JustValue @justvalue2 Twitter profile

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JustValue

2 months

My last article is out! “Builders FirstSource $BLDR: 8 Reasons to Love The Company (And Many Sectorial Tailwinds)” (link in bio) $FAST $WSO $POOL $SITE $GWW $IBP $FERG $AIT $BXC $BLD $UFPI $GMS $BECN $OC

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JustValue

@justvalue2

1 month

Bruce Greenwald’s approach to valuation

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@justvalue2

2 years

For those interested in roll-up strategies, serial acquirers, consolidators… this is a list with some of them (mainly from US). Any other interesting one?? (trying to create a comprehensive list)

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@justvalue2

5 years

Are P/E ratios really telling us whether one company is cheaper than another? Epoch Investment provides an interesting article about how to correctly interpret P/E and its interplay with FCF, ROIC, growht and required returns. Full of insightful messages👇

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@justvalue2

5 years

Li Lu on Charlie Munger

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@justvalue2

2 years

This is one of the most beautiful moments I've found in a conf call transcript. Watsco $WSO Q4 2017 Earnings Call Transcript

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@justvalue2

2 years

List of 138 Acquirers (roll-up strategies, consolidators, financial holdings, serial acquirers and many others)

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@justvalue2

2 years

$TXN This is how a disciplined capital allocation strategy makes 3x FCF to become 7x FCF per share

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@justvalue2

6 years

How sales are finally converted into earnings? The importance of understanding “earnings chain”: operating leverage and financial leverage together determine earnings (“Operating Leverage” by Michael J. Mauboussin) #ValueInvesting

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@justvalue2

6 years

Understanding Price-Earnings multiple’s economic background through Modigliani & Miller’s formula of firm’s value (Ref documents: “What Does a Price-Earnings Multiple Mean?” and “M&M on Valuation” by M.J. Mauboussin) #ValueInvesting

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@justvalue2

5 years

"Primer on the ROIC Valuation Framework" Value is driven by the following four levers and determined by their interaction: 1. Excess returns 2. Reinvestment opportunities 3. Competitive advantage period 4. Risk profile of the company (WACC)

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@justvalue2

2 years

9 Characteristics of a Good Acquirer

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JustValue

@justvalue2

6 years

"The Seven Immutable Laws of Investing" by James Montier

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@justvalue2

6 years

Shareholder Value calculation (reference book: “Creating Shareholder Value: A Guide for Managers and Investors” by Alfred Rappaport) #ValueInvesting

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JustValue

@justvalue2

6 years

How capital structure affects firm's value? Great explanation of Modigliani and Miller's proposition: the value of a firm is independent of its capital structure (under certain conditions) (Source: Mauboussin, "Estimating the Cost of Capital")

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JustValue

@justvalue2

6 years

Business valuation from a customer perspective (Reference paper: Mauboussin, "The Economics of Customer Businesses", 2004, )

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@justvalue2

2 years

LRT Capital Management 13F-HR provides a great fishing pond to look for quality companies. Any recommendation of funds focused on similar companies to look for?? (i.e. quality companies, compounders, growing moats, CF machines…)

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JustValue

@justvalue2

5 years

“Wonderful Companies at Fair Prices” by Polen Capital Great paper that highlights the importance of outweighing the understanding of a business over its valuation, and how a good earnings power analysis may overcome the consequences of a bad valuation

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@justvalue2

5 years

Interesting reading: The Equity “Compounders" What defines a compounder? - high quality - franchise businesses - recurring revenues - high ROIC - sustainable competitive advantages - pricing power - low capital intensity ... and main sectors to look into👇

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JustValue

@justvalue2

2 months

There is no better margin of safety than a management able to increase intrinsic value over time. Bill Nygren is clear about it

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@justvalue2

2 years

List of companies that attract “quality shareholders” (long-term horizon + high conviction). Source: “Lessons from quality shareholders on corporate governance practice, research and scholarship” by Lawrence A. Cunningham

