New book out now! The Acquirer’s Multiple: How the Billionaire Contrarians of Deep Value Beat the Market

Tobias CarlisleAmazon, Tobias Carlisle1 Comment

From Amazon

The Acquirer’s Multiple is an easy-to-read account of deep value investing. The book shows how investors Warren Buffett, Carl Icahn, David Einhorn and Dan Loeb got started and how they do it. It combines engaging stories with research and data to show how you can do it too. Written by an active value investor, The Acquirer’s Multiple provides an insider’s view on deep value investing.

The Acquirer’s Multiple covers:

  • How the billionaire contrarians invest
  • How Warren Buffett got started
  • The history of activist hedge funds
  • How to Beat the Little Book That Beats the Market
  • A simple way to value stocks: The Acquirer’s Multiple
  • The secret to beating the market
  • How Carl Icahn got started
  • How David Einhorn and Dan Loeb got started
  • The 8 rules of deep value

The Acquirer’s Multiple: How the Billionaire Contrarians of Deep Value Beat the Market provides a simple summary of the way deep value investors find stocks that beat the market.

Excerpt

Media

(If you’d like to schedule an interview, please shoot me an email at tobias@acquirersmultiple.com)

Buy The Acquirer’s Multiple: How the Billionaire Contrarians of Deep Value Beat the Market is out now on Kindle, paperback, and Audible.

Other Books

Charles Munger: One Filter That’s Very Useful For Investors

Johnny HopkinsCharles Munger, Investing StrategyLeave a Comment

During the 1997 Berkshire Hathaway Shareholder Meeting, Warren Buffett and Charlie Munger were asked their thoughts on calculating intrinsic value. Here’s Munger’s response:

I would argue that one filter that’s useful in investing is the simple idea of opportunity cost.

If you have one opportunity that you already have available in large quantity and you like it better than 98% of the other things you see, you can just screen out the other 98% because you already know something better.

So that people who have a lot of opportunities tend to make better investments than people that don’t have a lot of opportunities, and people who have very good opportunities, and using a concept of opportunity costs, they can make better decisions about what to buy.

With this attitude you get a concentrated portfolio which we don’t mind.

That practice of ours, which is so simple, is not widely copied. I do not know why. Now it’s copied among the Berkshire shareholders. I mean all you people have learned it but it’s not the standard in investment management, even at great universities and other intellectual institutions.

If we’re right why are so many eminent places so wrong?

You can watch more of the presentation here:


(Source:YouTube)

Warren Buffett: Jack Bogle – Thank You On Behalf Of American Investors

Johnny HopkinsJohn Bogle, Warren BuffettLeave a Comment

With the sad death of John (Jack) Bogle last week we thought it would be a great time to remember Warren Buffett’s public adulation of Bogle at the 2017 Berkshire Hathaway Shareholder Meeting in which Buffett said:

There’s one more person I would like to introduce to you today and that is Jack Bogle who I talked about in the annual report. Jack Bogle has probably done more for the American investor than any man in the country.

Jack Bogle many years ago, he wasn’t the only one that was talking about an index fund, but it wouldn’t have happened without him. I mean Paul Samuelson talked about it. Ben Graham even talked about it.

But the truth is it was not in the interest of the investment industry, of Wall Street. It was not in their interest actually to have the development of an index fund because it brought down fees dramatically.

And as we’ve talked about, some in the reports, and other people have commented, that index funds overall have delivered for shareholders a result that has been better than Wall Street profession as a whole, and part of the reason for that is that they’ve brought down the costs very significantly.

So when Jack started, very few people, certainly Wall Street did not applaud him. He was the subject of some derision and a lot of attacks. Now we’re talking trillions when we get into index funds and we’re talking a few basis points when we talk about investment fees in the case of index funds, but still hundreds of basis points when we talk about fees elsewhere.

I estimate that Jack at a minimum has saved, left in the pockets of investors, without hurting them overall in terms of performance at all, most performance. He’s put tens and tens and tens of billions into their pockets and those numbers are gonna be hundreds and hundreds of billions over time.

