- The blog has moved to SubstackHi everyone, Thanks for following along on the blog so far, the nearly two years of Superfluous Value have been some of the craziest in market history. I have been approached by Substack to take my blog onto their platform and after scoping it out and taking the advice of several bloggers much more experiencedContinue reading “The blog has moved to Substack”
- Antero Resources: How to 20x Your Money (After a 96% Drawdown)That’s amazing Guy, you added near the bottom, right? Glad you asked… of course I didn’t.
- Following Up Ping AnOn balance, I still believe Ping An is too cheap and has an exceptional, probabilistic-weighted return. However, given the wide dispersion of macro risks and opacity of the Chinese financial system, it is also unsuitable as a concentrated position and should be sized according to large impairment being one possible outcome.
- Lloyds Bank: Worth the PainIf there is a developed market that has been loathed to the point of total indifference, it is the UK. Between the initial Brexit horror, the slumping Pound and ongoing political shambles, investors have gone through all the stages of grief and with good reason. Within the UK market, the financial sector has been particularlyContinue reading “Lloyds Bank: Worth the Pain”
- Barrick: The Best Hedges Are Those You’re Paid To TakeIf you are hunting for a sector that is a long way off its highs in the midst of a bull market in just about everything else, look no further than precious metals. I have a 4% weighting in Barrick Gold, but I view it very differently to many stock pickers and am aware thereContinue reading “Barrick: The Best Hedges Are Those You’re Paid To Take”
- Dilutive times at AMAI see AMA as too cheap for its post-Covid fundamentals, but being priced as if the lockdown hangover will be permanent. If the company hits $1b in revenues in its first pandemic unaffected year (now likely to be FY23) and achieves historic EBITDA margins of around 9-10%, we can expect normalised EBITDA of $90-100m in short order.
- Ping An: Growing Like a Weed, Priced to LiquidatePing An is selling for 70% of the current Embedded Value of the whole group, implying that it is not only being wound down, but the pieces only recouping 70c on the dollar. Given that group EV has doubled in the last five years, and is showing no signs of slowing, this is just fanciful.
- Value Traps: The Price of Admission and Shinsei BankMost of my holdings have been considered value traps by the market at one point or another (many of them right now). Likely, some of them will indeed turn out that way- I’m just not sure which ones yet.
- Saipem’s H1 Results: A Brief UpdateYou’ve got to love European energy services- energy prices fall and they fall, and then energy prices rise… and they fall more.
- The Leverage Sweet SpotFor industries where Enterprise Value (EV) metrics are the preferred valuation method, the Private Equity model of “leveraging up the balance sheet”, has proven extremely effective over time. Mimicking this strategy in the public markets has been claimed by numerous value funds, but has been best quantified and popularised by Dan Rasmussen of Verdad Advisors.Continue reading “The Leverage Sweet Spot”
- Gazprom: The Ultimate Inflation HedgeGazprom is one of the most polarising companies in global markets, but in my experience, those that dismiss it citing Russia, Putin or the oligarchs are looking through biased lenses and passing prematurely. I view the company not only as a potenitial multi-bagger, but as one of the market’s best inflation hedges. If inflation getsContinue reading “Gazprom: The Ultimate Inflation Hedge”
- Behavioural: The One True and Enduring EdgeInvesting wisdom is very clear that you should only invest when you have a clear “edge”. This is logical and self-explanatory given the zero-sum nature of returns (in relation to a benchmark at least). Taking positions with negative expected returns is a sure-fire way to damage your portfolio, but what edges are there that areContinue reading “Behavioural: The One True and Enduring Edge”
- Babcock International: An Inverted ShortI spent my run last night listening to Brandon Beylo’s thought-provoking interview with Dan McMurtrie of Tyro Partners on the Value Hive podcast. I am only part-way through (it’s over three hours), but the level of differentiated, independent thinking is already impressive, with the most interesting being McMurtrie’s discussion of “Inverted Shorts”. An Inverted ShortContinue reading “Babcock International: An Inverted Short”
- NOV Inc: A Survivor With Leverage to the Energy RevivalTo avoid an energy supply disaster, there is going to need to be substantial capex flows into exploration and production very soon. Clearly, NOV stands to benefit heavily from this.
- Turkcell: You Just Wouldn’t Find It This Cheap Anywhere ElseOk, maybe besides China. But Turkcell Iletisim Hizmetleri (TKC:NYSE) is a perfect example of a predictable, profitable business with opportunities for future growth, tossed on the scrap heap due to Turkish macro uncertainty and general market indifference to unexciting EM businesses. Even in traditional telco, which currently has some of the cheapest valuations globally, Turkcell’sContinue reading “Turkcell: You Just Wouldn’t Find It This Cheap Anywhere Else”
- Chinese Bargains Thrown Out With The Tech BathwaterI have no idea how BABA and TCEHY will fare from here, they appear oversold, but as often, my preference is for stodgy, cheap, cash-flowing companies at some of the cheapest prices in EM value’s history.
