Offshore
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Hidden Value Gems
RT @HiddenValueGems: At the beginning of 2023, the market estimate for aggregate 2025 “Hyperscaler” Capex was just $154bn. This estimate has increased by 51% to $232bn by now.
At the same time, “revenue revisions for 2025 for these four companies have increased by just 4% (and have actually fallen by 9%
since the start of 2022), meaning that their aggregate capex/sales ratio has increased from 10% in 2023 to an estimated 15% in 2025.”
h/t @Argonautcapital
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RT @HiddenValueGems: At the beginning of 2023, the market estimate for aggregate 2025 “Hyperscaler” Capex was just $154bn. This estimate has increased by 51% to $232bn by now.
At the same time, “revenue revisions for 2025 for these four companies have increased by just 4% (and have actually fallen by 9%
since the start of 2022), meaning that their aggregate capex/sales ratio has increased from 10% in 2023 to an estimated 15% in 2025.”
h/t @Argonautcapital
$MSFT has seen the largest increase in Capex/Sales ratio in the past 10 years (now at 18% compared to 3% in 2014).
$AAPL Capex/Sales has actually declined over the same period (from 3% to 2%). https://t.co/83npeBxqn6 tweet
Offshore
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Invest In Assets 📈
This is Walter Schloss.
Schloss achieved a 21.3% CAGR in the stock market from 1956 to 1984.
His bargain-hunting strategy is a must-read for investors.
Let's dive in 🧵👇 https://t.co/mLHvmFE9gV
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This is Walter Schloss.
Schloss achieved a 21.3% CAGR in the stock market from 1956 to 1984.
His bargain-hunting strategy is a must-read for investors.
Let's dive in 🧵👇 https://t.co/mLHvmFE9gV
tweet
Offshore
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Hidden Value Gems
RT @HiddenValueGems: Fairly basic, but still a good reminder of the 5 typical mistakes investors make during increased volatility:
1️⃣ “They panic-sell: someone who stayed invested from 1980 until the end of March 2024 would have a 12% annual return, whereas someone who started at the same time, but sold after downturns and stayed out of the market until two consecutive years of positive returns, would have averaged a 10% return annually.”
via @MorganStanley
1/5
tweet
RT @HiddenValueGems: Fairly basic, but still a good reminder of the 5 typical mistakes investors make during increased volatility:
1️⃣ “They panic-sell: someone who stayed invested from 1980 until the end of March 2024 would have a 12% annual return, whereas someone who started at the same time, but sold after downturns and stayed out of the market until two consecutive years of positive returns, would have averaged a 10% return annually.”
via @MorganStanley
1/5
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Offshore
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Stock Analysis Compilation
Colebrooke Partners on Watches of Switzerland Group $WOSG LN
Thesis: Watches of Switzerland Group's strong ties with Rolex and ambitious growth plans in the US market make it a compelling investment opportunity despite recent market sentiment
(Extract from their Q2 letter) https://t.co/BcCxTTPPNU
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Colebrooke Partners on Watches of Switzerland Group $WOSG LN
Thesis: Watches of Switzerland Group's strong ties with Rolex and ambitious growth plans in the US market make it a compelling investment opportunity despite recent market sentiment
(Extract from their Q2 letter) https://t.co/BcCxTTPPNU
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Offshore
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Invest In Assets 📈