So it’s Jack’s 88th birthday on Monday… So I just say Happy Birthday Jack and thank you on behalf of American investors… And Jack I’ve got great news for you, you’re gonna be 88 on Monday and in only two years you’ll be eligible for an executive position at Berkshire, hang in there buddy…


(Source:YouTube)

This Week’s Best Investing Reads 1/18/2019

Johnny HopkinsValue Investing News1 Comment

Here’s a list of this week’s best investing reads:

How to Do Great Things (Farnam Street)

What I Learned From Jack Bogle (A Wealth of Common Sense)

Stock Markets and the Rule of Law (The Reformed Broker)

Caveat Investor? (Cliff Asness)

Buy Low, Buy High (The Irrelevant Investor)

Billionaire Sam Zell Buys Gold for First Time in Bet on Tight Supply (Bloomberg)

Notes From Sohn London Investment Conference (Market Folly)

Back to Class: A Teaching Manifesto! (Aswath Damodaran)

FY-2018: What The Market Gods Giveth, They Also Taketh Away… (Wexboy)

The Worst Possible Environment For Stock Market Investors (The Felder Report)

When It’s Time To Do Something (Collaborative Fund)

What Amazon’s Rise to No. 1 Says About the Stock Market (Jason Zweig)

Beware the Gatekeeper (Of Dollars & Data)

Paul Lountzis on Qualitative Investing and Lessons Learned (MicroCap Club)

Saint Jack (Humble Dollar)

Ray Dalio Sees Investors Ill-Prepared to Weather Next Bear Market (Chief Investment Officer)

Stress and Investing: A 20-Point Checklist (Safal Niveshak)

The Intangible Valuation Renaissance: Five Methods (CFA Institute)

Success is only obvious in hindsight (Oddball Stocks)

Beats & Misses, Seen & Unseen (Vitaliy Katsenelson)

Hedge Fund Baupost Has a Complex $1 Billion Bet on PG&E (Bloomberg)

O’Shaughnessy Quarterly Investor Letter Q4 2018 (OSAM)

i3 Insights: In Search of Temperament II – Contrarianism (Market Fox)

The Quarterly Guidance Trap Bites Apple (The Rational Walk)

What will be the cause of the next recession? (Mark Rzepczynsk)

How To Choose An Investment Manager (Behavioral Value Investor)

An Ode to Crowding (Investment Innovation)

The Myth of Capitalism: Monopolies and the Death of Competition. Jonathan Tepper and Denise Hearn. A review… (Bronte Capital)

This week’s best investing research reads:

Equity investing is Riskier than You Probably Expected (Alpha Architect)

Is Multi-Manager Diversification Worth It? (Flirting with Models)

Stocks Rally, But Fundamentals Get Worse (UPFINA)

High-Yield Credit Spread Blowout (The Macro Tourist)

Flat Yield Curve Inverted in December (Validea)

Anthony Milewski: 2018 Was The Tipping Point For Electric Vehicles (Palisade Research)

Multiple Narratives (Advisor Perspectives)

This week’s best investing podcasts:

Animal Spirits Episode 64: The Richest 50% (Ben Carlson & Michael Batnick)

Michael Duda – Investing In Brands (Patrick O’Shaughnessy)

Winning at the Great Game (Part 2) (Shane Parrish)

TIP225: Billionaire Peter Thiel Lessons Learned (Preston Pysh & Stig Brodersen)

Scott Malpass – The Fighting Irish’s Twelfth Man (Ted Seides)

Episode #138: Yariv Haim, “You Should Never Try To Reassess Your Risk Appetite When Markets Crash” (Meb Faber)

TAM Stock Screener – Stocks Appearing in Marks, Greenblatt, Grantham Portfolios

Johnny HopkinsStock ScreenerLeave a Comment

Part of the weekly research here at The Acquirer’s Multiple features some of the top picks from our Stock Screeners and some top investors who are holding these same picks in their portfolios. Investors such as Warren Buffett, Joel Greenblatt, Carl Icahn, Jim Simons, Prem Watsa, Jeremy Grantham, Seth Klarman, Ray Dalio, and Howard Marks.

The top investor data is provided from their latest 13F’s (dated 2018-9-30). This week we’ll take a look at:

Cemex SAB de CV ADR (NYSE: CX)

Cemex is the largest ready-mix concrete company and one of the largest aggregates companies in the world. In 2017, the company sold roughly 68.5 million tons of cement, 52 million cubic meters of ready-mix, and 147 million tons of aggregates. As of Dec. 31, 2016, the company had annual cement production capacity of 92.9 million tons. The company generates roughly 26% of sales in Europe, 23% in Mexico, 26% in the United States, 14% in South America and the Caribbean, and 10% in Asia, Middle East, and Africa.

A quick look at the price chart below for Cemex shows us that the stock is down 36% in the past twelve months. We currently have the stock trading on an Acquirer’s Multiple of 5.58 which means that it remains undervalued.

