For a general description of the Caesar investment style, including cash flow investors can expect while holding the stocks in anticipation of appreciation, please see the Camarda Investment Philosophy section in this issue.
We’ve made a number of adjustments to the Caesar portfolio recently. For one thing, we’ve had some strong performers since inception, so we rebalanced the portfolio, taking some profits and using the proceeds to add to positions in some of the other stocks we like at cheap prices. We also expanded the portfolio to twenty-three stocks, picking up Carnival Cruise Lines, Key Bank, and Tapestry – owner of fashion brands like Coach and Kate Spade – at prices we like. Caesar is now about equally divided between these 23 stocks, though that will change as some move faster than others.
While it is inevitable that some will move faster, it is important to emphasize that we like them all, and hope for nice profits from each of them, barring unforeseen problems. We think it is important to try to separate the long-term probabilities from the short-term noise like what’s trendy, and how the media is reporting.
For instance, in 2019 Caesar stocks – Kimco Realty and Physicians Realty Trust – have done quite well, mostly because REITS are popular in 2019. Others have not, for instance CVS because it is still digesting the Aetna acquisition, and Carnival Cruise lines, because of an unexpected change in US policy for travel to Cuba, a tiny part of its worldwide market. In Camarda’ s view, these moves represent just noise based on popularity and news.
We think they are all worth lots more than the current market price, and we plan to hold them – like the Vegas houses you will read about in the Investment Philosophy section – until that value is realized. In the meanwhile, we’ll just collect the rent, and wait.