BC TRADING
Saved by @SteveeRogerr

1/12 Valuing a Disruptive Businesses: Naked Wines ($WINE) Case Study. In my intro last week, I promised examples of using ROIIC & reinvestment rate to value disruptors. $WINE is an eComm D2C wine model with SaaS-like outcomes. EXCELLENT DISCLOSURE makes it a good case study

 It began as an online wine retailer with many SKUs/low loyalty, but then pivoted at a pivotal moment when a top exec realized a cohort of consumers were super loyal – those that enjoyed supporting independent winemakers. @_inpractise Feast your eyes on this glorious disclosure:
Naked Wines is forecast to report approximately zero EBIT this year. As we will see, the company is not worth zero, nor does it mean Value Investors are allowed to cavalierly toss it in the “too hard” pile. Here’s a way to value Naked Wines with discipline:
Variable (1): $WINE discloses Standstill EBIT, boosted by COVID. Loyalty of $WINE’s “angels” makes EBIT stickier than some other eComms. Astute SaaS observers will note revenue retention (I assume ~78% on avg) is below B2B SaaS (95-130%). My standstill NPV implies 6.3x EV/EBIT.
Variable (2): A disclosure triumph. If slides could talk, “we reject simpleton requests to under-invest & produce 123% IRR for shareholders that truly like value creation.” Value investors, note what the V stands for in LTV. PV it. I assume payback holds 5 yrs, then slow decay
Variable (3): Do they have a chart for fixed costs along with a medium-term guidance that seems logical? Yes…yes, they do! They target fixed cost growth to be half of revenue growth.
Variable (4): As for the full maturity stub, be very careful with double-counting the value already within your high IRR CAC spend valuation in (2), but this is the smallest component in my appraisal of $WINE’s value, so let’s use our time wisely.
My output: (1)+(2)-(3)+(4) = 303m + 486m - 130m + 53m = 713m EV. This implies a warranted multiple of 6.3x EV/GP on current year. If you tend to viscerally avoid researching zero EBIT companies, consider that the high IRR CAC spending program (2) is largest part of my value!
123% IRR (2016 cohort actual) AS MUCH AS POSSIBLE PLEASE. Even insufferably holier-than-thou value investors wielding “doesn’t make any money” gibberish (I’m guilty) might agree that $WINE chooses to spend. Or would we rather they under-invest to make our models simpler?
“So, great, one scaling small cap gives you enough detail to value it. Congratulations, champ. Wake me when you’ve found a way to replicate this on other names,” says Mr. Dinosaur Value Guy, irritated after a call with a decade-long client asking for a $200m redemption.
Cheer up, Dino, and WAKE UP, we can replicate this on many names. Your valuation discipline is rightfully non-negotiable. See that meteor in the sky that looks like a @blackrock hellbent on creative destruction? Let’s do something about it: https://t.co/Wyr7F0EQK7
12/Upcoming research: Value Investors, I write provocatively to rattle some cages that need it, including my own. But a simple cheap stock can still be attractive in this market, especially with catalysts. Next is a cheap global #1 with 40-50% market share w/ 2 catalysts. /end
@Greenbackd @Symmetry_Invest @modestproposal1 @mjmauboussin @mario_cibelli @SuperMugatu @Post_Market @aaronvalue @goodinvestingc @marketplunger1 @MarcRuby @CCM_Ryan @ruth_proactive @proactive_UK
@IPafbahia @pommelhorse9 @jesperhenrikson @still_ill______ @antoniofbahia @NorthmanTrader @trailmakercap @Lawbitrage

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In my 20 years of trading I have noticed this cycle play out again and again with traders that "make it":

1. Overconfidently reach for returns
2. Get humbled by the market
3. Simplify + concentrate on clear, high probability edges.

1/n

Nearly everyone starts with a lack of respect for how hard it is to consistently make money trading.

That leads them to pass over high-probability sources of returns in favor of more marginal ideas.

Or they overcomplicate the trading of a good edge.

2/n

Here's an example...

It is 2015. You look at a simple strategy.

You hold an equal dollar exposure to:
- Cap Weighted US Stocks (VTI)
- 20+ Yr US Treasury Bonds (TLT)
- Gold (GLD)

And rebalance each month.

(I've extended back a bit with mutual fund prices.)

3/n


It made money consistently with a few blips.

You'd have 4x your money from 1997 to 2015.

It makes sense. It's harnessing two big sources of risk premia (equity + duration).

It diversifies across 3 macro assets that tend to outperform in different econ environments

4/n

But, naturally, you turn your mind to how you could do better...

And here is where it gets dangerous!

There are good ways to try to "do better", and there are bad ways to try to "do better".

5/n
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Brian Feroldi
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@BrianFeroldi
1/ How to review quarterly earnings 🧵

A step by step guide using $DXCM as an example

⬇️

2/ The BIG question: Is the thesis on track❓

Other question:

❓Is revenue growing?
❓Are margins stable/expanding?
❓Profits?
❓Balance sheet?
❓New opportunities?
❓New threats?

3/ I open 4 browser tabs

Tab 1 - Current company earnings report / shareholder letter

Tab 2 - Previous company earnings report / shareholder letter (check guidance)

Tab 3 - Analyst estimates

Tab 4 - Call Transcript


4/ Tabs 1 & 2 - Find the current & previous earnings report

I search "Dexcom Investor Relations"

I click on "press release"

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It can also be a shareholder letter/presentation


5/ Tab 3 - Find the quarterly analyst estimates

Open up $DXCM in yahoo finance

The "news" section usually has a link to reports on whether the company beat/met estimates

The "analysis" tab is a good source, but sometimes it updates to the next quarter too quickly
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Prashant Shah
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@Prashantshah267
Thread: Parabolic SAR Indicator

Parabolic SAR (PSAR) indicator was developed by J. Welles Wilder.

