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Learning from mistakes without paying for it


yadayada
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i looked up a bunch of highly rated idea's in 2011 on VIC that didnt work out and are either break even or trading at a lower price now. And I thought it was interesting to analyze them and figure out what went wrong. ANd see if you would have invested in them. The problem is tho, that I know already all of them did badly, so it seems that I will be results oriented and pretty biased in general.

 

So I thought it would be interesting that maybe every week or so a different forum user posts an idea that looked really cheap 2-3 years ago (or more, as long as we can look up results afterwards) and did either good or bad. Preferably with one or more write ups about it already available to make this easier.

 

Then we analyze it before looking up results. It seems like this way you can quickly learn from your mistakes and figure out what can bite you in the ass that your not aware of.

 

Quickly learning from experience without paying for it :) . And it is very important that you dont look up the current price and earnings, otherwhise this exercise won't work as well imo. Also dont spoil it if you already know results.

 

 

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Ill start off with one:

 

AXX - Axia netmedia this idea got rated a 6,6, which is high for that site, so it is suposed to do well. You can make account with email and look at old idea's for free.

http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/61190

 

posted january 2012

 

2011 annual report:

http://ir.axia.com/files/doc_financials/2011/MDA%20YE%20FY11%202011-9-20%20FINAL.pdf

 

http://ir.axia.com/Investors/financial-reports-presentations/default.aspx

 

Thesis is, they are a canadian company building fibre networks, but instead of selling directly to customers, they sell to third party's, who then offer internet/cable etc to the customer. Government loves this as it removes some of the monopoly element, so they get some government funds as well. EV is 60 million, ebitda 22 million. According to write up all their networks stand to make 28-53 million in pretax income. With a market cap of 83 million

 

This  idea might be a bit too fresh with only little more then 2 years old, but discuss away :) .

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Ill start off with one:

 

AXX - Axia netmedia this idea got rated a 6,6, which is high for that site, so it is suposed to do well. You can make account with email and look at old idea's for free.

http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/61190

 

Even easier, you can add ?guestLogon=true to the address: http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/61190?guestLogon=true

 

I've never looked at Axia before. The pitch is pretty persuasive.

-It barely mentions the balance sheet, even though the company was trading under tangible book value with 40% of the market cap in cash.

-Earnings were inconsistent but free cash flow was stronger and growing. Typical of small media/telecom companies.

-The competitive dynamics of internet service in France and Singapore might strike us as unusual. France is supposedly 94% DSL with barely any cable internet service. Of course FTTH can take market share from DSL, but is there also risk of increased cable competition in any of these markets?

-The minor markets, Singapore, Spain and US, potentially seem like aggressive estimates given that they are still earlier in development phase.

-Low multiple (7x EBITDA) seems appropriate for Alberta since they don't own the pipe and have to negotiate rates. Slightly higher multiple seems appropriate for other networks, where they own the pipe but have to deal with minority or majority partners.

 

I think this is a great idea for a thread but am I looking at the right stock?

 

http://finance.yahoo.com/echarts?s=AXX.TO+Interactive#symbol=AXX.TO;range=5y

 

Looks like it's up 100% over the 2+1/4 years since the write up.

 

Maybe the mistake was not buying it.

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I think this is a great idea for a thread but am I looking at the right stock?

 

http://finance.yahoo.com/echarts?s=AXX.TO+Interactive#symbol=AXX.TO;range=5y

 

Looks like it's up 100% over the 2+1/4 years since the write up.

 

Noooo dont look! The idea is to post some winners in between as well. Otherwhise you will be biased and only look for reasons why it is a bad investment. The idea is to allow yourself to walk into value traps and quickly learn from something that you might have overlooked without paying for it. But in order to do this we can't just analyze bombs.

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I think this is a great idea for a thread but am I looking at the right stock?

 

http://finance.yahoo.com/echarts?s=AXX.TO+Interactive#symbol=AXX.TO;range=5y

 

Looks like it's up 100% over the 2+1/4 years since the write up.

 

I believe the basic concept here is to analyze without knowing how it did!  Great idea, but now we are biased by knowing the result.

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