Warren Buffett’s Advice On How To Value A Business

Warren Buffett’s Advice On How To Value A Business

Warren Buffett has been investing in stocks since his teenage years. Over the past seven decades, he’s bought and sold thousands of stocks across sectors and industries accumulating hundreds of billions of dollars in value for himself and his investors along the way. During his lengthy career, Buffett has become skilled at calculating intrinsic value, the underlying value of a business based on its fundamentals. Warren Buffett: Starting with the cash flow statement The exact process Buffett uses varies from…

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4 Rules For Becoming A Bad Investor

4 Rules For Becoming A Bad Investor

I recently re-read one of Charlie Munger speeches from 1986 to students of the Harvard Westlake business school. In the speech, Munger laid out his rules for living a miserable life, in an attempt to warn students away from these actions.  The full speech is published in Munger’s unofficial biography, Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger. It is well worth seeking out if you’re interested.  After reading Munger’s words, I’ve been inspired to create my…

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A Case Study Of Why Warren Buffett Bought Disney In 1966

A Case Study Of Why Warren Buffett Bought Disney In 1966

A few weeks ago I wrote an article for GuruFocus outlining one of Warren Buffett’s biggest mistakes of all time; selling Disney.  Buffett first noticed Disney back in 1966. The company at the time was selling for $80 million in the market with a debt-free balance sheet, significantly below what Buffett’s estimate of intrinsic value for the business. Smelling a bargain, Buffett invested $4 million of his partners’ money to buy a 5% stake. A year later, he sold this…

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Lessons From The Charlie Munger Partnership

Lessons From The Charlie Munger Partnership

Before he became Warren Buffett’s right-hand man at Berkshire Hathaway, Charlie Munger ran his own investment partnership where he established an impressive track record for himself. In fact, the Munger partnership performance earned him a place in Warren Buffett’s now-famous essay, The Superinvestors of Graham and Doddsville: “ … is the record of a friend of mine who is a Harvard Law graduate, who set up a major law firm. I ran into him in about 1960 and told him…

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The Curious Case Of WD-40’s Record Valuation

The Curious Case Of WD-40’s Record Valuation

Over the past few decades, there has been a boom in demand for so-called “low volatility” stocks. These companies tend to be high-quality Consumer Staples, Heathlcare of Industrial names, like 3M Company or PepsiCo, Inc.  However, in most cases, the boom in demand for these names has not matched their growth. As a result, we’ve seen historical valuation correlations between peer companies and relative valuation metrics breaking down as investors clamour to buy these stocks without considering the underlying fundamentals…

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Property Investing And The Advantages of an Illiquid Asset

Property Investing And The Advantages of an Illiquid Asset

Real estate is a great way to build wealth, and owning property has made a lot of people a lot of money over the years. However, equity investing has yielded similar, if not better results over the years (although this varies from market to market and depends on which benchmark you use.) The one primary difference between real estate investing and equity investing, however, is liquidity. The liquidity issue It is very well known that investors are their own worst…

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Why Debt Is Like Russian Roulette

Why Debt Is Like Russian Roulette

Since the mid-1950s, global indebtedness has exploded to record levels. At the beginning of 2019, the IMF reported global debt reached an all-time high of $184 trillion in nominal terms at the end of 2018, equivalent to 225% of 2017 GDP. On a per capita basis, the world’s debt now exceeds $86,000, which according to the IMF is “more than 2½ times the average income-per-capita.” Further data show that the private sector’s debt has tripled since 1950 making it “the…

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Mohnish Pabrai: The Most Common Mistake Investors Make

Mohnish Pabrai: The Most Common Mistake Investors Make

Mohnish Pabrai is widely considered to be one of the best value investors managing money today. He runs the Pabrai Investment Funds, a group of hedge funds modelled on Buffett’s original partnerships. Returns since inception have been highly impressive. $100,000 invested with Pabrai on July 1, 1999 (inception) was worth $1,164,600 at the end of 2018, a compound annual return of 13.4% net of fees. I’ve learned quite a bit from reading and listening to Pabrai’s advice over the years,…

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Seth Klarman On Catalysts In Value Investing

Seth Klarman On Catalysts In Value Investing

One of the most frustrating scenarios to be faced with as an investor is a stagnant stock price. You’ve done all the hard work, analysed the company correctly, invested at a deep discount to intrinsic value and waited patiently only for the stock to trend sideways for years. In areas of the market where mispricings are most common, particularly in small-cap and micro-cap stocks, this scenario is all too common. It can take years for a stock to close the…

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Extract From The Upcoming Hidden Value Stocks Q1 2019 Issue

Extract From The Upcoming Hidden Value Stocks Q1 2019 Issue

An extract from the Q1 2019 issue of Hidden Value Stocks. The issue features two interviews with emerging hedge fund managers, Gate City Capital Management and Breach Inlet. This is an extract from the interview with Breach Inlet. To discover more about Hidden Value Stocks scroll down. What traits are you initially looking for in an opportunity? To put it another way, what makes you say “yes” or “no that is too hard”? We are generalists, but avoid companies heavily…

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