- H1 2021 Portfolio ReviewFor the six months to June 30, I gained 21% in AUD, when compared to the MSCI ACWI IMI, which gained 13.5%. On a constant currency (USD) basis, I was up 24%, due to a modest decline in the Aussie Dollar over the period. More importantly, since I began formally tracking my portfolio in AugContinue reading “H1 2021 Portfolio Review”
- Sins of Omission: Covid EditionMistakes of commission are often the most apparent to an investor. They rub your nose in it every time you open your brokerage account. But due to the skewed outcomes of equity investing (with unlimited possible upside vs 100% possible downside), often the investments you passed on were truly the most costly. We are nowContinue reading “Sins of Omission: Covid Edition”
- Saipem: Too cheap to Ignore, Safe Enough to SurviveDespite the rally in energy services since November, the sector remains one of the cheapest in global markets, with many businesses grinding lower over the seven-year bear market, only to then be totally decimated during the pandemic. After having spent a huge block of time working through the sector over the last 12 months (includingContinue reading “Saipem: Too cheap to Ignore, Safe Enough to Survive”
- 13F Idea Generation: A Value Investor’s GuideI have heard the saying many times when it comes to value investing- “whoever turns over the most rocks wins”. You can only hope to do as well as the best of the opportunity set you investigate, so getting the most quality ideas through your funnel is a vital skill, especially for those of usContinue reading “13F Idea Generation: A Value Investor’s Guide”
- Updating Micro Focus After a Strong RunToday I want to update my thinking on the stock I have had the most feedback on since starting this blog- Micro Focus (MFGP). I first bought it in November 2019 at $14, before doubling down at $4.90 last March and tripling down at $3.70 in September. After bottoming out at $2.70 in October, theContinue reading “Updating Micro Focus After a Strong Run”
- Daring to Be GreatHoward Marks is justifiably revered in value investing circles for an ability to decipher finance in a simple way, possibly second only to Warren Buffett himself. My favourite memos of his relate to the 2006-10 period, as he chronicled the GFC with great prescience, and none more so than his 2006 piece “Dare to BeContinue reading “Daring to Be Great”
- Telefonica Brasil: The Ultimate LBO CandidateIn my last post discussing Petrobras and the Brazilian market’s swan dive, I referenced a number of strong companies that I believed were being pummelled by association with their Brazilian domicile. Today I want to flesh out one of these ideas in depth and expand a little on why I think Brazilian equities, particularly boughtContinue reading “Telefonica Brasil: The Ultimate LBO Candidate”
- Emerging Market Risk Revisited: PetrobrasEM equity investors were given another reminder of the political risk inherent in the asset class last week, when Brazilian president Jair Bolsonaro ousted the CEO of oil giant Petrobras (Petróleo Brasileiro S.A.). The highly rated Roberto Castello Branco (himself a Bolsonaro appointment in 2019) is to be replaced by, Joaquim Silva e Luna, anContinue reading “Emerging Market Risk Revisited: Petrobras”
- Some observations on the Auckland property marketMy family are now settled back in Auckland after our sabbatical road-trip and one of the first things to strike us has been the frenzied level of building and buying activity here. Since returning, we have had very few conversations where property hasn’t come up and the idea that prices can only continue to rocketContinue reading “Some observations on the Auckland property market”
- 2020 Portfolio Review:For calendar year 2020 I lost 1% in AUD, when compared to the MSCI ACWI PMI, which gained 9%. On a constant currency basis, I was up 11%. The strength of the AUD over the year detracted from returns, but is setting up attractive opportunities going forward, so I welcome its rise. Since I beganContinue reading “2020 Portfolio Review:”
- Investing for future yieldI am not a fan of traditional dividend investing, as it often focuses an investor on the wrong outputs and favours companies creating value in a tax inefficient manner. This style of “dividend aristocrat” investing leans towards businesses who have paid their dividends in a metronomic manner over long periods of time, often using highContinue reading “Investing for future yield”
- ABS CBN: A lesson in political risk and opportunityOne of my most humbling investments this year has been the filipino media conglomerate ABS CBN Holdings (ABSP.PH). It is easy to dismiss the political risks often associated with emerging markets, but in this case, those fears came to fruition with a vengeance. This has been a shocking headwind for long-term holders of the stock,Continue reading “ABS CBN: A lesson in political risk and opportunity”
- And Value Stocks Are *checks notes*- Up?!With value investing showing signs of a comeback over the last fortnight, it seems an opportune time to re-examine the strategy and what the deep-value universe could look like going forward. Much has been written about the shocking underperformance of value investing over the last decade and indeed recent research by Mikhail Samonov at TwoContinue reading “And Value Stocks Are *checks notes*- Up?!”
