Buffett has a long period of investment success, helping Berkshire Hathaway to provide an annual gain made up of almost 20% over several decades.
The best investor was not a share buyer in the last quarters – but he recently saw an opportunity.
10 actions that we love better than the swimming pool ›
Warren Buffett is not known to have followed investment trends. For example, last year, when the indices soar, the billionaire president of Berkshire Hathaway was a net of shares seller and built a record level of cash – the level of cash flows now at 347 billion dollars. As investors have shown their exuberance, in particular for technology and growth actions, Buffett remained on the sidelines.
It’s not exactly a surprise. Buffett does not invest massively in technological actions. It promotes the search for undervalued players in other industries and accumulate them before the rest of the market discovers their potential. He then sticks to these long -term investments, and this strategy was a winner for Berkshire Hathaway, helping her to offer an annual gain made up of almost 20% over five decades.
The increase in S&P 500 evaluations also represented a red flag for buffett because of its accent on the value. With the Ratio Cape S&P 500 Shiller reaching a level that it is only reached twice before, the actions looked expensive – and that means that Bargain Hunter Buffett did not do much shopping.
The caution of Buffett last year could have protected its portfolio from turbulence of the first months of the year, when the three main benchmarks slipped on the concern of the economic impact of the import pricing plan for President Donald Trump. All of this suggests that buffett movements could help us determine future trends and make better investments in the present. And now, again and with a particular stock, Buffett seems sure that he knows that something will happen.
Image source: The Motley Fool.
As mentioned earlier, Buffett has not been a big shareholder in recent times and has in fact been a net seller for 10 consecutive quarters. He even cut his positions in some of his favorites, as Apple And America Bank In the past year. But they always remain the best funds, in places n ° 1 and n ° 4, respectively.
Last year, stocks seemed expensive, the S&P 500 Shiller Cape ratio exceeding 37 for the third time in its history.
S&P 500 Shiller Cape Ratio Table
Data from the S&P 500 Shiller Cape report by Ycharts.
Explaining his investment intentions, Buffett wrote in a recent shareholders’ letter: “Often, nothing seems convincing; very We rarely find ourselves to the knees in opportunities. “”
In this context, without a large number of tempting opportunities, Buffett has always made convincing movements. One was the purchase of Pool Corp.(Nasdaq: swimming pool)The best worldwide distributor of swimming pool supplies in the third quarter. He followed this by increasing his position by 145% in the first quarter of this year to 1,464,000 shares. This is a small position for buffett to just under 0.2% of its portfolio, but its opening of the position then the increase of this suggests that it believes that something will happen. And knowing Buffett, he expects to come to come.
The swimming pool reached a hollow of evaluation and prices around the purchase of buffett last year, then climbed, but it has been retiring for again.
Pool
Pool data by Ycharts.
Income has dropped to the pool lately due to the drop in discretionary expenses and difficult weather conditions on the large markets in Texas and Florida. In the last quarter, net sales dropped by 4% and without including the impact of a tax advantage, the benefit by diluted action dropped by 29%.
It is important to note that pool activities can be injured by seasonal factors such as weather. As an industry which depends on discretionary expenses, it is sensitive to economic changes. So, this kind of slowdown is not alarming.
It is clear that Buffett took advantage of the drop in last year and this year to buy pool actions at a good price, and it aims to benefit by retaining long -term action as the economic environment improves and that Pool’s income resume. The company has something that Buffett likes, and it is a strong gap or a competitive advantage. It includes many elements, from the company’s solid distribution network to its relations with commercial customers who oversee the strict maintenance of hotel or gymnological swimming pools. In addition, Pool sells its own water test products and software.
All of this addresses recurring income for Pool – and this large portfolio of products and services would be very difficult to develop for a new rival.
There are therefore reasons to be optimistic that the weakness of Pool sales today is a temporary situation, and over time, this market giant will offer growth to investors who have had the patience to keep. Warren Buffett is perhaps one of these investors, seeing the opportunity now that this action is in the slump and understanding that something positive is on the horizon.
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Bank of America is an advertising partner of Motley Fool Money. Adria Cimino has no position in the actions mentioned. The Motley Fool has positions and recommends Apple, Bank of America and Berkshire Hathaway. The Motley Fool has a policy of disclosure.
Warren Buffett seems to know that something will happen was initially published by The Motley Fool