#PSAR #Indicators #Definedge


The calculation of this indicator is a bit complex, but the concept is extremely useful. I will try to simplify it and explain the logic. I will briefly explain the concept, calculation and reading.

Let us think about creating an indicator that shows the trend.

Using the indicator, we can identify & ride the trend using the trailing stop-loss method.

For trailing the stop in uptrend, indicator needs to be placed below the candle. Similarly, it should be placed above the candle for trailing in a downtrend. We will plot it using ‘dots’.


So, the indicator & stop-loss will be rising in uptrend & falling in downtrend.

Let us define the trend as:

If Low of the candle > Stop-loss level in bull market = Trend remains bullish.

If High of the candle < Stop-loss level in bear market = Trend is bearish

Imagine you are driving a car on highway; you would like to accelerate if the road is clear. You will slow down if the road is bumpy.
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Aditya Todmal
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@AdityaTodmal
I spent over 100 hours studying the best patterns in Technical Analysis taught to me by @niki_poojary.

Turns out, patterns trading is simple—if you follow these 8 Patterns:

Let's start: ↓

While studying her Twitter profile and with constant talks with her, I found these to be the most important patterns she focuses on always.

Then I wrote a small summary of what each pattern means.

Also attached are some examples from her tweets.

1/ Cup and handle Pattern

Happens during an uptrend.

The cup portion has a U-shaped appearance.

The bears are getting weaker as they are unable to drive the prices below the last low.

Subhasish Pani uses this a lot in stocks to spot bullish trades.


Eg


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Trader knight
Trader knight
@Traderknight007
Overthinking - The art of creating problems which weren't even there.

Thread on How Over-analysis leads to decision Paralysis-


What is Analysis paralysis?

In simple terms, analysis paralysis is a person's tendency to over-analyze or over-think upon a decision to such an extent that he/she fails to make a choice resulting in a paralyzed state of inaction.


How a retail trader trades-

A trader named Rahul, He know all the basics of markets, He also has made a system which gives signals on nifty, he has also encorporated good Risk management and Position sizing into his system.

One day he gets a signal to buy Nifty at 13500 with stop at 13450, he wanted to take the trade, but he wanted to get sure that the trade he has take should be a winner.

So he says just let me check the RSI if its above this level I will buy , he checks it and it was above his

level, then again he wants to check another indicator named MACD, he wanted to get sure man, Now he do the most intelligent thing to get sure he gets right.

He goes to twitter and ask his twitter Friend Trader knight he ask him that should I buy nifty at 13500,
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Best resort on the Ganga at Rishikesh
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Erik Torenberg
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@eriktorenberg
1/“What would need to be true for you to….X”

Why is this the most powerful question you can ask when attempting to reach an agreement with another human being or organization?

A thread, co-written by @deanmbrody:


2/ First, “X” could be lots of things. Examples: What would need to be true for you to

- “Feel it's in our best interest for me to be CMO"
- “Feel that we’re in a good place as a company”
- “Feel that we’re on the same page”
- “Feel that we both got what we wanted from this deal

3/ Normally, we aren’t that direct. Example from startup/VC land:

Founders leave VC meetings thinking that every VC will invest, but they rarely do.

Worse over, the founders don’t know what they need to do in order to be fundable.

4/ So why should you ask the magic Q?

To get clarity.

You want to know where you stand, and what it takes to get what you want in a way that also gets them what they want.

It also holds them (mentally) accountable once the thing they need becomes true.

5/ Staying in the context of soliciting investors, the question is “what would need to be true for you to want to invest (or partner with us on this journey, etc)?”

Multiple responses to this question are likely to deliver a positive result.
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Noah Smith
Noah Smith
@Noahpinion
Krugman is, of course, right about this. BUT, note that universities can do a lot to revitalize declining and rural regions.


See this thing that @lymanstoneky wrote:

And see this thing that I wrote:

And see this book that @JamesFallows wrote:

And see this other thing that I wrote:
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Noah Smith
Noah Smith
@Noahpinion
Krugman is, of course, right about this. BUT, note that universities can do a lot to revitalize declining and rural regions.


See this thing that @lymanstoneky wrote:

And see this thing that I wrote:

And see this book that @JamesFallows wrote:

And see this other thing that I wrote:
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Simon DeDeo
Simon DeDeo
@SimonDeDeo
This is a pretty valiant attempt to defend the "Feminist Glaciology" article, which says conventional wisdom is wrong, and this is a solid piece of scholarship. I'll beg to differ, because I think Jeffery, here, is confusing scholarship with "saying things that seem right".


The article is, at heart, deeply weird, even essentialist. Here, for example, is the claim that proposing climate engineering is a "man" thing. Also a "man" thing: attempting to get distance from a topic, approaching it in a disinterested fashion.


Also a "man" thing—physical courage. (I guess, not quite: physical courage "co-constitutes" masculinist glaciology along with nationalism and colonialism.)


There's criticism of a New York Times article that talks about glaciology adventures, which makes a similar point.


At the heart of this chunk is the claim that glaciology excludes women because of a narrative of scientific objectivity and physical adventure. This is a strong claim! It's not enough to say, hey, sure, sounds good. Is it true?
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