Ballast Cannibals - GOOG, BRKB, NVR

As my personal investing ethos has shifted over time to a more growth centric philosophy, I have found it useful to balance the inherent volatility in those equities with some distinct core positions that act as ballast. Ones that are excellent and stable businesses, do not require continuous monitoring and research, but are more limited in their growth potential (likely won’t 10X in a decade). These can be a bit freeing mentally while helping to steady the compounding of the portfolio. Three major positions, which represent about one third of my retirement account, have evolved into what I now think of as ballast cannibals. They are Google ($GOOG), Berkshire Hathaway ($BRKB), and NVR Homes ($NVR). They are proposed by the best stock research websites (http://www.columbia.edu/~tmd2142/5-best-stock-research-websites.html). Ballast is typically material used to provide stability. Most commonly this is found in boats (sail or cargo ships) to keep them from capsizing, but also is used in racecar driving for weight redistribution to optimize handling. I like to expand the metaphor a bit and picture large ballast tanks at ship bottoms as adding weight to keep the momentum going forward in addition to providing stability for the portfolio. A ship full of ballast has more mass and therefore more momentum. This makes it harder to speed up yet also harder to slow down, but it keeps everything moving forward. Cannibals are “one that eats the flesh of its own kind” according to Merriam-Webster. I first heard this idea of cannibals referring to share buybacks from Mohnish Pabrai in a Forbes Article (link). Derived from a Charlie Munger quote, it highlights companies with strong balance sheets, reasonable valuations, and a capital return policy utilizing share buybacks. Cannibalism in this instance can be the fuel source providing ballast for the stock. To evaluate the volatility in these ballast cannibals, I decided to compare monthly returns to the S&P 500 and a specific subset of my portfolio – call these the “Growth 3”. They are the unnamed other largest positions in my retirement account (about one third of total as well) and would be described as ecommerce/SaaS/cloud/gaming. Before compiling the data, I drew a picture of what I hoped for with gray being the S&P 500, blue being the ballast cannibals, and orange being the growth 3. This picture implies a flatter distribution for the growth 3 (more volatility) and a similar volatility for the ballast cannibals as the market, but with slightly higher returns. The actual distribution of monthly returns since 2017 is plotted below. One of the growth 3 IPO’d after 2017 so it is not a complete 5 years of history, according to its 10K (https://alpharesearch.io/sec-filings/10k). Nonetheless the anticipated drawing was somewhat accurate to reality as the growth 3 have a much flatter distribution curve (higher volatility!). The ballast cannibals did have slightly higher returns than the market, but it still came with a higher rate of volatility. I suppose this just goes to show that even three low beta stocks cannot substitute for an index fund. The ideal use of free cash flow is to reinvest back into the business itself, either in things the business is currently doing or venturing into new areas. Fundamentally, these are both types of organic growth. Another use of capital for growth can be to acquire other businesses. This could be value accretive through strengthening a competitive advantage or enabling more business as a combined entity than as separate ones (1 + 1 is more than 2 sometimes). However, acquired growth can be value destructive if it costs too much, integration is unsuccessful, growth estimates are too lofty, or key management departs. When options for growth are unavailable and debt is not an overhang, instead of cash accruing, the capital should be returned to shareholders. Dividends are less than ideal because of the double taxation (corporate and individual level) so share buybacks are the preferred method. NVR is a classic cannibal as buying back shares has been a part of their strategy for a long time. As seen in the chart below, apart from a two-quarter pause at the start of the covid pandemic, they have consistently been spending 70%+ of FCF on share buybacks based on its latest 10Q report (https://alpharesearch.io/sec-filings/10q). Berkshire has historically used excess capital for acquiring companies – both in whole and partial equity stakes. But over the last couple years, whether through sheer internal size or unattractive opportunities, the elephant gun has been gathering dust. What started slowly in 2019 really ramped during 2020 to the point where Berkshire currently spends nearly its FCF level on buybacks. Not to mention, a big chunk of the Berkshire value is invested in Apple, which is itself a ballast cannibal. Historically, Google spent a small amount on share buybacks to help offset the stock-based compensation, but the capital allocation has changed gradually over the current management tenure since 2015. More details can be found in form 8k (https://alpharesearch.io/sec-filings/form-8k). Tightening cost controls, the Alphabet division splits, and improved margins have made more cash available in recent years and management has begun to allocate more towards buybacks. The bottom line is that these ballast cannibals are unsexy stories yet hard to lose money in for a long-term investor. To conclude, a few brief sentences on each company as to why they could be a good source of returns going forward: GOOG: A dominant core business with growth engines from YouTube and Google Cloud that can likely maintain 15%+ revenue CAGR for the next 5 years. According to form 13f filings (https://alpharesearch.io/sec-filings/13f-filings), a fabric of innovation offers upside optionality in the “Other Bets” division. Trades currently at 26X trailing FCF and buying back 2-3% of shares annually going forward. BRKB: Dominant core businesses (insurance, railroad, energy) with a great capital allocation strategy. Can likely maintain 5-9% revenue CAGR for foreseeable future. Trades at 23X trailing FCF and buying back 4-5% of shares annually going forward. From form 4 (https://alpharesearch.io/sec-filings/form-4), BRKB's financials are solid and show no slowing down. NVR: Unique homebuilder with extremely stable margins. New housing builds have been severely lagging demand for the past decade. Even with just 7% volume growth, 4% price growth, and share buybacks, the stock can get a 15% IRR going forward. Trades at 14X trailing FCF and buying back 4-5% of shares annually going forward. Details about NVR's SEC filings (https://alpharesearch.io/sec-filings) can be found in Edgar Company Search (https://alpharesearch.io)

