Monthly Archives: January 2024

Business Articles, Value Investing

Current Yield of Brown & Brown Stock?

Computation of Current Yield for $BRO

When forming the computation for the Current Yield of any Stock or Bond it’s necessary to understand what Current Yield Means and “Why we use this measurement of Yield?” “According to the Financial times: Current Yield does measure and examines the current price of a bond or stock, rather than looking at its face value. Current yield represents the return an investor would expect to earn, if the owner purchased the bond and held it for a year. However, current yield is not the actual return an investor receives if he holds a bond until maturity.”

Black Rifle Coffee Company $BRCC : NO DIVIDEND

I wanted to do an actual Current Yield computation of one of my investments to demonstrate the importance of minding your investments. While searching I came across something that truly raised my eyebrows! I am astonished that my SOF Veteran Brothers over at $BRCC Black Rifle Coffee Company has an annual Net Revenue in December 2023 175.4 Million. That is 30% higher YOY than last January. I will be watching closely as time moves on this year. If I see additional movement in the earnings later? This may be placed on my Defensive list. I am also astonished BRCC has so little Shares outstanding on it’s Balance Sheet! Only Sixty One Million Nine Hundred Sixty Four and One Hundred Fifty Seven shares outstanding. BRCC does not pay a cash or stock dividend. So this was in observation only.

The Computation of “Current Yield”

The Stock I am choosing for today Current Yield Computation is Brown and Brown Insurance. Amazingly B&B has seen 30 years of increased Dividends! That’s incredible. Making it certainly a stock that does pay a healthy Dividend. According to Brown & Browns 10K the Company’s Outstanding Shares equal Two Hundred Seventy Nine Hundred Million, Nine Hundred Thousand Shares Outstanding. (279,900,000.)The Current market price of the Stock is: Seventy Six dollars eighty eight cents. $BRO $76.88. Wikipedia say’s “Brown & Brown, Inc. is an insurance brokerage firm, specializing in risk management. Headquartered in Daytona Beach, Florida, Brown & Brown has 450+ locations worldwide”. And currently has an annual revenue of 3.051 Billion. They pay an Quarterly Cash Dividend of $13.00per 100 shares.

So let’s find the Current Yield of Brown and Brown? With all the information provided we need to get back to our basics and decipher “What exactly Current Yield measures?” Current Yield measures the Annual Dividend divided by the Current Market Price and equals the Yield of the Investment. Our computation should look like: We take the $13.00 and divide by 100 equal .13 per share. Then take Annual Dividend $0.13×4= Annually dividend of $.52c. Then we divide our .52 by Current Stock Price of $76.88 which equals after all the math is done? = .676 or a( .7% Current Yield). This is our Current Yield explained for Brown and Brown.

I do hope you learned something in todays post? It was fun to write, and breakdown all the different elements to the computation of Stock Brown and Browns Current Yield. I needed a little practice for CY for my Investment Advisor curriculum. And thought writing an article would help me in ths area. I appreciate you stopping by to read this small Fundamental Analysis of $BRO.


Godspeed

JS

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Business Articles, Investment Vehicles

Treasury Inflation Protected Securities (TIPS)

What is (TIPS) Bonds/Fixed Income and How do Investment Advisors, Investment Banker, Stock Broker Professionals Calculate TIPS Payments?

Very interesting Topic has come up on my Study Plan this week inside the Fixed Income topic and Investment Vehicles. This post will go on to explain and demonstrate exactly “How” and “What” Treasury Inflation Protected Securities are used for as Investment Vehicles and the math that we use to calculate the Payments.

To make this simple according to the United States Treasury “(TIPS): are marketable Treasury securities whose principal amount is adjusted for inflation. They were first auctioned in January 1997 after the market expressed a strong interest in the inflation-indexed asset class. In 2009, 20-year TIPS were discontinued in favor of 30-year TIPS. Treasury now offers 5-year, 10-year, and 30-year TIPS.”

TIPS are used in Investment Portfolio’s for the purpose of staying ahead or keeping pace with inflation happening on the Consumer Price Index. The following article is “How Investment Professionals calculate and do the math for TIPS for your Portfolio. But first let’s watch more for The Money Guy Show explaining TIPS and How they are bought and used by Retail Investor and Investment Management.

TIPS are not just another Investment vehicle we use in Portfolio Management or as Investment Fund Managers. We must be highly selective on what make since at the time when we are building Investment Portfolios. Like other Treasury securities, TIPS are exempt from state and local tax. But! The TIPS interest and income on the principle are still taxed at the Federal Level for that year. Please have your Investment Counsel or Investment Advisor give you more information related to the Taxation of your own Investments. This post should not be used as Investment Advice and is strictly a informative guide to math of TIPS.