(Source: Google Finance)

Superinvestors who currently hold positions in Cemex include:

Charles Brandes – 52,792,531 total shares

Ken Fisher – 7,594,476 total shares

Howard Marks – 4,808,700 total shares

Jeremy Grantham – 2,825,300 total shares

Cliff Asness – 274,907 total shares

Ken Griffin – 147,311 total shares

Joel Greenblatt – 36,930 total shares

Carl Icahn – Top 10 Holdings

Johnny HopkinsStock ScreenerLeave a Comment

One of the best resources for investors are the publicly available 13F-HR documents that each fund is required to submit to the SEC. These documents allow investors to track their favorite superinvestors, their fund’s current holdings, plus their new buys and sold out positions. We spend a lot of time here at The Acquirer’s Multiple digging through these 13F-HR documents to find out which superinvestors hold positions in the stocks listed in our Stock Screeners.

As a new weekly feature, we’re now providing the top 10 holdings, new additions to the portfolio, and sold out positions from some of our favorite superinvestors based on their latest 13F-HR documents.

This week we’ll take a look at Carl Icahn (9-30-2018):

The current market value of his portfolio is $25.217 Billion.

Top 10 Holdings

Security Current
Shares		 Current Value
($1000)
IEP / Icahn Enterprises L.P. 175,441,588 10,452,809,813
CVI / CVR Energy, Inc. 71,198,718 2,863,612,000
HLF / Herbalife Ltd. 35,227,904 1,921,683,000
LNG / Cheniere Energy, Inc. 23,380,490 1,624,710,000
NWL / Newell Brands Inc. 41,832,250 853,377,900
FCX / Freeport-McMoRan Inc. 50,161,354 698,246,000
NAV / Navistar International Corp. 16,729,960 644,104,000
XRX / Xerox Corp. 23,456,087 632,845,000
HTZ / Hertz Global Holdings, Inc. 29,263,869 477,879,000
CNDT / Conduent 24,586,540 325,771,655

Stanley Druckenmiller – Bulls Make Money, Bears Make Money, And Pigs Get Slaughtered – I’m Here To Tell You I Was A Pig

Johnny HopkinsInvesting Strategy, Stanley DruckenmillerLeave a Comment

We’ve just been re-reading one of our favorite speeches from legendary investor Stanley Druckenmiller at the Lost Tree Club some years ago. During the speech ‘The Druck’ provides some great insights into the mindset necessary to become a successful investor, saying:

The third thing I’d say is I developed partly through dumb luck – I’ll get into that – a very unique risk management system. The first thing I heard when I got in the business, not from my mentor, was bulls make money, bears make money, and pigs get slaughtered. I’m here to tell you I was a pig. And I strongly believe the only way to make long-term returns in our business that are superior is by being a pig. I think diversification and all the stuff they’re teaching at business school today is probably the most misguided concept everywhere.

And if you look at all the great investors that are as different as Warren Buffett, Carl Icahn, Ken Langone, they tend to be very, very concentrated bets. They see something, they bet it, and they bet the ranch on it. And that’s kind of the way my philosophy evolved, which was if you see – only maybe one or two times a year do you see something that really, really excites you.

And if you look at what excites you and then you look down the road, your record on those particular transactions is far superior to everything else, but the mistake I’d say 98 percent of money managers and individuals make is they feel like they got to be playing in a bunch of stuff. And if you really see it, put all your eggs in one basket and then watch the basket very carefully.

You can read the entire speech here – Stanley Druckenmiller – Lost Tree Club – 1—18—15

Michael Burry: How Can Investors Get Even After Suffering A Loss

Johnny HopkinsInvesting Strategy, MIchael BurryLeave a Comment

We’ve just been re-reading Michael Burry’s MSN Case Studies in which Burry provides some great insights into what investors should do after suffering a loss saying:

How to get even

An outsider might find investors’ thinking odd. Presented with new money to invest, most set goals of growing that money. They set targets of 20%, 30% or sometimes much more. And they set off fully intending to do so. Not so odd, yet.

However, once having lost money, investors tend to set a seemingly conservative new goal: breakeven. The irony is that breakeven math is one of life’s crueler realities. That is, breakeven requires a percentage gain in excess of the percentage loss incurred. Not so conservative.

Moreover, losses are the ultimate slippery slope. If one has lost 20%, then one requires a 25% gain to break even. If one has lost 50%, one requires a 100% gain to break even.

