Finding Long-Term Winners in Packaging and Exchange Stocks

During their recent episode, Taylor, Carlisle, and George Livadis discussed Finding Long-Term Winners in Packaging and Exchange Stocks. Here’s an excerpt from the episode:

Tobias: So, you don’t want to talk about individual names, but can you give us an idea of where you tend to look, what you tend to look for?

Jake: On the longs side.

George: Yeah.

Tobias: Yeah, on the long side.

George: Oh, longs. Yeah. So, I do a lot in the sectors that I used to cover. I’ve probably done less and less of it over time, but it’s still a core part of the portfolio. So, the packaging sector, I almost always have at least one long.

To me, it’s actually a great universe for long-short investing. So, when I covered it, I covered basically 10 companies. There’s a great diversity of the types of companies within there. You have some, I’d say, more reasonable quality type companies, and then some just tough like melting ice cube situations. There’s a wide range of cyclicality.

And so, to me, there’s always something to do, probably both long and short within the packaging sector. So, it’d be like beverage cans, and glass bottles and plastic packaging, stuff like that. So, I always do something there.

Usually, I have something in the exchange sector, so like NASDAQ, CME, those kind of companies. I covered those when I was a banker. And in that space, I rarely have shorts. I’ve tended to find them– I like the way they fit into a long portfolio. Some of them at least have exposure to volatility. So, as volatility goes up, their business actually benefits.

I think in general, they’re very classic quality businesses. They’re monopolistic in a lot of ways. Depending on the product, really high margin, good cash flows. It can be hard to predict sometimes, but I think that can also be where the opportunity is, because nobody can really predict where trading volumes are going to go, but you do know that over time, they’re going to do okay, and they’ll probably go up over the long run for certain products. And then, beyond that–

Jake: What do they do with the cash? It is always [crosstalk]

George: So, those companies have migrated more towards large cap over time. I think when I started, they looked a little bit more mid-cap like. But I think, Tobias, your comment about professional management, they’re pretty disciplined and pretty professionally managed. So, it’s not something I worry about too much.

You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:

Apple Podcasts