You are a free subscriber to Me and the Money Printer. To upgrade to paid and receive the daily Capital Wave Report - which features our Red-Green market signals, subscribe here. Buffett's Alphabet Stake Fits the "Every Buyer" Portfolio StrategySurprising... No... the $4.3 billion stake makes perfect sense in a market structured like this one...
Good Evening: Warren Buffett’s Berkshire Hathaway (BRK.A) revealed what CNBC called a “surprising” stake in Alphabet Inc. (GOOGL), the company behind Google… That’s going to be a solid catalyst into next week… all $4.3 billion of the stock. Writes Yun Li at CNBC, this position was “a surprising move given Buffett’s traditional value investing philosophy and reluctance toward high-growth, tech names.” To which I ask… why is it surprising? The company still owns a fortune in Apple (AAPL). But more importantly… why isn’t it surprising? The World Has Changed, Portfolios Must AdaptI’ve been explaining the need for investors to transition toward capital-efficient businesses and assets that fit a combination of Buffett’s and sovereign wealth fund models. In many cases, the concept goes… Beyond Warren Buffett. Here’s how people really have to think about stocks in the U.S. market… Especially if they want to be confident and avoid value traps… I noted the other day that investors would be wise to focus on three types of stocks that align with the three main investor types today…
Well… Wouldn’t you know it… Alphabet (GOOGL) fits the bill for all three… It has a high F score… Z score over 16 (there’s virtually no debt)… a Return on Invested Capital (ROIC) of nearly 30%, profit margin above 32%, significant insider ownership, a practical monopoly on search, 1,398 ETFs owning Class A shares… and 1,008 ETFs owning Class C shares… more and more leveraged ETFs adding GOOGL exposure, and Alphabet has exhibited the momentum trade since 2017… following liquidity swings in a predictable manner… And I haven’t even talked about its moves into AI and its massive balance sheet, loaded with cash, thanks to its accounts payable practices. There’s really no reason not to own it… and Buffett just reminded everyone about this… as the stock fits squarely into this model… What else fits the bill?
That’s the subject of the Capital Wave Report… all next week… If you want access to the other dozen stocks on the screener today… Join us… Meanwhile… members can expect more on this Alphabet purchase all next week… I’m specifically talking not only about companies that meet the bill of the three parts above… but also about those with very liquid option chains that allow their owners to engage in various income strategies, high-probability trades, and more… You need to be able to get out of these names as fast as you get into them… I’ll break it down into five parts next week in the morning… It’s a pretty simple investing model if you learn how the markets really work in the post-2008 environment… Stay positive, Garrett Baldwin About Me and the Money Printer Me and the Money Printer is a daily publication covering the financial markets through three critical equations. We track liquidity (money in the financial system), momentum (where money is moving in the system), and insider buying (where Smart Money at companies is moving their money). Combining these elements with a deep understanding of central banking and how the global system works has allowed us to navigate financial cycles and boost our probability of success as investors and traders. This insight is based on roughly 17 years of intensive academic work at four universities, extensive collaboration with market experts, and the joy of trial and error in research. You can take a free look at our worldview and thesis right here. Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.
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