As a result, the goal of breakeven is often much more aggressive than one’s initial investment assumption. In an attempt to get back to breakeven, most investors simply ratchet up the risks they take. Of course this usually just ratchets up the losses – and increases the required return back to even. Talk about a death spiral.

My experience is that when one has losses that look other than temporary, there is usually a reason. The appropriate corrective action is to investigate the reason for the loss. More often than not, I find that I have strayed from the consistent method of investment that has served me so well for so long. Indeed, this finding often needs no investigation – I knew at the onset of the investment operation that I was straying, yet foolishly plowed ahead anyway.

All investors stumble. Usually some stubborn insistence plays a role. But fools will not be suffered lightly in a bear market. The risk of ruin is real. As investors, we must continually guard against the missteps that might lead to losses – and react rationally if we find ourselves down.

Acting like a fool after the fact will only compound the error.

You can find Michael Burry’s MSN Case Studies here – Michael Burry’s MSN Case Studies.

This Week’s Best Investing Reads 1/11/2019

Johnny HopkinsValue Investing NewsLeave a Comment

Here’s a list of this week’s best investing reads:

How Not to Be Stupid (Farnam Street)

10 Things Investors Can Expect in 2019 (A Wealth of Common Sense)

The Art of the Deal, 2019 (The Reformed Broker)

Wild Expectations (Collaborative Fund)

Seven Big Ideas from Fooled by Randomness (Safal Niveshak)

A History of Bear Market Bottoms (The Irrelevant Investor)

‘You Have To Know The Past To Understand The Present’ (The Felder Report)

Investing is hard. Big Mistakes and Moats (csinvesting)

Bridgewater’s New Brain is a Millennial Woman (Validea)

Resetting Defaults (Vitaliy Katsenelson)

January 2019 Data Update 1: A reminder that equities are risky, in case you forgot! (Aswath Damodaran)

You Would Have Missed 961% In Gains Using The CAPE Ratio, And That’s A Good Thing (Meb Faber)

The Best Lessons of 2018 – Patience & Discipline (Pragmatic Capitalsm)

Investment guides come and go, but the best advice stays the same (MoneyWeek)

Robert J. Shiller on Bubbles, Reflexivity, and Narrative Economics (CFA Institute)

Beyond Cheap (Humble Dollar)

When Your Neighbors Move In to Your Investment Portfolio (Jason Zweig)

When Markets Are Tough, Don’t Look (Morningstar)

The Price of Greed (Of Dollars & Data)

Don’t Be Your Worst Enemy: Self-Inflicted Wounds Are Terribly Unnecessary (Financial Samurai)

If only a company did… then things would be better (Oddball Stocks)

Dart-Throwing Monkeys and Process Diversification (Flirting with Models)

Fear Not (Above The Market)

Modern Monopolies (Barel Karsan)

Can More Information Lead to Worse Investment Decisions? (Behavioural Investment)

This week’s best investing research:

Discipline: A Necessary Condition for Successful Investing (Alpha Architect)

“Death-Cross Getting Close in 10-Year Note Yield” (Price Action Lab)

The Most Crowded Trade + Consumer Expectations Signal Recession (UPFINA)

Precious Metals Video Update: Gold & Gold Stocks Moving Towards Bull Market (Palisade Research)

Analyst Forecasts: Lessons in Futility (CFA Institute)

What are shadow interest rates telling us? (DSGMV)

2019 Outlook – Party On or Party Over? (Advisor Perspectives)

This week’s best investing podcasts:

Animal Spirits Episode 63: Record Outflows (Ben Carlson & Michael Batnick)

i3 Podcast Ep 18: Tadas Viskanta (Daniel Grioli)

Episode #137: Emily and Morgan Paxhia, “The Growers Who Focused On Creating Efficient Operations Are The Ones That Are Still Around Today” (Meb Faber)

Abby Johnson – Future of Finance – [Invest Like the Best, EP.116] (Patrick O’Shaughnessy)

Goal Mining – Brent Gilchrist (Shane Parrish)

TIP224: Billionaire Ray Dalio’s Book – Big Debt Crises (Stig Brodersen & Preston Pysh)

Diego Parrilla On The Perpetual Search For Extreme Optionality (Jesse Felder)

Jennifer Prosek – Branding an Asset Management Firm (EP.81) (Ted Seides)

TAM Stock Screener – Stocks Appearing in Tepper, Griffin, Grantham Portfolios

Johnny HopkinsStock ScreenerLeave a Comment

Part of the weekly research here at The Acquirer’s Multiple features some of the top picks from our Stock Screeners and some top investors who are holding these same picks in their portfolios. Investors such as Warren Buffett, Joel Greenblatt, Carl Icahn, Jim Simons, Prem Watsa, Jeremy Grantham, Seth Klarman, Ray Dalio, and Howard Marks.