How to Calculate Treasury Inflation Protected Securities

It’s true when calculating TIPS that there is a part of this method that does involve compounding of the Coupon Rate and the Principle Semiannually. This is how we Make the Math Make Since. You need to know first, That we use the Nominal Yield as the Coupon and we also use the Principle value for our computation/calculations.

Let’s say for instance we have (TIPS) that pay’s 6% annually and then Inflation Rate is 4% for the next 3 years? Here is what happens Mathematically and how we see this Investment Vehicle work and keep pace with Inflation.

Let’s say you bought the 6% TIPS BOND and the Inflation Rate is 4% for the next three years.

You first need to understand the Coupon/Nominal Yield of 6% will be paid in two installments of 3% semiannually. And the 4% will be compounded and paid on the Principle of the Bond.

BOND is $1000 at par.

6months pass by… We are paid as the Bond Holder $1020.00,(2%+1000=1020.00) the first semi annual Dividend we are paid is $30.60.

6months later? We are paid another 40.20. Which now added brings our Bond Principle to ($1040.40). Our Second semi annual Dividend paid to us is $31.21

Year 1 Complete.

Year 2 after 6 months We are paid on the Principle and now Principle increases to (1,061.21). The math to get to this number is (1,040.40×102%=1,061.21) Our first Dividend for this year is paid to us $31.84. How we arrive at this dividend number? We take 1,061.21×3%=31.84

Six Months later our Principle is paid again (1,061.21×102%=$1,082.44) Our final semi annual year 2 Dividend is paid out. (1,082.44×3%= $32.47)

Year 3, six months pass and our Principle is paid (1,082.44×102%=1,104.09) Our first year 3 Dividend is paid out (1,104.09×3%=$33.12)

Six Months later our final year three semi annual Principal is paid (1,104.09×102%=1,126.17) Our final year 3 Dividend is paid out (1,126.17×3%=$33.78).

The Math is clear and so is the method we use to calculate (TIPS) Treasury Inflation Protected Securities. It’s easy, clean math. If you had trouble calculating the math here? Please feel free to email me and I would be happy to walk you through the math in a Video. You may be wondering why I wrote and posted this? Well truth is? I love this stuff and do it for fun. I know I am slightly bizarre. But in all fairness Mr. Bill Gross who is a fellow Navy Veteran and Bond Bad Ass who built the Bond Company PIMCO is also a life long student of Fixed Income and Investing Wisdom. Please do feel free to watch this video Documentary of Mr. Gross. It’s certainly is worth the watch!

However the proof is in the numbers. And rolling up your sleeves and learning new things is the backbone of what makes a Great Investor and Investment Professional. I hope you enjoyed todays post and learned something. Thank You for stopping by.

Godspeed

JS

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Business Articles, Investing, Value Investing

2023 Annual Letter & Investment Performance

The following post is my personal Investment Portfolio’s 2023 Performance and How I achieved a 19.9% Real Rate of Return. This in depth investment post will also include incredibly in depth personal thoughts, and thought processes from my Education as a Value Investor from this year. It’s likely to surely strike a chord with many out there who are in the Investment Management, Family Offices to the Entrepreneurial space. Thank you for spending a few minutes reading my annual Investment Notes. Let’s begin.

It’s been a good year, I learned a lot more about being a Investment Portfolio Manager and what it takes to build your skills as a Value Investor and as Howard Marks would share “What is the most important thing?”. With all the distractions in this world working against us and our Investment performance? I still managed to pull off a great victory. Achieving a stable 19.9% Real rate of return for my personal Investment Portfolio. As I posted to the Value Investors I am connected with? I shared, “I will take it!”

This post will be about my personal Investment Portfolio and I will take you trade by trade “The Good and The Bad” and show you how I ended up with a stable 19.9% Real Return at the end of the year.

Charlie Munger May G-D Rest His Soul, was right! “There are only a three ways a smart person can go broke: Liquor, Ladies, and leverage.”

