Value Investing Podcast: Recent Episodes
Jun Kim, CFA
A BETTER LIFE IS WITHIN YOUR REACH! Value Investing podcast covers knowledge and discipline that you need to bring financial success to your life. In terms of knowledge, this podcast will deliver wisdom from legendary investors such as Warren Buffett and Peter Lynch and in terms of discipline, this podcast will train you to be a wise and long term investor. Enjoy the podcast!
This episode covers the following four stages of making BIG money in the stock market.
Level 1 (Easy - medium): Research on the companies Level 2 (Easy): Buy the companies that you like Level 3 (Difficult): Accumulate enough shares to make a meaningful impact Level 4 (Very difficult): Stay invested in the long term
This episode covers the important of right spending habits and their impacts on your wealth over time.
This episode covers two strong secular trends; 1) rise in ecommerce and 2) rise in the internet usage.
Most books cover how to make money, but not cover what to do with money at different stages of becoming rich. In this episode, I talk about my views at different stages.
Why don't we put growth into value investing framework instead of considering the two separately?
This episode covers The Cheesecake Factory (CAKE).
You can find the details of the investment ideas here (https://shareinvestmentideas.com/2020/08/01/cake-the-cheesecake-factory-could-be-a-good-buy-now/)
In this episode, I talk about CARS.com which is the company that I own in my portfolio and which I believe is undervalued at the current price $5.91 as of this recording on July 18.
You can find the details of the investment ideas here (https://shareinvestmentideas.com/2020/07/18/cars-low-risk-and-potentially-big-return-at-current-price-5-91/).
In this episode, I revisit the stocks (EBAY, SWBI, M, KHC) that I talked about one and half years ago. The main focus is to discuss the main business developments and also one and half year performance relative to S&P500.
I also wrote investment articles last year regarding the four stocks here ( https://shareinvestmentideas.com/)
SWBI deck for its spinoff rationale (https://ir.smith-wesson.com/static-files/e64b6622-49e5-4413-8e16-4bd465cb4b8d)
In this episode, I cover my portfolio in terms of my investment strategy change and individual stocks (M, EBAY, AOBC, SWBI,CAKE, CARS, CPRI) that I have bought and sold during the Covid-19 pandemic.
Berkshire Hathaway Annual Shareholders Meeting 2020: Youtube Link
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I talk about four companies (Macy's, Cars.com, The Cheesecake Factory, Capri Holdings) in this episode and assess their survival probability by looking at their liquidity conditions.
Stock tickers (M, CARS, CAKE, CPRI)
Donate: https://valueinvestpodcast.com/en/donate/
Dow Jones Historical Chart: https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart
Spanish Flu: https://www.cdc.gov/flu/pandemic-resources/1918-pandemic-h1n1.html
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Howard Marks' memo about coronavirus: https://www.oaktreecapital.com/docs/default-source/memos/weekly.pdf?sfvrsn=8
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This episode covers my views on Coronavirus and the recent market drop.
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This episode covers six things that prevent your investing success.
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Knowing What You Don't know in Howard Marks’ book – The Most Important Thing (Link to buy from Amazon: https://amzn.to/2ZYx6rO).
Patient Opportunism in Howard Marks’ book – The Most Important Thing (Link to buy from Amazon: https://amzn.to/2ZYx6rO).
Chapter 12: Finding bargains in Howard Marks’ book – The Most Important Thing (Link to buy from Amazon: https://amzn.to/2ZYx6rO).
Chapter 11: Contrarianism in Howard Marks’ book – The Most Important Thing (Link to buy from Amazon: https://amzn.to/2ZYx6rO).
Chapter 10: Combating Negative Influences in Howard Marks' book - The Most Important Thing (Link to buy from Amazon: https://amzn.to/2ZYx6rO).
Chapter 8: Everything is a cycle in Howard Marks' book - The Most Important Thing (Link to buy from Amazon: https://amzn.to/2ZYx6rO).
Chapter 6 & 7: Recognizing and Controlling Risk in Howard Marks' book - The Most Important Thing (Link to buy from Amazon: https://amzn.to/2ZYx6rO).
