! However asking, research and practice, have worked for me.

I loved the high risk, blue sky, investments that I use to do. I just now lack the energy and subcontract the work.

PS, my SMT.L is still in profit. Up 102%, though I did sell a chunk approaching the top at £10.51 and £13.60. I keep thinking that, were I to have the funds, I should buy some back. I also recently bought SSIT.L Early days, but I'm currently up 26%, though it had dipped to a 30% loss soon after purchase.

I would caveat that with only if you ask the right type of question...

What are the right question?

- Question that seek counter points of view
- Questions that make you consider the risk/reward trade off
- Questions that make you consider if that style is right for you
- Question that empower you to go off and become you own expert


Bad questions are questions that people can find out for themselves but are just too lazy, or question that seek to recomfirm bias, question that put the cart before the horse, or question make too many implicit assumptions