Tobias Carlisle: "Deep Value Investing" | Talks at Google



"Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations" is an exploration of the philosophy of deep value investment. It describes the evolution of the various theories of intrinsic value and activist investment from Benjamin Graham to Warren Buffett to Carl Icahn and beyond. Filled with engaging anecdotes, penetrating statistical analysis and meticulous research, the book illustrates the principles and strategies of deep value investing and examines the counterintuitive idea behind its extraordinary performance. About the Book It is a simple, but counterintuitive idea: Under the right conditions, losing stocks—those in crisis, with apparently failing businesses, and uncertain futures—offer unusually favorable investment prospects. This is a philosophy that runs counter to the received wisdom of the market. Many investors believe that a good business and a good investment are the same thing. Many value investors, inspired by Warren Buffett’s example, believe that a good, undervalued business is the best investment. The research offers a contradictory view. Deep Value is an investigation of the evidence, and the conditions under which those losing stocks become asymmetric opportunities, with limited downside, and enormous upside. In pursuit of this idea, it canvases the academic and industry research into theories of intrinsic value, management’s influence on that value, and the impact of attempts to unseat management on both market price and value. The value investment philosophy as first described by Benjamin Graham identified targets by their discount to liquidation value. That approach has proven extremely effective; however, those opportunities have all but disappeared from the modern stock market. To succeed, today’s deep value investors have adapted Graham’s philosophy, embracing its spirit while pushing beyond its confines. In Deep Value, I examine Graham’s 80-year-old intellectual legacy using modern statistical techniques to offer a penetrating and highly original perspective: That losing stocks offer unusually favorable investment prospects. The evidence reveals an axiomatic truth about investing: Investors aren’t rewarded for picking winners; they’re rewarded for uncovering mis-pricing.

Comments

  1. i am 85% gram and 15% phil fisher. fisher ----find out as much as possible about the quality of the business and ability to growth. shes candy reinvested only 70m to generate 1.35b income from 1972 to 2011.
  2. buffet moved from liquidation method to franchise method. shes chandy it earning 2m on 8 capital and he valued 47m which was a discounted price.
  3. BUFFET-YOU ARE MUCH BETTER OF OVER LONG TERM GROWTH RATHER THAN CIGAR BUTTS. HIGH QUALITY+ GOOD VALUE=High ROIC+ high EBIT/Enterprise value
  4. NET CURRENT ASSET MODEL OUTPERFORM---CURRENT ASSESTS
  5. GOOD COMPANY WITH FAIR PRICES OF WARREN- HIGH QUALITY AND GOOD VALUE--
  6. THE LITTLE BOOK THAT BEATS THE MARKET BY JOE
  7. SIMPLE MODEL HELPS US TO OUTPERFORM
  8. SO WE ARE LOOKING FOR DECLINING EARNINGS AND UNDER VALUATION
  9. GLOBAL GROWTH ABOVE AVERAGE OR BELOW AVERAGE OR EXCEED THE AVERAGE---- IT DOES NOT INDICATE ANYTHING---most company does not avoid this cycle very few can avoid this cycle
  10. OVER TIME UNECCELLENT OUT PERFORM THE EXCELENT.
  11. ASSET GROWTH, EQUITY GROWTH, PB VALUE, RETURN ON CAPITAL, RETURN ON EQUITY, RETURN ON SALES---- EXCELENT AND UNEXCELENT COMPANY
  12. SO THE REAL DRIVE WAS UNDER VALUATION NOT THE GROWTH.
  13. SO LOW GROWTH IS BETTER THAN HIGH GROWTH----VERY INTERESTING
  14. LOW GROWTH UNDERVALUE OUTPERFORMS HIGH GROWTH UNDERVALUE.
  15. 5 year average return to the portfolio ---contrarian did the best.
  16. contrarian portfolio- wich is very low growth portfolio- growing at low rate and available on a low multiple
  17. high value portfolio- still growing a quite high rate growth but available for much cheaper multiple
  18. glaumer portfolio has the highest rate of growth --earing, cashflow, book value, operating earning all are growing high.----you have to pay higher multiple to acquire these---19.8 pE, 10.8 PCF higher to acquire very expensive.
  19. PE, PB, PCF, P operating earing. undervalue slow growth stocks portfolio and overvalue high growth stocks portfolio. 3 types slowest growth, medium growth, highest growth and three type of valuation most undervaluation, average ,most overvalued---9 types has come-- 3 are shown here-----
  20. 4 years later undervalue shares earing improve and over value shares earing goes down


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