Excellent resource for Individual investors who want to learn about Accounting and Financial Statements.📊

The concepts are really well explained in a simple, understandable manner for beginners.

cc: @dmuthuk @Gautam__Baid

Excellent summary of Philip Fisher's book "Conservative Investors Sleep Well".

Plenty of great points on identifying the growth potential, managerial capability and defensiveness of a Company.

cc: @dmuthuk

Characteristics of high quality companies with good long term prospects

✔️Lowest-cost
✔️Customer focused
✔️Effective research
✔️Strong marketing
✔️Good accounting

People factors

✔️Determination, competence and teamwork
✔️Internal development and promotion
✔️Entrepreneurial and disciplined
✔️Genuine and conscious culture

Business characteristics to grow and defend

✔️Profit margins
✔️Barriers to entry
✔️First mover advantage (& extending that Leadership)
✔️Competition and substitution
✔️Economic moats

Few of my fav pts from the article. Not every Company will have all these traits, but the more the better.

Time for a Scorecard📊and thesis📑updates for purchases done in Feb/Mar 2020. Last review done in late April. How far things have come since then.😯

Not taking any drastic actions, other than few sells in fully valued, slower growth Co.'s.

Events since then
✔️Co's reporting two Qtrly reports
✔️Accelerating growth for few sectors
✔️Understandable problems for few others
✔️Crazy run-ups & valuations in the last 9 mo's, supported by biz growth in some cases, but mostly due to Monetary factors & Investor enthusiasm...

I usually buy for two scenarios

1⃣Leading Co's within strong secular trends, that also have strong Management Teams and solid Financials (Rev growth, Profitability or improving Margins/FCF prospects, no balance sheet risk...).

These are bought with the intention of holding for the long-term as long as the thesis is intact or getting better. Strongly intend to add along the way. Ex : $ROKU $PINS $TWLO $DOCU $W $NOW $WDAY $NVCR $MTCH in the above table.

2⃣More mature and stable Co.'s but with some growth left (no Financial risk), mainly bought for their current under-valuation, with the intent to sell when the Market or those stocks recover. Ex : $BIP $BUD $VTR $BR $BA in above table.

One of my fav docs to come back to during all market cycles. Covering Investment principles, checklists, economic cycles/bubbles, value traps & more. Phenomenal compilation by @pcordway👏

cc: @dmuthuk @Gautam__Baid @saxena_puru

Some of my fav content.⬇️

https://t.co/TIkvktVoJC

Pretty good process and checklist.

Tenets from "The Warren Buffett Way"

Some lessons from Ben Graham

Phil Fisher's 15 Questions and 10 Don'ts.

What caused all the supply chain bottlenecks? Modern finance with its obsession with "Return on Equity."

To show great ROE almost every CEO stripped their company of all but the bare minimum of assets. Just in time everything. No excess capacity. No strategic reserves. No cash on the balance sheet. Minimal R&D.

We stripped the shock absorbers out of the economy in pursuit of better short term metrics.

Big businesses are supposed to be more stable and resilient than small ones. And economy built around giant corporations like America's should be more resilient to shock. However the obsession with ROE means that no company was prepared for the inevitable hundred year storms.

Now as we're facing a hundred year storm of demand, our infrastructure simply can't keep up.

@vinaytalwar It’s ratio of

Market Cap/10 Year Free Cash Flow

For example

Hikal

Hikal = MCap / FCF~10Y = 5618 / 748 ~= 7.5

Q&A 161

Read this 🧵to understand ROE, PE & relationship between them.👇

PE expansion to bridge the Gap (if any) between ROE & PE.

RT if you find this helpful.

1

ROE is PE's brother from another mother / Half-brother (Sautela Bhai)

@Atulsingh_asan

2

ROE & PE definition continued..

Keep an eye on Equations !

3

Establishing Relationship between ROE (profitability) & PE (valuation).

Replace Market Capitalization with Book value in Earnings Yield (or PE) we get ROE.

4

Understanding ROE & PE deeper with Dupont Analysis.

5

@Dinesh_Sairam @a_basumallick @ashwinidamani Questions that are only answered with time haha.

@a_basumallick @ashwinidamani Just to add - sustainable FCF is a faraway concept for most till (if) they gain scale or innovate/add value. Till then, it's generally always a struggle to manage WC and capacity addition. Wouldn't expect that to change for a while.

Thread Threadexplaining #PE Ratio & #PEG Ratio & its use in #FundamentalAnalysis

(Must read for #FA learners)

🙏Like & RT to spread learning with all🙏

Views Welcome👉@dmuthuk @Vivek_Investor @datta_arvind @caniravkaria @FI_InvestIndia

#FundamentalAnalysis #StockMarket

1⃣

Price to Earnings (#PE) ratio, also known as price multiple or earnings multiple is the ratio obtained by dividing the current share price by earnings per share (#EPS).

#StockMarket #Investing #FundamentalAnalysis

2⃣

P/E ratio is a reflection of the market's opinion of the earnings capacity & future business prospects of a company.

Companies which enjoy high investor confidence & have a higher market standing usually command high P/E ratio.

#StockMarket #Investing #FundamentalAnalysis

3⃣

On the face, it would seem that companies with low P/E ratios would offer most attractive investment opportunities. This is not always true.

Companies with high current earnings but dim future prospects often have low P/E ratio.

#StockMarket #Investing #FundamentalAnalysis

4⃣

As an #investor your primary concern is with future prospects of a company & not so much with its present performance.

This is why companies with low current earnings but bright future prospects usually command high P/E ratio.

#StockMarket #Investing #FundamentalAnalysis