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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (60535)	3/19/2018 5:01:31 AM
From: Elroy	Read Replies (1) \| Respond to of 78752

Online Korean game company GRVY did revenues of $23m in Q1 2017, $27m in Q2 2017, $23.7m in Q3 2017, and then, out of the blue, $67.5m in Q4 2017. If Q4 2017 revenues keep up around that level, buying GRVY is a no brainer!! :-) GRVY's cash position has gone from $38.7m in Q4 2016 to $61.6m in Q4 2017, and the market cap is about $300m. It remains a complete mystery why revenues jumped from $24m in Q3 2017 to $67m in Q4 2017, but they are constantly launching new games in new countries, and perhaps their new games are, I don't know, well received by the gaming masses? There's not a whole lot of info on the company beyond those few sentences, so it really is a no brainer. There's nothing to analyze......

To: Paul Senior who wrote (60535)	3/19/2018 7:49:02 AM
From: Graham Osborn	Read Replies (1) \| Respond to of 78752

You’re right of course. I think those who have observed me here know that my learning curve the past 5 years has been a steep one, and I still know far less than I should. I was attempting to speak from Buffett’s frame of reference. I had great difficulty until late 2016 determining the appropriate price to pay for a growth stock since I was still more in the Graham camp then on the long side. But at my present state of knowledge I think I could have spotted GOOGL in 2008 and MSFT in the late 80s. The sticking point is obviously that such businesses become available at truly attractive prices perhaps once a decade, when the investor may not have the liquidity or psychological fortitude to buy in the requisite quantities. I guess it’s arguable whether FB will have such a moment before it’s a giant company (by sales relative to the larger FANGs), but I’ll keep my hopes up. The real access points on some of these have moved to the private markets since 2000 - and I doubt whether those were value prices. I do have an early-stage formula (which obviously only works with massive levels of diversification) suggesting that Peter Thiel’s early investment in Facebook was at an incredible price - probably because they were raising capital in the wake of the dot-com meltdown. No brainers (which to me means better than 25% probability of a 10X in 10 years) should be concentrated - for me the max is 20% cost/ assets at the time of purchase. I own only one such stock right now. I need to plug those Coke numbers into the interest-rate formula by the way - predictable growth for 10-20 years should not be valued on a PEG basis. But forecasting interest-rate trends is a difficult. I am guessing it will spit out a PE of 20-30 for a declining interest-rate epoch - not a rational purchase price but a meaningful upside when combined with intrinsic-value growth.

To: Paul Senior who wrote (60535)	3/19/2018 7:54:12 AM
From: Graham Osborn	Respond to of 78752

You’re right of course. I think those who have observed me here know that my learning curve the past 5 years has been a steep one, and I still know far less than I should. I was attempting to speak from Buffett’s frame of reference. I had great difficulty until late 2016 determining the appropriate price to pay for a growth stock since I was still more in the Graham camp then on the long side. But at my present state of knowledge I think I could have spotted GOOGL in 2008 and MSFT in the late 80s. The sticking point is obviously that such businesses become available at truly attractive prices perhaps once a decade, when the investor may not have the liquidity or psychological fortitude to buy in the requisite quantities. I guess it’s arguable whether FB will have such a moment before it’s a giant company (by sales relative to the larger FANGs), but I’ll keep my hopes up. The real access points on some of these have moved to the private markets since 2000 - and I doubt whether those were value prices. I do have an early-stage formula (which obviously only works with massive levels of diversification) suggesting that Peter Thiel’s early investment in Facebook was at an incredible price - probably because they were raising capital in the wake of the dot-com meltdown. No brainers (which to me means better than 25% probability of a 10X in 10 years - assuming the downside is accounted for) should be concentrated - for me the max is 20% cost/ assets at the time of purchase. I own only one such stock right now. I need to plug those Coke numbers into the interest-rate formula by the way - predictable growth for 10-20 years should not be valued on a PEG basis. But forecasting interest-rate trends is a difficult. I am guessing it will spit out a PE of 20-30 for a declining interest-rate epoch - not a rational purchase price but a meaningful upside when combined with intrinsic-value growth.

