⚑05# The Value Investor's Kit: News, Readings, and Insights from Glenn Greenberg"
🗻Japan the new playground for Warren, 💵Glenn Greenberg's lessons and investment process, 🛢️Berkshire Hathway is still strengthening its position in Occidental Petroleum.
⚑ What you will learn and find in this edition :
🗞️ Value Investor’s news
📖 My readings of the week
🔥Learn from the best value investor: Glenn Greenberg
💎Latest publications
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⏱ Reading time: 4 minutes.
Hey Value Investors !
I hope you are doing well!
Before commenting on this edition, I wanted to inform you of the release of this Excel model, which allows you to value a company based on the DCF method. This Excel file shows how Mohnish Pabrai valued Microsoft and Cisco in 2001.
🗞️ Value Investors news
🛢️Saudi Arabia and OPEC+ decided to reduce oil production
Just a quick reminder, an increase in oil prices typically only benefits oil producers. This development has the potential to negatively impact the global economy, while simultaneously contributing to a slowdown in inflation.
Saudi Arabia and OPEC+ regulate the market, like the European Central Bank with interest rates. In contrast, the Biden administration is doing everything in its power to lower oil prices, in order to fight inflation.
It may be interesting to take a closer look at the oil companies because the West wants to become self-sufficient in this area. In the meantime, we note that Berkshire Hathway is still strengthening its position in Occidental Petroleum.
🏰 Walt Disney launched the first phase of its layoff plan, involving 7,000 job cuts, and eliminated its Metaverse division in the process. Company with an important moat to watch in the future.
🗻Warren Buffett is getting ready to offer more yen-based bonds, which could indicate a possible intention to invest further in the Japanese stock market.
💵Warren Buffett and his associates were paid $184 million by Coca-Cola, $31.75 million by HP, and $23.4 million by Paramount Global.
📖 My readings of the week
I share here the articles or videos that I found interesting this week. The goal is to provide you with stuff to become a better value investor step by step.
Why Terry Smith doesn't invest in banks? (Fundsmith)
Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor
🔥Learn from the best value investor : Glenn Greenberg
📝Sum-up :
Become an expert in great firms before investing in them.
Focus on understandable businesses in a way to estimate future cash flows and their intrinsic value. (You can say if the firm is cheap or not)
If the company is cheap go on it. Sometimes, you have a discount price due to macroeconomic events. So it's time to get your ticket
Use simple methods of analysis, common sense over computer models.
Glenn Greenberg is a value investor with an atypical background.
In college, he studied English literature and after his graduation, he was teaching school.
After 3 years, he realized that what he liked was managing the school rather than teaching. As a result, he returned to Columbia Business School.
Next to graduation, he started working for J.P. Morgan as a mismanaged. He started with the mistake of investing in a business that didn't understand (Avon & Polaroid) and that ended up collapsing.
5 years later, he left J.P Morgan to join a smaller company to put aside the pollution of wall street and focus on value investing methods.
Understand your investments. If you think you understand how it works, you don't. So take the time to study and understand the mechanics. This experience will allow you to broaden your knowledge and therefore your circle of competence.
Finding the right stocks. The purpose of value investors is to spend time finding rare gems rather than lots of bad ones.
Make a concentrated portfolio, focusing on 7-10 stocks better than 100 stocks.
Be an expert in the company before investing. The aim is to be able to estimate the future cash flows of the business. You need to understand how the money is invested and how much it could earn. Remember that your money is helping the business to grow, so it is important to be an expert.
Buy good businesses, which generates a lot of cash flow and has a great capital allocation.
Invest in Duopolies better than Monopolies. Monopolies are always subject to government intervention.
Buy great and cheap companies. Focus your investment strategy to find a high rate of return with a low level of risk.
Invest when macroeconomics is in trouble for sectors. When everyone panics, that's when the value investors make their sales.
Invest in companies with stable earnings and free cash flow generations. Put your eggs in the least volatile basket with revenues easily estimated with a DCF model (That’s why value investors don’t invest in tech companies, it’s too hard to estimate cash flows).
Force you to value firms with the DCF method. This method forces you to understand well the business. Because sometimes you have to estimate the future as rates of production or the price of energy to determine future earnings.
If you don’t know, what I’m saying about DCF valuation or Cash flows. I redirect you to an introductory article on its thermals that I myself faced when I started to study investment.
Source: Value Investing: From Graham to Buffett and Beyond
💎Latest publications
That's it for this edition,
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The Art of Invests ⚑
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