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Strategies & Market Trends : Value Investing

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S. maltophilia

Spekulatius

To: Harshu Vyas who wrote (74677)	12/29/2023 9:43:55 AM
From: Sean Collett	2 Recommendations Read Replies (1) of 78764

People have been writing on this thread about pro forma manipulation for years. Heck, even Dr. Burry who you mentioned was calling this out here or on his MSN letters back in the late 90's early 2000's. This is nothing new, Harshu. All these things you mention have always been problems and even in 1997 folks were writing about how NCAV were getting harder to find and the environment had changed and so on. I think the issue is the macro environment itself has created a world in which valuation does not matter right now. Folks are investing for future stories and not for a world where money is tighter. Then 2000 happened and all of a sudden value companies took off once again. And who is basing investment theories off of tweets from Dr. Burry? I would hope if one is going to use anything from him they do a further deep dive into his meaning and thus the concepts he's tweeting about. And just looking at the FCF itself without understanding where it comes from is the issue on the investor not the reported figure. Is it from sales of assets? Or is the business generating the FCF through its healthy operations? You have to do some analysis yourself outside of what the figures are just telling you. << The truth is most companies cannot completely pay down their debt through cash flows, anyway>> Well depends on the company and debt/cash level first off. That said the debt level itself isn't so much of a problem as when does the debt come due? If I have $2B of debt termed (and fixed rate) out over 10 years then that's a different game than having $1B due in a few years but then $1B is due in the next month or so. If the debt can be serviced then the leverage isn't as nuclear. In the end everything you have written is what a value investor should be looking at anyway. Taking the numbers and making adjustments where needed and then using the other data points to build your value story. Lynch was some 29% a year, Druck 30%, but somehow you're going to hit 50%? -Sean

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