Ann: Trading Halt, page-249

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zaidi675

407 Posts.

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09/02/22

10:19

Post #: 59449784
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Originally posted by madamswer: ↑

"madamswer has read something about buying low p/e stocks and selling high p/e."

Not just read about it, but have been doing it for going on three decades.

And you keep baiting me about this, when it is the investment process of every valuation-based fund manager in the world.

So it's not some sort of unique, proprietary methodology that I've come up with; I've merely copied it from a great many others who have created untold wealth by doing so.

That you seem to find value investing to be so preposterous is quite bemusing given how universally it is applied right around the world - with great success demonstrated over long periods of time.

So why you have such an obvious objection to such an approach is quite bizarre.

In the two years since you have been casting aspersions about the perfectly normal, and quite common, approach of selling expensive stocks and buying cheap stocks, CSL (which two years ago was, recall, trading at valuation multiples that were multiples of standard deviations above the historical average) has under-performed the market by highly significant 59%.

And if you sold CSL to participate in the capital raisings being conducted in April 2020 by a number of the market's other pre-eminent companies, your relative outperformance would be almost 140%.

View attachment 4071281

These are all clearly non-trivial relative return figures.
(Even if one tax-adjusted the relative wealth positions would still be very different).

But by your hold-forever-and-never-sell philosophy, apparently there is never a valuation multiple too high for CSL which which cause you to sell, irrespective how attractive other investment alternatives might be.

So let me ask you this:

How much higher does CSL's valuation multiple need to be compared to Company XYZ (say, AMC, JHX, RHC or WES or some other similar quality business) before you would feel compelled to sell CSL?

Does the valuation multiple spread between CSL and Company XYZ need to be:

A. 30 P/E points higher?
B. 40 P/E points higher?
C. 50 P/E points higher?
D. More than 50 points higher?
E. There is no limit to which CSL's multiple would have to exceed that of investment alternatives which would cause you to sell CSL and to buy those alternatives?

Serious question.

.

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May I please seek your views on how you see the impact of CSL entering in renal with the new acquisition? Given the fact that CSL PE multiples are now approaching or almost around 40, will you be buying it at this stage? Given the hike in interest rates are going to continue, there is a good chance that CSL may approach further bargaining territory.

CSL Price at posting: $254.80 Sentiment: Hold Disclosure: Not Held
2 Upvote

0 Great analysis

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