The average fund investor significantly underperforms the S&P 500: https://t.co/4OKot6Ntzw
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The average fund investor significantly underperforms the S&P 500: https://t.co/4OKot6Ntzw
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Offshore
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Dimitry Nakhla | Babylon Capital®
A sober valuation analysis on $LVMH 🧘🏽♂️
•NTM P/E Ratio: 19.97x
•10-Year Mean: 23.92x
•NTM FCF Yield: 4.87%
•10-Year Mean: 4.13%
As you can see, $LVMH appears to be trading below fair value
Going forward, investors can receive ~19% MORE in earnings per share & ~13% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $LVMH is a high-quality business
*Financials In Euros €*
BALANCE SHEET✅
•Cash & Short-Term Inv: €11.09B
•Long-Term Debt: €11.64B
$LVMH has a strong balance sheet, reflected by its AA- S&P Credit Rating & 16x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 16.6%
•2020: 10.2%
•2021: 18.9%
•2022: 21.2%
•2023: 21.0%
•LTM: 19.1%
RETURN ON EQUITY✅
•2019: 21.5%
•2020: 12.8%
•2021: 28.9%
•2022: 28.0%
•2023: 26.7%
•LTM: 22.8%
$LVMH has excellent return metrics, highlighting the company’s financial efficiency
REVENUES✅
•2013: €29.02B
•2023: €86.15B
•CAGR: 11.49%
FREE CASH FLOW✅
•2013: €2.99B
•2023: €11.59B
•CAGR: 14.52%
NORMALIZED EPS✅
•2013: €6.83
•2023: €30.33
•CAGR: 16.07%
SHARE BUYBACKS❌
•2013 Shares Outstanding: 503.22M
•LTM Shares Outstanding: 499.83M
MARGINS✅
•LTM Gross Margins: 68.5%
•LTM Operating Margins: 25.6%
•LTM Net Income Margins: 16.3%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~19% MORE in EPS & ~13% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $LVMH has to grow earnings at a 9.99% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2026 EPS growth over the next few years to be less than (10.95%) the required growth rate:
2024E: €30.12 (-0.7% YoY)* Dec
2025E: €33.57 (11.4% YoY)
2026E: €36.73 (9.4% YoY)
So, let’s assume $LVMH ends 2026 with €36.73 in EPS & see its CAGR potential (dividends included) assuming different multiples:
23x P/E: €844.79💵 … ~14.1% CAGR
22x P/E: €808.06💵 … ~12.1% CAGR
21x P/E: €771.33💵 … ~10.0% CAGR
20x P/E: €734.60💵 … ~8.0% CAGR
As you can see, we’d have to assume 22x for $LVMH to have attractive return potential & while 22x is certainly reasonable given its quality, we should be aware that $LVMH 10-Year average multiple (24.92x) is elevated a bit due to the valuation spike in 2020-2021
If we “normalize” the multiple & use the 5-year average period from 2014-2019 we have a mean of 20.83x 🔎
While $LVMH deserves to trade at a premium multiple due to its quality, I’m hesitant to rely on 23x because I want to ensure some margin of safety
It’s safer to rely on ~21x earnings & be pleasantly surprised with some multiple expansion (rather than have the risk of multiple compression)
At 21x, we can still reasonably expect double-digit returns with some multiple expansion if growth estimates rise
Today at €636💵 $LVMH appears to be a decent consideration for investment (perhaps with a second tranche of accumulation if it gets to €585💵)
$MC $LVMHF $LVMUY
#stocks #investing
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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A sober valuation analysis on $LVMH 🧘🏽♂️
•NTM P/E Ratio: 19.97x
•10-Year Mean: 23.92x
•NTM FCF Yield: 4.87%
•10-Year Mean: 4.13%
As you can see, $LVMH appears to be trading below fair value
Going forward, investors can receive ~19% MORE in earnings per share & ~13% MORE in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $LVMH is a high-quality business
*Financials In Euros €*
BALANCE SHEET✅
•Cash & Short-Term Inv: €11.09B
•Long-Term Debt: €11.64B
$LVMH has a strong balance sheet, reflected by its AA- S&P Credit Rating & 16x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 16.6%
