Tobias Carlisle, Founder

Tobias Carlisle is the founder of The Acquirer’s Multiple®. He is the founder and Chief Investment Officer of Carbon Beach Asset Management LLC.

He is best known as the author of the #1 new release in Amazon’s Business and Finance The Acquirer’s Multiple: How the Billionaire Contrarians of Deep Value Beat the Market, the Amazon best-sellers Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014), Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012) and Concentrated Investing: Strategies of the World’s Greatest Concentrated Value Investors (2016). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law.

Prior to founding the forerunner to Carbon Beach in 2010, Tobias was an analyst at an activist hedge fund, general counsel of a company listed on the Australian Stock Exchange, and a corporate advisory lawyer. As a lawyer specializing in mergers and acquisitions he has advised on transactions across a variety of industries in the United States, the United Kingdom, China, Australia, Singapore, Bermuda, Papua New Guinea, New Zealand, and Guam. He is a graduate of the University of Queensland in Australia with degrees in Law (2001) and Business (Management) (1999).

Connect with Tobias on Twitter, LinkedIn or Facebook.

Johnny Hopkins, Analyst

Johnny Hopkins Head Shot

Johnny Hopkins is a financial analyst who specialises in deep value stocks, here at The Acquirer’s Multiple. He’s a Deep Value investor, based in Melbourne, Australia.

You can contact Johnny here: johnny@acquirersmultiple.com

 

38 Comments on “About us”

  1. Hi Tobias,

    I just registered for the free screener, but am considering the upgrade to paid.

    At this point, I envision my strategy would be to add one stock per month for the first year for a twelve stock portfolio. By each month choosing the lowest TAM stock in the chosen universe (that is not already held), might this strategy build a portfolio even cheaper in value than the all-stocks-at-once back tests and, therefore, over time, outperform?

    Also, I question non US-based stocks. At times, in other screeners, I have wondered if currency conversions were always reliably done, and if accounting conventions in other countries were different enough so that financial information might not always be recorded consistently in the rigid format of a database. I understand the benefits of international diversification, but I am still thinking of limiting my choices to the lowest TAM US-headquartered companies only. I am interested in your thinking on this.

    I have followed Greenbackd off and on over the years, but had not been aware of your TAM work until I saw it referenced today on Seeking Alpha. I am intrigued.

    Best wishes.

    Bruce Murison

    1. Hi Bruce,

      Thanks for the note.

      There’s no problem with scaling in 1-2 stocks every month. Once you’re fully invested the portfolio should perform broadly in line with the screener portfolios.

      No problem at all in avoiding the ADRs or non-US based stocks. That’s quite common. I include them because the model portfolios have historically outperformed when ADRs are included, but I understand why you may not feel comfortable holding them. That’s not an issue.

      Would you please let me know where you saw it on Seeking Alpha?

      Best,

      Tobias

  2. Hi Tobias,

    Thanks for the reply.

    I have to rethink my concern about ADRs, in view of their historic performance. I believe I saw that you exclude Chinese domiciled companies, which somewhat alleviates my concern.

    I had thought that constructing the portfolio with the lowest TAM stock each month might outperform the 30 or 20 stocks-at-once tests, at the cost of greater volatility. My thinking was that I would, in effect, have twelve one-stock portfolios that could, over time, capture extra alpha from the very deepest value TAM stocks.

    I know TAM is constructed differently than the Magic Formula, but I see a correspondence in the current top 30 for the largest caps in your free screener. The ascending 30 TAMs are also exactly descending Magic Formula earnings yields. Would this always be the case? If so, why not just use magic formula earnings yield and skip the MF dual quality ranking? I realize I am raising this question with extremely limited data. Perhaps the best MF earnings yields from the whole data base would be completely different stocks than the best TAMs.

    I note you include MLPs. Is this a difference from the Magic formula universe?

    The Seeking Alpha article is by author “Inner Scorecard” and is titled “Being a Value Investor Without Doing the Work Part II: Alternatives to the Magic Formula”. It was published May 25 at 10:15 a.m.

    Thanks again for your attention to your followers’ questions. I hope you have a lot of success with this site.

    Bruce

    1. Hi Bruce,

      As a general rule, the cheaper the AM, the better the performance. In practice, there’s a lot of randomness, so it pays to diversify. Pat O’Shaughnessy did some interesting research examining exactly your question (monthly rolling 1-100 holdings) here. He initially found the buying the best 5 gave the best returns, and the best 15 gave the best risk adjusted returns. (I have seen some revised research of his that suggests the best one gives the highest returns and the best 25 give the best risk adjusted returns). A handful every month may give you the best of both worlds.

      The AM operating earnings and EBIT/EV (the Magic Formula Earnings Yield) will mostly coincide, however, they are constructed differently. Operating earnings is built from the top of the income statement down, where EBIT is built from the bottom up. Calculating operating earnings from the top down standardizes the metric, making a comparison across companies, industries and sectors possible. Most importantly, it excludes special items–earnings that a company does not expect to recur in future years–which ensures that these earnings are related only to operations. EBIT will catch special earnings unless it is specifically backed out. Operating earnings is the better metric. Great question. (You’ve got a good eye!)

