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Newsletter - November 11th, 2023

Dear Reader,

Attached is our latest list of stocks passing value screens (low EV/ebit, high returns on invested capital, 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:




Notes on a recent Pabrai chat with Harvard business school:

12:15 Keep the risk down

Focus on downside protection. Buy hated, unloved, oversold stocks - stocks worth more than their price, which are subject to what Ben Graham called "under-speculation" or to undue pessimism because of a shrinkage in earnings.

27:30 Basic businesses at low multiples

During the dotcom boom, Pabrai invested in basic businesses (funeral homes, steel and coal companies, etc.) selling at low multiples of earnings - with outstanding results.

35:00 Value investing still untaught

It seems a quirk of human nature that value investing either clicks immediately with people or never does - thankfully it offers a safe and profitable method to make a living.

41:00 Turkey fear

Investing in Turkey still sounds hairy - but Pabrai's success is an illustration of the stock market being an avenue where wealth is transferred from the active to the inactive.

1:20:15 Let the winners run

This is where most of the outperformance is.

1:33:30 No need to lever

The margin of safety is sufficient for satisfactory performance. Having a good defence is more than half the battle in investing.

We seek low leverage even in the businesses we invest in - generally they're expected to face headwinds and a lack of leverage increases their chances of survival. As a bonus, excess cash gives them valuable options in a downturn. Join today to access our stock ideas.


Wish you an excellent week ahead.


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