Jun 82 min read

Newsletter - June 8th, 2024

Dear Reader,

Attached is a recent list of stocks that passed value screens (below net current asset value, 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

Pabrai Latest

Notes on a recent interview below:

0:00:45 Businesslike when young

There's a strong correlation between the age when a person starts their first business and business success.

Even if you've never started your own business, you can succeed at investing by adopting simple temperamental qualities - primarily patience (1:21:15).

33:45/1:11:30 Minimize risk

Entrepreneurs don't take risk, they minimize risk.

Or "Heads I win, Tails I don't lose much" (where the odds are heavily stacked in your favor).

This is the same philosophy in value investing: low risk, high return.

1:15:15 Hated and Unloved stocks

One path to high (and safe) returns is to scavenge among hated and unloved stocks, which is what we do.

1:15:30 Coal industry

Pabrai's thesis is that coal will be required for the next 50 years, and coal companies are available at ~2x earnings.

1:17:00 Auction-driven markets

A review of most traded stocks would reveal 52-week lows and highs that are wide apart.

Public auction-driven markets provide you opportunities to buy shares that are severely mispriced in small blocks, which no businessman (owning control) would sell at.

These are the opportunities available to stock investors, which we try to exploit.

1:34:30 How Ajit Jain's mind works

Jain walks away from business that's inadequately priced, and charges up to 1/3rd of insured value as premiums for super-catastrophes.

The point is to pick your spots, which is also true in investing.

1:37:30 "Trouble is Opportunity"

Attributed to Sir John Templeton, trouble is where you usually find the most mispricing.

Be fearful when the world is greedy, and greedy when the world is fearful.

1:48:00 Reysas Thesis (30x return)

Reysas was selling for $16mn when liquidation value was $800mn.

Kick the tyres to see what's wrong.

Largest warehouse operator in Turkey with 99-year inflation-linked leases. $70-80 per sq ft x 12mn sq ft = ~$1bn minus $200mn of debt = $800mn.

Pabrai considers himself a minority partner in the business.

There are important differences in being an outside minority shareholder vs. an insider - requiring greater caution - but the general businesslike attitude is helpful (followed by inactivity).

For reports on the best investment values in stocks worldwide:

Join Here

Wish you an excellent week ahead.

Newsletter - June 8th, 2024

Dear Reader,

Attached is a recent list of stocks that passed value screens (below net current asset value, 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:

Pabrai Latest

Notes on a recent interview below:

0:00:45 Businesslike when young

There's a strong correlation between the age when a person starts their first business and business success.

Even if you've never started your own business, you can succeed at investing by adopting simple temperamental qualities - primarily patience (1:21:15).

33:45/1:11:30 Minimize risk

Entrepreneurs don't take risk, they minimize risk.

Or "Heads I win, Tails I don't lose much" (where the odds are heavily stacked in your favor).

This is the same philosophy in value investing: low risk, high return.

1:15:15 Hated and Unloved stocks

One path to high (and safe) returns is to scavenge among hated and unloved stocks, which is what we do.

1:15:30 Coal industry

Pabrai's thesis is that coal will be required for the next 50 years, and coal companies are available at ~2x earnings.

1:17:00 Auction-driven markets

A review of most traded stocks would reveal 52-week lows and highs that are wide apart.

Public auction-driven markets provide you opportunities to buy shares that are severely mispriced in small blocks, which no businessman (owning control) would sell at.

These are the opportunities available to stock investors, which we try to exploit.

1:34:30 How Ajit Jain's mind works

Jain walks away from business that's inadequately priced, and charges up to 1/3rd of insured value as premiums for super-catastrophes.

The point is to pick your spots, which is also true in investing.

1:37:30 "Trouble is Opportunity"

Attributed to Sir John Templeton, trouble is where you usually find the most mispricing.

Be fearful when the world is greedy, and greedy when the world is fearful.

1:48:00 Reysas Thesis (30x return)

Reysas was selling for $16mn when liquidation value was $800mn.

Kick the tyres to see what's wrong.

Largest warehouse operator in Turkey with 99-year inflation-linked leases. $70-80 per sq ft x 12mn sq ft = ~$1bn minus $200mn of debt = $800mn.

Pabrai considers himself a minority partner in the business.

There are important differences in being an outside minority shareholder vs. an insider - requiring greater caution - but the general businesslike attitude is helpful (followed by inactivity).

For reports on the best investment values in stocks worldwide:

Wish you an excellent week ahead.

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