The top investor data is provided from their latest 13F’s (dated 2018-9-30). This week we’ll take a look at:

Huntsman Corporation (NYSE: HUN)

Huntsman Corp is a US-based manufacturer of differentiated organic chemical products. Its product portfolio comprises of the methylene diphenyl diisocyanate (MDI), amines, surfactants, maleic anhydride, epoxy-based polymer formulations, textile chemicals, dyes and others. The company’s products are used in the adhesives, aerospace, automotive, construction products, among others. Its operating segments are Polyurethanes, Performance Products, Advanced Materials and Textile Effects. It derives a majority of the revenue from the Polyurethanes segment which includes product used to produce rigid and flexible foams, as well as coatings, adhesives, sealants, and elastomers.

A quick look at the price chart below for Huntsman Corp shows us that the stock is down 40% in the past twelve months. We currently have the stock trading on an Acquirer’s Multiple of 6.97 which means that it remains undervalued.

(Source: Google Finance)

Superinvestors who currently hold positions in Huntsman Corp include:

Cliff Asness: 3,771,721 total shares

Alexander Roepers: 2,805,697 total shares

David Tepper: 2,030,039 total shares

Jean-Marie Eveillard: 1,541,939 total shares

D E Shaw: 761,423 total shares

Jim Simons: 672,100 total shares

Ken Griffin: 405,486 total shares

Jeremy Grantham: 297,692 total shares

Mario Gabelli: 138,000 total shares

Paul Tudor Jones: 112,689 total shares

Bill Ackman: Top 10 Holdings

Johnny HopkinsBill AckmanLeave a Comment

One of the best resources for investors are the publicly available 13F-HR documents that each fund is required to submit to the SEC. These documents allow investors to track their favorite superinvestors, their fund’s current holdings, plus their new buys and sold out positions. We spend a lot of time here at The Acquirer’s Multiple digging through these 13F-HR documents to find out which superinvestors hold positions in the stocks listed in our Stock Screeners.

As a new weekly feature, we’re now providing the top 10 holdings from some of our favorite superinvestors based on their latest 13F-HR documents.

This week we’ll take a look at Bill Ackman (9-30-2018):

The current market value of his portfolio is $5,208,720,000.

Top 10 Positions (Only 7 Positions held)

Security Current
Shares		 Current Value ($)
QSR / Restaurant Brands International Inc. 20,843,919 1,235,628,000
LOW / Lowe’s Companies, Inc. 8,438,801 968,943,000
CMG / Chipotle Mexican Grill, Inc. 2,059,106 935,905,000
UTX / United Technologies Corp. 4,947,788 691,750,000
ADP / Automatic Data Processing, Inc. 4,029,427 607,073,000
PAH / Platform Specialty Products Corp. 40,451,506 504,430,000
HHC / Howard Hughes Corp. (The) 2,133,236 264,991,000

Steve Romick – Value Investing Has Morphed From The Days Of Graham and Dodd

Johnny HopkinsInvesting Strategy, Steven RomickLeave a Comment

We’ve just been listening to a great interview by Meb Faber with one of our favorite value investor’s – Steve Romick, Portfolio Manager for the FPA Crescent Fund. During the interview Romick explains how value investing has morphed from the days of Graham and Dodd saying:

Steve: Value investing is, to us, simply investing with a margin of safety, believing that you’ve made an investment where it’s hard to lose money over time. I mean, over any short periods of time, anything can happen. So that’s really what it stands for, for us, and it can wear a lot of different cloaks. And as you just mentioned in that quote from that shareholder letter that I had written a while back.

Value investing, though, when you think about it, has morphed over the years. There used to be a point in time where it was really all about the balance sheet. I mean, going back to Graham and Dodd and thinking about the margin of safety and buying net-nets, you know, the companies that are trading below net working capital.

Meb: The old cigar butts?

Steve: The old cigar butts. And that was a not-unreasonable way to invest, certainly. Today, the world’s changed and it’s changed because of technological innovation. The world changes so quickly, the life cycle of a company as it existed in an index, and the S&P 500, for example, is shorter or as short as it’s ever been and it’s continuing to decrease.

