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Recent exciting acquisition, giving them an entry into the commercial lending space. Decent dividend is well covered with a 23% payout ratio. Good place to be with an ongoing, growing economy. Credit quality is important in any recession. Long term, will do well.
In this environment, if you just put your portfolio in a drawer, you're going to be disappointed when you open that drawer. You have to be an active manager to add alpha. He's not interested in regaling guests at cocktail parties with stories of how he did well on high-beta names. He's in the business of taking wealth and growing it responsibly over time. For reasons to be optimistic about the 2023 markets, look at the Gauge under Insights on goodreid.com.
The semi space is volatile, so you do have to manage your exposure. You could spend a good long time of an economic cycle out of favour, and you could suffer if you don't get the timing right. EPS has dropped from $5 to $2. Lots of leadership trouble. Failed to hit promises. Not competing well. Value trap despite the dividend.
Alpha is the added value that you provide. If you add value to a particular benchmark, that's alpha. In a more technical way, it can be defined as the reward you gain off a risk-free asset, such as a government treasury bond. Think of it in the generic way, as just the additive amount. For example at his firm, they're trying to add alpha, which means they're adding to a benchmark. As a peer group, he uses a broad group of several thousand similar managers under the Morningstar umbrella. He wants to be in the high percentiles of that group. His firm's record is found at Performance on goodreid.com.
We're all faced with that as investors. What's the difference between being patient and being stubborn? There's a small difference, but it's of a magnitude that makes a big difference. He likes to get up each morning and look at the market with fresh eyes. Is a company working at solving problems that would provide a catalyst for the stock price to go up? You wait for it to work. If you feel that it's not working, at some point you move on. In the investing world, they say that an incredibly successful investor will be right about 70% of the time, and wrong 30% of the time. You want the companies that comprise the 70% to be up a lot more than the companies that comprise the 30%. Your losers may fall, but it doesn't hurt you too much.
Subscription based. Accretive technology. Around 90% market share in the space. Figma purchase caused stock to fall. PE in high 20s. Now $11 EPS in 2023, expects $18-19 EPS by mid-decade. Closely aligned with AI. Huge, bright future. No dividend.
(Analysts’ price target is $383.10)Average US house price is down only 3% from highs. Homebuilders are getting through this downturn quite nicely, and the homebuilders index is hitting 52-week highs. LZB will benefit. Less than 10x earnings, solid dividend, revenue will do well coming off supply chain issues. Yield is 2.56%.
(Analysts’ price target is $43.00)
High beta stock. Changed business plan. Spending $1B a month on the metaverse. Share buybacks, stock went up, but don't be fooled. Company today is not the one he bought, and that's a great reason to sell.