"When you say you are selling like you did with CSL to buy...

"When you say you are selling like you did with CSL to buy better priced opportunities, are you doing the same now?

@andy777

No, I'm afraid not - well, not in any major way, at least (the exceptions are additions to some microcap stocks - liquidity permitting; and while I do not typically invest on macro-thematic grounds, I am very bullish on energy so I've been building a Long Energy + Energy Derivatives exposure in recent months.)

This time is totally different to when I was selling CSL - during March/April last year.

Back then there were several companies - of equally good, financial pedigree as CSL, and some even better - trading at valuation multiples that were one-third, and even as low as one-quarter of CSL's at the time.

Because of CSL's excellent share price performance leading into Covid, for most long-term CSL shareholders, justifying selling and recycling capital into other investments means that those other investments have to be sufficiently attractive has to overcome the CGT impost that arises from the sale of CSL.

99% of the time these sufficiently alternative investments don't exist en masse but every now and then a crisis erupts out of nowhere which does make it a logical and wealth-creating thing to do.

The market's crash during Covid was such a time.
(They say one should never let a crisis go to waste.)

But unlike during Covid, when there was indiscriminate selling of a great many excellent businesses, today the situation is quite different: all the free money sloshing around the globe has resulted in a paucity of high-conviction investment opportunities.

But the chronic under-performance of CSL over the past 15 months - not just against superior high-quality companies which had been discounted heavily during Covid, when CSL wasn't, but also against even the broader market - had me revisiting CSL as an investment opportunity in recent days.

On a relative basis - compared to some of the other high growth stocks I follow (and some of which I own), CSL is no longer unambiguously overpriced. Which means that professional investment managers who are paid to be fully invested at all times, are likely to be attracted to CSL right now.

Trouble is, I'm not a fund manager who is paid to invest against a somewhat arbitrary index; so relative value does not matter to me. I'm concerned only in absolute value.

And on that measure, CSL still doesn't appear to me to be sufficiently undervalued on an absolute basis.

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