Article Update and Weekend Reading Links

I have finished up all three articles in my now shortened series and will proofread and do some light editing over the weekend and post them as soon as possible after I am able to acquire the shares I want.

Psy Blog-How Long To Form A Habit.

Hardcore value-Amazon, Apple, and The Beauty Of Low Margins.

Distressed Debt Investing-One Of Warren Buffett’s Greatest Trades.

CSInvesting-Video Lecture Course On Security Analysis and The Intelligent Investor.

Share Sleuth-Finding Hidden Debt.

Can’t Eat Value’s Blog-What’s Your Investing Edge.

Oddball Stocks-Value Momentum, Speculating On Recovering Net Nets.

The Equity Desk-Benjamin Graham: An Investing Legend.

Ragnar Is A Pirate-Fraud, Bankruptcy, and Ethanex.

25iq.com-Charlie Munger On The Psychology of Human Misjudgement.

Basehitinvesting.com

Wexboy-Why I Write…

The Globe and Mail-Article By GreensKeeper Asset Management Principle Michael McCloskey.

Distressed Debt Investing-My Three Favorite Quotes From Baupost’s 2012 Year End Letter.

Graham And Doddsville-Legacy Of Benjamin Graham.

Wexboy-The Great Irish Share Valuation Project Part IV.

GuruFocus-Answers From Tom Gayner’s Interview With Guru Focus.  Thanks for the link Obtuse Investor.

Sahara Investing-Triyards Holdings.

World Financial Review-Repeatability: How Companies Create Enduring Businesses In A World Of Change.

CSInvesting-More Valuation Case Studies.

An Update, New Translation Page, and Links

As you might have noticed at the top of the page is now a translation page where you can translate the entire blog into many different languages.  I found something similar to this a few days ago but could not get it to work on the blog so I enlisted the help of my brother and he got the translation page working, thanks a lot Kev.  This also means that the short-lived Mandarin Value Investing Journey is also not now needed and will be going away.  I am sure the 20 of you who visited the mostly untranslated site will miss it dearly :).

A quick update on where I am at with the process of my article series.  I have now finished up the first two articles of the series and as you know I had planned to write articles on one or two more companies and then do a conclusion article.  Two of the companies I was planning on writing articles on I have been asked not to by the person who recommended them to me because he is planning on writing articles about them.  I am still going to read those companies annual reports and other filings but will not be writing articles about them so this has turned into a three-part series covering the two companies I have already written articles about and the conclusion article where I decide which of them to buy.  I will hopefully have the whole series posted as soon as possible.

“Things do not happen–they are brought about by careful planning, diligence, application, and direction.”George Mecherle, Founder of State Farm Insurance.

Valueprax-This One Is Personal.

25iq.com-Charlie Munger On The Importance Of Worldly Wisdom And Consistently Not Being Stupid.

CP-Africa.com-Meet 31 Year Old Ashish Thakkar-Africa’s Youngest Billionaire.

OTC Adventures-International Wire Group Is Cheap, But Is It Safe (ITWG)

Valuewalk-Baupost Group’s Seth Klarman Sees “50 Shades Of Value” In The Market.

Valueinvestingblog.net-CASA Holdings and Fiamma Holdings.

CSinvesting-A Reader’s Question On Case Studies.

Santangel’s Review-Benjamin Graham On Staying Small.

Motley Fool-Charlie Munger Info From A Board Poster.

Valueprax-Notes-Nintendo Back In The Saddle?

CSInvesting-Valuation Case Study HVAC.

OTC Adventures-Value Investing Strategy and Unlisted Securities Part 2.

CSInvesting-ValueUncovered Philosophy; Treat Everything As A Case Study.

Wexboy-2013: The Great Irish Share Valuation Project Part 2.

Credit Bubble Stocks-Horizon Kinetics, Owner Operators, and the Predictability Arb.

Catching Up On Some More Links

Farnam Street-The World Is Much More Interesting Than Any One Discipline.

Wexboy-Tetragon Ready To Be A Star.

