Waiting Is the Hardest Part
Top down investing is futile, frustrating, and f….ed up, but you cannot ignore it.
All I want for Christmas is a clear path to 3% GDP growth so I can buy the very cheap cyclicals, but to get that I need the Big Beautiful Bill to pass. The version of the bill that came out of the Senate is very problematical, and all this Middle Eastern bombing is getting distracting.
The Middle East is a 4000 year old problem that cannot be solved. If you do not know the story of Abraham, Issac, and Ishmael, go back and read some Genesis. And then before you weigh in on what Israel should do next, be sure you know, Cyrus the Great, the battle Tours, the Crusades, the battle of Vienna, and the Balfour Declaration. Yes folks, it is always about knowing the history.
I worry about a fracturing of the Republican consensus on the BBB. If all you read is mainstream media, then you need to listen to some, Tucker Carlson, Steve Bannon, Dave Smith, and the folks at Breaking Points. The market thinks is the bill will pass in the end, but I have my concerns.
While I wait for Armageddon to happen, I need to stay busy so I went back to my friends at Barrow Hanley and make the following observations:
I can almost make a case for their 10th largest holding Qualcomm - QCOM - $154. This is a complex story because they are losing their Apple business, but have lots of stuff to replace it with. I missed my chance at several tech names in April, but this one is still out of favor. You have to give Barrow credit for digging into these difficult stories.
Barrow is starting a position in Fortive - FTV - $70. This is a spinout of the great Danaher - DHR - $196 - (too expensive at 26x). These guys are too crazy for me. They buy and sell businesses every month. FTV includes the company that actually invented PC technology, can you name it? That would be the old Tektronix, look it up.
I just cannot get excited about bank software, Fidelity National - FIS - $81.
I am very angry about missing Philip Morris International - PM - $184. I knew the story cold, but gave up because of complexity. Again Barrow deserves credit.
I am fascinated to to see Barrow using REITs like Public Storage - PSA - $291 and Prologis - PLD - $105
United Healthcare - UNH - $310 - is just too complicated.
CRH PLC - CRH - $90 - makes me think about my favorite cement stocks and rock crusher Vulcan - VMC - $261, but I am still waiting on housing
They do own WillisTowers - WTW - $298 - I like other insurance brokers more. They are all too expensive.
Barrow is jumping into Everest Re - EG - $334 - There is nothing more complex than reinsurance. I like others better. EG does trade around book value, but who knows what that means.
Barrow has been a big seller of Comcast - CMCSA - $35. They can only take so much pain.
There are a dozen interesting small cap names at the bottom of this Barrow portfolio. All of you that know what Knife River - KNF - $81 - does, go to the head of the class. They make cement in Bismarck, North Dakota. They are an interesting spinoff of a big utility company.
I spent a day on Qualcomm. I almost got there, but not quite. Can I dance with a small cap like Ultra Clean Holding - UCTT - $20? Not really. In tech, I feel like I need to know more. Maybe QCOM is all I can hope for.
In the mean time, all I can do is wait. It was fun to learn about QCOM. Every time I pick up a Barrow Hanley stock I learn something. You can find this portfolio at WhaleWisdom.com.
Before you buy Knife River, you probably should know a little about Cyrus the Great. Go find that sentence in another investment text. I wish you could ignore everything going on in the world, but that is not good investing.