Newsletter - March 16th, 2024

Dear Reader,

Attached is our latest list of stocks passing value screens (low P/E, low EV/EBITDA, etc.), which 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:

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Steve Schwarzman Bloomberg Interview

Some notes relevant to investing below:

11:45 Wait for prices to pick up

Leave the first 10-15% to someone else.

This is an interesting practical point because we focus on value received and ignore momentum/charts. While we will retain our value focus, we acknowledge this point in avoiding long periods of underperformance.

And it's not just about price. David Tepper made a similar point when he invested in Argentinian bonds after its default in December 2001 - he looked for increases in the country's bank deposits before investing, which indicated confidence in its government.

Sometimes it pays to wait for things to pick up.

14:00 Minimize risk

Entrepreneurs don't take on risk, they try to minimize risk. In investing, minimize risk by limiting your downside - perhaps by requiring substantial tangible/liquid asset values, and/or other business factors where you can't lose much.

15:15 Two or three key drivers

Look for the two or three key drivers in any investment that can make a mess of things. If you can get a grip on the variability of these factors, you can limit your investment risk.

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Wish you an excellent week ahead.