Key Ideas (Draft)

Transcript

1. Nickshire Hathaway, PLC. 19th June 2020 Thinking aloud
2. Warren E. Buffett “Investing shouldn’t be price speculating; that’s just a game of who beats who.
3. Warren E. Buffett it’s a game of anticipating future cash inflows and outflows from the instrument itself.”
4. Contents • RISK Measures • INVESTING styles • VALUE techniques • BASIC Ratios • OPTION trading • INFORMATION theory
5. Identify Hidden Assets to use Change Management Change Strategy Cost Structure The ‘Activist’ Investor Playbook Buy ~10% or enough to influence the board then… … not Blackmail but ‘Greenmail’.
6. “It’s Pretty Hard to go bankrupt if you have no debt” OpsWare was trading for less than half the money it had in the bank, despite holding a £30m contract, and no debt. - Ben Horowitz (he went on an investor ‘roadshow’ to fix the discrepancy)
7. Influential ‘activists’ Carl Icahn - pushed Apple to start it's $150bn+ share buyback programme Dan Loeb ?? …Find other similar names, Setup Google Alerts ??? trail-blaze their moves Profit Bill Ackman - Reads a headline: "citi group to acquire the wachovia banking subsidary for $2 in citigroup stock" hmm what happens to the holding company? Crack open the 10K Find intrinsic valuation of $10-$14 for shares trading at $1-3. Use the 27bn loss on the subsidiary to recover cash / prior taxes that had been paid.
8. Warren E. Buffett Unlike Government Bonds, Stock certificates don’t have the maturity date or coupon value (aka interest payments) printed on it. An Investor’s job is to fill those would-be coupon payments with some degree of confidence.
10. More on how bonds work
11. FCF - Earnings from operations, minus PP&E (Property Plant & Equipment) 1. Free Cash Flow is there any? 2. What is the company doing with it? a. Capital Reinvestment b. Dividends c. Buybacks (only when they buyback cheaper than the intrinsic value of the company / the sticker price = it's good)
12. Intrinsic value?
13. To explore
14. Nick’s Picks • Spotify - Why? • Twilio • Shopify • Dropbox • Tesla • Halma • IQE • AMD • MSFT • Versarian Mynaric AG Random pattern matching - a long time exec from SpaceX leaves to join a startup..to suss them out and do a whale- sized deal for ground based antennas (haven’t looked into volumes yet) - saw the same thing when a head of Microsoft joined Nokia and then ended up buying them out. This is my most speculative pick yet
15. Discounted Cash Flows & Internal Rate of Return
16. • Tullow oil is a good one that plays the game...barely made any profits for 20+yrs but the ceo plays the rights issues cards well Petra at 70 88e.l British tarmac companies — CRH plc Put all your savings in tarmac CATL Stickin Blind hundie in Cenovus energy and Maxar technologies when the market re-opens Twilio 123 was a key level but I didn’t jump in
17. When a company looks to analyse whether it should invest in a certain project or purchase new equipment, it usually uses its weighted average cost of capital (WACC) as the discount rate when evaluating the DCF. https://www.investopedia.com/terms/w/wacc.asp
18. Reuters Bloomberg Economist Guardian Financial Times - Chinese / Indian / Middle Eastern etc. News Outlets, suggestion?
19. Blackstone Median Analysis Best dividend yield controlled company - Options Trading Diversified portfolio Principles-- dalio
20. Stock screener NY Times Wallstreet journal Google / Yahoo
21. Twitter Sentiments-AlphaGo esq Statistical Price signaling movements Seasonal timing / Tax years / Pension payouts-e.g. Baby boomer demographics etc. Trends / psychographics / behaviour changes Watched the AlphaGo documentary last night, wonder how that gem would trade
22. Liability: Non culumative perpetual preferred stock => Trading Volumes - - Statistical variance - 7day rolling statistical variance etc.
24. £10k + £15k in McDs at £180 Paying out dividends = /// You fucked up.
25. Everything is getting smaller Dark Matter - explain it
26. Jules Renault The true value of the raunt perpetualé
27. profit margin % 0.05 price increase 5% sales volume increase number of stand increase
28. Earnings Yield - Earned £1502 in Y5 compared to £1500 intial market valuation, 100% yield as of Year 5 RETURN ON CPITAL £2100 buying 7 stands which earned £2336 in Y5, 111% ROC Earnings Growth - Earnings per share £0.06 in Y2 to £1.00 in Y5, 155% compound annual growth rate Profitablity - Margins of 1.3% in Y2 to 28.6% in Y5 Risk Debt is safer than equity Higher Risk = Higher Return Lower Risk = Lower Return Investment risk = Permanent loss of capital Gov Bonds 10Yr -> 3%, 5yr, 3yr £1000 => £30/yr + £1000 = £1300 Shares outstanding x Share Price share trades a 20x earnings per share But WHY do prices move.. HOW?
29. Or auto-trading BTC could work well if we could up with a good algorithm remember when there was the 2010 BP disaster.. Other companies exporting from the mex gulf got 33% higher profits the following quarter [10:39 AM, 2/25/2020] Ben Phillips: Yeah same happened with easyJet when Thomas cook went under [10:40 AM, 2/25/2020] Ben Phillips: +20% Same with shipping for 5months when Hajoon went down come to think of it commoditise your compliments
30. invest in 2nd best market share growing to win; press customers, price correlation company distribution - criteria, market cap, P/E, Div Yield, 52w price change
31. Index investing - Go for lowest cost fund
32. Measure of risk and how they are useful
33. Dollar cost averaging trailing regular tracking Strategies / portfolio upkeep
34. Historical EPS growth How much did it Beat inflation?