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Newsletter - January 6th, 2023

Updated: Mar 24, 2023

Dear Reader,


Attached is our latest list of apparently cheap stocks generated from basic value screens (low p/e, ev/ebitda, debt/equity, etc.), which don’t meet our investment standards - and our reasoning.


This may help you avoid a few ‘value traps’ or stocks that aren’t sufficiently attractive compared to the opportunities available today.


For reports of stock ideas that pass our quantitative and qualitative standards, join at the link below:


 

Quality Value - Tom Russo


Tom Russo's investment style differs from our own - part of the reason we love listening to his insights. His approach is to make concentrated bets in quality companies, and he's done well.


Though four years old, this talk is packed with valuable anecdotes on:


- the benefits of low portfolio turnover (savings on capital gains taxes): 4:55

- paying for long-term independence (Richemont avoiding the mafia when setting up business in Russia): 40:14

- lack of shareholder orientation in his Japanese investments coming through in his interactions with them; the Asahi beer episode is revealing: 48:00

- Heineken buying value disregarding consensus Wall Street thinking (business offered to them for $5b bought up for $720m four years later): 29:45




The talk also impressed upon us the need to consistently monitor M&A deal activity to understand perceptions of current business values - we did this when working in corporate finance but it may be useful to incorporate that discipline even as individual investors.




Press the bet - Soros


Important reminder to press the bet when your conviction is high, a hallmark Soros move. He considered timid allocation as bad as being wrong on a trade - and he has an excellent point.


As quoted by his protégé Druckenmiller (28:20):


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