ValueArb

Buffett’s best returns were when he traded in and out. He only abandoned that approach when his portfolio got so large it made it difficult or impossible. Same reason he stopped buying net-nets. If you understand the intrinsic value of a thousand bagger well, you should be able to do even better with it by sitting out periods of overvaluation and returning when undervalued. The problems with this approach include: 1) It makes investing a full time job. You have to stay in top of pricing and IV changes to be able to respond quickly to opportunities. You can’t just sit on cash waiting for a specific stock to reach a large discount to IV that may never come, you need to have a full bench of attractive opportunities to redeploy cash into. 2) Tax costs. As you pointed out if you are investing in a taxable account you need to account for tax costs. If you sell a long term holding at IV you will only net around 75% of IV (depending on state tax rate), so if you reinvest proceeds at a 25% discount to IV that was a wash. And it’s worse if you only have short term gains. For long term investments in taxable accounts this strategy only makes sense if you wait to sell at significant premiums to IV such that you net close to IV. That also ensures that you do it rarely and aren’t constantly generating short term capital gains. Obviously in tax deferred accounts the strategy works much better.

FTW. If Buffett had never taken Grahams course at Columbia he’d still be a stock broker in Omaha.

Only if you avoid the evils of the rock and roll as assiduously as Charlie did.

Its profitable without any marketing or R&D expenses! It is going to massively increase installed base on the back of ESP I think. Most amazing company I've seen in quite a while.

Hans Zimmer's film scores. I'm always looking for good instrumentals since there is good research that vocals reduces how deeply you can think as decoding speech requires a lot of the brains computational power, even if it's happening subconsciously below your current focus.

Just came across this preliminary prospectus for Hand in Hand Metaverse Marriage Technology, a Hong Kong based company. "The main business of Hand in Hand Metaverse Marriage Technology Co., Ltd is marriage and love social networking and one-stop marriage and love photography services, focusing on online marriage and love social networking and offline physical store management respectively." "The following chart illustrates our corporate structure, including our subsidiaries, as of the date of this prospectus. The percentages shown on the following chart represent percentages of equity ownership:: "For Internet enterprises, due to the rapid success stage, Internet enterprises are generally in a state of loss. Therefore, PS (market / sales ratio = market value / sales revenue) is generally used in the industry. Match's highest PS value in the past year was 18 times, and the current market gives a PS of 5.46 times. The U. S. stock market is currently in a bear market, the market has been falling for nearly a year, so the current market overall PS is low. At the same time, considering that the target company is a start-up enterprise and is in the stage of rapid development, the valuation should be higher than the mature Match and Buble. Therefore, the reasonable PS valuation of Hand in Hand Metaverse Marriage Technology Co., Ltd is 9 times, and the sensitivity of the company valuation is calculated as follows. PS value of assessment (USD) 2022 2023 2024 PS=6 17,568.08 86,167.23 276,069.77 PS=9 26,352.11 12,9250.85 414,104.66 ps=12 35,136.15 172,334.46 552,139.54 Hand in Hand Metaverse Marriage Technology Co. The development of Ltd is still in its early stages, and it will take time to release the performance. Therefore, it is reasonable to estimate the revenue of 2023. Under reasonable circumstances, the Company's PS value is the 9 times, corresponding to a valuation of $1,292,508,470.32, $2,623,521,144.43 in 2022; in the optimistic circumstances, the Company's PS value is 12 times, $1,292,292; in the pessimistic scenario, $861,672,313.55 for 2022, $1,756,876,762.96. Based on the company valuation by market method, we believe that the reasonable valuation of Hand in Hand Metaverse Marriage Technology Co., Ltd is $861,672,313.55- $1,292,508,470.32. Hand in Hand Metaverse Marriage Technology Co., Ltd Although Ltd has a very broad development potential, it has not been reflected in the financial report at present, and there is great uncertainty in the future, so it adopts a more conservative valuation. Thus, Hand in Hand Metaverse Marriage Technology Co., Ltd.'s reasonable valuation in 2023 is $861,672,313.55. "Hand in Hand Metaverse Marriage Technology Co., Ltd is still in the initial stage of enterprise development, so the income at this stage is relatively single, mainly from the service income of membership fee. The company adopts the promotion mode of partners, transferring the majority of the profits to partners, to ensure that the company can achieve rapid horse racing. According to Hand in Hand Metaverse Marriage Technology Co., Ltd. Corporate Business Development Plan, It is expected in 2023, Hand in Hand Metaverse Marriage Technology Co., Ltd revenue reached $143,612,052.26; In 2024, Hand in Hand Metaverse Marriage Technology Co., Ltd revenue to $460,116,283.93." Hand In Hand Metaverse Marriage Technology Co., Ltd AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME AS OF JULY 31, 2023 (UNAUDITED) (except for share and per share data, unless otherwise noted) July 31, 2023 Total revenues 560,216.50 Cost of revenues 164,138.43 Gross profit 396,078.07 Operating expenses 164,546.50 General and administrative expenses 163,874.24 Financial expenses 672.26 Income from operations 231,531.57 Other income (expense) Other income 0.1 Other expenses 0 Income before income tax expense 231,531.67 Income tax expense 57,882.92

Trump gave the Taliban 18 months to rebuild their forces without worry of air strikes and the date to plan for their offensive. His plan was ridiculous, he was the one who made “cut and run” our strategic plan for Afghanistan. And to be honest, he was right to pull out. Twenty years of wasted US tax dollars after we already got the goat herders who did 9/11. There never should have been a $1B base and it was a sunk cost, not an asset.