So businesses are being put out to pasture. I mean, just a very obvious conversation would centre around retail and the disruptive influences from the likes of Amazon and other online companies. So of late, we had Toys R Us’ bankruptcy this year. And we have Sears’ restructuring that’s currently…well, it remains to be seen whether it’s going to be a liquidation or it’s going to be a restructuring. And that’s because these businesses aren’t what they used to be, because of a competitor that’s come in…

In the last 50 years, we have seen more new inventions, more technological innovation, more ways to use the technology in a disruptive way than we’ve ever seen in history. And businesses, just by buying something on book value, book value can erode pretty quickly if you can’t get a return on that capital investment.

Let’s take Warren Buffett’s company, Berkshire Hathaway, a defunct textile mill. I mean, he made money on it because he bought it at such a good discounted margin of safety, but it got disrupted by manufacturing offshore.

And so, he was able to sell the land and the building for… at a profit to ultimately what he had paid for it. And so, it ended up being not his worst investment or he certainly didn’t lose money. But it certainly wasn’t his best investment, either. So when we think about making money, we think about value investing, we want to make sure that we have some kind of tale where the business is going to be better, at least, in 10 years than it is today, ideally.

You can listen to the interview by clicking on the play button below:

You can find the original podcast on Meb Faber’s website here – Meb Faber Interview with Steve Romick.

Joel Greenblatt – Great Value Investors Need To Be Cold Hearted JellyBean Counters

Johnny HopkinsInvesting Strategy, Joel GreenblattLeave a Comment

Here’s a great video with Joel Greenblatt at the CFA’s Distinguished Speaker Series. During the presentation Greenblatt recounts the story of how he was able to explain the stock market and value investing to a ninth grade class, using a big jar of jellybeans. Greenblatt says:

I have a friend who’s an orthopedic surgeon. He’s head of this group of orthopedic surgeons and they have a big dinner every year.

For whatever reasons he asked me to give a talk about investing for about a half an hour to the learned doctors in the room and take some questions.

So I explained how the stock market worked for about a half an hour and then I said, “Any questions?”.

First question was – Market was down 2% yesterday should I get out?

The second question was – Oil was up 1% yesterday should I get in?

My conclusion from those questions was that I had just crashed and burned and they didn’t understand anything I had just said about the stock market.

Luckily, a few days later I got asked to teach a ninth grade class. All the kids were from Harlem. An investing class, once a week for an hour teaching them about investing.

These doctors had a lot of degrees and they had to be really smart to get there. They were all surgeons. Pretty successful guys and women, but now I’m asked to teach ninth graders, who had no money or interest or background and no degrees yet.

I had failed with the doctors, so I said yes anyway and I thought I had a few weeks to prepare for the first class and I didn’t want to fail with the kids.

So I thought about it and I walked in the first day of class with a big jar of jellybeans. One of those old-time glass jars.

I passed the jar of jellybeans around the room and I passed out three by five cards and I told the kids to count the rows. Do whatever they had to do. Write down how many jellybeans do you think are in the jar. So they passed the jellybeans around. They did their counting or whatever they were gonna do.

I collected the three by five cards then I went one by one around the room and I said tell me how many jellybeans do you think are in the jar and you can keep your original guess or you can change your guess that’s completely up to you!

One by one around the room I said how many jellybeans are in the jar and I wrote down those answers.

So here are the results of that test. When I averaged the guesses from the three by five cards the average guess was 1771 jellybeans, and there were 1776 jelly beans in the jar, so that was pretty good.

But, when I went around the room one by one and asked them, that guess averaged to 850 jellybeans. I told the kids that the stock market was actually the second guess. Because everyone knows what they just heard. What they just watched. What they just read. Who they just talked to. They’re influenced by everything around them, and they didn’t make a very good guess.

When they were cold and calculating and independent their guess turned out to be much better.

So I think of ourselves as cold hearted jelly bean counters when we’re trying to value businesses and trying to cover our ears and close our eyes and trying to figure out valuation without being influenced by things around us.

What are the ways to do that is to use trailing numbers rather than our own projections. It turns out to work better and that’s very much how the stock market works and how you can go about beating the market.

Charles Munger – I Frequently Sit In A Room And Converse With Dead People While The People Around Me Are Irritated

Johnny HopkinsCharles Munger1 Comment

Here’s a great compilation on reading habits and books by Warren Buffett and Charles Munger. Our favorite quote from the video is when Munger is asked how he was able to concentrate and balance his reading with so many children around when his family was younger. His response is:

“I have the kind of mind that if I want to read something i can tune everything else out. In fact I frequently sit in a room and converse with dead people while the people around me are irritated. So I don’t think you should try my methods.”