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JustValue

@justvalue2

6 years

Difficulties arising when using EV/EBITDA multiple (Reference documents: “Valuation using multiples. How do analysts reach their conclusions?” by P. Fernández and “What Does an EV/EBITDA Multiple Mean?” by M.J. Mauboussin)

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@justvalue2

5 years

Rowan Street Capital Q2 2019 Letter Lesson learned 👇

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@justvalue2

5 years

“Maximizing Moats: Reinvestment Runways & Capital Allocation” Dorsey Asset Management (Pat Dorsey) (Presentation at the Project Punch Card Conference, December 2019)

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@justvalue2

6 years

What defines a great investor? (Source: Mauboussin, "Thirty Years. Reflections on the Ten Attributes of Great Investors")

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@justvalue2

6 years

Active-Passive investing paradox: Big concentrations on active or passive investing create forces in the opposite direction: the higher the active investing the higher the market efficiency and the higher the incentives for investors to move to passive investing, and vice versa.

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@justvalue2

6 years

What’s wrong with “traditional” return metrics? Introducing Market-Expected Return on Investment (MEROI) as an alternative measure based on market expectations. (reference document:“Where’s the Bar? Introducing MEROI” by M.J. Mauboussin ) #ValueInvesting

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@justvalue2

6 years

How vulnerable is the moat? How big is the threat of new entrants? Understanding what influences the decision of a new entrant will help to select top value creators (source “Measuring the moat” by Michael J. Mauboussin ) #ValueInvesting #valuation

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@justvalue2

5 years

"Terry Smith: What I have learnt at Fundsmith in the past five years" (2015) Terry Smith's insightful reflections

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@justvalue2

5 years

Fundsmith’s Terry Smith guiding principles on bear markets

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@justvalue2

5 years

Schematic comparing the individual components of a vehicle powered by an internal combustion engine with one powered by an electric battery

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@justvalue2

6 years

Greenwald’s approach to firms’ valuation (Reference book: “Value Investing: from Graham to Buffett and beyond” by Bruce Greenwald) #ValueInvesting

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@justvalue2

4 years

Hayden Capital Q1 2020 Letter Absolutely must! A really interesting reflection on the formation of new online habits, probably here to stay

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@justvalue2

2 years

The beauty of $POOL business model lies on its capacity to create a win-win-win situation where all the players (manufactures, retailers and the Company itself) within the pool industry’s hugely-fragmented supply chain can benefit

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@justvalue2

6 years

DCF models frequently fail to reflect the impact of innovation: the absence of new investments may deteriorate firm’s financial performance. Doing nothing is not neutral. (Article: Clayton M. Christensen, S. P. Kaufman, W. C. Shih; "Innovation Killers")

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@justvalue2

5 years

Connor Leonard's presentation at Google: - Legacy moats: High ROIC but NO opportunities to deploy incremental capital - Reinvestment moats: High ROIC with opportunities to deploy incremental capital - Legacy moats + Capital allocation ≈ Reinvestment moats

Google Deck - FINAL (1).pdf

drive.google.com

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JustValue

@justvalue2

6 years

Capital allocation: relevant issues when assessing share-buyback programs (reference documents: "Disbursing Cash to Shareholders" and "Capital Allocation" by M.J. Mauboussin) #valueinvesting

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JustValue

@justvalue2

3 years

Great compilation of Mauboussin (first) writings (800+ pages!!) "Michael Mauboussin – Research, Articles and Interviews (1995-2004)"

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@justvalue2

6 years

How information technology and networks have merged to create companies with unprecedented market shares, very high ROICs and rapid growth? Insightful paper: “Exploring Network Economics” by Mauboussin Some highlights: 1) The idea of “winner-takes-most”

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@justvalue2

5 years

“The irony is that past stock market crashes always look like opportunities, but future ones look like risks”. Great market perspective from Saga Partners Q4 2019 investor letter: S&P 500 Historical Corrections 👇

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@justvalue2

4 years

ROCE = Operating ROA + (Leverage x Spread) (the essence of the strategic use of leverage by equity investors)

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@justvalue2

5 years

In its Q3-18 letter, F. Liu (Hayden Capital) raises an interesting open question: how much capital should we risk on each position? And provides some discussions points: equal weight? Proportional to conviction? does personality matter? Interesting reading

Hayden Capital

Shared with Dropbox

www.dropbox.com

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JustValue

@justvalue2

2 years

The best distribution businesses create dynamics and network effects that make them stronger and outperform as they expand. I have in mind companies like $POOL $SITE $WSO $SHW $FERG $BLDR $AIT $BECN $ATKR $FAST $GMS $GWW $RS $GPC What other companies fit in this list??

