I enjoyed my session with Dakshana scholars at JNV Kottayam. I talked about the Dakshana scholar Ashok Kumar's success story, cloning Super 30 and the importance of being a harsh grader.

Enjoy!
www.youtube.com/watch?v=R_pnRg24btM

​Here is the link to the podcast:

• ​Apple Podcasts
• Spotify

If you prefer reading over listening, here is the transcript.

In late December 2016, I co-wrote an article on Forbes.com that introduced the "Uber Cannibals," a 5-stock investing strategy that invests in businesses aggressively buying back their own stock. This is a "set it and forget it for one year" strategy that rebalances every April when 5 companies are selected for the portfolio for the upcoming year. The Uber Cannibals is also part of the broader 15-stock Free Lunch Portfolio, which also invests in Shamelessly Cloned ideas and Spawners that are updated annually in December. 

These portfolios were an opportunity to shine light on concentrated strategies in high quality corners of the market. It has been over 7 years since we started presenting our picks. The performance of the portfolios since inception is presented below.

This post will be the final update in this series. My team will no longer be updating the Free Lunch Portfolio and highlighting new businesses. Our efforts have shifted solely to our day job of managing our funds. 

Recap of 2023 Uber Cannibals:

As a recap, in my 3/31/17 blog post, we met Ms. Sonia Patel, who had embarked on her Uber Cannibals compounding journey with $100,000 from her IRA account at Interactive Brokers. Sonia invested in the first 5 Uber Cannibals on 1/3/17, and then rebalanced her portfolio every year in April. The 2023 Uber Cannibals were:

1. Assured Guaranty (AGO)
2. Primerica (PRI)
3. Jack in the Box (JACK)
4. eBay (EBAY)
5. Toll Brothers (TOLL)

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As of 3/31/24, Sonia's $100k was worth $266,463 up 14.5% annualized since inception. If Sonia had instead invested in the S&P 500 over that period, she would be up 14.5% annualized and her portfolio would be worth $266,860. Uber Cannibals was up 56.0% in the last 12 months, vs. 29.9% for the S&P 500. Uber Cannibals has outperformed the S&P 500 for the last 12 months, despite no exposure to high-flying tech names. The Uber Cannibals 5-stock portfolio is far more concentrated than the indices and will be more volatile.

All five Uber Cannibals paid dividends. As per our rules, Sonia reinvested those dividends back into the same businesses.
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Please note, the Uber Cannibals performance assumes that stocks are bought at the high price of the day and sold at low price of the day, whereas S&P 500 and Small Dogs of the Dow performance assumes that stocks are bought at last close.
 
The New 2024 Uber Cannibals:

Here are the 2024 Uber Cannibals:

1. Alpha Metallurgical Resources (AMR)
2. AutoNation (AN)
3. Primerica (PRI)
4. eBay (EBAY)
5. Toll Brothers (TOLL)

Sell Assured Guaranty and Jack in the Box and invest the proceeds equally in AMR and AutoNation. The swaps are no-brainers at present prices (the threshold we need to meet to make a change to the portfolio). AMR and AutoNation  operate in out-of-favor industries and generate a significant amount of free cash flow.

If you are a new investor to the Uber Cannibals, you can just equal weight the five stocks (i.e., invest the same amount of money in each of these five).

As a reminder, in December 2023, we added AMR to  the Free Lunch portfolio as a Shamelessly Cloned idea. As of 3/31/24, the weight of AMR in the free lunch portfolio is 3.3% if you had been investing in the free lunch portfolio since 2018 and 6.3% if you started investing in the free lunch in 2024. Considering these low weights for AMR, we don’t see any concentration issues adding it as a cannibal as well.

Free Lunch Portfolio:

We published the 2024 Free Lunch Portfolio in December 2023. The Free Lunch portfolio was up 13.7% in Q1 2024, vs. 10.6% for the S&P 500. The portfolio managed to outperform the high-flying S&P 500 in 2024. Since inception on January 1, 2018, on an annualized basis, the Free Lunch portfolio is up 7.8% while the S&P is up 13.4%. The S&P 500 has trounced the Free Lunch portfolio so far. In 2021 we decided to ignore the algorithm’s buy and sell decisions and only make portfolio tweaks if they are no-brainers. Since 2021, the Free Lunch portfolio is up 21.2% versus 14.3% for the S&P 500.
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Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.