Bloomberg is dumb. At least on this topic.
OT: Stock and Investment Thread
- Thread starter RU05
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PRWCX is one of the best funds available today. Well, kind of available, since it is closed to new investors. I was thrilled to finally get access to it last year (as a T Rowe Price account holder with enough balance). We will continue to increase our allocation to this one as the years go on.
Man is this guy selling. He’s buying leveraged loans for brokers and software businesses, tells you the debt to enterprise value is really low. Doesn’t tell you that the debt to cash flow is nose bleed, and the cash flow figures are jokes, Look out when rising rates cause credit issues despite borrower performance. Also worth highlighting that about 70% of his fixed income holdings are junk rated.
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Software plays are a great idea since they have strong reoccurring revenue via subscriptions and have low risk of default, which was his point. He believes rates will be lower over the next 3-5 years, so he is managing for the long-term.
Buy it if you like. Software levered 8x adjusted cash flow, where 1/3 of the adjusted cash flow isn’t real, can create a coverage problem even if the borrower performs if the forward curve materializes. Good luck. Agreed good sector. Horrible capital structures. And long term doesn’t matter if you can’t pay your interest bill In 6 months.
As mentioned in the interview, he hasn't had a holding default in 16 years (his entire tenure as the fund's manager). Check out the funds portfolio and let me know if you see any red flags:
5-star gold fund, 2-time Morningstar Fund Manager of the year, nobody is perfect, but I assume he is more right than wrong.
Beware someone telling you they are a conservative fixed income manager when 50% of his holdings are rated B or lower, If I were to look at this guys record, I’d want to see what the percentage of his fixed income over time carried junk ratings and compare to today. And please provide your credit card information if you’d like me to review his portfolio, thanks.
Not that I don’t like Bloomberg, but always look at the statutory prospectus.
+1
Matches up to what Morningstar is citing. And of course, my T Rowe account says the same thing.
If you told me he invested in junk rated loans for the last 16 years to the tune of 70% of his portfolio, I’d agree. Of course, these are tradable loans that he could sell at a loss before a filing. So you could have trading losses on his book that technically aren’t credit losses due to default, all sorts of tricks guys play, and it’s kind of easy to do so with retail investors who don’t know what to ask or analyze. I suspect you’d see thats he’s moved further Out on the risk spectrum in a low yield environment. And if that’s right, the 16 year track record might not be as relevant as you think,
All that said, looks like fixed income is only 25-30% of his portfolio, so, yeah, if any of these loans go bad, you may underperform but not get wiped out, I’d agree on that. I just don’t like when someone portrays an air of conservatism in fixed income when 70% are junk rated loans,
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Why would you think he needs to do that? It's a 2/3 equities, 1/3 fixed/bonds asset allocation fund. The bulk of returns for the fund come from stocks.
As for tricks and increased turnover, that would be flagged by Morningstar. Seriously, if you don't like this guy, you probably don't like any fund managers. Which if that is your POV, we can disagree and move on.
Why would you think he needs to do that? It's a 2/3 equities, 1/3 fixed/bonds asset allocation fund. The bulk of returns for the fund come from stocks.
As for tricks and increased turnover, that would be flagged by Morningstar. Seriously, if you don't like this guy, you probably don't like any fund managers. Which if that is your POV, we can disagree and move on.
Look, it’s your money. if it were my money, I’d certainly do the basic work mentioned above. Prove that his track record with zero defaults over 16 years is from a profile of investments that are predominantly junk rated. If his mix has shifted, then that track record might not be as significant as you think. I know what is in his book that he calling Hugh quality, good sectors, recession resistant, unprecedented amount of debt, all floating rate, against highly adjusted cash flow figures, let me tell you, that has not been the case over the last 16 years. Good luck.
My money is doing just fine. From Morningstar:
Performance
T. Rowe Price Capital Appreciation’s performance record is nothing short of stellar. The fund’s Investor share class outpaced all of its peers in the allocation -- 50% to 70% equity category from lead manager David Giroux's June 2006 start through March 2022 and come out ahead of the Morningstar Moderate Target Risk category index by more than 3.3 percentage points annualized since Giroux stepped aboard.