You can check out the video here:


(Source: YouTube)

Happy Holidays

Johnny HopkinsStock ScreenerLeave a Comment

Tobias and I would like to wish all of our readers and subscribers a very Merry Christmas and a Happy New Year. We’re going to take a break from publishing articles on the blog for a couple of weeks over the holidays, but Tobias will still be posting on his Twitter feed @Greenbackd.

Happy Holidays!

This Week’s Best Investing Reads 12/21/2018

Johnny HopkinsValue Investing NewsLeave a Comment

Here’s a list of this week’s best investing reads:

The Spacing Effect: How to Improve Learning and Maximize Retention (Farnam Street)

Prediction vs. Preparation (A Wealth of Common Sense)

Unforced Errors (The Reformed Broker)

Did The Fed Just Make Another Mistake? (The Felder Report)

Why Value Investing Is Making A Comeback (US News)

Surveying the Damage (The Irrelevant Investor)

30 Principles from “Pre-Suasion” by Robert Cialdini (Samuel Woods)

After a Lost Decade, Will Value Get its Groove Back in 2019? (Advisor Perspectives)

Women of Jeopardy! on Defining Success (CFA Institute)

Just in Case (Humble Dollar)

The Biggest Benefits Of A Stock Market Meltdown (Financial Samurai)

Investing Ideas That Changed My Life (Collaborative Fund)

There Are No Atheists in Foxholes (Macro Tourist)

The Journey (Safal Niveshak)

2019 Free Lunch Portfolio (Mohnish Pabrai)

Big Swings in Stock Market Are at Their Highest Level Since 2011 (NY Times)

Expectation vs. Reality (Of Dollars & Data)

You have to be in the game.. (Oddball Stocks)

What do portfolios and teacups have in common? (Flirting with Models)

In Search of Temperament II – Contrarianism (Investment Innovation)

Let’s Talk About QE and Assflation (Pragmatic Capitalism)

50 Reasons Why We Don’t Invest for the Long-Term (Behavioural Investment)

Yield Curve Inversion Hysteria – Give It A Rest (DSGMV)

Timothy Geithner: The Financial Crisis 10 Years Later (CFA Institute)

This week’s best investing research:

Our 20th Anniversary Anthology (Cliff Asness)

A Backtesting Protocol in the Era of Machine Learning (Research Affiliates)

Is Current Stock Market Sentiment A Contrarian Indicator? (UPFINA)

The Game Of Higher Open Followed By Lower Close (Price Action Lab)

Truce Be Told (Advisor Perspectives)

A Protocol to Prevent “Quants Gone Wild” (Alpha Architect)

Favoring Recession-Resistant Equities and Cash (MOI Global)

This week’s best investing podcasts:

Animal Spirits Episode 60: Everyone Should Earn 3% (Ben Carlson & Michael Batnick)

MarketFox interview with Tadas Viskanta – Abnormal Returns (Daniel Grioli)

Keith Rabois – If You Can’t Sell Them, Compete with Them (Patrick O’Shaughnessy)

Episode #134: Chris Cole, “Volatility Is The Instrument That Makes Us Face Truth” (Meb Faber)

TIP221: Commercial Real Estate Investing w/ Ian Formigle (Stig Brodersen & Preston Pysh)

Daniel Kahneman on Cutting Through the Noise (Ep. 56— Live at Mason) (Tyler Cowen)

Tim McCusker – Consistency and Creativity at NEPC (EP.80) (Ted Seides)

TAM Stock Screener – Stocks Appearing in Wachenheim, Dalio, Miller Portfolios

Johnny HopkinsStock ScreenerLeave a Comment

Part of the weekly research here at The Acquirer’s Multiple features some of the top picks from our Stock Screeners and some top investors who are holding these same picks in their portfolios. Investors such as Warren Buffett, Joel Greenblatt, Carl Icahn, Jim Simons, Prem Watsa, Jeremy Grantham, Seth Klarman, Ray Dalio, and Howard Marks.

The top investor data is provided from their latest 13F’s (dated 2018-9-30). This week we’ll take a look at:

PulteGroup, Inc. (NYSE: PHM)

PulteGroup is one of the largest homebuilders in the United States, operating in 47 markets across 25 states. The company mainly builds single-family detached homes (88% of unit sales) and offers products to entry-level, move-up, and active-adult buyers. PulteGroup offers homebuyers mortgage financing and title agency services through its financial services segment. The company is headquartered in Atlanta.

