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The Science of Hitting  Alex

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  • Totally has 1530 visits
  • "Ted Williams described in his book, The Science of Hitting, that the most important thing is to wait for the right pitch. And that’s exactly the philosophy I have about investing." - WB »

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  • Dr. Paul Price 2016-06-07 15:17
    I wrote a full-fledged article on MKL today that will be published tomorrow on Real Money Pro, a subscription only site.

    If you give me your e-mail I will send it to you privately.

    Paul Price
  • fletchercole 2015-06-09 07:33
    The Science of : Fletcher, Didn't see your friend request (from a few months ago) until right now - sorry about that! Thanks for the kind words and hope to talk some No problem.  The notifications for the gurufocus site can be hard to pay attention to sometimes.  I usually focus on the articles!  I don't write/contribute on gurufocus, but occasionally like to "friend" contributors that I feel are well-worth reading.  Thanks for your contr ...
  • mike.crew 2013-01-24 09:54
    Science:
        I have read your comments and analysis with great interest. I am a value manager with a smallish portfolio ($163 mill) and would be interested in establishing a dialogue. If you are interested drop me a line at [email protected]
                                   Thanks Mike
  • leycrjb 2012-10-26 02:41
    The Science of : I wasn't pointing to the increase in allowance for doubtful accounts as the explanation - that's what the Securitization Program part was about. What Oh I see. No worries. I just find the massive increase strange, even moreso that they don't explain it at all. I guess they've been giving their customers longer to pay them in order to keep their business, but I'd have thought there'd be a sentence somewhere in the 10-k to explain that. ...
  • leycrjb 2012-10-25 05:29
    The Science of : Take a look at the May 2009 Securitization Program in the 10-K filed in March 2010; in that instance, the allowance for doubtful accounts matched (rou
    I don't understand. Why should an increase in the allowance for doubtful accounts lead to an increase in receivables?

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All The Science of Hitting's Activities

  • The Science of Hitting commented on The Science of Hitting's article 10-16 13:55
    The Importance of Consistency
    In my last article, I briefly discussed Netflix Inc. (NFLX). I think it might be useful to circle back to that discussion to address the main point I...
    View all 8 comments
    The Science of Hitting 10-16 14:55
    • Stephenbaker,

      I think that's a great answer. 

      We're getting to the heart of the matter here. What's the intrinsic / fair value of a company run by someone you view as one in a billion who is likely to be around for decades? The answer is A LOT more than whatever price is currently attributed to that security by Mr. Market (assuming anything close to "normal" valuation metrics). On top of that, you have a HUGE benefit from the tax deferral over years, decades, or even permanently (step-up in basis).

      "Any company that has no limitations, can invest (or divest, as the case may be) in anything, and is run by two of the smartest investment minds of all time deserves far more credit that it has ever received." - Yes!

      Now to the other side of the coin: (1) how many of those exist, (2) that you can spot in advance, and (3) that you can hold for 20+ years? Our number is getting smaller (of couse you only need 1-2 in a lifetime). Then we have the valuation issues you mentioned (and know well): in 2009, MSFT shareholders were looking at a position that was down >50% from where it had been a decade earlier. Even today, those investors are only up ~1/3 cumulatively (before dividends) from 18 years ago. And I don't think that's the whole story: I'd argue hiring Satya Nadella was very important. Said differently, it could be a lot worse than it is right now. 

      What does any of that mean? I know I can't predict price movements. Was there good reason to sell Microsoft in late 1999 on valuation? I'd say yes. But I would also have said yes a few years earlier (1997 - 1999) and missed out on HUGE gains in MSFT.

      So the summary of that long answer may be that I don't have a great answer! :)
  • The Science of Hitting commented on The Science of Hitting's article 10-16 12:38
    The Importance of Consistency
    In my last article, I briefly discussed Netflix Inc. (NFLX). I think it might be useful to circle back to that discussion to address the main point I...
    View all 6 comments
    The Science of Hitting 10-16 13:38
    • Stephenbaker,

      Thanks for the thoughtful response. Here's what I would ask: with everything you've said, how do you define fair value? To me, it's the price at which I think I could conservatively generate a certain level of returns over a long period of time (with that level having some combination of absolute and relative hurdle rates).

      Here's my follow up: if you don't sell stocks when they sell at a premium to your definition of fair value, when should you sell them? It sounds to me like you think the answer (in certain situations) is very rareful (or maybe never); to use a different example than NFLX, you could argue what what Amazon (Bezos) did with AWS over the past decade shows that the company deserves to trade at a significant premium to your estimate of "normal" fair value to account for businesses that may not even exist until 2020.