- Bullshit Earnings: Pros and Cons“I think that, every time you see the word EBITDA, you should substitute the words “bullshit earnings.” Charlie Munger Ever eloquent, Munger’s quote and associated scepticism have turned a large part of the value community against using EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) in security analysis. I am not for a second advocatingContinue reading “Bullshit Earnings: Pros and Cons”
- Jardine Strategic: Value Managers Going Cheap- Part 2I thought it was about time I followed up from a post I made a couple of months ago, where I highlighted the anti-bubble in proven value managers left for dead in this market*. Today I want to hone in on one of my larger positions- Jardine Strategic Holdings (SGX:J37), an Asian conglomerate, run byContinue reading “Jardine Strategic: Value Managers Going Cheap- Part 2”
- Global Value Stocks in AUD FiresaleToday’s post is a little shorter than usual, but I believe it is one of the most powerful I have written. Australian investors have been delivered a fire sale in international stocks, courtesy of the AUD rallying from 55c at the March low to 72c today. This has created a surprising opportunity, with a significantContinue reading “Global Value Stocks in AUD Firesale”
- Investing in the Anti-Bubble: CommoditiesI wasn’t sure whether to put “commodities” in the title of this post, because there is no better way to ensure no one reads what follows, but at least you were forewarned. Over the weekend, I watched a presentation given by Adam Rozencwajg, of Goehring & Rozencwajg, at the FuW Advisor Conference in Zurich lastContinue reading “Investing in the Anti-Bubble: Commodities”
- A quick note on the LILAK Rights IssueI must confess to being initially baffled by the Liberty Latin America Subscription Rights Issue, announced on August 5, as a means of financing their acquisition of Telefonica’s Costa Rican wireless operations. Why announce a $100m share buyback in March, only to issue $350m in equity later the same year? The company’s valuation sits firmlyContinue reading “A quick note on the LILAK Rights Issue”
- Long-Term Thinking and a Lack ThereofIntelligent investing is long-term at its core. I’m not breaking any new ground with that statement. Any number of classic value quotes will tell you so. Books have been written, podcasts recorded and 40 000-strong crowds packed into Omaha stadiums to hear the subject expounded upon. As usual, Buffett summed it up best when heContinue reading “Long-Term Thinking and a Lack Thereof”
- Micro Focus: The world’s only tech stock at March lowsAs many of you know, I’m constantly searching for the most beaten up valuations I can find and seeing what has been passed over by the market. Today I’m posting my thesis on Micro Focus plc, which suffers the dual ignominies of already being in a revenue down-grade cycle when Covid-19 hit and being primarilyContinue reading “Micro Focus: The world’s only tech stock at March lows”
- Thanks and changing the websiteHi all, Thanks for following along and supporting my blog. I have just become aware that there is an excellent and longer running value investing blog whose name I have encroached upon with my little site. It’s called Yet Another Value Blog and I recommend you all to check it out. However, rather than complicateContinue reading “Thanks and changing the website”
- Proven legends going cheap!- Part 1The growth rocketship we have witnessed in the NASDAQ over the last several years has ushered in a new era of capital allocation legends. Bezos for his long-term cash flow breakeven strategy and development of AWS that has proven genius. Zuck for his timely and savvy purchases including WhatsApp and Instagram at prices that nowContinue reading “Proven legends going cheap!- Part 1”
- Crouching Bear, Hidden Value: China within an EM value contextThose of you who’ve read a few of my posts will know I’m a big believer in Emerging Market value stocks to be big winners over the next decade. This is largely on a valuation basis that has EM value trading on a Shiller PE of around 8x- an extraordinary number, when contrasted with theContinue reading “Crouching Bear, Hidden Value: China within an EM value context”
- H1 2020 Portfolio ReviewIn surely the most humbling six months for market punditry on record, my portfolio was down 14% in AUD, leaving it down 5% since I started systematically tracking it on 9/8/18. This compares to the MSCI ACWI PMI in AUD which has fallen 6% over H1 2020 and gained 6% since my inception date. ThereContinue reading “H1 2020 Portfolio Review”
- Long Royal Bank of Canada/ Short ShopifyThere have been a lot of crazy and memorable moments over the market turmoil of the last several months. One that went somewhat unnoticed and really captures the zeitgeist of the digital economy crushing everything in its path was Shopify surpassing Royal Bank of Canada as the largest Canadian company by Market Cap. My earsContinue reading “Long Royal Bank of Canada/ Short Shopify”
- Valuation vs PredictionThere are a lot of theories thrown around to justify why markets do what they do. We have witnessed this in overdrive since the current crisis began roiling financial markets in late February, despite the current outlook seeming the most uncertain in my lifetime. This is not to say that forecasts are mostly accurate whenContinue reading “Valuation vs Prediction”
- Holding commercial property through covid-19One of the undoubted losers from Covid-19 and the large-scale necessity of working from home is commercial property, specifically office space. Workers on mass are discovering that taking a commute and co-worker distractions out of their day is making them a lot more productive. This is especially noticeable for many whose children have started backContinue reading “Holding commercial property through covid-19”
- A generational buying opportunity?The brutal plunge and whipsawing recovery investors have witnessed since the Covid-19 pandemic took hold has left many wondering if they missed the boat on a “generational buying opportunity” in March. The term was certainly thrown around a lot in the media and even some high profile value investors dropped the term, including John RogersContinue reading “A generational buying opportunity?”
