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Newsletter - June 24th, 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:


Tweedy Browne; San Francisco Real Estate Distress


William H. Browne

Tweedy Browne was Ben Graham's broker and adopted his investment lessons with good results - one of Buffett's "Superinvestors".

William H. Browne is a managing director there, notes at timestamps below:

15:45 Time Horizon

A long time horizon is your competitive advantage - the longer the better. Don't get dismayed by poor short-term results.

20:30 Bond Collateral

Value investing as taught by Ben Graham is an extension of bond investing where we seek collateral with sufficient earning power and tangible equity.

21:45 Underwrite Safe Stocks

Tweedy looks for large discounts to book value, low debt/equity, insiders purchasing stock, recent price declines - factors we weight in our stocks.

23:15 Appraisal

They look for sustainable, growing businesses with competitive advantages.

Stability is a key qualitative factor we value.

29:30 Tweedy's Earnings Threshold

7-8x pre-tax earnings and growing. As smaller investors, we can generally find much better bargains.

36:45 Diversification

Not over 4% initial allocation; 20 stocks comprising 65-70% of the portfolio; and a longer list of stocks for the rest.

When you're smaller you can find many more opportunities - and as Ben Graham said, "To give yourself the best odds statistically, the more stocks you have to play with, the better". He spoke in the context of a simple standard for the margin of safety (twice the bond yield); but if you're unable to predict earnings, more is probably better.


San Francisco Real Estate Distress

Wanted to share an FT article (below) reporting the extent of San Francisco real estate declines, which is surprising.

Usually 60-70 cents on the $ is a floor to real estate prices and lending at these levels wouldn't be considered imprudent even during boom times.

Just goes to show that some geographic diversification is wise.

San Fran_cisco faces risk of prop_erty fire-sale
Download PDF • 127KB


Until next time, Cheers!


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