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@justvalue2

4 years

Polen Capital’s Quality Approach 💯💯

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@justvalue2

5 years

“Companies with high levels of ROIC tend to hold on to that advantage..." Exhibit 4 "looks at the probability that a company will migrate from one level of ROIC to another over the course of a decade" and shows some sort of stability, specifically in case of high-ROIC companies

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JustValue

@justvalue2

6 years

Warren Buffett comments on EBITDA: "I’ll look at that figure when you tell me you’ll make all of the future capital expenditures for me" (Berkshire’s annual shareholder meeting in 2003. Image from Mauboussin, "What Does an EV/EBITDA Multiple Mean?”) #ValueInvesting

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JustValue

@justvalue2

6 years

Basic governance principles that help companies to create shareholder value (and help investors to identify companies committed with shareholder value creation) (Reference document: “Ten Ways to Create Shareholder Value” by A. Rappaport https:/ )

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@justvalue2

4 years

Sell-discipline vs hold-discipline

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@justvalue2

4 years

"The Value of Everything in an Unstable Environment" by Aswath Damodaran (73rd CFA Institute Annual Conference)

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@justvalue2

5 years

Bill Nygren's great video describing how Oakmark Funds have adapted to this new environment where GAAP accounting fails to reflect some businesses' reality and value (from min 8:30 on).

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@justvalue2

6 years

20 Examples of Business Models

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@justvalue2

3 years

OneWater Marine Inc. $ONEW: The Beauty of a Roll-up Strategy

OneWater Marine Inc. ($ONEW): The Beauty of a Roll-up Strategy

In a Nutshell

justvalue.substack.com

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JustValue

@justvalue2

6 years

Average economic profit by industry: Industry matters, a lot. -“You’d rather be an average company in a great industry than a great company in an average industry” -“In some cases, you’d rather be in your supplier’s industry than in your own"

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@justvalue2

5 years

"But on the rare occasions that you find a company with such a strong growth potential, be ready to pay a multiple that wouldn’t make sense for a value investor" François Rochon (Giverny Capital)

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JustValue

@justvalue2

2 years

Airbnb $ABNB: Wonderful Business But Still Expensive

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@justvalue2

5 years

Really interesting report on the automotive sector ("auto-related stocks are attractive bargains, or classic value traps"?) Value Investor Insight (December 31, 2019)

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JustValue

@justvalue2

6 years

Persistence of high & low returns: few low-ROIC firms are successful in reverting the situation. Choosing high-ROIC ones improves the odds: 46,5% of high-ROIC firms (>20%) in 2007 remained at this level in 2016 70% of low-ROIC firms (<10%) in 2007 remained at this level in 2016

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JustValue

@justvalue2

6 years

10 Enlightening propositions for valuation (Reference book: A. Damodaran, “The Dark Side of Valuation”) #ValueInvesting

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@justvalue2

5 years

"We have found no difference in the distribution of growth rates between so-called value and growth stocks. We did, however, find that growth stocks tend to have high ROICs... So the companies classified as growth did not grow faster on average, but they did have higher ROIC"

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JustValue

@justvalue2

2 years

Watsco $WSO: The Beauty of a Virtuous Cycle

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JustValue

@justvalue2

5 years

What EBITDA Misses

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JustValue

@justvalue2

5 years

Terry Smith’s guiding principles for dealing with predictions of crashes and bear markets (Fundsmith's 2018 annual shareholders letter )

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@justvalue2

5 years

Giverny's (François Rochon) fantastic approach. (2018 Annual Letter)