Chapter 5: Understanding Risk in Howard Marks' book - The Most Important Thing (Link to buy from Amazon: https://amzn.to/2ZYx6rO).
I talk about a book called The Most Important Thing By Howard Marks (https://amzn.to/2ZYx6rO).
I discuss how hedge fund managers are using alternative data for their investing decisions.
16 Investing rules by a legendary value investor John Templeton
https://www.franklintempleton.com/forms-literature/download/TL-R16
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
Reference Documents: 1986 Berkshire Hathaway Shareholder Letter
Donate: https://valueinvestpodcast.com/en/donate/
16 Investing rules by a legendary value investor John Templeton
https://www.franklintempleton.com/forms-literature/download/TL-R16
This episode covers the advantages and disadvantages that retail investors have over institutional investors such as hedge fund and private equity fund managers.
This episode is a reply of EP7 which was originally aired on April 28, 2018.
In this episode, I discuss the following two topics. 1) Basics of insurance business in terms of how insurance companies make money and why Buffett likes them 2) Warren Buffett’s investment on an insurance company called GEIGO
Two key terms for the valuation of insurance companies
“Float”, or available reserve, is policyholder money held, but not owned, by insurers, which comes about because there exist time intervals between received premiums and incurred losses to be paid out, usually more than a year. Float = Policy holder money held (Liability side) – Policy holder money not held yet (Asset Side) = [loss and loss adjustment reserves + unearned premium + fund held under reinsurance assumed + other policy holder liabilities] – [premium receivables + loss recoverable + deferred policy acquisition costs + deferred charges on reinsurance + prepaid taxes]
Combined ratio = (Incurred Losses + Expenses) / Earned Premium
Podcast website: https://valueinvestpodcast.com/
I talk about Amazon CEO Jeff Bezos' Management Philosophy illustrated in 2016 letter to Amazon's shareholders (https://www.sec.gov/Archives/edgar/data/1018724/000119312517120198/d373368dex991.htm)
Podcast website (https://valueinvestpodcast.com)
I discuss four behavioral biases that stem from the following emotional errors.
Loss aversion Overconfidence Self-control bias Endowment bias Regret aversion Status quo bias
https://shareinvestmentideas.com/
https://valueinvestpodcast.com/
I discuss four behavioral biases that stem from cognitive errors.
Website: https://valueinvestpodcast.com
I discuss five behavioral biases that stem from cognitive errors.
https://valueinvestpodcast.com
This episode covers the topics related to common investing mistakes.
Podcast homepage: https://valueinvestpodcast.com/My investment Idea website: https://shareinvestmentideas.com/
I talk about 7 reasons as to why Korean stock market is undervalued right now, and why it is important for the US investors to expand their circle of confidence in other foreign markets.
I discuss two stocks, Macy's (M) and Kraft Heinz (KHC) that I own in this episode. Nothing in this episode is a solicitation of buying any stocks. Please consult with your investment professional for any investment decisions.
You can find my articles with respect to Ebay and AOBC about the stocks on https://shareinvestmentideas.com
This episode covers 2018 Berkshire Hathaway shareholder letter by Warren Buffett. http://www.berkshirehathaway.com/letters/2018ltr.pdf
New mark-to-market GAAP rule Book value no longer useful as a proxy to the intrinsic value of BerkshireGuide to Berkshire's intrinsic value calculationFour funding sourcesThe American tailwind
Check out my investment ideas athttps://shareinvestmentideas.com/
I discuss two stocks (Ebay and AOBC) that I own in this episode. Nothing in this episode is a solicitation of buy of any stocks. Please consult with your investment professional for any investment decisions.
You can find my articles with respect to Ebay and AOBC about the stocks on https://shareinvestmentideas.com
I am making this short recording to make an announcement that going forward, I plan to post one episode in two weeks instead of one episode a week.
Also, check out my investment ideas: https://shareinvestmentideas.com
This episodes covers the key items that you need to check prior to investing in risk arbitrage situations.
Check out my investment ideas on https://shareinvestmentideas.com
This episode covers the traits of a good management team and how an investor can identify them.
Check out this free website where you can share your investment ideas with other investors (https://shareinvestmentideas.com/)
This episode covers a concept called margin of safety and why it is not easy for an average investor to implement it in their investment decisions.
