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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: bruwin who wrote (62976)	12/17/2019 5:00:01 PM
From: Paul Senior	2 Recommendations Recommended By Jurgis Bekepuris Lance Bredvold Read Replies (1) \| Respond to of 78774

Yes, its in the nature of these companies that they don't make much money on each sales dollar (low net income margin). Otoh, their sales are humongous and generally growing. And their sales are over a diverse number of items. And having a lot of repeat sales. One has to ask what is the probabililty that something will happen to these companies such that NI declines or disappears and never comes back? Could there be anyone else on this board who would use low margins as a reason for not ever investing in these particular businesses and be happy about it? Jeez, there are plenty of people who've gotten rich buying and holding Walmart and Costco. Maybe Best Buy too after its revamping. Mr. Buffett has said one of his biggest errors was not buying Walmart when he looked at it for a substantial investment. It's been reported recently that Charlie Munger, a director of Costco, has increased his Costco shares. It's apparently not known whether that's due to options or vesting of restricted units or something else. The thing is though, these additional acquired shares come at a time when Costco is near an all-time high, which would seem to indicate a still bullish view by Mr. Munger. A criticism of Buffett is that because he's a pal of Munger, he totally missed/overlooked buying Costco when he could've and should've bought it, his being on the inside track (talking with Munger), or at least being quite aware of Costco progress and prospects. The mistake being he had $Billions to invest, and apparently never touched Costco. One buys what one believes will make one money, and passes on those stocks that one believes won't or that don't fit one's criteria. Which is fine. These stocks are not for you (or Buffett apparently). ok. The actual stock performance of a couple of these stocks over a long time though seems to show your negative opinion about low profit margins overlooks some good investing opportunities.

To: bruwin who wrote (62976)	12/17/2019 10:32:34 PM
From: Spekulatius	2 Recommendations Recommended By Jurgis Bekepuris Lance Bredvold Read Replies (1) \| Respond to of 78774

Some of these retailers can generate great returns on relatively slim margins but having high inventory turns (high sales /sqft or invested capital) yielding a high ROI. Costco is a prime example of this. They run on slim margins, by design and the earnings are basically coming from membership fees. Customers spent a lot of money in their strokes, because the prices and the quality are great and perhaps also to make the membership fees worth it. It’s a flywheel effect. Then there is a fact that retail scales. It’s basically ally just a matter of duplicating stores and the distribution system. So once a winning combination is found, it can run very far. That’s why retailing has few big winners and a lot of losers.

To: bruwin who wrote (62976)	12/18/2019 9:47:15 AM
From: Madharry	Read Replies (3) \| Respond to of 78774

as a consumer it seems to me that costco does a lot of stuff right. They have items that i love that i cant anywhere else. althought most of the stuff isnt cheap it seems fairly priced. the food is fresh and pretty cheap. I never had an issue returning anything. The annual fee more than pays for itself with the discounts i get. of course it helps that its less than 3 miles from my house too. My major positions are softbank and bidu and axu, which to me is an option play on silver. I just opened a position in Burford Capital. A litigation finance firm in london whose stock cratered after Muddy Waters took a short position and castigated the firms valuation methodology for its litigation claims. Both the Burford CEO and Carson whatever subsequent went on CNBC to defend their positions. I like the business model and this seems like a good entry point.