Harley Davidson at $56, an Epic Motorcycle Road Trip, and my Favorite Investment Portfolio Yet.
I’ve earned my stripes in the financial commentary community. Hey Hey What’dya Say???? …or at least, “say what?”
For no quicker than setting out on the return to Austin from our 7,133,280 foot Trans Pecos/Chihuahuan Desert ride on my Harley Davidson Sportster 1200, Barron’s changed up their cover story to feature that beast of a machine that was my best friend in Texas Hill Country, the Permian Basin, the Rio Grande river, and Big Bend National Park. We like to use lots of commas around the Pearly Pig, for it helps us get used to the amazing wealth good investing will afford us. But for all you comma-challenged folk, that’s a 1,351-mile journey.
I’m boring you already. Fine. Hop straight to this week’s amazing portfolio, a portfolio built for the times, a portfolio that many should add to their stash of investments. Go here. A portfolio built only on picks from this week’s Barron’s, curated and built on the Motif investment platform by THIS GUY. Many of you have thanked me for this weekly work. You’re welcome. I love hearing it. But I maintain, the biggest thanks you can give me is by going over to Motif and putting your hard earned cash to work. Let’s talk in 20 years how my work made you filthy rich. Now back to our regularly scheduled program…
As the story goes, once the Barron’s editorial desk saw my tweet go out last Wednesday, the 22nd, they switched up their weekend plans.
The original main piece, so I’ve heard, was a riveting investment discussion on the strengths and weaknesses of a variety of publicly traded companies that own hog and cattle feedlots, from Oklahoma to South Carolina. In fact, I have a good source that shared Barron’s was going to recommend it’s readers dump all of these stocks and grow chickens in their backyard, like so many do in Austin, Texas. And if that’s a little too active of an investment for you, then maybe living lawn mowers called goats may be your style. But watch everything else besides your lawn, the Pearly Pig has first hand knowledge of some pretty troubling damage caused by curious and courageous goats. But I digress, for it doesn’t sound like we’ll ever see that cover story. Instead, Barron’s took my advice.
The new and current cover story now discusses Harley Davidson stock (HOG). Barron’s saw the writing on the wall — if I was going to be sending Twitter and Facebook updates from a Harley in West Texas, the country’s stock investors would be clamoring for stock analysis in a fervor-like state.
“Barron’s saw the writing on the wall — if I was going to be sending Twitter and Facebook updates from a Harley in West Texas, the country’s stock investors would be clamoring for stock analysis in a fervor-like state.”
Thanks Barron’s for seeing the need and meeting the need. While I was out logging some serious miles from Austin to Far West Texas with the boys, riding some of the best country on our little blue planet, the Barron’s staff was hard at work putting together the Harley piece and creating the art for this weekend’s cover.
I will continue, Barron’s, to commit to give you great ideas to cover, and will try to give you better lead time than just a day or so. But sometimes it just won’t work — after all — timely coverage means deadline decisions.
And as far as that 1,351 miles on a Harley in just a few days… woof. While my boys were riding luxurious BMW two-wheel motorcoaches, I was howling and growling down the road, day dreaming of Harley and Davidson and their early quest to create horsepower and a rideable motorized bicycle. We have come along way, just seems maybe a few other bike manufacturers have come a little further. And therein lies the major problem my boys identified while sitting around talking about our motorcycles and the cycle industry… in our 120-year old Marathon, Texas adobe we found on AirBnB.
It was fun to get the take of 3 BMW riders — two seasoned Boomer riders from Austin and a Millennial Spaniard riding long-distance for his first time. Reality is we all are in love with the experience of riding. And that experience is pretty easily replicated across generations, and across racial and geographical boundaries. So the question isn’t if the motorcycle industry will grow or decline (it’s growing by the way), it is simply where does our beloved publicly-traded Harley Davidson fit into the mix.
One of our riders this weekend and a man dearly loved by many, is a long-time motorcycle enthusiast named Jim Moore. He rarely writes about riding and instead writes about interesting political goodies. In fact you can check out some of his goodies right here. If you ever run across Mr. Moore, you’ll surely want to walk up to him and whisper “JFK” in his ear. Just be sure you have a double scotch ready for hours of mind-blowing learnings about our country’s greatest political drama in our several hundred year history.
Jim is a gent that has ridden all crevices of America and across Australia at least once, and he says it best when he mused, “there’s just something about riding… it connects you to the road and to the nature.”
The guy enjoys riding so much I’m pretty sure he’d use the need to learn how to operate porta potties, those portable bathrooms at every small and major event between Bangor and San Francisco, if it meant he’d get the opportunity to hop on a bike and ride cross country. The question is simply not if he would ride, but what he would ride. And even for that motorcycle-riding Boomer enthusiast, a Harley wasn’t on his top-three list.
“There’s just something about riding… it connects you to the road and to the nature.” -Jim Moore. February 2017 motorcycle trip, Austin to West Texas.