Sahara Investing-The Luxury Goods Market.

Oddball Stocks-Thoughts On Quantative Value Investing.

Valueinvestingblog.net-Investing In Japan: Late To The Party.

Valuewalk-Insurance Companies, Where Buybacks Are Key: Travelers.

Farnam Street-Mastery.

OTC Adventures-Value Investing Strategy And Unlisted Securities Part 1.

Whopper Investments-The Best Values Are Over The Counter Stocks So Is $OTCM A Great Value Too?

Ragnar Is A Pirate-Changing 13D’s At Trinity Place Holdings.

The Aleph Blog-On Insurance Investing Part 2.

Quotations Page-Persistence Quotes, my favorite is the Calvin Coolidge One:

Nothing in the world can take the place of Persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan ‘Press On’ has solved and always will solve the problems of the human race.

Absoutely love that quote.

Mises.org-Cartman Shrugged: The Invisible Gnomes and The Invisible Hand In South Park.

CSInvesting-The Secret To Investing Success (Munger Tip).

Valueconferences.com-Adib Motiwala: Your Instructor At Small Cap Investing Summit 2013, hour long interview.

Some Links For The Week

Motley Fool-Monish Pabrai’s Lunch With Buffett and Munger.

Value Investing Blog-Alpha Pro Tech And The Value Of Optionality.

Cant Eat Value-Why You’re Undervaluing Good Capital Allocation.

Student Of Value-Investment Analysis Of Quality Products $QPDC The Mysterious.

Zero Hedge-Guest Post: A Short Lesson In Bad Decision Making.

The Daily Beast-Don’t Go To Business School!

Wexboy-The Great Irish Share Valuation Project (Part 1).

Oddball Stocks-CIBL is Undervalued Again, Is The Valuation Gap Enough?

Business Insider-Vitaliy Katsenelson Presentation On Why The Market Will Move Sideways For Another Decade.

Distressed Debt Investing-The High Yield Market “Is Completely Out Of Control”.

Philip Beeching-Why Companies Fail–The Rise And Fall of HMV.

Value Walk-Charlie Munger And The Art Of Stock Picking.

Sahara Investing-The Hour Glass.

OTC Adventures-Great Lakes Aviation Is Not Your Typical Airline $GLUX.

Grizzly Rock Capital-Why Selling Methodology Differs For Average Versus Great Companies.

Seraphin Group-When Do I Sell Stocks? Drawing Wisdom From Buffett To Zuckerberg.

CS Investing-Reading On Moats And Competitive Advantages.

Whopper Investments-Why Is Buying A Rising Stock So Hard?

Guru Focus-Geoff Gannon On How To Learn Everything You Need To Know About A Stock.

25iq.com-Charlie Munger On Investment Concentration Versus Diversification.

More Holiday Reading Links: Moats, Floats, Company Analysis, and Others

Gannon and Hoang On Investing-Unrepeatable Moats.

Csinvesting-A Reader’s Question On Niche Vs Moat and Greenwald Class Notes.  Make sure to read all the way to the comments as there is a very good discussion going on about moats there.

Fundoo Professor-Presentation on Moats and Floats.  Decided to post this again because it is so important.  Also read the comments section.

Fundoo Professor-All About Floats: Parts 1, 2, and 3.  Make sure to read the comments section as the discussion there goes quite deep into the inner workings of float.

Gannon and Hoang On Investing-Capital Allocation Discount.

ValueInvestingBlog.net-Audika Group: Can You Hear The Call Of Value.

Whopper Investments-$LAKE Update, The Bottom Has Fallen Out.

25iq.com-Charlie Munger On Moats (First Of The Four Essential Filters). Extremely valuable read for people learning about moats as I am right now.  Also contains a bunch of links to other Munger and moat information.

Gopal Gantayat-Evolving Competitive Advantages.

Psychology Today-Why Too Much Data Disables Your Decision Making.

Oddball Stocks-Thinking Like A Bond Investor.

