Thoughts of my portfolio

I just bought more of QSR, LBTYA, SRG and KHC. Except for SRG, these are all ‘platform companies’ that relies heavily on M&A as a pillar of growth. 

In addition to the above, there’s also LBRDA, LILA, BUD, AME, AXTA and ST. All are ‘platform companies’. Broadly speaking, I can group them into:

  • Telecommunications 
  • Consumer goods
  • Industrials

In an era of stagnated growth, what’s better than to create value through leverage and the reduction of cost? All companies are managed by top management with strong track records, especially John Malone and 3G Capital.

That said, I am concerned about the impact of raising interest rates. Right now, although these companies enjoy stable and predictable cash flow, they are all highly leveraged and higher interest rates will be a major dampener of their growth. 

Fortunately, their respective access to capital appears to be in good shape. QSR and KHC has the further backing of Berkshire Hathaway with its mighty cash pile. For the John Malone companies, the proper hedging instruments (fixed i/r) are also in place. This helps them to avoid surprises. 

All seems well then. But the risk is getting a little too high for me to stomach. Only BRK.B and AAPL are ‘safe’ in my portfolio, plus my cash holdings, and they make up 35% of it. But that will not do. It’s time to deleverage, and reallocate my portfolio to companies that will benefit from the raising interest rates. More of BRK.B, cash and maybe WFC then. 

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