Amazon, Microsoft, Meta and Alphabet are going wild with R&D and CapEx spending.
These businesses were infamous for a few attractive attributes:
1. They were asset and capital-light (but with enormous CapEx, that is no more)
2. They had amazing return on capital and cash conversion ratios (but with enormous CapEx, that is no more)
3. They were internally financed (requiring no debt) and even had excess cash flows to return to shareholders (but with enormous CapEx, that is no more)
Yesterday, Warren Buffett described investor Chris Hohn's performance to the Financial Times as "Exceptional"
Hohn's total returns since 2004 are 2,924%. A brief excerpt on Hohn's strategy:
"Like Buffett, Hohn focuses on big companies with powerful moats that help them stave off competitors. He also holds his positions for an average of nine years, a timeline more akin to a private equity firm than a trader. But unlike Buffett, Hohn spurns a whole host of industries, including banks, utilities, media and insurers.
Hohn says there are perhaps just over 200 companies in the world that are investable and, because of the uncertainties fomented by AI and climate change, that figure is decreasing."
Hohn runs a concentrated portfolio and his key factor for any company is pricing power.
Good Morning from Germany, where the road to socialism is paved with ever-rising govt consumption. Since 1999, state consumption is up 63%, while GDP has risen only 31% and capital investment a meagre 16%. The public sector keeps expanding, but the investment base is stagnating. Germany is becoming less of a market economy and more of a state-led redistribution machine.
Crypto stocks. We may be headed full-on to a Snow Crash cyber-punk future with no long-term personal relationships and digital value embedded in all of us directly correlated to the value provided to a society that increasingly devalues humanity. This may be the point in time that needs to be stopped from going forward by some future being. #snowcrash