-Charlie Munger (Jan 1st 1924 – Nov 28,2023)

In January 2023 I wanted to begin Earning and training a Series 65 Investment Advisor/Investment Fund Manager Course. This career move will pay massive dividends in my life. And already is beginning to as I write this. There are about two dozen Investment Professionals on Wall-Street watching me closely. Along the way I have developed attracted a little community of Commercial Real Estate Brokers as well. I am positive they will be awesome to know as well. But back to studying as a Investment Advisor Rep. It’s true there have honestly been times I have experienced complete and embarrassing failures. Like failing practice tests. And then times I have overcome obstacles and demonstrated incredible resilience. If I am being honest? Sometimes because progress is slow? I feel absolutely Retarded! LOL It feels like my brain is not absorbing the content I am reading. It’s incredibly frustrating. But you put the book down. And the next day at the same time? You begin studying again. It’s only a matter of weeks before I am able to officially say I conquered this latest stepping stone.

Militant discipline, I use? Is precise and plainly works. When you feel your unable to continue? You stop for a break. Then get back after it. And then you feel better. Because you begin to internalize the information and content your supposed to absorb. I do admit I have had to learn to forgive myself. A. Because I have had a Massive Head injury while serving in the Military. And B. Because my Metabolism Illness/Disability plays havoc on my Body and emotions at times. And this does cause my brain to have concentration issues on some days. But as one of my Veteran Brothers from the Army Ranger Special Operations community always tells me after a failed evolution? “Lets just Keep Rangering On Doc!” And thats the key to learning in life! Wether your learning as a Value Investor. Or as a Competent and Dangerous Investment Portfolio Fund Manger. This Discipline just makes you a Bad Ass in general. You just keep marching forward regardless of your repeated failures.

A Foundation of Conservative Investments

There have been many ups and downs during the 2023. Most people were afraid of full on Recession and others were very Greedy riding the never ending train of the Bull market. But when I began in January 2023 and opened a new Brokerage Account to build a new Experimental Value Portfolio, I was reading Seth Klarman’s famous book “Margin of Safety” just one more time. Because admittedly there is so much in his book that I learn something new as I go deeper into his Books Lessons. And I feel that can be said in life in general. We all start off from a place of sheer ignorance to finding which direction makes since. I must share I am not much of a Speculative Investor. I like to keep my foundation very Conservative when investing. So that is why the First Stock I bought in my portfolio was a Deep Value Real Estate Company “Howard Hughes”.

Buying Howard Hughes?

After doing a Deep Dive, and considering the Management and reading the Annual Report or 13k? This is a great company that is being discounted in the Market because of the fact it is a Real Estate Development company. All my research told me it’s going to be a great investment. Little did I know in later in February? Famous Investor Joel Greenblatt made the same call. And posted inside the Value Investors Club website, which I am a member of, that he too has taken a large position in this undervalued Company. After learning this? I knew I was on to something. I guess it does help that Bill Ackman is the Chairman of the Board. This was another deciding factor. 100%

Insight Enterprises

I have been a long time Investor in the Company Insight Enterprises. So it would seem nautural that I would add this incredible little IT company to my Portfolio’s foundation. The companies management are genuinely “Truly Fantastic!” and I revere the Brothers who started as Entrepreneurs and built this incredible Company. Fact. The continued value of this company speaks for itself. And I am pretty sure just like Berkshire Hathaway it will be foundation for many Investment Portfolios to IT Professionals Retirement Accounts. It’s just that damn good. The end.

Pershing Square Hedge Fund

Im pretty sure everyone knows by now “How much I admire Bill Ackman as a good man and community leader.” I was going through a very dark time when I watched Bill’s Father’s “Larry” Career Leadership Award Ceremony and listened to Bill and Larry talk about life as a Entrepreneur and more importantly. Larry’s entrepreneurial Journey as a Mortgage Broker in New York City. It really brought some direction to my Emotional turbulence as a Entrepreneur during that time. I was really going through just terrible things from my illness. Made me question my sanity and my direction as a Entrepreneur. But! Larry and Bill straightened me right out. And for the fact Bill has personally been very generous with me? Pershing Square was a Buy! I really did not care about the value. I just knew I had to Support Bill. I am glad I did. Bills Fund is a Value Investing Powerhouse this year. If I may leave you with one thought? Invest in the People you genuinely Adore as Mentors and Community Leaders. The good faith will always come back to do nothing but good things. Live by the Golden Rule.

Blackstone Group

Next on my list of Investments that I have been invested in for a few years is Blackstone Group. It’s abundantly clear Mr. Schwarzman and President Jon Gray and the Team are building a phenomenal Business. Even during the Interest Rates and Inflation Crisis early this year? It was clear Blackstone’s Portfolio was more than capable of handling the bumps in the road. I should add, Jon, and Mr. Joe Dowling has personally been very generous with me personally. So Blackstone? Was a no brainer. It must be in my new Portfolio. So I invested. I owe all these Guys on this Investment list Success. And I am gonna give it to them.