Podcast website: https://valueinvestpodcast.com/
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This episode covers a concept called economic moat in detail and discusses various types of business models that have the economic moat.
Podcast website: https://valueinvestpodcast.com/
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We discuss 12 fun facts about Warren Buffet that you may have not known before.
Podcast website: https://valueinvestpodcast.com/
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We continue to discuss five more mistakes by investors that Philip Fisher mentioned in his book.
Don’t overstress diversification Don’t forget your Gilbert and Sullivan Dont be afraid of buying on a war scare Don’t fail to consider time as well as price in buying a true growth stock Don’t follow the crowd
The content of this episode was from Philip Fisher’s book (Common Stocks and Uncommon Profits: https://amzn.to/2QRM7mR)
Podcast website: https://valueinvestpodcast.com/
This episode covers Philip Fisher’s advice on the five things that investors shouldn’t do.
Don’t buy into promotional companies Don’t ignore a good stock just because it is traded “over the counter” Don’t buy a stock just because you like the tone of its annual report Don’t assume that the high price at which a stock may be selling in relation to earnings is necessarily an indication that further growth in those earnings has largely been already discounted in the price Don’t quibble over eighths and quarters
The content of this episode was from Philip Fisher’s book (Common Stocks and Uncommon Profits: https://amzn.to/2QRM7mR)
Podcast website: https://valueinvestpodcast.com/
The last episode covered Philip Fisher’s advice on when to BUY stocks and this episode covers when to SELL stocks.
The content of this episode was from Philip Fisher’s book (Common Stocks and Uncommon Profits: https://amzn.to/2QRM7mR)
Podcast website: https://valueinvestpodcast.com/
This episode covers Philip Fisher’s advice on the best timing of your stock purchase.
The content of this episode was from Philip Fisher’s book (Common Stocks and Uncommon Profits: https://amzn.to/2QRM7mR)
Podcast website: https://valueinvestpodcast.com/
Donate: https://valueinvestpodcast.com/donate/
We continue to talk about the remaining 7 points (out of 15 points) that Philip Fisher checks when buying a company.
Does the company have depth to its management? How good are the company’s cost analysis and accounting controls? Are the other aspects of the business, somewhat peculiar to the industry involved, which will give the investor important clues as to how outstanding the company may be in relation to its competition? Does the company have a short-range or long-range outlook in regard to profits? In the foreseeable future will the growth of the company require sufficient equity financing so that the larger number of shares then outstanding will largely cancel the existing stockholders’ benefit from this anticipated growth? Does the management talk freely to investors about its affairs when things are going well but “clam up” when troubles and disappointments occur? Does the company have a management of unquestionable integrity?
The content of this episode was from Philip Fisher’s book (Common Stocks and Uncommon Profits: https://amzn.to/2QRM7mR)
Podcast website: https://valueinvestpodcast.com/
Donate: https://valueinvestpodcast.com/donate/
This episode covers the first 8 points (out of 15 points) that Philip Fisher checks when buying a company.
Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years? Does the management have a determination to continue to develop products or processes that will still further increase total sales potentials when the growth potentials of currently attractive product lines have largely been exploited? How effective are the company’s research and development efforts in relation to its size? Does the company have an above-average sales organization? Does the company have a worthwhile profit margin? What is the company doing to maintain or improve profit margins? Does the company have outstanding labor and personnel relations? Does the company have outstanding executive relations?
The content of this episode was from Philip Fisher’s book (Common Stocks and Uncommon Profits: https://amzn.to/2QRM7mR)
Podcast website: https://valueinvestpodcast.com/
Donate: https://valueinvestpodcast.com/donate/
This episode covers how Peter Lynch utilized Master Limited Partnership (MLP) investment opportunities in the stock market. List of current MLPs: https://www.mlpassociation.org/mlp-101/list-of-current-mlps/ The content of this episode was from his book (Beating the Street: https://amzn.to/2yklmzj) Podcast website: https://valueinvestpodcast.com/ Donate: https://valueinvestpodcast.com/donate/
This episode covers how Peter Lynch analyzes cyclical stocks through the examples of Phelps Dodge and General Motors.