      My concern is that this becomes slippery - are there any prices where AMZN is a sell under that framework? How much of a premium should I apply for intangibles such as the future genius of Bezos and the culture at AMZN? I'm more skeptical than most in this regard (what I really love is when I'm able to buy a stock where none of the optionality is priced in). This seems relevant here: "As value investors, our crystal ball gets fuzzier faster than it does for other people."

      I look forward to your follow-up. 
  • The Science of Hitting commented on The Science of Hitting's article 10-16 08:28
    The Importance of Consistency
    In my last article, I briefly discussed Netflix Inc. (NFLX). I think it might be useful to circle back to that discussion to address the main point I...
    View all 4 comments
    The Science of Hitting 10-16 09:28
    • Asheesh,

      No question that Netflix is a great product, that they've disrupted their own business, etc. The attractiveness of the stock at ~$200 per share is another question. Thanks for the comment!
  • The Science of Hitting commented on The Science of Hitting's article 10-16 08:27
    The Importance of Consistency
    In my last article, I briefly discussed Netflix Inc. (NFLX). I think it might be useful to circle back to that discussion to address the main point I...
    View all 3 comments
    The Science of Hitting 10-16 09:27
    • Jtdaniel,

      One quick note that I think is worth remembering: there's an important distinction between being overpriced and being vulnearable to Mr. Market's unpredictable mood swings. Most people are focused on the mood swings (which is silly if they're upredictable) - and even worse, draw conclusions about the attractiveness of the security based on those mood swings. I'll stop myself from saying more because I'm currently writing an article on this topic. Thanks for the comment!
  • The Science of Hitting commented on The Science of Hitting's article 10-11 06:08
    'Moneyball', FAANG and Buying Opportunities
    For me, writing is like riding a bike. When I am putting together a new article every few days, the ideas seem to come easily. On the other hand,...
    View all 10 comments
    The Science of Hitting 10-11 07:08
    • Spunia,

      I'm not sure! But if you own it I hope you have a better answer than I do :)
  • The Science of Hitting commented on The Science of Hitting's article 10-05 11:13
    'Moneyball', FAANG and Buying Opportunities
    For me, writing is like riding a bike. When I am putting together a new article every few days, the ideas seem to come easily. On the other hand,...
    View all 8 comments
    The Science of Hitting 10-05 12:13
    • Stephen,

      Agree 100% - for the truly great businesses with sustainable competitive advantages (meaning decades), almost always underpriced; that's really what I think the investors cited above are saying. We are on the same page: that's a great way to get rich long-term :)

      UA is a great example of sentiment changing violently - and that's when the people who were "long-term" investors at ~$50 per share aren't so sure anymore at $15 - $20 per share. Just to clarify on UA, it's still a very small % of my portfolio. Like yourself, there are aspects of it that I think are in the "too hard" pile (don't want to be overconfident). Some of those hurdles become more bearable as the price keeps falling. Hopefully single digits are on the horizon! :)
  • The Science of Hitting commented on The Science of Hitting's article 10-05 10:31
    'Moneyball', FAANG and Buying Opportunities
    For me, writing is like riding a bike. When I am putting together a new article every few days, the ideas seem to come easily. On the other hand,...
    View all 6 comments
    The Science of Hitting 10-05 11:31
    • Thanks Stephen. And I agree with your comments, but would note that people become much more comfortable buying into that philosophy after eight years of multiple expansion. We'll see if they're saying the same thing when Mr. Market is less kind. UA is a great example: people were confident in the long-term thesis as long as they're making lots of money; now that it has gone the other direction, they are nowhere to be found. Thanks for the comment. 
  • The Science of Hitting commented on The Science of Hitting's article 10-05 07:32
    'Moneyball', FAANG and Buying Opportunities
    For me, writing is like riding a bike. When I am putting together a new article every few days, the ideas seem to come easily. On the other hand,...
    View all 4 comments
    The Science of Hitting 10-05 08:32
    • Snow,

      Fair point. The distinction you make is important: the investors you called out are clearly saying that they don't have a sell point. They want to buy and own great businesses for a long, long time. That's a lot different than someone who says a stock has moved past their sell point, but it's just too painful to let it go and miss the next few points higher (a sentiment I can certainly appreciate). Said differently, I can see the logic in both paths - as long as you stick to your approach. Thanks for the thoughtful comment!
  • The Science of Hitting commented on The Science of Hitting's article 10-05 07:28
    'Moneyball', FAANG and Buying Opportunities
    For me, writing is like riding a bike. When I am putting together a new article every few days, the ideas seem to come easily. On the other hand,...
    View all 3 comments
    The Science of Hitting 10-05 08:28
    • Maurodejesus,

      I think Alphabet is interesting (and the track record they've put up is obviously stellar). It's not in my wheelhouse at this time, but I wouldn't be surprised to see the stock do quite well over the next 5-10 years. Thanks for the comment!

       

       
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