Market Folly-Charlie Munger On The Psychology of Human Misjudgement.

Zenpenny-Here Is To The Downfall Of Micro Managing Portfolio Positions.

SMB Training-What A Star Portfolio Manager Can Teach Us About Improvement.

Weekend Reading Links: Klarman, Munger, Buffett, Valuation, and Learning

The new company I was researhing turned out to be another bust after valuation.  I found the Australian company to be in a range from fairly valued at the high end of my intrinsic value estimate to overvalued by as much as 70% from my low estimates of value and have decided to not do any further research on it at this time, especially since its margins were not very good either.

For now I am going to be reading some books over the coming days and then its back to searching for more companies to research.

Seth Klarman On Leadership.  This video is from ValuePrax and contains some very valuable insights from the reclusive Klarman.

Charlie Munger Lecture at the Harvard-Westlake School.  This interview is from Santangel’s Review and contains Mungers thoughts on the recent financial crisis.

Alice Schroeder On How Buffett Values a Business and Invests.  This is yet another article from Greg Speicher that contain Ms. Schroeder’s thoughts on how Warren Buffett looks at business.

Valuation: Valuing Growth and the Petersburg Paradox.  This is from Csinvesting and the page also has some links to papers that talk about different things valuation related.

I Learned To Speak Four Languages In a Few Years: Here’s how.  This is a write up from LifeHacker about the techniques that helped the author learn four languages in a relatively short amount of time.  This is fascinating to me because I have always wanted to learn a new language and have recently started learning a bit of Spanish.

CSInvesting Update, Checklist Presentation By Mohnish Pabrai, How To Win In Investing, Leon Cooperman On How To Get Better, and The Benefits of Stress

I have finally found another company to do a full research article on and will have it up as soon as possible.  I am still doing research and waiting for its next quarterly results to come out this week so I can value the company with updated numbers so it will probably a little while until I write the article up.  Up to this point the company looks promising and as of its last quarterly results that came out in June, it is selling for less than the reproduction value of its assets, with about 50% of its value coming from cash and short term investments, and no debt.

CSinvesting update as John has now moved the blog over to csinvesting.org and the blog is up and running.  It also looks like the blog is going to become more focused on investing as well.

Checklist Presentation By Mohnish Pabrai from Hardcore Value where Mr. Pabrai uses examples from Graham, Buffett, Munger, and others to build a checklist.

“You Don’t Win By Predicting The Future, You Win By Getting The Odds Right” is another article from Farnam Street on how to win in investing.

Leon Cooperman On Hedge Funds, Investment Outlook, and Life, includes an hour long presentation.  Page is from Market Folly.

The Surprising Benefits Of Stress

Until next time.

New Blog, National Western Life Analysis, Stretching Yourself To Learn New Things, Notes From Meeting Value Investor Mohnish Pabrai, And CSInvesting News

After yesterdays detour and the help from your comments in the comments section, I will now get back to posting links.  A big thanks to all readers who helped out yesterday clarifying the situation, I really appreciate it.

The Red Corner Blog.  For those of you who might not know, Red has been very helpful to me in the past on Whopper Investments blog, and more recently on this site as well.  I recently found that he has his own blog where he analyzes and values companies.  His work is exceptional and I highly recommend that everyone visit his site, especially if you need help with the more technical aspect of evaluating companies, which is an area where I currently struggle.  He also answers a lot of questions from readers as well so make sure to read the comments on his writings as well.

Student of Value has come up with another great analysis piece, this time on National Western Life, as always highly recommended.

Stretching Yourself To Learn New Things is another great write up from Farnam Street.

Notes From Value Investor Mohnish Pabrai is from Perfect Research that contains Mr. Pabrai’s thoughts on a wide range of topics in investing.

I wanted to let everyone know who might be clicking on the CSinvesting links I have, that I got an email from John the other day after noticing that his site is down currently.  He said that he is currently in the process of moving his blog to a self hosted site, while also recovering from surgery.  Get well John, no need to rush back after major surgery.

