Tag Archives: stock investing

EP23 Why Spin-offs are Good For Value Investors by Joel Greenblatt



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A legendary value investor, Joel Greenblatt, explains why value investors should pay special attention to spin-off stocks.  This episode covers the four points that make the spin-offs very attractive investments for individual value investors.

  • The shares of the new spin-off stock are distributed to the existing shareholders of the parent company who usually don’t want the shares.
  • The spin-off companies are usually small in size, and are not worth for institutional investors.
  • The spin-off event unleashes entrepreneurial forces and creates a better incentive and reward system
  • The very act of the spin-off decision by the executive team is a good indication that the executive team is shareholder-oriented

The future episodes will cover the details of what factors you need to look at to identify great spin-off stocks.

More details could be found from this book (You Can Be a Stock Market GENIUS).

Click here (Value Investing Podcast) to visit this podcast website


EP22 Investment Basics (Part 2) by Joel Greenblatt



Support this podcast through your donation: https://paypal.me/valueinvesting

Joel Greenblatt is a legendary value investor who founded a hedge fund Gotham Capital with an astonishing track record of 40% annualized return from 1985 to 2006.  This episode covers the second part of the investment basics that Joel discussed in his book (You Can Be a Stock Market GENIUS).

  • Don’t buy more stocks; Put money in the bank
  • Look down, not up
  • There’s more than one road to investment heaven

The future episodes will cover the details of great special investment opportunities such as spin-offs, merger securities, restructurings, rights offerings, etc.


EP21 Investment Basics (Part 1) by Joel Greenblatt



Support this podcast through your donation: https://paypal.me/valueinvesting

Joel Greenblatt is a legendary value investor who founded a hedge fund Gotham Capital with an astonishing track record of 40% annualized return from 1985 to 2006.  This episode covers the first three investment basics that Joel discussed in his book (You Can Be a Stock Market GENIUS).

  • Do your homework
  • Don’t listen to others
  • Pick your own spots

The future episodes will cover the rest of the investment basics, and discuss the details of great special investment opportunities such as spin-offs, merger securities, restructurings, rights offerings, etc.


EP19 Bank Analysis (Part 2): Financial Statements



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I will create three episodes to explain the basics of analyzing bank stocks which are a black box to many investors. This episode covers how you can analyze banks’ financial statements (balance sheet and income statement), which are vastly different from the financial statements in non-financial companies.  The next episode will cover the steps that you can follow to identify undervalued bank stocks.

Click here (The Bank Investor’s Handbook) to learn more about the book referenced in this episode.


EP16 (Part 2) Business Intrinsic Value Calculation



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Followed by EP15 that covered three main valuation approaches (ratio-based, asset-based, and acquisition-based), this episode covers a Discount Cash Flow (DCF) approach to derive an intrinsic value of a company.  In this episode, I discuss three important questions for the DCF approach and show you how you can estimate the intrinsic value by using a 2-stage DCF analysis.

  1. Estimate the first year normalized future cash flow after excluding unexpected items
  2. Determine the first stage growth rate depending on the characteristics of the business
  3. Calculate a terminal value by assuming that the company is mature
  4. Use an appropriate discount rate (either 30 yr Treasury bond rate or other approaches such as WACC)

Additionally, I cover how you can include conservatism as a value investor in three different places (cash flow projection, discount rate, and margin of safety).

DCF tool available on: https://www.gurufocus.com/

 


EP15 (Part 1) Business Intrinsic Value Calculation



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This episode and next episode cover four valuation approaches to derive an intrinsic value of a company.

  1. Ratio-based approach (covered in this episode)
  2. Asset-based approach (covered in this episode)
  3. Acquisition approach (covered in this episode)
  4. Discounted Cash Flow approach (covered in the next episode)

Podcast Website: http://valueinvesting.blubrry.net/


EP14 Why Long-term Investing Works and Is Not So Easy



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This episode covers seven benefits (four explicit and three implicit benefits) with respect to long-term investing.  Additionally, I do a deep-dive analysis on why most people fail to do the long-term investing despite many benefits, and finally discuss what you can do for your portfolio.

Podcast Website: http://valueinvesting.blubrry.net/


EP13 Six Investment Criteria By Warren Buffett



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This episode covers the following six criteria that Warren Buffett checks when acquiring businesses, and I further discuss how you can apply the Buffett’s criteria into your investment strategy as an individual investor.

  1. Large purchases (at least $75 million of pre-tax earnings unless the business will fit into one of our existing
    units),
  2. Demonstrated consistent earning power (future projections are of no interest to us, nor are “turnaround”
    situations),
  3. Businesses earning good returns on equity while employing little or no debt,
  4. Management in place (we can’t supply it),
  5. Simple businesses (if there’s lots of technology, we won’t understand it),
  6. An offering price (we don’t want to waste our time or that of the seller by talking, even preliminarily, about a
    transaction when price is unknown)

Podcast Website: http://valueinvesting.blubrry.net/


EP12 Owner Earnings By Warren Buffett



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Warren Buffett defined the earnings called “Owner Earnings” that is more relevant to the valuation of a company than the reported earnings on the income statement.  The owner earnings can be calculated by adjusting the reported accounting earnings in the following ways:

Owner Earnings = (a) Reported earnings + (b) depreciation, depletion, amortization and certain other non-cash charges – (c) the average annual amount of capitalized expenditures for plant and equipment

= cash flow from operating activities – capital expenditures

Podcast Website: http://valueinvesting.blubrry.net/

Reference Documents: 1986 Berkshire Hathaway Shareholder Letter