Best Anchor Stocks

15. Returns, Reinvestment, & Valuation w/ Andy Feldman

35 snips
Feb 12, 2025
In this engaging conversation, self-directed investor Andy Feldman shares his journey from a buy-side professional to managing his own investments. He emphasizes the importance of reinvestment rates and their impact on returns and valuations, discussing real-world examples from companies like CME and Nasdaq. Feldman also addresses the complexities of selling stocks, balancing intuition with systematic strategies. His insights on long-term investing and personal investment philosophies encourage listeners to embrace unique opportunities and refine their investment approaches.
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ANECDOTE

CME's Reinvestment

  • CME reinvests only 10-20% of its earnings, limiting reinvestment opportunities.
  • Their returns come from earnings growth and capital returns, like dividends.
ADVICE

Ideal Reinvestment

  • Aim for companies with high returns and high reinvestment rates.
  • The ideal scenario is reinvesting 100% of earnings at 20% returns, like serial acquirers.
INSIGHT

Measuring Reinvestment

  • Incremental returns over incremental investments capture P&L and cash flow statement data.
  • Investments like R&D, reflected in reduced earnings, and CapEx/acquisitions are considered.
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