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JustValue

@justvalue2

5 years

Third Avenue Selling Checklist (for investments after experiencing a substantial improvement in price)

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JustValue

@justvalue2

1 year

Searching for new distributors to dive in. Any suggestion?? Here is a list of the kind of companies I’m looking for 👇 $FERG Ferguson $GWW WW Grainger $WSO Watsco $POOL Pool Corporation $SITE SiteOne Landscape Supply $SHW Sherwin-Williams $BLDR Builders FirstSource

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JustValue

@justvalue2

1 month

My last article is out! The Breakdown of the ROIC. The case of Fastenal $FAST and W.W. Grainger $GWW (Link in bio)

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@justvalue2

5 years

Really interesting RiverPark Q2 2019 letter Five "fact patterns" to invest in growth stocks (and many real-world examples): 1. "Higher for Longer" (Adobe $ADBE, Amazon $AMZN)

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JustValue

@justvalue2

5 years

“Founder-Led Companies Outperform the Rest” Why? “the founder’s mentality” approach: -Higher commitment: leadership; inspiration; engagement. -Front line obsession: product- and customer-centric -Owner’s mindset: personal impact for risk, cost & benefits

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@justvalue2

5 years

WACC minimization does not equal value maximization (Source: J. Pettit, "Strategic Corporate Finance", 2007, 154-155)

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@justvalue2

6 years

Common Errors in Discounted Cash Flow Models (Reference documents: “Common Errors in DCF Models” by M. J. Mauboussin and “119 common errors in company valuations” by P. Fernández ) #ValueInvesting

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JustValue

@justvalue2

5 years

Turtle Creek 2020 Q1 Commentary $BERY $SSNC $PRAA $KNX $GDI $MGA $MIDD $URBN

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@justvalue2

8 months

Automotive Dealership Industry 101 $ABG $AN $KMX $GPI $LAD $PAG $SAH Link in bio

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@justvalue2

6 years

Main methods for Valuing Companies and Equity by Cash Flow Discounting (and their link with basic accounting) (Reference documents: “Valuing Companies" and by Prof. P. Fernández) #ValueInvesting

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JustValue

@justvalue2

5 years

Joel Greenblatt on active management

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@justvalue2

6 years

Framework to assess capital allocation (Reference paper: Mauboussin, "Capital Allocation. Evidence, Analytical Methods, and Assessment Guidance", 2016)

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JustValue

@justvalue2

4 years

"The Epoch Core Model: Our Proprietary Stock Model" by Epoch Investment Partners. Interesting article where they explain the key components of their model...

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@justvalue2

5 years

Is higher ROIC always better? Article about the role of ROIC as a potential incentive plan metric and the unintended consequences of excessive focus on ROIC "ROIC alone is not enough..., a company needs both growth and returns to create shareholder value"

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JustValue

@justvalue2

5 years

"The Magic House" Insightful metaphor by @HaydenCapital to explain the 2 main components of what an asset will sell for: the fundamental value (earnings growth) and the price you’re willing to pay today for each $ of future earnings (multiple expansion)

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JustValue

@justvalue2

5 years

Impact of Capital Structure on Value (Source: Koller, Goedhart, and Wessels, "Valuation: Measuring and Managing the Value of Companies", 5th Edition, 492)

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JustValue

@justvalue2

6 years

Nice explanation about how a company (Netflix) strategically can create "consumer surplus" (eroding temporarily shareholders’ return) to increase its customers base and subsequently reclaim this surplus through its pricing power (Source: @IntrinsicInv )

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JustValue

@justvalue2

2 years

$TDG Transdigm is one of those companies that shows the perils of blindly make decisions based on quantitative screeners. Due to its high debt levels it would probably keep out of many screeners...

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JustValue

@justvalue2

6 years

Open thread about Netflix ($NFLX). Netflix seems to be an astonishing business but would it be able to achieve market expectations? Below some positive (P) and negative (N) points (no advice, just food for open discussion)

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JustValue

@justvalue2

5 years

Donville Kent's "stocks for the next decade"

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JustValue

@justvalue2

5 years