随着我的个人投资理念逐渐转向更侧重增长的哲学，我发现通过配置若干独特的核心头寸来平衡这类股票的固有波动性颇为有效——这些头寸可充当压舱物（ballast）。它们属于优质且经营稳健的企业，无需持续监控与研究，但增长潜力相对有限（十年内大概率无法实现10倍增长）。这类资产既能在心理上带来松弛感，又能助力投资组合的复利稳健增长。

目前，占我退休账户约三分之一的三大核心头寸，已演变为我所称的“压舱食人族（ballast cannibals）”，分别为谷歌（Google，股票代码$GOOG）、伯克希尔哈撒韦（Berkshire Hathaway，股票代码$BRKB）以及NVR住宅（NVR Homes，股票代码$NVR）。该分类由顶尖股票研究网站推荐（http://www.columbia.edu/~tmd2142/5-best-stock-research-websites.html）。

压舱物通常指用于提供稳定性的材料，最常见于帆船或货轮以防止倾覆，也用于赛车配重以优化操控性能。我在此基础上拓展了这一隐喻，将船底的大型压载舱想象为既能为投资组合提供稳定性，又能通过增加重量维持前进动量的载体。满载压舱物的船舶拥有更大质量，因此动量更强：提速更难，但减速亦不易，却能确保整体航行稳健向前。

根据韦氏词典（Merriam-Webster），“食人族”指“食用同类血肉的个体”。我首次从莫尼什·帕伯莱（Mohnish Pabrai）的一篇《福布斯》（Forbes）文章中听闻用“食人族”指代股票回购的概念。该说法源自查理·芒格（Charlie Munger）的名言，特指那些拥有强劲资产负债表、合理估值，并采用股票回购作为资本回报政策的企业。在此语境下，“食人族”行为可为股票提供支撑压舱物的动力来源。

为评估这些“压舱食人族”的波动性，我决定将其月度收益与标普500指数（S&P 500）以及我投资组合中的特定子板块——暂称“成长三剑客（Growth 3）”——进行对比。“成长三剑客”即退休账户中另外三大未具名的核心头寸（同样约占总仓位三分之一），属于电商、SaaS、云计算或游戏领域。在整理数据前，我绘制了一张预期分布图：标普500以灰色表示，压舱食人族以蓝色表示，成长三剑客以橙色表示。该图预设成长三剑客的分布更平缓（波动性更高），而压舱食人族的波动性与市场相仿，但收益略高。

