Wednesday, June 29, 2016

Insights: Markets, Dharma Fund

The fund has bought Dollar Tree, Inc.(NASDAQ:DLTR) shares for almost ten years now. The oldest shares are up nearly 1,000% despite my grade school math teacher teaching me otherwise. Mr. Preston taught that anything over 100% is nonsense.

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The most recent major Dollar Tree event is the acquisition of Family Dollar stores. The executives down in Chesapeake continue to do a great job integrating, no, doubling the total stores. Mr. Sasser and his team provided a very positive forward statement recently. It is no surprise Moodys upgraded Dollar Tree recently. My experience suggests Dollar Tree shares will move above 100 and split again.

The overall fund was still way up for the year at the depths of the Brexit panic. Trade agreements take months if not years to change. The British vote will eventually put them in a Norway-like relationship with the EU. This could take two years or more. They cannot even figure out who lives at Downing Street right now. I see the EU population growing with the addition of Scotland and a reunited Ireland. It is difficult to find the place where Apple Inc. (NASDAQ:AAPL) runs into much trouble here, other than some currency issues.

From the point of view of EU reforms, Brexit may turn out to be a positive force for change. Barring some other new trend, investor sentiments will carry the U.S. markets higher. Overseas investors with large sums to invest are going to move a trillion dollars worth of investments into U.S. equities. They want to reduce their exposure to any negative Brexit fallout and the possibility of the EU fracturing. Mostly they just want good returns from their investments. There simply are no other secure markets capable of absorbing that much money.

Getting back into Brazil at the bottom has resulted in large Unrealized Gains for the fund, though this area is still a small holding. It came as a result of a review of past holdings, most long since sold off. The fund holds a block of shares for many past investments, such as Brazil Foods (NYSE:BRFS), as bookmarks. Otherwise there is no incentive to look back. The sun is driving me off the deck and back into the farmhouse. Enjoy your trading day!

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