I am still struggling to find another company to research and hope to find one soon.  I suspect that I am not alone in finding it hard to find companies to research since the market has been going up quite a bit?

Free Books, How to Absorb Knowledge, Future of Education, and a Microsoft Sony merger?

Free books

Here is a link for some more free books from Csinvesting.  Thanks again John and the anonymous contributor.

How to Absorb Knowledge

This article gives you a technique that a study shows, will help you remember what you have just learned.

Future of Education?

This is an amazing article that could help kids, especially from poor families, gain a proper education.  Rocketship Discovery Prep is a charter school who has been having some amazing results teaching kids so far how to become better in math and reading.

This is the kind of thing that we need more in this country.  We need school vouchers and school choice for families, especially if they live in terrible neighborhoods, and we need to worry less about the teachers unions and politicians that are controlling education now.

Microsoft Sony merger?

This article speculates that Sony and Microsoft could be working on some kind of collaboration for gaming in the future.  This is something I think could be beneficial for both of the companies in the upcoming console generation.  Too bad it is most likely not true.

Mini Review of Valuation: Measuring and Managing the Value of Companies and biases

My mini review

Let me first be up front with you about my bias against DCF (discounted cash flow) valuation, which is what this book overwhelmingly talks about.

There are several reasons why DCF valuation does not make sense to me from a practical perspective on a way to value companies:

  • 1) If you go through all the work it takes to do a proper DCF valuation, but you are off by 1% on one important number, your valuation could be off by more than 10%.  There are so many inputs in a DCF valuation that the margin for error seems astronomical to me.
  • 2) Lets say you are very good at DCF valuations and get all of the numbers correct, you still have to forecast out 5-10 years in the valuation.  If Warren Buffett, who is a certifiable genius, cannot forecast months or even a year in advance, why should I think that I can forecast out 5-10 years?
  • 3) Lastly, why do you have to do something as complex and time consuming as DCF valuation when you could just do relative/multiple valuations and come to pretty much the same conclusions in a fraction of the time.  Time you could be using to think about the how the company and its competitors operate, and the strategy the company should use going forward, or finding another company to evaluate.

I am interested to see what some other people think who might be keen on DCF valuations, feel free to write your thoughts or rebuttal.

On to the review

The first 200 pages, out of 860 plus, I read completely, learned some things, and was very excited for the rest of the book.

Part 2 on to the end of the book is unfortunately techniques and concepts I have learned in various other places such as Aswath Damodaran’s free online valuation course, Bruce Greenwald’s books, and other various books I have read.

The book is not bad by any means I just did not want to go over DCF valuation techniques again after having just finished up Damodaran’s class that was almost exclusively going over those same techniques.

Valuation is mainly a book that talks about how to do DCF valuation and how to master the techniques that it entails.  Throwing in some strategy, and some things to look for like high ROIC.  There was one major thing in the book that bothered me though while I scanned through the remaining 650 plus pages.

  • He talks about how markets are mostly efficient, except in rare cases, whose opportunities only last for a short time.  If he thinks markets are mostly efficient, except in rare cases, which only last for a short time, why does he need to value companies at all, shouldn’t they already be properly valued?

Individually I would recommend:

  • Learning how to do DCF valuations: Aswath Damodaran’s free online valuation course.  I took his free course on Coursekit, which is now Lore here.  I learned an enormous amount about how to think about doing valuations and things I need to watch for that I could apply to relative valuation.  Here is a different link to his free course on Academic Earth.
  • Thinking about strategy: Bruce Grenwald’s Competition Demystified..
  • Learning why ROIC is important: Various books, some of which I list here.

Collectively I would recommend Valuation to people who are just starting to learn about valuation techniques, how to do them properly with a little bit of strategy thrown in, and/or people who want to learn DCF valuation specifically.  Especially if you download the free book from Csinvesting’s site that I wrote about here.

Now it is time for me to get back to valuing and evaluating companies.  My next post will be showing you some of the new valuation techniques I have been working on.