Glenn Greenberg's Brave Warrior: Long Financials (CNBC Interview) ~ market folly

Friday, March 17, 2017

Glenn Greenberg's Brave Warrior: Long Financials (CNBC Interview)

Glenn Greenberg of Brave Warrior Advisors sat down with CNBC for a rare interview.  Here's some key takeaways:

- He looks to buy stocks that will have around a 10% free cashflow yield 1-2 years from now

- Focused on 2-3 years ahead, less concerned about short-term swings or quarterly volatility. Likes to focus on companies that build wealth.

- Long financial stocks JPMorgan (JPM), Primerica (PRI), and Charles Schwab (SCHW).  "We made a big bet that normal interest rates would not stay at zero.  It was that simple and we didn't know when they would change, but the payoff we felt would be substantial so we have had a lot of financial stocks in our portfolio the last few years."

- On JPM: "They should be earning $8-9 in a couple of years if rates track at the moderate increases that are in the dot plot (of the Federal Reserve)."

- On SCHW: "Amazing franchise" and sees it largely as a bet on interest rates normalizing ... 175 bps now versus 350 bps back in 2007 on client cash positions.

- On Freddie Mac: "Best business model I have ever seen."

- "(Interest) rates could go a lot higher, Inflation could go a lot higher."

- Also owns Airbus (AIR.PA), Express Scripts (ESRX)

- Says Valeant Pharmaceuticals (VRX) was "biggest investment mistake over last 30 years" for him.  But still broke even on it.

If you missed the interview on TV today, it looks like the video replay is behind CNBC's paywall.

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