Some Excellent articles on Financial Ratios and Analysis.
h/t @discover_ci 👏

1⃣ Profitability

"Poor Charlie’s Almanack" about Charlie Munger is a phenomenal book that should be read by all investors at least once. Excellent summary of that book by @allenxcheng👏

cc: @dmuthuk @Gautam__Baid

Thread below with my fav

Topics in the article ⬇️

Key points ⬇️

Mental Models suggested ⬇️

On Constant learning ⬇️

Insights from Philip Fisher. One of the best docs I came across for individual investors.

Phenomenal effort by @SiddharthVoraPL @PLIndiaOnline 👏👏

cc: @dmuthuk @Gautam__Baid @saxena_puru

https://t.co/K19gWk9TFO

Philip Fisher's 15 points, simplified. ⬇️

His Investment strategy and Search strategy. ⬇️

Full scale scuttlebutt is not possible for individual investors (lack of time, resources, contacts), but with efficient search & communication online (tuning out the noise), there are still some ways to do good research.

Good sequence of steps to filter from a wider universe of companies to the few promising ones that meet the criteria. ⬇️

Excellent Checklist for Business, Management and Financial characteristics. ⬇️

One of the best Investing blogs I recently came across. h/t @StableBread 👏

Five of my fav articles⬇️

@dmuthuk @saxena_puru @Gautam__Baid

1⃣On Moats
Network Effect
Intangible Assets
Switching Cost
Economies of Scale
Low Cost Provider
Toll
Cultural

2⃣Crucial Investment Principles You Need to Have
Capital Appreciation
Buy Low, Hold, Sell High
Recognize/Avoid Spec Bubbles
Ignore Noise
Stock Market=Pendulum
Diversify Your investments. Don't overdo it.
DCA
Understand Share Price Value
LT Tax

3⃣How to Read and Analyze Any 10-K Annual Report

Business Summary
Risk Factors
Selected Financial Data
Management's Discussion and Analysis
Financial Statements and Supplementary Data
Notes to Consolidated Financial

4⃣The Beginner's Guide to Dividend Investing

Dividend Yield
Dividend Growth Rate
Dividend Payout Ratio
Ability to Pay Back Debt
Net Debt to EBITDA Ratio
Return on Equity
Credit

5⃣How to Calculate the Intrinsic Value of a Company Like Warren Buffett

Owners Earnings
Growth Rate
Discount Rate
Calculate Intrinsic Value
Scenario Analysis
Margin of

One of my all-time favorite articles on "Investing Mistakes". h/t Altais Advisors @basrars @vishalmittal22 👏

So many good lessons here for long-term investors in individual stocks. My fav pts in the thread below.

1⃣ Selling good businesses too early: without giving due importance to long term growth outlook and the potential of the business to scale.

If you are invested in a growing business, do not sell it for temporary overvaluation,

there may be some time correction which is fine, which should be managed at a portfolio level. At the same time, one needs to be careful of slowing growth or fundamental deterioration in the business.

2⃣ Going down the Quality curve: Selling good companies, which were growing well, and investing in cheaper but low quality/ growth companies. Over the cycle, this results in sub optimal returns.

3⃣ Waiting for a little lower price to buy: Losing 10-20 baggers waiting for 20-25% lower price! Missing the boat on so many opportunities trying to just get them a bit cheaper, which never comes.

1/ The SPAC I’ve been tracking is $SAII, merging with Otonomo.

It’s a marketplace that enables auto manufacturers to monetize their connected car data that it aggregates and standardizes using its data platform. It projects revenue to grow from $3M in 2021 to $574M by 2025.

2/ Platform:

Otonomo is standardizing data using its patent-pending technology from its 16 OEM partners including Ford, GM, and BMW who provide data on 40M connected cars (4.3B data points daily), to make it easily usable by consumers and developers who can access it via API.

3/ Similar to other aggregators like $ROKU or $TTD, one of their biggest advantages is their neutrality. Many mobility services can’t operate well without data from multiple OEMs but individual OEMs lack the incentive to share their data with competitors.