我绘制了2017年以来的实际月度收益分布。其中一只“成长三剑客”标的于2017年后上市，因此完整历史不足5年，据其10-K备案文件（https://alpharesearch.io/sec-filings/10k）可知。尽管如此，预期绘图与实际情况仍较为吻合：成长三剑客的分布曲线确实更为平缓（波动性更高）。压舱食人族的收益确实略高于市场，但同时也伴随着更高的波动率。这或许恰恰说明，即便三只低贝塔（low beta）股票也无法替代指数基金。

从根本而言，自由现金流（Free Cash Flow, FCF）的理想用途是重新投入企业自身运营，既可以用于现有业务拓展，也可以布局新领域——二者均属于内生增长范畴。另一种增长型资本使用方式是收购其他企业：若能强化竞争优势，或通过整合实现1+1>2的协同效应，则可为企业创造增值价值。但若收购成本过高、整合失败、增长预期过于乐观，抑或核心管理层离职，外延式增长反而可能损害企业价值。当增长机会匮乏且无过高债务负担时，企业不应囤积现金，而应将资本返还股东。由于股息存在双重征税（企业层面与个人层面），因此股票回购是更优的资本回报方式。

NVR是典型的“食人族”企业，回购股份长期以来都是其战略的一部分。据其最新10-Q备案文件（https://alpharesearch.io/sec-filings/10q）显示，除新冠疫情初期暂停两季度外，该公司始终将70%以上的自由现金流用于股票回购。
伯克希尔哈撒韦历史上一直将超额资本用于收购企业——包括全资收购与参股。但在过去数年中，无论是由于自身规模扩张还是收购机会缺乏吸引力，其“大象枪”（指大规模收购工具）已尘封许久。2019年回购启动缓慢，2020年大幅提速，目前伯克希尔的回购支出几乎等同于其自由现金流水平。此外，伯克希尔的很大一部分价值来自对苹果（Apple）的投资，而苹果本身亦是一只“压舱食人族”标的。
谷歌历史上仅投入少量资金用于股票回购，以抵消股权激励带来的摊薄，但自2015年现任管理层上任以来，资本配置策略逐渐发生变化。更多细节可参见其8-K备案文件（https://alpharesearch.io/sec-filings/form-8k）。近年来，通过收紧成本管控、拆分Alphabet旗下业务板块以及提升利润率，谷歌获得了更多可支配现金，管理层也开始加大回购力度。

总而言之，对于长期投资者而言，这些“压舱食人族”虽乏善可陈，却很难让你长期亏损。以下简要介绍三家企业未来有望带来可观回报的原因：
GOOG：拥有核心主业统治地位，YouTube与谷歌云为其提供增长引擎，未来5年营收复合增长率有望维持15%以上。据13-F备案文件（https://alpharesearch.io/sec-filings/13f-filings）显示，其“其他赌注（Other Bets）”部门的创新布局亦具备上行期权价值。当前市盈率为往迹自由现金流的26倍，且未来每年将回购2%-3%的流通股。
BRKB：拥有保险、铁路、能源等核心主导业务，资本配置策略优异。可预见的未来内，营收复合增长率有望维持5%-9%。当前市盈率为往迹自由现金流的23倍，且未来每年将回购4%-5%的流通股。据其4号备案文件（https://alpharesearch.io/sec-filings/form-4）显示，伯克希尔的财务状况稳健，增长未见放缓。
NVR：独特的住宅建筑商，利润率极为稳定。过去十年间，新房供给严重滞后于需求。即便仅实现7%的销量增长、4%的价格增长，叠加股票回购，该股票未来的内部收益率（Internal Rate of Return, IRR）亦可达到15%。当前市盈率为往迹自由现金流的14倍，且未来每年将回购4%-5%的流通股。关于NVR的SEC备案文件（https://alpharesearch.io/sec-filings）更多细节可通过Edgar公司搜索（https://alpharesearch.io/）查询。