Retreads

It’s back to the future in a lot of ways these days.  A seventh television series of 50 year old Star Trek is due out early next year.  Of course, there have already been six Star Trek movies as well.

Star Wars is going stronger than ever too.  Disney acquired the Star Wars franchise from Lucasfilm in 2012 and is busily producing new movies, and theme parks (via Disneyland).  It seems to be an even more vibrant franchise than it was nearly 40 years ago when the first movie (now known logically as Episode 4) came out.

While we might wish personally that some slightly more original entertainment would hit the big and small screens, investment managers like us actually don’t mind a few re-runs at work – of the investment idea variety, that is.

We maintain a universe of stocks that we study, in some cases for several years.  We do our homework ahead of time to be ready for what the market brings, and that is ultimately unpredictable.  On occasion, Mr. Market prices these businesses low enough for us to buy for our clients.  Many times, in fact most of the time in our view, he does not.

But when the market does provide us a chance we might invest. In some cases, the stock increases and we sell as stock price converges with our estimate of business value. Then, down the road that same stock could fall to a level where we can consider investing in it again.  The good thing is that we already know that company from our research.

A tendency in entertainment – and investing – is to glom on to the next new thing. Recall the phrase “this time it’s different” – and be wary!

What we’ve found is that stocks don’t really care if they are new or old ideas.  What matters in our view are company results and the price paid to invest in its stock. Unlike entertainment, in investing retreads are always welcome.