Sunday, August 10, 2014

High Yield Reads - 8/10/14

Summary of recent stories of interest, sometimes enduring, to investors:

  • Eddy Elfenbein on a topic that's near and dear to many investors - what poolside investing is really all about. I agree with that watchlists trump screens, but I still like to run screens as a way to build the watchlist. 
  • Tim McAleenan on how focusing on Yield on Cost to take the stupid out of investing. Tim uses the same example that originally got me interested in yield on cost - Buffett's Coke purchase which pays him $488M/year in dividends an rising, on an original $1.3 Billion purchase that is good for a 37% yield on cost. Every year. And growing. Its easy to see why academics dismiss yield on cost, if you ignore trading cost, opportunity cost, and assume a spherical cow of uniform density, err I mean perfect market timing, then YOC is irrelevant; however back in the real world its an excellent North Star for individuals, individual investors should embrace it as part of a long term strategy.
  • Forever Investor - AstraZeneca rejected Pfizer's buyout bid. It was fair to ask if AstraZeneca's management talk about the pipeline was more narrow self interest or more shareholder friendly. I tended to think the latter at the time, but we got an additional positive developments in that the management wasn't just talking, they were buying north of 3 million pounds of shares. 

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