Reference link for total vehicle sales: https://fred.stlouisfed.org/graph/?g=lRSi
The content of this episode was from his book (Beating the Street: https://amzn.to/2yklmzj)
Podcast website: https://valueinvestpodcast.com/
Donate: https://valueinvestpodcast.com/donate/
This episode covers the following Peter Lynch’s 8 criteria for finding undervalued bank stocks.
Initial offering price < Current stock price Equity to assets ratio >7.5% Dividend paying stocks are a plus Book value > Current stock price PE Ratio < 11 High risk real estate assets < 10% Real estate owned < 1% 90 day nonperforming assets < 2%
The content of this episode was from his book (Beating the Street: https://amzn.to/2yklmzj)
Podcast website: https://valueinvestpodcast.com/
Donate: https://valueinvestpodcast.com/donate/
We continue to talk about the investing rules by Peter Lynch and this episode covers the following 8 rules.
There is always something to worry about. Avoid weekend thinking and ignore the latest dire predictions of the newscasters. Sell a stock because the company’s fundamentals deteriorate, not because the sky is falling.
Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.
If you study 10 companies, you’ll find 1 for which the story is better than expected. If you study 50, you’ll find 5. There are always pleasant surprises to be found in the stock market – companies whose achievements are being overlooked on Wall Street.
If you don’t study any companies, you’ll have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Time is on your side when you own shares of superior companies. You can afford to be patient – even if you missed Wal-Mart in the first five years, it was a great stock to own in the next five years. Time is against you when you own options.
If you have the stomach for stocks, but neither the time nor the inclination to do the homework, invest in equity mutual funds. Here, it’s a good idea to diversify. You should own a few different kinds of funds, with managers who pursue different styles of investing: growth, value, small companies, large companies, etc. Investing in six of the same kind of fund is not diversification. The capital gains tax penalizes investors who do too much switching from one mutual fund to another. If you’ve invested in one fund or several funds that have done well, don’t abandon them capriciously. Stick with them.
Among the major markets of the world, the U.S. market ranks eighth in total return over the past decade. You can take advantage of the faster-growing economies by investing some of your assets in an overseas fund with a good record.
In the long run, a portfolio of well-chosen stocks and/or equity mutual funds will always outperform a portfolio of bonds or a money-market account. In the long run, a portfolio of poorly chosen stocks won’t outperform the money left under the mattress.
The content of this episode was from his book (Beating the Street: https://amzn.to/2yklmzj) Podcast website: https://valueinvestpodcast.com/ Donate: https://valueinvestpodcast.com/donate/
We continue to talk about the investing rules by Peter Lynch and this episode covers the following 8 rules.
Never invest in a company without understanding its finances. The biggest losses in stocks come from companies with poor balance sheets. Always look at the balance sheet to see if a company is solvent before you risk your money on it. Avoid hot stocks in hot industries. Great companies in cold, no growth industries are consistent big winners. With small companies, your better off to wait until they turn a profit before you invest. If you're thinking about investing in a troubled industry, buy the companies with staying power. Also, wait for the industry to show signs of revival. Buggy whips and radio tubes were troubled industries that never came back. If you invest $1,000 in a stock, all you can lose is $1,000, but you stand to gain $10,000 or even $50,000 over time if you're patient. The average person can concentrate on a few good companies, while the fund manager is forced to diversify. By owning too many stocks, you lose this advantage of concentration. It only takes a handful of big winners to make a lifetime of investing worthwhile. In every industry and every region of the country, the observant amateur can find great growth companies long before the professionals have discovered them. A stock-market decline is as routine as a January blizzard in Colorado. If you're prepared, it can't hurt you. A decline is a great opportunity to pick up the bargains left behind by investors who are fleeing the storm in panic. Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and stock mutual funds altogether.