Palantir | Artificial Intelligence for the Future

Did you know when I was deep inside Politics I flew across the country and brought certain Community Leaders who are Running for US Congress to a small office in Washington D.C. that was Peter Theil’s Club for Growth PAC? It was a-lot of fun. And I thank the Club for Growth team for being very generous with me.I never spent much time with Mr. Peter Theil except one time at a conference about Tech and AI. And that was before I began my role as Club For Growths guy out in the field. LOL The only reason I bought Palantir for this Investment Portfolio is becuase I can see the good it it doing with AI. It’s a incredibly undervalued Company in the Tech/AI space. And Dr. Alex Karp and team are doing incredible work. I am certain the way this team is collecting contracts from Allied Governments this small investment will pay off very well during the next decade. It’s that simple. During the 3rd Fiscal Quarter Palantir earning were so good? The market rewarded the Company for it’s growth. If I can mention someone else I truly like is Joe Lonsdale. His views are no nonsense and are very close to my own. The fact that Joe, Peter, and Dr. Alex Karp teamed up for Palantir? Makes this company a winner.

Inverse ETF’s and X3 Leverage.

It’s only fair for me to share that on occasion I did experiment with certain speculative ETF’s that were x2 and x3 inverse levered on certain days. For the most part. I had mixed results. And although my results were more Positive than negative. More in depth? Meaning I did sustain 6 days of loss minimal loss during 2 months using this method of speculation. I won’t be using any of these ETF’s with inverse leverage moving forward. But I am grateful for the experience. Buffett was right. No need to use leverage.

During December we saw 15% growth in the Market

During December when the Market was off to the races and rising near Christmas, I felt it prudent to rebalance. My actions were more Defensive than speculative. The rising prices in the market just did not seem sustainable and felt a little overvalued. So I did implement some harvesting of Profits and Rebalanced this Conservative portfolio. I am glad I did. I am happy to report I did not lose anything by this action. And remained true to Gharam’s and Buffet’s rules of “Never lose money!”

Conclusion to 2023

The list of Value Investors who I feel have influenced me the most is growing yearly. But it’s a small group. All have taught me to share in a Annual Letter. So here I am. I would like to Thank, Warren Buffett, Li Liu, Tim C., Bill Ackman, Howard Marks, Guy Spier, Mohnish Pabrai, William Green, Rick Reider, Stanley Druckenmiller, Jon Templeton, Jim Rogers, Bill Gross, Lauren Templeton, and many more. Thank you for the lesson and teaching me a fantastic frame work of how to express myself and share a professional investment philosophy, to sharing the many business decisions I have made throughout the year.

Howard Marks has taught me much through his Annual Letters and Memo’s and interviews online. But there is one Quote that I feel sums up a direction for all of us while Investing during turbulent markets. And if you listen closely he is often heard sharing this quote again and again. During the 2008 financial crisis. When the world was burning. And everyone had thought that all is lost. Mr. Marks said a little qoute that is fitting for all of us during those times we feel uncertain in our investments. And that quote is?

“Keep Calm and Invest On!”.

If you are still reading. I think I know what your saying?.. “This guys writing sucks!” LoL Admittedly Yes. I am not the best writer. I apologize in advance if this is hideous and embarrassing writing. I am not the best at many things in life. I could probably use a professional writer to screen my posts and first annual letter. But since I am just a upstart? I am forced to just keep marching forward without a professional team to help me. So I do feel that does account for something.

I feel the same thing will apply to this years new Investment Portfolio. I am giving it my best! And in conclusion I would like to leave you with 2 thoughts. During 2023 there were many ups and downs. The market was hysterical at times. And was greedy at times. But I kept my focus and kept learning while doing deep dives on many companies. In the end my new personal Investment Portfolio did clear a healthy 19.9% Real Return after inflation. And if I include my other Portfolio? The Return rises for both Brokerage Accounts at just under 24.5% for the Year. That is a fact. If you would like to see the report images? I can email them to you directly.

If I can leave you with my last thought for this years Annual Letter? I would like to share a Post by Guy Spier. Guy shares. 2024: Begin. Just Begin. Put your pen to paper. Fire up that laptop. Put on the running shoes. Say that thing. Call that person. Write that note. Open that book. Just begin. The rest will be history. Thank you.

Godspeed.
JS

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