      The screeners include MLPs. Again, only because I want the broadest universe possible, and excluding them has led to underperformance.

      Hope that helps.

      Best,

      Tobias

  3. Dear Tobias,

    Thanks for the great response – very comprehensive.

    I need to trust the universe and take what it gives me – ADRs, MLPs, etc.

    I will be signing up soon and also need to get your book. I am asking questions mostly blind, without the book.

    My plan is a one stock portfolio each month for a year, then review monthly according to your rules. I am not too concerned about volatility. (At least that’s what I say now, before it happens! ) If I keep this up long enough, we will have a real world test of the one stock method.

    Thanks again for taking the time to share your knowledge.

    Bruce

  4. Tobias,

    This is my last comment / question – I know you are busy.

    I read your link to the O’Shaughnessy research after I had sent my last reply. It gives me pause that the one-stock looks so inferior. I wonder if you have a link to the revised research you mention, showing one- stock most profitable.

    My plan may be different than his. I would not repeat a stock, where I surmise that he might, if it were on top of his ranking two months in a row. I would instead choose the second ranked stock, if the same stock I had already bought were still first. That way I would definitely have twelve stocks after a year, where I don’t think he necessarily would. I’m not sure of this though, as I am not sure I understand his exact procedure.

    Looking at his table, showing one-stock among the worst, the highest returns look like they would come not from five-stock, but actually from four-stock, the four being second through fifth, eliminating the top ranked name.

    This would all go out the window if the revised research were convincing, but it always concerns me when “further research” changes results dramatically. Who knows what to believe.

    I am now going to fade to the background, sign up, put some real money to work and see what happens.

    Best wishes.

    Bruce

    1. Hi Bruce,

      The revised research will appear in my new book about concentrated value investment due out in about 9 months, so I can’t share it yet.

      You’re right that your plan is likely different. He has tested the results of holding a single stock etc, but done it on a rolling basis so that he eliminates any seasonal bias. Your results will be closer to the 12-stock portfolio.

      I think you get the best risk-adjusted results between 20 and 30, which is pretty standard in the investment community. The results keep going up as you concentrated, but they become much more volatile.

      Hope that helps.

      Best,

      Tobias

  5. Hi Tobias ,
    Read both your books great reads and learned alot from them.
    I just subscribed to your site as well.

    Wanted to ask about NSU which was on the screener for all investible stocks.
    It has an M score of -1.07 as per guru focus and that would suggest it might be a manipulator.

    Can you pls shed some light on that ? Since in your book that was one of the screeners to check.

    Thanks
    Haytham

    1. Hi Haytham,

      Thanks for the note. We use the suite of QV forensic accounting measures looking for earnings manipulation, and fraud. We rank on the combined score and kick out the worst. Beneish’s M-Score gives a probability of manipulation. NSU’s M-SCore, at -1.07, is slightly higher than the index of non-manipulators at -2.22. NSU’s red flag is in its DSRI-Days’ Sales in Receivables Index. YoY Sales jumped more than threefold from $155mm to $555mm, while Net Receivables fell from $57mm to $32mm, giving it a score over 5 on both the 5- and 8-variable versions of the DSRI, which is odd (non-manipulators should be at 1.031 on the 8-variable version). While Sales and Receivables behavior like that might be unusual for a manufacturing or service business, it’s not necessarily fatal for a commodity miner, where big swings in the underlying commodity and mineral finds mean Sales and Receivables are less predictable year-to-year. NSU was not knocked out by the other fraud and earnings manipulation variables, so it remains in the model. Still, it’s a red flag for a reason, and it’s worth watching. The fundamental data is run weekly, so the situation might change, but it’s within bounds for now.

  6. Tobias,

    I have a question for you regarding buying into a diversified portfolio based upon your screeners.

    Let’s assume that someone buys 2 companies per month for a total of 24 companies over a 12 month period. Is it better for buy the cheapest acquirers multiple available every month, whether or not that company is found on the small, all or large cap screener or is it better to stick to one screener (either the small, all or large) according to your process/system long-term?

    Lastly, does your additional screening based upon cheapness, risk and earnings cause one to experience different results than what you found in your back testing research for low growth value stocks?

    Thanks.

    1. Hi Jeremy,

      1. Cheaper is better. The best screeners for that purpose are the All Investable Screener or the Small and Micro Cap because they don’t overlap.
      2. Yes. I anticipate that it will improve it.

      Best,

      Tobias

  7. HI Tobias,

    This is an awesome website! Just out of curiosity, do you guys plan to provide such screeners for international markets as well? Given that emerging markets have been trading at overall low valuations, there will be more opportunities to discover based on TAM. For example markets like Singapore and Hong Kong which have strong regulations and reliable data reporting.

  8. Tobias:

    I have read both books with admiration.

    I have started a portfolio 2 weeks ago with 29 stocks.