To: Paul Senior who wrote (60535)	3/19/2018 8:04:27 AM
From: Graham Osborn	Respond to of 78752

You’re right of course. I think those who have observed me here know that my learning curve the past 5 years has been a steep one, and I still know far less than I should. I was attempting to speak from Buffett’s frame of reference. I had great difficulty until late 2016 determining the appropriate price to pay for a growth stock since I was still more in the Graham camp then on the long side. But at my present state of knowledge I think I could have spotted GOOGL in 2008 and MSFT in the late 80s. The sticking point is obviously that such businesses become available at truly attractive prices perhaps once a decade, when the investor may not have the liquidity or psychological fortitude to buy in the requisite quantities. I guess it’s arguable whether FB will have such a moment before it’s a giant company (by sales relative to the larger FANGs), but I’ll keep my hopes up. The real access points on some of these have moved to the private markets since 2000 - and I doubt whether those were value prices. I do have an early-stage formula (which obviously only works with massive levels of diversification) suggesting that Peter Thiel’s early investment in Facebook was at an incredible price - probably because they were raising capital in the wake of the dot-com meltdown. No brainers (which to me means better than 25% probability of a 10X in 10 years - assuming the downside is accounted for) should be concentrated - for me the max is 20% cost/ assets at the time of purchase. I own only one such stock right now. I’m not sure “no-brainer” is a great term since any idea requires a huge amount of research, but it is true that the numbers should hit you over the head with a baseball bat in the first 5 minutes. I need to plug those Coke numbers into the interest-rate formula by the way - predictable growth for 10-20 years should not be valued on a PEG basis. But forecasting interest-rate trends is a difficult. I am guessing it will spit out a PE of 20-30 for a declining interest-rate epoch - not a rational purchase price but a meaningful upside when combined with intrinsic-value growth.

To: Paul Senior who wrote (60535)	3/19/2018 8:09:25 AM
From: Graham Osborn	Respond to of 78752

You’re right of course. I think those who have observed me here know that my learning curve the past 5 years has been a steep one, and I still know far less than I should. I was attempting to speak from Buffett’s frame of reference. I had great difficulty until late 2016 determining the appropriate price to pay for a growth stock since I was still more in the Graham camp then on the long side. But at my present state of knowledge I think I could have spotted GOOGL in 2008 and MSFT in the late 80s. The sticking point is obviously that such businesses become available at truly attractive prices perhaps once a decade, when the investor may not have the liquidity or psychological fortitude to buy in the requisite quantities. I guess it’s arguable whether FB will have such a moment before it’s a giant company (by sales relative to the larger FANGs), but I’ll keep my hopes up. The real access points on some of these have moved to the private markets since 2000 - and I doubt whether those were value prices. I do have an early-stage formula (which obviously only works with massive levels of diversification) suggesting that Peter Thiel’s early investment in Facebook was at an incredible price - probably because they were raising capital in the wake of the dot-com meltdown. No brainers (which to me means better than 25% probability of a 10X in 10 years - assuming the downside is accounted for) should be concentrated - for me the max is 20% cost/ assets at the time of purchase. I own only one such stock right now. I’m not sure “no-brainer” is a great term since any idea requires a huge amount of research, but it is true that the numbers should hit you over the head with a baseball bat in the first 5 minutes. I’ve only seen 3-4 stocks like that in the last 5 years. I need to plug those Coke numbers into the interest-rate formula by the way - predictable growth for 10-20 years should not be valued on a PEG basis. But forecasting interest-rate trends is a difficult. I am guessing it will spit out a PE of 20-30 for a declining interest-rate epoch - not a rational purchase price but a meaningful upside when combined with intrinsic-value growth.

To: Paul Senior who wrote (60535)	3/19/2018 9:00:13 AM
From: E_K_S	1 Recommendation Recommended By Spekulatius Read Replies (3) \| Respond to of 78752

Netflix, Inc. (NFLX) - a no brainer investment It reminds me (w/ hindsight) that a no brainer investment would have been NFLX. A simple 42 bagger (9/2012 @ $7.50/share - 3/2018 @ $320.00) in 6 years, but as a value investor I never considered buying when in fact it was all about scale, growth and positive growing earnings. I think the lesson to be learned is to always keep an open mind, expand some of the ways you look at value rather than all the ways a company can 'blow-up'. That said, I still have a lot of war wounds from companies I thought had value (or potential to build value) and did not cut my losses. The common theme for most of my losers was excess debt w/ little to no plan (that is/was working) to reduce their debt. Also, growth and increasing revenues goes a long ways to reduce debt as long as revenues grows faster than debt. I still think Tesla, Inc. (TSLA) is burning way too much cash (even when compared to NFLX) for me to see the current value created. I own neither NFLX or TSLA but each have their own reason for being multibagger gainers which I missed as "value" investments. The possible "no brainer" value investment is/was to just follow Buffet's picks. EKS