The content of this episode was from his book (Beating the Street: https://amzn.to/2yklmzj)
Podcast website: https://valueinvestpodcast.com/
Donate: https://valueinvestpodcast.com/donate/
This episode covers the first 9 investing rules by Peter Lynch
Investing is fun, exciting, and dangerous if you don't do any work. Your investor's edge is not something you get from Wall Street experts. It's something you already have. You can outperform the experts if you use your edge by investing in companies or industries you already understand. Over the past three decades, the stock market has come to be dominated by a herd of professional investors. Contrary to popular belief, this makes it easier for the amateur investor. You can beat the market by ignoring the herd. Behind every stock is a company, find out what it's doing. Often, there is no correlation between the success of a company's operations and the success of its stock over a few months or even a few years. In the long term, there is a 100 percent correlation between the success of the company and the success of its stock. This disparity is the key to making money; it pays to be patient, and to own successful companies. You have to know what you own, and why you own it. "This baby is a cinch to go up!" doesn't count. Long shots almost always miss the mark. Owning stocks is like having children - don't get involved with more than you can handle. The part-time stock picker probably has time to follow 8-12 companies, and to buy and sell shares as conditions warrant. There don't have to be more than 5 companies in the portfolio at any time. If you can't find any companies that you think are attractive, put your money into the bank until you discover some.
The content of this episode was from his book (Beating the Street: https://amzn.to/2yklmzj) Podcast website: https://valueinvestpodcast.com/ Donate: https://valueinvestpodcast.com/donate/
This episode covers Buffett’s views on
Global diversification strategy Macro economy outlook consideration Pros and cons of buying the entire business against buying a portion of business in the stock market
Reference on today's show: 1994 Berkshire Hathaway Annual Meeting: https://www.youtube.com/watch?v=fjXZbW8ALRA
Podcast website: https://valueinvestpodcast.com/
Donate: https://valueinvestpodcast.com/donate/
This episode covers Buffett’s views on
How to identify good management teams for your investments How to deal with the investment analysis by others Buffett's investment in Saloman Brothers (asked by Bill Ackman)
1994 Berkshire Hathaway Annual Meeting: https://www.youtube.com/watch?v=fjXZbW8ALRA The content of this episode was from his book (Beating the Street: https://amzn.to/2yklmzj) Podcast website: https://valueinvestpodcast.com/ Donate: https://valueinvestpodcast.com/donate/
This episode covers Buffett's views on
Use of derivatives Intrinsic value calculation in terms of cash flow and discount rate Intrinsic value calculation for insurance business
1994 Berkshire Hathaway Annual Meeting: https://www.youtube.com/watch?v=fjXZbW8ALRA The content of this episode was from his book (Beating the Street: https://amzn.to/2yklmzj) Podcast website: https://valueinvestpodcast.com/ Donate: https://valueinvestpodcast.com/donate/
In his book (You Can Be a Stock Market GENIUS), Joel Greenblatt provided the following four tips via a spinoff case study (Strattec Security) on how to identify good spinoff opportunities.
Check if the spin-off is small in size for institutional investors Check insider ownership Check pro forma statements and derive an intrinsic value conservatively Look for hidden information that could dramatically change the intrinsic value
Joel Greenblatt's book (You Can Be a Stock Market GENIUS): https://amzn.to/2vjCwfX Podcast website: https://valueinvestpodcast.com/ Donate: https://valueinvestpodcast.com/donate/
A legendary value investor, Joel Greenblatt, explains why value investors should pay special attention to spin-off stocks. This episode shows you how Joel Greenblatt identified a very attractive investment opportunity from Marriott's spin-off that happened in the past. The spin-offs that involve the following points would give you a better chance for your investment success.
Institutions don't want it and their reasons don't involve the investment merits Insider wants it A previously hidden investment opportunity is created or revealed
Joel Greenblatt's book (You Can Be a Stock Market GENIUS): https://amzn.to/2vjCwfX
Podcast website: https://valueinvestpodcast.com/
Donate: https://valueinvestpodcast.com/donate/
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.
Joel Greenblatt's book (You Can Be a Stock Market GENIUS): https://amzn.to/2vjCwfX
Podcast website: https://valueinvestpodcast.com/
Donate: https://valueinvestpodcast.com/donate/
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.
Joel Greenblatt's book (You Can Be a Stock Market GENIUS): https://amzn.to/2vjCwfX
Podcast website: https://valueinvestpodcast.com/
Donate: https://valueinvestpodcast.com/donate/
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.
