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Newsletter - March 11th, 2023

Updated: Mar 24, 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:


Notes from 2010 Berkshire AGM below:


2010 Berkshire AGM

Notes at timestamps below:

1:13:45 Debt investing vs. Equity Investing

It is sufficient in debt investing to conclude that the company isn't going out of business.

Equity investing requires more knowledge of the business including: market share, trend of margins, management capability, etc.

Of course if investors can find equities selling for less than the debt that could be safely issued against the enterprise, which is what we look for, they get the ideal combination of safety and profit potential. And they're simpler decisions.

1:52:15 Management's Most Important Job

Widening the "moat"/competitive advantage of the business.

2:48:30 The Thomson Meeting

"I figure if I price it (newspaper advertising) to make 40% pre-tax margins, I'm not gouging." - Lord Roy Thomson

An excellent example of (former) pricing power in the newspaper business.

This was also the insight that led to Buffett swallowing the See's Candies purchase price (at 3x book) - its ability to raise prices without losing market share.

2:50:00 Oasis with small sums

There are always opportunities to overperform with smaller sums of capital (<$100mn); we don't expect to run out of attractive ideas any time soon.

3:10:00 The "Dumb" Kraft Deals

Example of a dumb deal: Kraft selling its growing pizza business tax-inefficiently for 7.4x pre-tax earnings to purchase the Cadbury business for 14.7x pre-tax earnings.

3:16:00 Everyone is Doing It

498 of S&P 500 company CEOs chose the flattering route to options accounting when they knew it was wrong. Do what is right regardless of what others do.

3:21:45 Temperament

If you're susceptible to the fear of the crowd, stock investing is probably not for you. Rational thinking and independent action are keys to success.

3:51:15 Rendering Dead Horses

Go where the competition is weak or non-existent for better results. That's exactly what we try to do among smaller stocks.

4:14:00 Following Your Passion

If you work at something that turns you on, very few will run faster than you - that's your edge. Keep at it.

"The power which resides in him is new in nature, and none but he knows what that is which he can do, nor does he know until he has tried." - Ralph Waldo Emerson


Until next week, Cheers!


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