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

To: Marco Vincenzo who wrote (79110)	2/5/2026 8:25:26 PM
From: E_K_S	Respond to of 79138

Hi Marco My analysis has changed over the 45 years I have been investing. I now do an initial screen after hearing about a company using AI. I ask AI to prepare a value proposition analysis with all the related metrics. Before AI, I would look at PE, Debt and Paul's favorite 10 years of positive FCF. More recently in the past 5 years, I have focused on FCF and FCF yield as a quick screen. I want growing FCF at a reasonable price (PE<15). I look at PEG <=1 is really good but I want that at a reasonable price too. Becareful w/ companies that have too much debt and make sure management has a plan to reduce that debt. The losers I have seem to originate from the company running into too much debt and not enough FCF to pay it down. Also, I want to see a catalyst for a change: an aqusition, new product or service, new partner, new management and/or a plan. An 'Exit' strategy too especially if you are in a position w/ an activist investor. I own XRAY w/ Carl Ichan now on the board who is a large 9% investor. He will force change and has an exit plan. PAHC mentioned here an animal health company. I was building a position in 11/2023 at $9.50/share. They took on a huge amount of debt after the acqusition of this animal product portfolio from ZTS. In October 2024, Phibro Animal Health Corporation (PAHC) completed a significant acquisition from Zoetis (ZTS). This move was a major strategic shift for Phibro, focusing on expanding their livestock health portfolio. The Deal at a Glance The Asset: Phibro acquired Zoetis’ entire Medicated Feed Additive (MFA) product portfolio and certain water-soluble products. This included over 37 product lines (such as antibacterials and anticoccidials) and six manufacturing sites across the U.S., Italy, and China. The Cost: The purchase price was $350 million in cash, subject to customary closing adjustments. Debt and Market Capitalization Phibro funded the acquisition primarily through new debt, significantly altering its leverage profile. Amount of Debt: To finance the $350 million purchase, Phibro entered into new credit facilities. According to financial reports from late 2024, the company’s total debt jumped to approximately $800 million (up from around $500 million prior to the deal). Market Cap at the Time: When the deal was announced and completed (April–October 2024), Phibro's market capitalization was approximately $900 million to $940 million. Debt-to-Market Cap Ratio: At the time of the transaction, the new debt taken on for the acquisition ($350M) represented roughly 37% to 39% of their market cap. If looking at total debt (~$800M) relative to their market cap (~$937M), the ratio was a staggering 85%. Leverage Impact Because Phibro is a smaller company than Zoetis, this was a "transformative" deal. Net Leverage: The company's net leverage ratio (Debt / Adjusted EBITDA) rose to between 3.5x and 4.0x at the close of the deal. Goal: Management stated their intention to use the increased cash flow from the new products to pay down this debt and bring leverage below 3.0x by June 2027. ----------------------------------------------------------------------------------------- Every situation is different and the companies I buy must have a story, have good assets & management. If it's a turnaround situation, management is key. I follow activist investors as they can force change when needed. FWIW PAHC hit an all time high today but only have 20 shares left as I scale into a new position and scale out. I typically will start to scale out when I reach a 35% or higher CAGR. Also, I am always learning new ways to view a company. I have been doing this 45 years and still learning.

To: Marco Vincenzo who wrote (79110)	2/6/2026 1:59:03 AM
From: Paul Senior	Respond to of 79138

For me, I don't use dcf, or make financial statement projections. I rarely read 10k's. I rarely do comps, if by "comps" Is meant a company compared to its peers. If "comps" means a company's results/metrics as compared to its own history, then yes, I do these type comps. As far as systems, I'm all over the place - LTB&H, value propositions, spinoffs, reversion-to-means, dividend plays, insider buy plays, following pro fund manager buys. People who seem to have one system or methodology here that they stick with appear to do better than me. It seems like it anyway -g-. After finding a stock to look at, my process to evaluate (to determine if a stock is a buy for me) usually takes maybe 10 minutes. Often to mitigate what I believe is risk of not knowing what I should know, I will consider making a buy for only a few shares (tracking position), and hope to learn more and gain confirming information as time passes. I try to have a "ruling reason' for any buy, such as "high dividend", "high roe/low p/e", "consistent revenue growth", "seems to meet someone else's criteria" (Buffett, some guys on this thread, some guys on other threads), "reversion to mean", "momentum". Keeping this in mind helps me because it tells me I should exit my position if the ruling reason does not hold up. ----------- For what it's worth: If you are intending to use this thread to buy value stocks mentioned here, please consider this: As moderator I'm trying to remain somewhat true to Ben Graham's ideas. Right now, it seems tough to find many stocks that meet his criteria; times and people's ideas about value have changed since Graham; etc. So sometime we or I get a little off-track. Anyway, over the years of discussing what value is, we (the people posting here historically and posting now) just cannot come to an agreement on what a "value" stock or a "value" buy is. I fall back on this: based on a non rigorous study I did here maybe 25 years ago (!), I found that if three or more people posted here that they bought a stock, that stock usually did "satisfactorily" within 18-24 months (not sure exactly/can't remember). Which made some sense in that if three people with likely three different viewpoints on what "value" is, decided the same stock was a value buy that met their different criteria that they had for "value", it likely would be a value stock that would do ok, as value stocks are supposed to do.