The fund has delivered these eye-popping returns with remarkable consistency. It has outperformed its category in 75% of rolling three-year periods since Giroux’s 2006 start and beaten its category index 81% of the time, partially thanks to the index’s dedicated foreign equity stake. The fund has also consistently turned in excellent risk-adjusted returns. Since mid-2006, its three-year rolling alpha--a measure of outperformance adjusting for risk--was positive 95% of the time versus the category index.
Giroux has added value via stock selection, outperforming the S&P 500 by more than 1.5 percentage points annualized over the past decade. Giroux’s skill in picking companies may also help to keep risk in check during turbulent markets: Although the fund carried 0.7 percentage points more volatility than its category index over the past 10 years--perhaps attributable to frequent asset-allocation shifts--it lost just 70% as much as its typical peer during downturns.
Was this the documentary mentioned in the thread a while back? Or is there another one? For some reason, HBO is ringing a bell. Gotta check them out!
And he dumped Wells Fargo. But good to see him (or his managers) buying. Always can feel good long term buying at the same price that he does.
Recession? I don't think so:
Strong U.S. retail sales, manufacturing output boost economic outlook
Strong U.S. retail sales, manufacturing output boost economic outlook
Then it is time to buy TSLA. Those bears are as right as a broken clock! LOL.
Cost of goods increasing is not mismanagement. Supply chain slow downs is not either. WMT also reporting a trend of customers with fewer items in their shopping carts at checkout. Watch other retail leaders reporting this week and their forecasts for the remainder of the year.
Mismanagement:
Despite the strong top-line performance, a number of issues weighed on profitability. The list includes a combination of wage and fuel cost inflation that was compounded by an increase in container and storage costs. Sub-optimal execution on behalf of management was also to blame. They partially attributed the lackluster performance to how fast things moved in the back half of the quarter. You’ll recall that Russia invaded Ukraine a week after the company’s prior earnings release.
Jim Cramer on Tuesday said: “The execution here is so poor, it’s embarrassing.”
It remains to be seen if management can ultimately bring down some of the costs, pass some others through over time, and ultimately realize longer-term profit growth targets.
On the earnings call management said, “We’re committed to our 4% top-line growth and greater than 4% profit growth algorithm. Our strategy and mid- to long-term financial plans support that despite the turbulence we’re managing through today.”
That may be the case longer term, and management did take some time to discuss the benefits of their so-called flywheel of “mutually reinforcing businesses.” This quarter makes Walmart a show-me story as management must prove their ability to address input cost inflation and protect profit margins better than they did in the first quarter.
However, we aren’t very interested in waiting around for management to show us that they can turn things around. So we’re downgrading the stock a 3 rating. That’s reflective of our desire to sell the position on any rally in shares. We see better opportunities in this beaten down market in companies that actually reported fantastic earnings results.
CNBC Charity Trust (Cramer and several other CNBC investors). Very good POV on the miss.
Musk may ultimately prevail in this Twitter debacle, but I think he’s lost a lot of credibility and people are starting to realize he’s a f’in manipulative d-bag. I read something about his kids buying meme stocks and crypto for fun. Wouldn’t shock me if his tweets (cough, manipulation) resulted in huge trading windfalls for his kids.
Half of Joe Biden's Twitter Followers Are Fake, Audit Reveals
Billionaire Elon Musk has claimed that 20 percent of Twitter users are "spam/fake accounts" amid his ongoing takeover bid.
www.newsweek.com
Sparktoro audit LOL. Guess Musk donated a Tesla to Newsweek for that article. Can’t wait to see how this plays out.Half of Joe Biden's Twitter Followers Are Fake, Audit Reveals
Billionaire Elon Musk has claimed that 20 percent of Twitter users are "spam/fake accounts" amid his ongoing takeover bid.
Cramer and the folks on CNBC are fine. Great to hear numerous POVs. Don't be silly.
My favorite part about the whole thing is that Musk has been trashing the SEC for the longest time but now he needs their help investigating Twitter. LOLHalf of Joe Biden's Twitter Followers Are Fake, Audit Reveals
Billionaire Elon Musk has claimed that 20 percent of Twitter users are "spam/fake accounts" amid his ongoing takeover bid.
He'll say anything to get his way. He's always been that way.
I saw that dolt Cramer say this morning that all Musk has to do is ask the Twitter CFO and he will tell him the truth because he told Cramer the truth when he asked him a question once. LOL.
He's a trader and gets great access to CEOs. I also get value out of his (and the trust's team) POV on market trends.