If the Fed is really intent on raising rates further (and I do) it should pop this mini-bubble that the techs have enjoyed this year.

Whenever young person asks me if they need to watch Aswath Damodaran videos, my answer say yes if they are planning to get their CFA or work on Wall Street, probably not if they want to become a value investor doing their own analysis and managing their own portfolio. I think the greatest utility and use of DCFs has been in selling stocks to retail clients. It's a wonderful tool for the buy side analyst who has to come up with a compelling valuation for a research report on a company their bank really wants to do business for, as no number your boss gives you is ever unattainable.

From everything I've read on Buffett this sounds like an excellent assessment on what he does today, with that ginormous portfolio limiting his options in the public stock market but giving him huge leverage in acquisitions and influence over stocks he can invest in. But when he was starting out in 50s and 60s he didn't have any of that, but also still had the entire universe of stocks to pick from. My theory is why he started without doing DCFs is that he was really focused on net-nets, merger arb, and special situations that all resolved within a year or two so discount to exit value was all he needed to estimate his potential return.

Anecdotally I've been told the magic formula was quickly traded away in the US after the book was released, but still works in smaller European countries. Either way it's likely still an excellent screen everywhere for the dedicated analyst who isn't going to blindly buy everything that shows up on it. This thread has been great but I'd also like to point out that smaller caps should always offer higher returns over long periods due to the Illiquidity Factor, which to my understanding is the strongest factor for market beating returns. Again it all comes down to being a good analyst putting in the research work to be able to separate out the chaff (and frauds) from the wheat.

Of course Elon loves Cathie, she helps him pump the stock by regurgitating his own ludicrous future narrative, so he pumps her ETF to thank her. Last week Matt Levine reported similar ethically challenged behavior by Cathie around ARKKs Twitter stake. She was forced to write her shares value down to a Twitter valuation of $23B, but defended it saying she thought the shares were undervalued and would happily buy more at that price if she could but no one wanted to sell. Matt pointed out that Fidelity gave Twitter a valuation of $15B in their write-down, so clearly they would be happy sellers at $23B. Seems clear she didn’t want to upset Musk, so the mutual hand washing continues.

He’s definitely a whiz at doing compounding math in his head (munger always carries a table with him). But that’s a small fraction of a the math needed for a DCF which also would involve keeping numerous partial values in your head. But he’s told us exactly. He didn’t say he did it in his head, or didn’t write it out. Charlie said he flat out didn’t do any, and Warren agreed with him. https://nvariant.substack.com/p/why-warren-buffett-never-calculates I think the reality is he has memorized the relative values of various growth rates and durations, so for example he knows how much more it is worth paying for a 20x growth vs a 12% growth. And I don’t think he even estimates a precise value, from his comments I believe he focuses on relative value. If he finds something that is clearly a better value than most of his portfolio, he buys it. Petrochina is a good example. His quote was essentially it was worth around $100B and trading for $35B. He didn’t need to know if it was worth $95B or $105B. If it was worth $40B it would require more analysis but it wouldn’t be worth the effort. https://www.eaglepointcap.com/blog/petrochina-case-study-of-a-one-foot-hurdle Again this is typical Buffett who will tell you that estimating value isn’t the hard part, it’s avoiding bias. He refuses to look at stock prices before he’s estimated the value, so he’s not influenced to subconsciously increase his estimates for businesses he loves. DCFs don’t make sense because minor errors in your estimate of future events can radically change the estimated value.

the funny part is that Buffett and Munger have publicly said he never ever calculates a DCF. One reason is he feels it’s to easy to mislead yourself with one because even small changes to inputs can lead to large changes in estimated value. The essential quote is if value isn’t obvious he just moves in to something else.

I need a new car. Come on deflation!

Is the list filtered for a minimum market cap?

Thanks! I've been planning on doing it for the last couple years, it took this long to get my financial house in order, and only time will tell if I jumped too early.

QuickFS.net

How about Sigilon Therapeutics for the gamblers? Trading at $22 now, being acquired for $14.92 in cash and a CVR. The CVR pays up to $111 per share if the SIG-002 drug is approved for sale. The first milestone payment of $4.06 is due on a human trial that is a pretty good chance of happening in 2024-2025. The remaining milestones are far more iffy and farther out.

17 on list, they are all net-nets, and I've read all of their financial reports for the last year and have alerts so I can read every new filing they make and any news stories that mention them same day. I expect to grow the list in size quite a bit in the next few months, I've only been investing full time for a month and a half, prior to that I was only able to do it on weekends and it was really hard to find time even then.

I keep a list of ideas ranked by discount to intrinsic value and estimated annual return. I never even reach 20% cash, I am regularly selling my lowest expectation ideas to move their funds into higher expected return ideas.

I first started value investing in 2000, the returns were so extraordinary the next six years that I fear I will never see them again.

At $300 I knew that their metaverse strategy was a cash incinerating failure and the company suffered from a distinct lack of ethical leadership. At under $100 I forgot that those problems now mattered far less. That was a far bigger sin than my prior virtue. I comfort myself in the knowledge I would have sold it at $150.

i followed him in at $124, only then did I take the time to read their annual reports and see how badly their margins and business quality had declined since 2015. I was fortunate to get out with a small loss. Following SuperInvestors blindly is always a mistake, at most their purchases should be viewed as weak suggestions to be researched. They almost all are well past their glory years because their portfolios have grown so large they greatly limit their opportunities. Buffett only has a couple hundred mega caps to choose from now, his decades of 30% annualized returns are long gone.

Ray paints a pretty picture with his words, but hasn’t Bridgewater trailed the market during most of it’s lifetime?