4/ Otonomo is collecting over 150 data parameters per vehicle such as engine status, temperature, speed, location, fuel or battery levels, or seatbelt status. This is then normalized across OEMs and car models, anonymized, cleansed, and enriched through AI/ML.

5/ There are hundreds of use cases that range from helping drivers to find parking to helping rental companies monitor their fleets in real-time or insurance companies offer usage-based insurance and better claims processing. Otonomo charges usage-based fees based on use-case.

Market PE at 40 and yet the market is not falling, why? Getting asked this question multiple times. Here's a thread covering ‘very basic’ premier on valuation for my retail investor friends.

Do hit the ‘re-tweet’ and help us educate more investors (1/n)

For us to be able to comprehend the situation, we need to understand 4 very basic valuation matrixes
(1) Trailing EPS
(2) Forward EPS
(3) Trailing PE
(4) Forward PE

Formula

EPS = Profit After Tax / Number of outstanding Shares
PE = Market Price / EPS (2/n)

So what's a trailing EPS?

So in March 2020, RIL generated a Profit after tax (PAT) of 39,354 cr. The number of outstanding shares of RIL is some 676.21 cr. which means the 39,354 cr of PAT belongs to the 676.21 cr. shareholders, right? (3/n)

That also means that per share, RIL earned Rs. 58.20 (39,354/676.21). This 58.20 is called the trailing (TTM) EPS. Trailing means past, already done. (4/n)

So RIL earns 58.20 rupees per share but you pay 58.20 * 33.16 = 1930, 33.16 times more to buy 1 share from the market, that 33.16 is called the Price/Earnings (PE) ratio. This is again trailing as 58.20 EPS is trailing. (5/n)

1) My investment philosophy + Disclaimer -

I'm a full-time investor and my concentrated portfolio is comprised of (primarily founder-led) high growth companies with large addressable markets. I usually look for dominant businesses with a special sauce (moat) which allows..

2)...them to compound their revenues, cash flows and earnings for an extended period of time (multiple years).

Usually (but not always), such disruptive businesses operate in the technology sector and they are led by visionary founders with skin in the game.

When I invest,...

3)...it is always with the intention of holding indefinitely but the business world is unforgiving and capitalism is brutal; so in reality, my average holding period is a few years.

So, when do I sell?

(i) When a company's rev. growth < 15% pa
(ii) When the mgt. deteriorates

4)...(iii) When the 'moat' has been invaded
(iv) When I spot a new opportunity + need cash

Apart from the above scenarios, I remain invested in the companies and allow them to compound over time.

On macro, market timing, forecasts -

I started investing in the late 90s...

5)...and have yet to come across an individual who has accurately and consistently timed the economy and/or the stock market. Not one!

Over the years, many have tried to predict the future and plenty of well meaning people still try, but I've realised that...

✍️CÓMO LEER EL 10-K✍️

Es el informe más importante y antes de invertir en cualquier empresa debemos leerlo y saber interpretarlo.

Papel, lápiz y café.

El 10-k es un informe completo que detalla las actividades de una empresa durante el año anterior.

Su propósito es brindar a los usuarios, como accionistas o potenciales inversionistas, información sobre las operaciones y desempeño financiero de la empresa.

La estructura de los informes anuales, sin duda, variará según cada empresa, pero la mayoría de los informes anuales generalmente contendrán lo siguiente:

▪️Parte 1: Business and Risk Factors

▪️Parte 2: Financial Data and MD&A

▪️Parte 3: Executive compesation

Vamos a ver cada una de ellas (Subcategorias) y cómo se podría analizar.

1. Business
2. Risk Factors
3. Selected Financial Data
4. The Management Discussions and Analysis (MD&A)
5. Directors, executive officers and corporate governance
6. Executive Compesation

1) BUSINESS

Esta es la primera parte del reporte, y es una de la más importante.

Se habla de la actividad principal de la empresa, de cómo gana dinero, de dónde opera.

También de la visión y misión general de la empresa.