Jun 17, 20232 min read

Newsletter - June 17th, 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:

Join Here

Pabrai Investments

Pabrai Equitymaster Interview

Pabrai is interesting to us because he turned his initial $1mn to $150mn+ by passively investing in stocks. Here are a few notes from one of his interviews two months ago:

27:30 Classic Graham in the dotcom Era

Pabrai began investing in classic Ben Graham stocks when dotcom stocks were overpriced in 1999.

He looked for: "Stable cashflows and operations, extremely boring, and no one's interested"

Funeral homes for 2x earnings;

Ipsco trading for $45/share with $15/share in cash and $15/year in earnings for the next two years via orders in hand.

38:30 GFC

Interesting anecdote where Pabrai met Michael Burry during the 2008 crisis and gets an intense drilldown of CDSs, tranches, how to short it, etc.

This guy's the Zelig of the investment world. He shows up everywhere.

50:30 Walter Schloss' 40-cent dollars

Interesting to note that Pabrai bought into Satyam when the market cap was 4x earnings (and growing fast), and well below its real estate value in Hyderabad - the stock appreciated 150x.

Of course Pabrai was well-versed with the IT business - but sometimes good things happen when your downside is simply low.

Reminds us of Buffett's description of Schloss' technique in his Superinvestors essay (which we remember fondly at the start of our investment journey):

"Walter has diversified enormously, owning well over 100 stocks currently. He knows how to identify securities that sell at considerably less than their value to a private owner. And that's all he does.

He simply says, if a business is worth a dollar and I can buy it for 40 cents, something good may happen to me. And he does it over and over and over again.

He owns many more stocks than I do - and is far less interested in the underlying nature of the business."

This is the focus of our efforts - to identify securities that sell for considerably less than the business would be worth to a private owner.

Until next time, Cheers!

Newsletter - June 17th, 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:

Pabrai Investments

Pabrai Equitymaster Interview

Pabrai is interesting to us because he turned his initial $1mn to $150mn+ by passively investing in stocks. Here are a few notes from one of his interviews two months ago:

27:30 Classic Graham in the dotcom Era

Pabrai began investing in classic Ben Graham stocks when dotcom stocks were overpriced in 1999.

He looked for: "Stable cashflows and operations, extremely boring, and no one's interested"

Funeral homes for 2x earnings;

Ipsco trading for $45/share with $15/share in cash and $15/year in earnings for the next two years via orders in hand.

38:30 GFC

Interesting anecdote where Pabrai met Michael Burry during the 2008 crisis and gets an intense drilldown of CDSs, tranches, how to short it, etc.

This guy's the Zelig of the investment world. He shows up everywhere.

50:30 Walter Schloss' 40-cent dollars

Interesting to note that Pabrai bought into Satyam when the market cap was 4x earnings (and growing fast), and well below its real estate value in Hyderabad - the stock appreciated 150x.

Of course Pabrai was well-versed with the IT business - but sometimes good things happen when your downside is simply low.

Reminds us of Buffett's description of Schloss' technique in his Superinvestors essay (which we remember fondly at the start of our investment journey):

"Walter has diversified enormously, owning well over 100 stocks currently. He knows how to identify securities that sell at considerably less than their value to a private owner. And that's all he does.

He simply says, if a business is worth a dollar and I can buy it for 40 cents, something good may happen to me. And he does it over and over and over again.

He owns many more stocks than I do - and is far less interested in the underlying nature of the business."

This is the focus of our efforts - to identify securities that sell for considerably less than the business would be worth to a private owner.

Until next time, Cheers!

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