Joel Greenblatt's book (You Can Be a Stock Market GENIUS): https://amzn.to/2vjCwfX
Podcast website: https://valueinvestpodcast.com/
Donate: https://valueinvestpodcast.com/donate/
I created three episodes to explain the basics of analyzing bank stocks which are a black box to many investors. This episode covers how you can find undervalued bank stocks through five steps.
Get a list of banks and narrow the list via Price to Book and Price to Earning ratios Understand why the banks are undervalued in terms of the two ratios. In many cases, the undervaluation is due to troubled assets or loans Evaluate whether or not the banks have an appropriate level of capital and reserve relative to troubled assets and loans Analyze their financial statements (balance sheet and income statement) Assess the quality of the executive management team via previous shareholder's letters
The Bank Investor's Handbook: https://amzn.to/2JnWsm3 Podcast website: https://valueinvestpodcast.com/ Donate: https://valueinvestpodcast.com/donate/
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.
The Bank Investor's Handbook: https://amzn.to/2JnWsm3
Podcast website: https://valueinvestpodcast.com/
Donate: https://valueinvestpodcast.com/donate/
I will create three episodes to explain the basics of analyzing bank stocks which are a black box to many investors. This episode covers the bank business model in terms of how they make money, what deposit structure and lending portfolio mix are generally good for investors. Additionally, I explain why it is important for investors to look at Common Equity Tier 1 (CET1) ratio and understand the current capital level of a bank. The next two episodes will cover how you can analyze the financial statements of a bank and how you can identify undervalued banks in the stock market.
The Bank Investor's Handbook: https://amzn.to/2JnWsm3
Podcast website: https://valueinvestpodcast.com/
Donate: https://valueinvestpodcast.com/donate/
This episode covers how management's decision on capital allocation policy can greatly affect the value of your investment in the long term. Earnings/capital can be allocated in various ways. Warren Buffet mentioned in his shareholder letters as to when it makes sense to use one option vs. the other. Later, I discuss how you can get a hint of whether the management team acts in the best interest of long-term shareholders.
The following capital allocation options are discussed in this episode.
Reinvested back into the business to maintain the current operation Reinvested back into the business to grow the business Used to acquire other businesses via M&A deals Parked and invested in marketable securities such as Treasury Bills Distributed to shareholders in the form of dividends Distributed to shareholders through share-repurchase program
Podcast website: https://valueinvestpodcast.com/
Donate: https://valueinvestpodcast.com/donate/
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.
Estimate the first year normalized future cash flow after excluding unexpected items Determine the first stage growth rate depending on the characteristics of the business Calculate a terminal value by assuming that the company is mature 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/ Podcast website: https://valueinvestpodcast.com/ Donate: https://valueinvestpodcast.com/donate/
This episode and next episode cover four valuation approaches to derive an intrinsic value of a company. Ratio-based approach (covered in this episode)Asset-based approach (covered in this episode)Acquisition approach (covered in this episode)Discounted Cash Flow approach (covered in the next episode) Podcast website: https://valueinvestpodcast.com/ Donate: https://valueinvestpodcast.com/donate/
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: https://valueinvestpodcast.com/
Donate: https://valueinvestpodcast.com/donate/
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.
Large purchases (at least $75 million of pre-tax earnings unless the business will fit into one of our existing units), Demonstrated consistent earning power (future projections are of no interest to us, nor are “turnaround” situations), Businesses earning good returns on equity while employing little or no debt, Management in place (we can’t supply it), Simple businesses (if there’s lots of technology, we won’t understand it), 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: https://valueinvestpodcast.com/
Donate: https://valueinvestpodcast.com/donate/
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
Reference Documents: 1986 Berkshire Hathaway Shareholder Letter
Podcast website: https://valueinvestpodcast.com/
Donate: https://valueinvestpodcast.com/donate/
This episode covers the concept called Mr. Market that teaches how you can be prepared with short-term stock price fluctuations. It is a very simple concept to understand, but it is not an easy concept to implement in real life if you are an emotional person and are attached to the money invested in the stock market. Remember that Mr. Market is there to serve you, not to guide you.
