Meryl Witmer Baron’s Roundtable Half Year Interview

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Meryl Witmer Baron’s Roundtable Half Year Interview

Meryl Witmer Baron’s Roundtable Half Year Interview full piece here

Witmer: When the Roundtable met on Jan. 11, the S&P 500 was at 1923. It has risen about 9% since then, but my feeling hasn’t changed. Back then, I thought fair value was 5% to 7% higher. The stocks we know well are pretty fairly valued. In February, when stocks gapped down, there were some great opportunities to buy. Today, there aren’t tons of bargains. I expect the market to be flat between now and year end.

That should make for a dull year.

Seth Klarman Describes His Approach In Rare Harvard Interview

Seth KlarmanIn a rare interview with Harvard Business School that was published online earlier this month, (it has since been taken down) value investor Seth Klarman spoke at length about his investment process, philosophy and the changes value investors have had to overcome during the past decade. Klarman’s hedge fund, the Boston-based Baupost has one of Read More

We have a good amount of cash because when stocks reach our sell targets, we sell. But I like Wyndham Worldwide [WYN]. I recommended it at the 2014 Roundtable. Wyndham has done everything we thought it would do. It increased its after-tax free cash flow to the level we expected. Management shrank the market capitalization by buying in shares right around the level we expected. The stock went from $70 to $90. Now, it is back at $67. Wyndham has 113 million shares outstanding, compared with 132 million the last time I recommended it. The market cap is $7.6 billion.

What explains the stock’s round trip?

Wyndham is a lodging company. The market is overly concerned about the impact on Wyndham’s business of Airbnb and the hotel cycle. Wyndham operates in three business segments—hotels, vacation exchange, and time-share. It is the world’s largest hotel franchiser, with more than 7,800 properties, mostly in the economy and mid-scale segment. This segment has consistently generated 25% operating profit margins and grown by 7% to 10% a year through a combination of new franchisees and modest price increases.

At the higher end of the market there has been a lot of building. But Wyndham is somewhat insulated from those head winds, relative to companies that serve the luxury market. The economy and mid-scale markets aren’t seeing the same increase in supply.

Full article here

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