We discussed Millennial riding habits, the difference between Harley Davidsons and other makes, and the beauty and validity of the newer Indian motorcycle to name a few. Needless to say, we came to most of the same conclusions that the Barron’s article did, if not in a more blunt way. While Barron’s says be patient (to see where international sales go), the guys said that Millennials generally want a different type of bike, the Indian is a capable adversary with a significant pent up demand, and Boomers are buying less bikes period. After all, my Boomers on this trip are still shopping for bikes. Just not Harleys. They want long range comfort as well as utility to comfortably ride gravel and dirt. Harley is challenged in both of those markets. And after a completely numb butt as well as two cramped up hands and wrists, I tend to agree.
I’m not a buyer of HOG stock in the high 50s. And that was the case that Barron’s made in this week’s cover story. Don’t get me wrong, I’d love some Harley Davidson in my portfolio. But as we know from good investing practice, the “win” isn’t necessarily found in the timing of selling a stock right as much as it is in the timing of buying a stock right. If HOG can show us solid growth potential I’d be willing to buy it at 12X earnings, but with their declining-to-flat earnings growth, I’d need to be a buyer at 9–10X earnings — or in the low to mid $40s.
“The ‘win’ isn’t necessarily found in the timing of selling a stock right as much as it is in the timing of buying a stock right..”
Want to know more about analyzing a stock and making great buying decisions for your portfolio? Because this isn’t hard stuff — and when it clicks, it really makes sense and puts a smile on an investor’s face… have you seen Warren Buffet frown lately? Shoot me an email (ryan@thepearlypig.com) and let me know you are interested in class — we’ll be getting started shortly.
The Wild Wild West was calling because of the Cowboy Poetry Festival, and of course we used that event to be the excuse to get on our bikes and ride. What we saw of the festival was great, and perhaps we’ll get back to catch more of it again someday. It was as much about the eclectic friendly folks that were in from all parts of the Cowboy world as it was the poetry and music.
That’s what is so great about bikes, the simple fact that you want to get on and ride. Anywhere. You’ve heard it before and it is so true — it’s not about the destination but about the journey. So we rode. We rode to Alpine. And Marathon. And Big Bend. And Telingua. And Fort Davis. And Marfa. And of course, to Prada Marfa to shop Prada’s Fall 2005 collection. And we rode.
So much thanks to Jim, Gary & Ricardo — these brothers this weekend for showing this Pearly Pig the time of his life. Reminds me why I want to get investing right. Because with good sound investing comes good sound opportunity to take advantage of experiences that literally last a lifetime. You can’t get it right be trying to be quick about it. There’s simply no rushing it. But you can sure get it right by being good at it. Thanks for joining me on this journey to be good at it.
“Reminds me why I want to get investing right. Because with good sound investing comes good sound opportunity to take advantage of experiences that literally last a lifetime.”
This edition of Barron’s gives me solid optimism in this week’s portfolio. I’ll be investing pretty heavy in this week’s portfolio. It will be the most concentrated portfolio so far — with only 8 holdings. And because I think the primary holding has a helluva chance to double in the next 12–18 months — a stock that I’ve been investing in off and on for nearly 10 years — I’m going to concentrate the heck out of this portfolio. Simply put — this portfolio possibly has the most opportunity since we’ve been putting portfolios together at the Pearly Pig — and it carries the most risk.
Solid franchise names offer a great “moat” when investing, as Barron’s made a mixed case for Harley in this week’s edition. (“Moat” is another term we dive into during class). So while I was trying to read in between the lines to make a case for investing in Harley above $56/share, I also uncovered some very subtle franchise recommendations by Barron’s.
Barron’s reminded us that they love a couple of stocks that represent some wonderful American past times — specifically major arena concerts, the MLB and the NBA. There are some great ways to get exposure to specific franchise names, and I added the two major ones covered in Barron’s into this week’s portfolio.
As you likely already know, I build these portfolios each week, and invest $250 — $500 depending on how convicted I am in that week’s Barron’s recommendations. I’ve been known to invest $1,000 once or twice when I’m totally stoked in the portfolio. I let you know each week how much I’m investing, so you can usually gauge my enthusiasm. So in all transparency, when I say I’m pretty bullish on this week’s Barron’s recommendations and how I built the portfolio, I mean it. I invested $2,500 this morning in this week’s portfolio, and now we let the games begin.
With this week’s portfolio you may see a little more volatility. And fair warning, it will primarily swing with the price of oil as well as the ability for a stock that is down 90% from its all-time high to rebound by limited losses and getting key capital assets to work in an industry that has landed on hard times. But in my humble Pearly Pig opinion, Barron’s killed it this week. Another great edition.
And again Barron’s, thanks for following up on my lead to cover Harley. You are completely welcome.
Sincerely,
Ryan @ The Pearly Pig
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