Jason Zweig has produced another excellent column exposing truths that hide in plain sight. If you want to buy a dollar of free cash flow for less than one dollar, you are probably not going to find it among the companies that everyone wants to own. Instead, you will need to hold your nose and pick among the “profoundly unpopular” and hold on (or buy more) when they become even more unpopular. In the long run, it works. It works largely because most people cannot do it.
Among my clients’ ten corporate exposures is a gambling-related company (and it’s also a spinoff) and a defense-related company (a spinoff)–the “bets and bombs” components of the “butts, booze, bets and bombs”. PAR previously invested in the butts (UVV) and booze (TAP) and other bomb (NOC) components. It is much easier to find a Margin of Safety in these areas. Enjoy:
I think everyone is intrigued by the chance that you can get a lot of money from gambling, and that’s why it is such a problem. It’s important to understand that it’s completely by chance, no luck is involved. But great article.