A quick look at the price chart below for PulteGroup shows us that the stock is down 24% in the past twelve months. We currently have the stock trading on an Acquirer’s Multiple of 7.02 which means that it remains undervalued.

(Source: Google Finance)

Superinvestors who currently hold positions in PulteGroup include:

Ed Wachenheim – 6,985,895 total shares

Cliff Asness – 2,813,796 total shares

Bill Miller – 2,271,600 total shares

James O’Shaughnessy – 2,044,009 total shares

Ray Dalio – 1,051,770 total shares

Ken Griffin – 389,759 total shares

Mario Gabelli – 335,000 total shares

Paul Tudor Jones – 20,218 total shares

Stanley Druckenmiller: What Characteristics Do You Need To Be A Great Investor

Johnny HopkinsInvesting Strategy, Stanley DruckenmillerLeave a Comment

Here’s a great interview with Stanley Druckenmiller speaking to Bloomberg’s Erik Schatzker in which Druckenmiller provides his thoughts on the economy, stocks, bonds, trump, algos, and the Fed.

Druckenmiller was asked what sort of personality you have to have to be a successful investor. He says:

“I think you have to be a little sceptical and a bit of a contrarian… Bulls make more money than bears, so if anything being an optimist about life and about things in general is a great attribute to have as an investor. You just can’t be starry eyed and naive. I think a better characteristic would be, being able to control your emotions…”

“You need to be intellectually curious, and really, really open minded, and you need to have courage. When I say courage, you need the courage to bet big, and to bet concentrated, but also the courage to fight your own emotions. I’ve never made a buy at a low that I didn;t just feel terrible and scared to death making it. It’s easy to sell at the bottom. You can home that night and it relieves you of your nerves.”

“There’s another saying Drellus used to have… “The higher they go the cheaper they look”. So when things are going up it’s easy to buy them. When they’re going down, it’s hard to buy them”.

You can watch the full interview here:

David Einhorn: Q32018 Top 10 Holdings

Johnny HopkinsDavid Einhorn, Portfolio ManagementLeave a Comment

One of the best resources for investors are the publicly available 13F-HR documents that each fund is required to submit to the SEC. These documents allow investors to track their favorite superinvestors, their fund’s current holdings, plus their new buys and sold out positions. We spend a lot of time here at The Acquirer’s Multiple digging through these 13F-HR documents to find out which superinvestors hold positions in the stocks listed in our Stock Screeners.

As a new weekly feature, we’re now providing the top 10 holdings from some of our favorite superinvestors based on their latest 13F-HR documents.

This week we’ll take a look at David Einhorn (9-30-2018):

The current market value of his portfolio is $2,368,304,000.

Top 10 Positions:

Security Current
Shares		 Current Value
($)
BHF / Brighthouse Financial, Inc. 11,580,000 512,300,000
GM / General Motors Company 14,881,043 501,045,000
GRBK / Green Brick Partners, Inc. 24,118,668 243,598,000
AER / AerCap Holdings N.V. 3,789,678 217,982,000
ESV / Ensco plc 20,000,000 168,800,000
VOYA / Voya Financial, Inc. 2,049,053 101,777,000
YHOO / Yahoo! Inc. 1,472,598 100,313,000
CCR / CONSOL Coal Resources LP 5,488,438 98,518,000
IAC / IAC/InterActiveCorp. 435,150 94,306,000
XELA / Exela Technologies, Inc. 8,384,629 59,782,000

Charles Munger: Investing In Shares Is Much Easier Than Investing In Real Estate, Here’s Why

Johnny HopkinsCharles Munger, Investing StrategyLeave a Comment

Here’s a great little video in which Charles Munger is discussing why investing in shares is better than investing in real estate. Munger says:

“The trouble with real estate is that everybody else understands it, and the people who you’re dealing with and competed with, they’ve specialized in a little twelve blocks or a little industry. They know more about the industry than you do. And you’ve got a lot of bullshitters and liars and brokers. So it’s not a bit easy. It’s not a bit easy!”

“You don’t even see the good opportunities in real estate. They show those to the big investors they’re dealing with. It’s not an easy game to play against. Whereas stocks you’re equal with everybody, if you’re smart. In real estate you don’t even see the good opportunites when you’re starting out. They go to others. The stock market’s always open.”

You can watch the video here:

(Source: YouTube)