    Three have left the screener, KORS, MOV, and MU, and are up 8.58%, 25.3%, and 16.3% respectively. Do I sell or wait the year. They are in a tax free Roth .

    Thanks

    Roger Stephens

    1. Hi Roger,

      I’m not sure what approach you’re using, but you either hold until the positions have reached your estimate of value, or you hold until your next regular rebalance. Those are good returns in a very short period of time. You’ll typically get better returns holding for longer (say ~ 1 year or more).

      Tobias

  9. Good morning Tobias,

    I was wondering if you have any plans to calculate and publish the Acquirers Multiple on the ASX (Australian Stock Exchange) in the near future. I’d be interested in adopting a strategy such as yours in Australia- assuming that the results are similar to the USA.

    Thanks and regards
    Nick

  10. In my country, the maximum tax rate on capital gains and foreign dividends is going up to almost 29%.

    This raises two questions. Have you looked at the results if stocks are held for multiple years? Even holding for just 2 years decreases cap gains to around 14.5%.

    Have you repeated your screens, but limited the results to those stocks with low dividend yields ( bottom 50% or bottom 33% or bottom 25% or no dividends)?

    1. I haven’t looked, but I would guess that holding for longer would slightly reduce returns. It sounds like the additional “alpha” from paying the long-term capital gains tax rate would likely improve after-tax returns, which is all that counts.

  11. I should correct my post above. In my country, the maximum tax rate on capital gains is going up to almost 29%; however, the maximum tax rate on foreign dividends is going up to almost 58%.

  12. I have my free account and I’m going to join the payment registration.
    The EV/Ebit method(TAM) looks pretty interesting, but for me there is a weak part: the drawdowns
    1. What does the TAM to avoid them or at least to try it?
    2. Your financial scores ( your own Piotroski variation) is part of TAM or not? Is it taken in condideration in your screener?

    1. Hi Miguel, The screen runs the Beneish, Piotroski and Altman scores, and other value and risk metrics over the universe before ranking on the acquirer’s multiple. The best way to avoid drawdowns is to hedge with an index. Now might be a good time because the market is expensive, and the most popular trend signals (Golden/Death cross and 200 moving average) are down.

  13. Thank you very much for your quick answer. With your answer I can deduct that the Piotroski, Altman filters help to avoid too leveraged or financially weak companies. I realize that nobody can provide absolute safety about the future of the companies, and with these filters TAM pass my requirements.
    Sadly I haven’t understood your explanation about how to avoid the drawdowns (or at least the worse drawdowns) hedging with an Index. If we agree that the market is expensive and the trend signals look that are going down…wich is the right behaviour for a non pro value investor like me? Keep me out of the markets until the trend looks to change ? Taking short positions?
    Thank’s for your answer, congratulations for your books and happy and healthy new year for all the suscribers from a small sunny spanish island in the middle of the mediterranean sea.

    1. Thanks for the kind words. I’m not sure what your comfort level is, but for long only investors fearful about the level of the index, Graham recommended being no less than 25% invested. If you’re prepared to hedge, you can be fully invested long, and hedged. One way to do so is to sell short an index ETF.

  14. Hello Mr. Carlisle,

    I just watched an interview online where you mentioned an etf coming from you based on these principles – any news as to a launch date?

    I’m Canadian – any plans to publish the Acquirers Multiple for Canada?

    Thanks

    Jim Maron

  15. Hi Tobias,

    Two quick questions:

    1. In the “Four steps to implementing a quantitative value investment strategy” FAQ post, you state:

    “Hold winners for one year plus one day to maximize after-tax returns, then sell. If a stock is up, and remains in the screener after one year and one day, hold until it leaves the screener. If a stock is down and remains in the screener, hold. If a stock is down and leaves the screener, sell. You should check the portfolios to see if a rebalance is necessary no less than quarterly.”

    My question relates to “if a stock is down and leaves the screener, sell.” I recently (within the past month) purchased WNR and it appears that it has left the screener (which I assume is because other stocks have arrived due to the recent routs these past few weeks). Does this mean sell immediately when a stock leaves the screener, or rather, wait a year and sell if it leaves the screener?

    Obviously being a human, I don’t want to sell yet, but I rely on the model and not my intuition.

    2. I believe I saw a post above from May 2015 that you said you were writing a new book on Concentrated Value…any update on that?

    Thanks for all you do,
    Rob

  16. “The best way to avoid drawdowns is to hedge with an index. Now might be a good time because the market is expensive, and the most popular trend signals (Golden/Death cross and 200 moving average) are down.”

    well done Mr. Carlisle!

  17. Hi Tobias, how are you?

    I really liked your talk on Youtube and just bought your book Deep Value. I would like to put your system into practice but would like to ask you if you guys plan on screening more markets other than the US market. Places like Europe, Latin America and so on.

    Thanks,

    Fabio

  18. Acquirer multiple -ve:

    I see one of the acquirer multiple(A/M) value is -ve (company symbol PCO) and it may be the valid case. However, should we invest in a company whose A/M value is -ve?

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