Value Investing Podcast

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

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. B

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

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/