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Newsletter - May 20th, 2023

Updated: May 21

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:


We were watching Sam Zell interviews last week when news flashed that he passed away two days ago. This edition is a compilation of notes from some of his interviews. Some of his points may be repetitive but they're important:


Sam Zell

Notes at timestamps below:

25:00 Best Deal

Zell's best deal was in Toledo, Ohio - the "armpit" of the nation. There wasn't an insurance company willing to underwrite a loan there - no competition, so margins were favorable.

Opportunities usually arise where everyone's avoiding a situation.

"What you're looking for in investments is stability, barriers to entry, and a rate of return."

43:30 Market Timing

"Every time you're a seller, you're also a buyer" (even if it's treasuries).

"Stepping out of the arc" is dangerous and the opportunity cost could be significant.


21:30 Be Opportunistic

"You can have a bad deal in a hot market and a good deal in a cold market."

"Some of the best deals I've made was during stress."

23:00 Focus on the downside

How bad can it get? If you protect your downside, the rest will take care of itself.

29:00 Everything you do should be understandable

Surprising to hear Zell didn't invest in real estate in the last eight years.

Only do deals where the value and pricing makes sense to you.

32:15 Don't get too statistical

Basic valuation is enough. Courage to act is more important.

36:30 Staying Power

Is critical to give investments the time to work out.

39:00 Farmland Yield

Is barely 1.5%-2.0%, not worthwhile.


54:30 Downside analysis

Liquidation value for downside analysis - quantify the risk before you invest.


1:03:30 Simplest Execution

Always choose the path of simplest execution - underestimated risk.


3:45 Understand where the fulcrum of risk is

Zero in on where the risk of losing money is, and minimize it. Rigorously test the sensitivity of your assumptions there.

18:30 Simplify everything

Distill the investment idea in a few sentences.

20:45 Freedom

Never give it up.

23:00 Never reach your goals

Always stretch. Echoing Buffett, paint a painting that'll never be finished - fruitful attitude to life.


14:00 Simplify everything

Respect the risk of execution. Minimize the number of moving parts for an investment to work.

15:30 Control the downside

Control the risk.

23:15 Ideal Negotiation

Is where both parties are indifferent to taking the other side of the deal

Zell gave an extra 0.25% to Merill Lynch bond investors to build goodwill for future financing.

Keep your counterparties happy, build long-term relationships.

28:45 Contrarian riches

Most fortunes were made thinking unconventionally.

And high profit margins are rare.

40:45 "Buy a Ticket"

You can't win if you don't play.


14:30 Statistics may not reveal oversupply

Insightful anecdote where Zell saw the oversupply in the commercial real estate market before the pandemic.

Wework was overbooking office space in anticipation of demand years down the line - but Zell saw through it. Oversupply was eaten by Wework rather than the market (end-user demand). Statistics are a lagging indicator.

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