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No. of Recommendations: 14
brief musing
had a client ask me for a cost basis on non-covered lot, and it turns out the snippet of a position was 1/16th of the sale amount (a 16 bagger over less than 10 years)
before you congrats to me consider that at 3% if I'd held this position then it would be worth more than 15m today (vs. the 1m I hold), and it is entirely plausible that I could have purchased this and left it alone, cause it never really deviated from the criteria originally set forth for buying it per Jason Doneville in 2010:

1 - high degree of recurring revenue (high barriers to entry)
2 - high degree of excess cash flow due to low CapEx requirements
3 - some sort of competitive advance which results in high margins
4 - management with a superb track record of acquiring bolt-on companies at attractive prices relative to their subsequent cash flows

(stock is Constellation Software)

the weird thing is
I don't think spotting companies like this is that hard
you can do this if you can read a cash flow statement and a 10k
what's hard is holding on to them over the long-term, at least for me
obvious now, but most of time you want to sit on your hands
or even DCA them
unless something really weird happens - esp. with number 4

instead, you can get caught up with the most irrelevant stuff
near-term valuation
temp downturn in organic growth
your own fears and regrets

if you pick stocks long enough this is gonna get you - the woulda, coulda, shoulda
but that doesn't do a thing if you don't figure out how to address this
was reading a piece from Whitney Tilson bemoaning how he
found some great stocks but never held them
so his track record wasn't successful
I mean, the Dolphins should have won the Super Bowl if they got Drew Brees
or they drafted Tom Brady
or they hired Bellicheck
or any number of maybe and what ifs
but what was predictive?
the things is, the stocks he mentioned as 'I got them early and should have held' were netflix, amazon, and ross stores

I thought the examples were bad ones - netflix doesn't generate FCF which is ok but it is weird for a biz to grow to such values unless they are involved in life-changing industry alterations (and sure, maybe netflix fits that, but you don't have to try this hard) or like amazon are involved in transforming the entire US economic system (good for you if you bot in early, but there was a degree of difficulty here that didn't exist in other things). Ross is better, and there are tons where that came from.

This got me to thinking that musings about missing things is absolutely irrelevant
anybody can do that in a happy markets - that's why you buy index funds, to participate in the growth of the economy, and there are plenty of winners in there
but it made me wonder what could be predictive in picking winners like this
i mean, obvious and simple predictive?

which lead to me to the above 4 points
and my own stupidity in not internalizing the message
I don't really treat stocks as companies as businesses
part of the reason I don't is cause I don't know a huge amount
about actual businesses themselves, esp. many I follow today
but if you keep it simple, then maybe holding shouldn't be so hard
but I often don't approach things this way

course, maybe this is too simple
maybe it isn't easy to find 10 baggers
maybe I'm deluding myself

But i like this quote in the recent ROP call (if you aren't familiar with ROP, look up a long term stock chart on it):

Laurence Neil Hunn Roper Technologies, Inc. - President, CEO & Director Because it -- sorry, yes. But the one thing I'd say is that it's a challenge that I just wake up every day thinking about. As we get bigger, the concept that complexity can creep in is certainly something that I spend a lot of time thinking about and how at every turn we can avoid that and really keep this thing simple, which is one, probably the single largest thing that Brian left for the legacy is that we -- what we do is just very simple, and we'll continue to do that going forward. And that's very top of mind.

anyway, just 2c
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