•2020: 10.2%
•2021: 18.9%
•2022: 21.2%
•2023: 21.0%
•LTM: 19.1%
RETURN ON EQUITY✅
•2019: 21.5%
•2020: 12.8%
•2021: 28.9%
•2022: 28.0%
•2023: 26.7%
•LTM: 22.8%
$LVMH has excellent return metrics, highlighting the company’s financial efficiency
REVENUES✅
•2013: €29.02B
•2023: €86.15B
•CAGR: 11.49%
FREE CASH FLOW✅
•2013: €2.99B
•2023: €11.59B
•CAGR: 14.52%
NORMALIZED EPS✅
•2013: €6.83
•2023: €30.33
•CAGR: 16.07%
SHARE BUYBACKS❌
•2013 Shares Outstanding: 503.22M
•LTM Shares Outstanding: 499.83M
MARGINS✅
•LTM Gross Margins: 68.5%
•LTM Operating Margins: 25.6%
•LTM Net Income Margins: 16.3%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~19% MORE in EPS & ~13% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $LVMH has to grow earnings at a 9.99% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2026 EPS growth over the next few years to be less than (10.95%) the required growth rate:
2024E: €30.12 (-0.7% YoY)* Dec
2025E: €33.57 (11.4% YoY)
2026E: €36.73 (9.4% YoY)
So, let’s assume $LVMH ends 2026 with €36.73 in EPS & see its CAGR potential (dividends included) assuming different multiples:
23x P/E: €844.79💵 … ~14.1% CAGR
22x P/E: €808.06💵 … ~12.1% CAGR
21x P/E: €771.33💵 … ~10.0% CAGR
20x P/E: €734.60💵 … ~8.0% CAGR
As you can see, we’d have to assume 22x for $LVMH to have attractive return potential & while 22x is certainly reasonable given its quality, we should be aware that $LVMH 10-Year average multiple (24.92x) is elevated a bit due to the valuation spike in 2020-2021
If we “normalize” the multiple & use the 5-year average period from 2014-2019 we have a mean of 20.83x 🔎
While $LVMH deserves to trade at a premium multiple due to its quality, I’m hesitant to rely on 23x because I want to ensure some margin of safety
It’s safer to rely on ~21x earnings & be pleasantly surprised with some multiple expansion (rather than have the risk of multiple compression)
At 21x, we can still reasonably expect double-digit returns with some multiple expansion if growth estimates rise
Today at €636💵 $LVMH appears to be a decent consideration for investment (perhaps with a second tranche of accumulation if it gets to €585💵)
$MC $LVMHF $LVMUY
#stocks #investing
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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Offshore
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Stock Analysis Compilation
Ensemble Capital on Illumina $ILMN US
Thesis: Illumina, poised for recovery with a divested GRAIL and new leadership, offers a compelling investment with its leading position in genomic sequencing and improving financial outlook
(Extract from their Q2 letter) https://t.co/a6VeqnApev
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Ensemble Capital on Illumina $ILMN US
Thesis: Illumina, poised for recovery with a divested GRAIL and new leadership, offers a compelling investment with its leading position in genomic sequencing and improving financial outlook
(Extract from their Q2 letter) https://t.co/a6VeqnApev
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Invest In Assets 📈
RT @InvestInAssets: Top European Quality Stocks 💎
Sweden 🇸🇪
- Evolution Gaming
- Atlas Copco
- Lifco
Italy 🇮🇹
- Luxottica
- Moncler
- Ferrari
Spain 🇪🇸
- Clinica Baviera
- Amadeus
- Inditex
Netherlands 🇳🇱
- Topicus
- Adyen
- ASML
Denmark 🇩🇰
- Novo Nordisk
- Coloplast
- DSV
What else?
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RT @InvestInAssets: Top European Quality Stocks 💎
Sweden 🇸🇪
- Evolution Gaming
- Atlas Copco
- Lifco
Italy 🇮🇹
- Luxottica
- Moncler
- Ferrari
Spain 🇪🇸
- Clinica Baviera
- Amadeus
- Inditex
Netherlands 🇳🇱
- Topicus
- Adyen
- ASML
Denmark 🇩🇰
- Novo Nordisk
- Coloplast
- DSV
What else?
tweet