원문 보기
hey welcome back to two super guys Trad talks I'm Dylan and I'm Vinnie and holy crap with this recent Alibaba rally it started making me wonder when is it actually at fair market value and I have to start thinking about what I want to do in my position right we know it's undervalued we talked about that extensively for a long time it's just a question of when we would make that move and start to think about it as may have run its course a little bit okay yeah we're definitely not jumping the gun here yeah definitely not running jumping the gun but you know what like you want to have a plan in you know in place and kind of think about this stuff early right I'm planning for retirement that's like 20 years from now dude all right boy so these I asked Google like what are the reasons why you sell a stock all right this is a AI gave me they were like yeah it's up 20 25% you've lost 78% you realize it was a mistake remember just a retailer Charlie Munger rest in peace but um maybe that was his thought there um you need cash right you know hey you know I don't know about you but like you know certain people of the night don't take uh don't take Alibaba shares that's payment but you know I've never tried that's more of a youth thing all right uh and then this final one here Target price it's reached your Target price you you think it's actually a fair market value and you no longer you know are perceiving that as a value play anymore right can you go back one slide this is horrible advice just to be clear go go to the the loss you were on the right one you can sell a stock if it falls 78% below what you paid for it to limit your potential downside man okay good job AI I mean hey this is Google what do you want me to tell you um you know the kind of CounterPoint here is as far as like going to sell a stock is you you have these kind of thought processes here with Warren Buffett our favorite holding period is forever but it's not an absolute as you've seen him selling off his Apple shares of late he loves Apple but it got really concentrated his portfolio and you know he thought maybe the valuation our undervaluation time frame had passed and it's time to start liquidating some of those and get the profits in the books so I've used this analogy here for what what we've been seeing with the shares you know to me this this is a great example of what it ha what happens you have an undervalued stock right it's been held underwater and there is increasing Force under it uh and eventually it wants to find that fair market value so what is fair market value for a company like Alibaba you know don't forget that you know how steep this rally was here on meta uh coming out of this when it got significantly undervalued right there's it can keep on keep it on for quite a while before it finds that natural equilibrium again yes I mean it's still going up yeah yeah they Rose at a p of 29 right so this will also kind of come into play in that it's an evolving price Target all right every time you get earnings you have to readjust and see based upon what the company has been doing and you know what their predictions for the future are um so you know this is the Google's best estimate or or Zach's investment research when the next earnings period would be so we still have a couple more months so I have to look back at the previous earnings you know kind of uh release in order to determine what I think the price should be based upon just that information there all right if you remember our last Alibaba earnings video this is kind of my final slide this is how I look at uh my investments from like this free cash flow yield you know you could flip this on its head and think of it as a multiple of free cash flow what are you willing to pay um and it's obvious to me when you get down in this territory here 16% that that's phenomenal right I'm earning 16% back in my money that's that's stupid way of thinking about it um but if I want to develop a price Target I kind of have to re-engineer this formula a little bit and work it backwards so this is what I Rose at all right so to me a company like Alibaba although I love a lot of things about them I am unwilling to have that risk in my portfolio if I'm not getting more than a 5% free cash flow yield right um yeah what do you think okay but that's using the numbers we have right now as of the last quarter right yeah because no way in hell are we hitting 221 so so I agree you would sell if it hits 221 the next two months so would I that's stupid High that's incredibly High however let's say it's a year from now and their free cash flow yield is now at 5% but their cloud has now finally grown you know 20% according for the last five quarters I ain't selling I'm not getting not I'm out I'm I'll stay until it's like two or three it depends a lot on the growth rate you're seeing on overall Revenue right now the the kind of Baseline I think about this is it wasn't very long ago that you could buy Google stock for 5% free cash flow yield and they were growing in the time at the high single digits right yeah Alibaba hasn't been able to achieve that level of growth so to me owning it below a five percent or recently recently in the last couple years so to me owning it in that kind of price range doesn't really make sense you know if if I'm getting more than a 5% C free cash flow uh yield or I'm getting growth that is you know we're talking about at least in the teens then I'm interested in holding them so well I'm gonna have to continue to evaluate this every quarter going forward yes the news has been fantastic but we have to see how this rubber meets the road so to speak and then where the price tracks along with that but as of right now with this data we have I would say if I if I saw it hit 220 the next two months I would sell next earnings I'll revise that makes sense all right uh let us know what you guys would sell at and how fast we're going to hit 220 two weeks two weeks all right
Comments 0