- I’m sticking with the old guysIt seems like an age since the virtual Berkshire Hathaway AGM a fortnight ago. For those not quite so obsessed with everything Warren, there were a few surprising takeaways. Firstly, Buffett came across as quite bearish, he dumped his airline holdings and professed his concern that his company would need to hold more cash toContinue reading “I’m sticking with the old guys”
- The Energy melt-down and why I like GazpromOne of my favourite set-ups in a business includes what I think of as the toxic trio- a business that operates in a hated sector, within a hated country, with a hated currency. If a stock has these three traits there is a good chance it is priced as a bargain. This is where theContinue reading “The Energy melt-down and why I like Gazprom”
- (Position) Size MattersValue investing opinion is divided on the optimal number of positions an investor should own. From Walter Schloss, who often held over 80 stocks at a time, to Charlie Munger’s early partnership days, where he was concentrated in a handful and sometimes only one*. Buffett famously stated that a skilled, “know-something” investor should “place allContinue reading “(Position) Size Matters”
- Building a portfolio under Covid-19The whipsaw of the last two months has had many re-examining their portfolios. I am definitely one of them and will share my evolving thinking on positioning. The array of short-term outcomes seems as wide as here as at any time in my investing life. Should an investor be positioned bearishly or bullishly? I thinkContinue reading “Building a portfolio under Covid-19”
- The Compounder Bro: Past, Present and FutureAmongst the value community, one of the lasting legacies of the 2010s bull market will be the rise of a new beast of value(ish) investor- the Compounder Bro. It all began as the peak capitulation of the GFC began to fade and lying in plain sight were a few unexpected businesses. The shellshocked Compounder BroContinue reading “The Compounder Bro: Past, Present and Future”
- The case for holding cashThere are many rites-of-passage on the booklist value investors are introduced to when they are new to the school. Howard Marks memos, The Intelligent Investor, Phil Fisher, Margin of Safety and One Up on Wall Street are perennially popular, but the most hallowed reading of all are the Berskhire Hathaway (Buffett) annual letters. The mostContinue reading “The case for holding cash”
- Emerging markets value: A case studyIn previous posts I have discussed my conviction that US markets are far too expensive to justify a large chunk of my capital currently. Instead, I have been focusing a large amount of my time in foreign markets, particularly the Emerging Markets, which display unusually cheap valuations today (https://superfluousvalueblog.wordpress.com/2020/04/23/fertile-hunting-grounds/). Continuing along this vein, I amContinue reading “Emerging markets value: A case study”
- Fertile Hunting GroundsIn my last post (https://superfluousvalueblog.wordpress.com/2020/04/21/the-forgotten-ratio-sticking-with-cape/), I discussed how the S&P 500 is still far from cheap today. I believe this so strongly that only 9% of my portfolio is currently invested in the US, despite it accounting for around 54% of global market cap. If this is the case, where do I believe the opportunitiesContinue reading “Fertile Hunting Grounds”
- The forgotten ratio? Sticking with CAPENo, I’m not a permabear. I actually would desperately like to be fully invested, maybe even with a modest amount of leverage. It just hasn’t been possible at price levels that make since for several years now and the falls that occurred between late February and March 23 didn’t quite get us there. You see,Continue reading “The forgotten ratio? Sticking with CAPE”
- Long ViacomCBS/Short NetflixI thought I could talk about my investing philosophy through the lens of two businesses the market perceives as very different. One is a boring, disrupted, old world media producer and distributor and the other is a sexy, Silicon Valley, disrupting media producer and distributor (I don’t own either, for the record). One has aContinue reading “Long ViacomCBS/Short Netflix”
- Why I’m hereI’ve been investing in a haphazard manner for around 15 years and in a concentrated value style for around three. My evolution was basically a series of overconfident mistakes and some lucky outcomes, with some stubbornness in the mix. My father mowed lawns for a living, but jagged the investing bug somewhere along the way.Continue reading “Why I’m here”
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