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Newsletter - August 19th, 2023

Dear Reader,


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



 

Mohnish Pabrai latest

 

Mohnish Pabrai latest interview


Some notes on Mohnish Pabrai's latest interview with Meb Faber:


23:15 Log scale of compounding


The power of compounding isn't intuitive to humans due to its logarithmic nature - the impact of reduced errors and even incremental consistent returns is exponential over a lifetime. This is our objective in providing consistent-quality undervalued stock reports to you.



40:00 Hold winners


Pabrai explains the Shelby Davis approach of wide diversification and letting winners run. (This approach seems practical and comfortable to us.) Even though most of Davis' selections weren't successes, a few big winners like AIG built him a fortune.


In our previous blog, we noted it wasn't the hit rate but the quantum of gains of winners that made the results worthwhile.



48:00 Turkey


What struck us was the importance of micro-economics and bottom-up research in trumping macro-economics at an economic basket case like Turkey.



59:15 Importance of quality management


Pabrai makes the point that outside USA, quality of management can't be assumed. At the least, it's probably best to have minimum standards of profitability and shareholder-orientation in distressed stock investing.



1:11:45 Inch wide, mile deep


It's not the breadth of your knowledge but your certainty in your area of expertise that matters in investing. We have rigorous financial criteria for a stock to pass our standards, and we strike only when it's right in our zone - these are the stocks we report to you.

 

Until next time, Cheers!

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