Tag: value investing

 A good friend asked me what were the lessons I learned from this volatile period, and just to be clear, by volatile I mean drawdown. Nobody really calls out volatility when stocks are rising

In this podcast, I share about my journey, the investment framework I favors, how I looks at loss-making companies as well as my thoughts on Chinese stocks such as Alibaba.

Marathon Asset produced several iconic investors such as Nick Sleep and Jeremy Hosking. Their letters from 2002 to 2015 provided a treasure trove of insights into their investment frameworks and how they look at the capital cycle. Here are my main takeaways.

I will go through these two styles of investing with real-life case studies. Get ready to go beyond theory and dive into application.

Using the gross profitability method, a dollar invested in the market between 1973 to 2011 grew to over $80. While the same dollar invested in businesses that have high gross profitability (i.e. above 33%) grew to $572 in the same period.

Reading the financial statements may be daunting for beiginners. This post will bring you through revenue, cost of goods and gross profit with case studies such as Costco, L Brands, Ulta and Ferrari!

Operating leverage is a measurement of how an additional dollar of sales translates into operating profit. A 10% increase in sales may result in a 30% increase in net profits. Likewise, a 10% decline in sales may send a company's earnings into oblivion.

The desperate search for yield has led to a number of people choosing to invest in income funds, or in mature companies providing a high dividend yield. On the surface, it might sound sensible, but it is erroneous. It may lead to investors underestimating the risk of investing in high yield instruments. Moreover, what is less obvious is the opportunity cost of focusing on yield ...

The price-earnings (P/E) multiple has been one of the most popular tool analysts use to value stocks. A company trading at 10x P/E implies that investors are willing to pay 10 times the net income that was generated. In other words for every $1 in net income generated, investors are willing to pay $10 or a 10% earnings yield. Despite its popularity, it remains one ...

Increased engagement due to shelter-in-place measures but some of this increased engagement will be lost once measures are relaxed in the future. Engagement increased by ~10% YOY across all measurements, compared to ~7% in the previous period. Demonstrating that Facebook's attractiveness as a platform for users to connect with their friends and family.

It is important to understand that the intrinsic value of a business is the present value of all the cash generated over its lifetime. And most would agree that COVID-19 would be a temporary event. It would be silly to sell your stocks or to hold on to your investable cash because this year's earnings would show a drastic decline due to COVID-19 induced shutdown.

The moat surrounded Ferrari has proven to benefit investors immensely. Since its spin-off in 2016, it has delivered a CAGR of 37.3%, delivering a 400% return prior to Covid-19 within a short span of 4 years. Comparing this result with Ford, GM, or even the S&P 500, Ferrari has generated astounding returns for its investors.