Reference Documents: 1987 Berkshire Shareholder Letter; 1985 Berkshire Shareholder Letter
Podcast website: https://valueinvestpodcast.com/
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This episode covers Warren Buffett's views on why "independent" directors may not be best positioned to represent a majority of shareholder under the current corporate system, and how the board of directors should perform their job on behalf of shareholders. Warren Buffett provides his own criteria to select the best directors who can truly be independent and are willing to challenge a forceful CEO.
Reference Documents: 1993 Berkshire Shareholder Letter; 2002 Berkshire Shareholder Letter; 2004 Berkshire Shareholder Letter
Podcast website: https://valueinvestpodcast.com/
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Followed by the EP8 which covered the first 7 business principles, this episode covers the rest of 8 business principles in the owner's manual written by Warren Buffett for Berkshire Hathaway shareholders. The purpose of the manual is to explain Berkshire’s economic principles of operation and the manual is included in every annual letter for new shareholders as a reference to understand the important principles behind how Buffett and Munger run the company. Owner's Manual: http://www.berkshirehathaway.com/ownman.pdf Podcast website: https://valueinvestpodcast.com/ Donate: https://valueinvestpodcast.com/donate/
This episode covers the first 7 business principles of the owner's manual written by Warren Buffett for Berkshire Hathaway shareholders. The purpose of the manual is to explain Berkshire’s economic principles of operation and the manual is included in every annual letter for new shareholders as a reference to understand the important principles behind how Buffett and Munger run the company. The rest of the 8 principles will be covered in the next episode. Owner's Manual: http://www.berkshirehathaway.com/ownman.pdf Podcast website: https://valueinvestpodcast.com/ Donate: https://valueinvestpodcast.com/donate/
In this episode, I discuss the following two topics.1) Basics of insurance business in terms of how insurance companies make money and why Buffett likes them2) Warren Buffett's investment on an insurance company called GEIGO Two key terms for the valuation of insurance companies “Float”, or available reserve, is policyholder money held, but not owned, by insurers, which comes about because there exist time intervals between received premiums and incurred losses to be paid out, usually more than a year.Float = Policy holder money held (Liability side) – Policy holder money not held yet (Asset Side)= [loss and loss adjustment reserves + unearned premium + fund held under reinsurance assumed + other policy holder liabilities] – [premium receivables + loss recoverable + deferred policy acquisition costs + deferred charges on reinsurance + prepaid taxes] Combined ratio = (Incurred Losses + Expenses) / Earned Premium Podcast website: https://valueinvestpodcast.com/ Donate: https://valueinvestpodcast.com/donate/
In this episode, I discuss the following two topics in Buffett's investment partnership letters. 1) 1967 letter on why Buffett thinks that his past 10-year outstanding performance would not be replicated in the future 2) 1969 letter on the decision to liquidate Buffett's investment partnership despite the incredibly successful past performance
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In this episode, I discuss the following two topics in Buffett's early investment partnership letters. 1) Buffett's views on why institutional investors do not perform as well as the general market 2) Why Buffett thinks that a conventional diversification strategy does not make sense for his investment portfolio
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In this episode, I discuss four topics regarding Buffett's investment partnership.1) Deep dive analysis on why Buffett invested in a company called Dempster Mill manufactoring,2) Buffett's definition of conservative investing,3) A growing fund size and its impact and4) Investment performance relative to the market. Podcast website: https://valueinvestpodcast.com/ Donate: https://valueinvestpodcast.com/donate/
In this episode of Value Investing, I discuss how well the first Warren Buffett's investment partnership had performed in its 12 years of operation relative to other mutual funds and the market. In the second half, I perform a deep-dive analysis on why Buffet purchased two stocks that accounted for 25% and 35% of his total portfolio value.
Podcast website: https://valueinvestpodcast.com/
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In this episode, I talk about how Warren Buffett started his first investment partnership with a small amount of money and compare his fund's fee structure against that of general hedge funds today. In the second part of the episode, I discuss the three strategies that Warren Buffett used at his early investment career. Podcast website: https://valueinvestpodcast.com/ Donate: https://valueinvestpodcast.com/donate/