Here I go again. I just made another stupid mistakes. Every single time I make this mistake, I tell myself, that I would not make the same mistake again but here I go. To my defense, I have been getting better at it but it was not enough 👿
What was the mistake?
This was my mistake.
Missed opportunity on 20% of return today. Yup. I am laughing at myself because of I was really really close to buy it. I was going to initiate a $10K position and another $10K to be in full position on the company. I have been watching this company for months and it was coming down nicely from around $250 to $220. I bid at $220 but it did not go through for a couple of days and all of a sudden the company released a news that it will acquire a company @$1.3B. The company being acquired has revenue of $570M and EBITDA of $155M. So its basically buying it at less than 10 times of multiple which is amazingly reasonable and the company will only incur $5M of very purchasing cost.
CCL has been an excellent consolidator. Its skills at integrating those subsidiaries have been incredible. Look at the EPS growth for last 4-5 years. It grew by almost 300%. Not to mention its free cash flow growth. The management has been superb at allocating its capital as well. High ROE of 20ish. Fairly reasonable debt level. Strong moats with market power. The industry is very defensive. Never lost a penny for last 10 years including 2007-2008 market crisis. That tells a great story.
Unbelievable. What a timing. I should have just purchased it at $223-4 at market but guess what! I wanted to save $130-160 which resulted in missing $2,300 gain and probably more. XXXX!!!
I have been a quite patient investor. I typically bid my target companies at my target price and just wait until the bid gets executed. But waiting for stocks to become cheap do not really work on super high quality businesses. Phillip Fisher (Warren Buffett’s investing inspiration) said
I believe that the greatest long-range investment profits are never obtained by investing in marginal companies.
He believed in quality and I have been telling it to myself for a while ever since I made similar mistakes in the following companies not so long ago.
The first mistake was MTY food group where I missed 60% of return about 1 year ago. I remembered bidding at $29-30 which did not get executed then it just jumped by 30% or so in one day because of its news release of acquiring US based fastfood franchises. MTY group’s CEO is another super top quality, highly skilled and ethical (less greedy, more business building) business personal and he has been amazing at integrating many subsidiaries. I should have just bought it at market around $30-$33. Stupid. There goes my lost opportunity of a couple of grand.
The second mistake was Tucows, a Canada’s Godaddy. Superb management with amazing business prospects.
I bid at around $35 in August and it keeps breaking records after records. Missed another 40-50% gain on this.
This should be your takeaway.
If you find a superb quality company and its valuation is reasonable (let’s say 18-20 of P/E), do not wait until it gets cheaper. Just buy it and do not be cheap like me trying to save $100-150 by bidding 0.5% cheaper than the market. Because the lesson that you will learn will be quite costly if you are cheap like me. 🙂
Trust me I am slowly getting better at not making the same mistakes again and you should be too if you have been following my blog.
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