Jul 202 min read

Newsletter - July 20th, 2024

Dear Reader,

Attached is a recent list of stocks that passed value screens (e.g. low P/E ratios, below tangible equity, etc.) but don’t meet our investment criteria - and our reasoning.

This may help you avoid some ‘value traps’, and stocks that aren’t sufficiently attractive compared to opportunities available today.

For reports of stocks that pass our quantitative and qualitative standards:

Join Here

Jim Grant: International Value Mysteries

Bad audio but some insights from David Samra, Artisan Partners (11.59% vs. 7.29% MSCI EAFE index since inception in 2002) below:

3:00 Cashflows/Efficient Markets

Investing is about determining the value of future cash flows. And Mr. Market takes prices to extremes due to fear or excitement. Exploit these price/value discrepancies (which we point out in our reports).

8:45 International liquidity

Markets are less efficient outside the US - especially among smaller stocks where there's relatively less attention paid to the companies, and the bid/ask spreads are wider. These are ripe pickings for the small investor (and typical of the stocks we report on).

14:15 Patience

Patience is the investor's competitive advantage. After finding an undervalued stock, patience is required to see it through 2-3 years of probably depressed earnings (on average) before the industry cycle turns.

21:15 Smaller sums

Performance declines as capital grows. Small stocks can't move the needle for larger sums - but it can have a dramatic impact on smaller portfolios. Our opportunity set tends to be concentrated in these smaller stocks.

24:30 Valuations vs. Business reality

Valuations cannot remain divorced from business/financial reality permanently (on the upside or the downside). The stock market is a supermarket of companies - and investors' aggregate returns can only come from the cashflows of the underlying businesses.

26:45 Good businesses at undervalued prices

A company may sell cheap for justifiable reasons. The investor's objective is to buy companies that are worth more than they're selling for.

On this basis, we invest in (and report on) two categories of stocks:

1) Companies selling below liquidation value, and

2) Good-Quality Companies selling at low multiples of earnings (sometimes with the bonus of excess cash)

We think this approach is logical and simple - and we intend to stick with it.

For reports on the best investment values in stocks worldwide:

Join Here

Wish you an excellent week ahead.

Newsletter - July 20th, 2024

Dear Reader,

Attached is a recent list of stocks that passed value screens (e.g. low P/E ratios, below tangible equity, etc.) but don’t meet our investment criteria - and our reasoning.

This may help you avoid some ‘value traps’, and stocks that aren’t sufficiently attractive compared to opportunities available today.

For reports of stocks that pass our quantitative and qualitative standards:

Jim Grant: International Value Mysteries

Bad audio but some insights from David Samra, Artisan Partners (11.59% vs. 7.29% MSCI EAFE index since inception in 2002) below:

3:00 Cashflows/Efficient Markets

Investing is about determining the value of future cash flows. And Mr. Market takes prices to extremes due to fear or excitement. Exploit these price/value discrepancies (which we point out in our reports).

8:45 International liquidity

Markets are less efficient outside the US - especially among smaller stocks where there's relatively less attention paid to the companies, and the bid/ask spreads are wider. These are ripe pickings for the small investor (and typical of the stocks we report on).

14:15 Patience

Patience is the investor's competitive advantage. After finding an undervalued stock, patience is required to see it through 2-3 years of probably depressed earnings (on average) before the industry cycle turns.

21:15 Smaller sums

Performance declines as capital grows. Small stocks can't move the needle for larger sums - but it can have a dramatic impact on smaller portfolios. Our opportunity set tends to be concentrated in these smaller stocks.

24:30 Valuations vs. Business reality

Valuations cannot remain divorced from business/financial reality permanently (on the upside or the downside). The stock market is a supermarket of companies - and investors' aggregate returns can only come from the cashflows of the underlying businesses.

26:45 Good businesses at undervalued prices

A company may sell cheap for justifiable reasons. The investor's objective is to buy companies that are worth more than they're selling for.

On this basis, we invest in (and report on) two categories of stocks:

1) Companies selling below liquidation value, and

2) Good-Quality Companies selling at low multiples of earnings (sometimes with the bonus of excess cash)

We think this approach is logical and simple - and we intend to stick with it.

For reports on the best investment values in stocks worldwide:

Wish you an excellent week ahead.

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