I am a value conscious investor looking for bargains.
1) Price is what you pay, value is what you get
2) Success in investing is limiting losses when you're wrong, and maximizing gains when you're right
3) Start with business model. Margins reflect value add a company's products bring to the market place. Does the Gross Margin and the Product match? High GMs accompany differentiated products with limited competition that do not compete on price. Low GMs accompany undifferentiated products that compete on price, CAPEX spend, cyclicality.
4) How is the business financed? Be wary of companies with a lot of debt. Great businesses do not require huge debt to generate high returns on equity. There is no achievement in generating high ROEs by levering up like banks, leasing businesses (car rental, equipment rental, aircraft rental). ROA should be telling here.
4) A company's value changes because the NPV of future profits changes. NPV of future profits is a function of changes in revenues, gross margins, OPEX, leverage, taxation. A company's value appreciates when the NPV of profits goes up due to revenue growth, GM expansion, OPEX reduction, leverage (refinancing) / tax (change of domicile) reduction.
5) Markets look forward. Bottoms coincide with maximum pessimism while tops coincide with maximum euphoria.
6) A stock is not undervalued because it is cheap and it is not overvalued because it is expensive (based on traditional valuation metrics). Similarly, a stock is not undervalued because it has gone down a lot or overvalued because it has gone up a lot.
7) Look at market cap when valuing companies. Don't be overly influenced by management projections, analyst reports, share buybacks, cash on B/S, price movements, other people in the stock.
8) Companies with significant debt can go bankrupt. Cash burn typically determines if they go bankrupt before the cycle (for their industry or the economy) turns.
9) Undervalued stocks can get cheaper, overvalued stocks can get more expensive.
10) Keep emotion out of investing. You will be wrong. Unpredictable things will happen. Stay vigilant to anger, anxiety, exuberance. Stay vigilant to thesis creep.
11) Leverage will kill you sooner or later. Companies have large operating and financial leverage.
12) Have a thesis. If the thesis plays out, stay with it. If it doesn't exit. Always have a thesis.
13) Understand the business you are invested in. It's valuation and what can go wrong. Know the business inside out.
13) Don't trade.
14) Diversify. There are many good ideas in the market. Don't put your eggs in one basket.
15) Failing businesses rarely turnaround.
This is a pseudonym. Started my career in structured finance, moved into corporate debt, and now equities. My investment style is focus on the fundamentals and figure out what the company is worth. Writing is a way for me to gather feedback and information, rather than convincing someone else to buy or sell. Please feel free to message me. thanks
I am a former oil stock analyst now living in Tokyo. I do not just look at net net Japanese stocks, but rather find companies that have recurring revenues and some kind of competitive advantage, as well as being extremely cheap.
A.J. D'Asaro is a Alternative Strategies Analyst on an alternative manager research team, where he covers international currency, hedge fund replication, long/short equity, and market-neutral strategies. He co-manages a small-cap value investment partnership with the Chicago Investment Association during his spare time. Prior to that, D’Asaro worked at Parallel Advisors LLC, a San Francisco based registered investment advisor.
D’Asaro holds bachelor’s degrees in economics and business administration from the University of California-Berkeley and the Haas School of Business. During his time at Haas, he managed an investment pool of more than 200 investors using a bottom-up fundamental value strategy.
All articles reflect my personal opinion only and not the views of my employer or any of its subsidiaries.
I am a value-investor that looks for opportunities to exploit market inefficiencies to make outsized profits. Intense research, intelligence, and patience are the keys to having success in this strategy.
I taught my self investing after I got tired of losing money in the hands of so called "professionals" over the years. I figured it's better if I lose my own money - at least I can blame no one else for my mistakes.
I immigrated to Canada from India in the 80's with $10 in my pocket and have not done badly. I am grateful to Canada for giving me the opportunity to succeed and build a good life. I lived in the US for a couple of years but returned to Canada. The similarities and differences between the two countries fascinate me, I have a Bachelor's degree in Pharmacy (I am a Ontario licensed Pharmacist), and was "retired" recently from the R&D department of a major Pharma company. I also have an MBA from the University of Saskatchewan.
Over the last 15 years, through a combination of interest, hardwork and luck, I have accumulated a portfolio which has made me financially independent (at least on paper), while making all the rookie mistakes and enduring two big bear markets fully invested (the last one with leverage) and holding a full time professional job and raising a family. The 2007-09 bear market has taught me that technical's are important and its important to raise cash at the right time. I follow the economic indicators carefully with the hope of avoiding (at least partially) a bear market. I continue to learn from experience and the read economic and financial commentary voraciously. I like to think I am playing the long game which takes guts, skill and patience.
My investing style is value - with a GARP orientation. My experience is that a few home runs make up for a many strike-outs, though now I focus more on stealing singles. I realize that Investing is a "losers game", to win you need to minimize your losses but at the same time, if there is no risk, there is no gain. I like to be highly diversified and routinely follow over a 100 positions. I invest, not trade, waiting patiently for a fat pitch.
Thanks for stopping by and good luck investing.