Great moments in long-term alpha... AZO goes 25x
Michael Storm Jeske
Founder and Manager of III Macro LLC, a hedge fund. Top HFs since 2006 - Risk, Perf, and Research Consultant to over $50B in fund assets, with close funds ALL 95-99%-ile. My returns ~30% net ann. References here..
My clients and close colleagues know… I have often noted that the AZO story is worth visiting. It illustrates how simple "buybacks" can produce amazing outperformance as equity prices seem to be somewhere between systematically under-valued at ~15 PE and / or occasionally massively undervalued at lower PEs just above 10x.
This is true because those PE #s set against borrowing rates… give a common sense CEO the opportunity to produce near unlimited EPS growth by financing stock purchases (pre-tax debt vs pre-tax E yield is out of alignment).
The attached AZO picture here gives us a nice view of this idea in practice with 30 year looks at stock price, PE and # shares outstanding. Check out the accumulation by 1 famed investor in 1999 (around $20/shr... its stands at $532/shr here today). It is a timely reminder in today’s market of what level of equity upside potential lies beneath modest long-term growth and good corp financial management.
MSJ
Founder and Manager of III Macro LLC, a hedge fund. Top HFs since 2006 - Risk, Perf, and Research Consultant to over $50B in fund assets, with close funds ALL 95-99%-ile. My returns ~30% net ann. References here..
1moThis was my first Article in 2014! AZO - I have a new Update, and a Re-Newed Focus on Hunting these “Forever 21%” companies! The results are simply - “Great Stories in LT Alpha”.
Founder and Manager of III Macro LLC, a hedge fund. Top HFs since 2006 - Risk, Perf, and Research Consultant to over $50B in fund assets, with close funds ALL 95-99%-ile. My returns ~30% net ann. References here..
1moThis was my first Article in 2014! AZO - I have a new Update, and a Re-Newed Focus on Hunting these “Forever 21%” companies! The results are simply - “Great Stories in LT Alpha”.
Founder and Manager of III Macro LLC, a hedge fund. Top HFs since 2006 - Risk, Perf, and Research Consultant to over $50B in fund assets, with close funds ALL 95-99%-ile. My returns ~30% net ann. References here..
7moJUST ANOTHER UPDATE - ON MY POST#1 - Spring 2014! - I promise to do more in this series, bc studying - "Great Stories in Long-Term Alpha" (Long and Short) is my Life's Work: *Note the 40% draw downs *Note that since my story AZO is 4X (I even have told when to SELL!! - to know LIMITs is the ULTIMATE GAME! See that?) *Note that I DO NOT ERASE STORIES - NOR PERF - And I AM NOT FAKE!
Retired Managing Director of Wealth Management at Union Bancaire Privée UBP SA, Geneva, Switzerland. An unblemished 47 year career in Trusts, Wealth Management and Swiss Private Banking
1yAnd the price in March 2023 is $2610! That was a nice call.
Founder and Manager of III Macro LLC, a hedge fund. Top HFs since 2006 - Risk, Perf, and Research Consultant to over $50B in fund assets, with close funds ALL 95-99%-ile. My returns ~30% net ann. References here..
2yI wanted to revisit this story - my first from 7 years ago. While its performance since my story is ONLY ~16% annual. I find the KEY to market is avoiding mistakes, and concentrating in long-term winners. As I say above: * the price in 1999 was $20 * buybacks have largely powered the drive upwards (at least half), and I LOVE BUYBACKS *AZO today is near $1500, and so soon should a 100X investment - since 1999. WOW! * Its not our favorite (APPLE), but to get a tax deferred 100x from a simple retailer (that buys back stock at too low PEs) is what the SP500 is all about. * If you can then short the LOSERs - the net result is PURE magic! This article was written 7 years ago. It was my first. More recently I did an article (featured on my profile!) "Buyback Kings are the Kings QED". About how near ALL the top performing Long-term Stocks are Buyback monsters. At III MACRO, I do "boring stocks" with buybacks and downside limits. And then short "fake", or "too much competition". It continues to work 7 years later (35% annual net). Please comment or reach out in message to be added to our distribution - www.iiimacro.com.