Nov 202 min read

Newsletter - November 19th, 2024

Dear Reader,

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

Mohnish Pabrai Latest

Notes on his recent talk to the University of Nebraska below:

2:00 "Win-win" business models

Pabrai quotes Charlie Munger favoring win-win business models - as opposed to predatory models that exploit reluctant customers. These may be safer bets over time - due to long-term stability and customer loyalty - while avoiding regulatory risks and public backlash.

He cites Costco, which acts as a buying agent for customers (limiting mark-ups to 15%), as an excellent win-win model.

He then contrasts this with controlling stakes in win-lose models (though highly profitable businesses):

5:30 Conwood Tobacco - Chewing tobacco (oral cancer)

13:45 Valeant - Pharmaceuticals (raising prices of essential drugs)

18:00 Credit Acceptance - Car loans (repossession of cars on first delayed payment)

24:00 Transdigm - Aerospace parts (excessive raising of prices due to monopolistic position)

28:00 Inversion

Munger's filtering process was focused on throwing out ideas fast.

Instead of asking why a specific stock would be a favorable investment, invert and ask how it will fail.

(In conjunction with the win-win point above, avoid businesses with "pissed off" customers.)

43:30 Time and Compounding

Try your best not to interrupt the compounding of capital.

Life throws up health emergencies, and these can't be avoided - but otherwise, it's best not to interrupt the compounding with discretionary expenditures (and frequent trading).

For reports on the best investment values in stocks worldwide:

Join Here

Wish you an excellent week ahead.

Newsletter - November 19th, 2024

Dear Reader,

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

Mohnish Pabrai Latest

Notes on his recent talk to the University of Nebraska below:

2:00 "Win-win" business models

Pabrai quotes Charlie Munger favoring win-win business models - as opposed to predatory models that exploit reluctant customers. These may be safer bets over time - due to long-term stability and customer loyalty - while avoiding regulatory risks and public backlash.

He cites Costco, which acts as a buying agent for customers (limiting mark-ups to 15%), as an excellent win-win model.

He then contrasts this with controlling stakes in win-lose models (though highly profitable businesses):

5:30 Conwood Tobacco - Chewing tobacco (oral cancer)

13:45 Valeant - Pharmaceuticals (raising prices of essential drugs)

18:00 Credit Acceptance - Car loans (repossession of cars on first delayed payment)

24:00 Transdigm - Aerospace parts (excessive raising of prices due to monopolistic position)

28:00 Inversion

Munger's filtering process was focused on throwing out ideas fast.

Instead of asking why a specific stock would be a favorable investment, invert and ask how it will fail.

(In conjunction with the win-win point above, avoid businesses with "pissed off" customers.)

43:30 Time and Compounding

Try your best not to interrupt the compounding of capital.

Life throws up health emergencies, and these can't be avoided - but otherwise, it's best not to interrupt the compounding with discretionary expenditures (and frequent trading).

For reports on the best investment values in stocks worldwide:

Wish you an excellent week ahead.

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