New Series - The Essentials of Value Investing

We are kicking off a comprehensive series about value investing, covering everything from the anatomy of a 10-K to proprietary research techniques. An outline of the content we will be covering can be found below, and we hope to provide you with several new ideas to consider for your own research process. Subscribe to the blog for bi-weekly updates.

Preliminary Topics

1. Starting Out - Eyes Wide Open

• Who the stock market is suitable for
• Common behavioral temptations
• Why the majority of full-time, professional money managers fail
• Stop paying attention to crappy marketing messages about hot stocks
• Proceed with caution

2. Know and Own Your Sweet Spot

• The importance of sticking within your circle of competence
• Finding and maintaining an investment playbook aligned with your personality
• What "value investing" is and why it can be an effective strategy

3. Finding Ideas in Your Sweet Spot

• Quantitative screens are good...
• But qualitative screens are often more enlightening
• Brick-by-brick idea discovery
• Situational awareness - how to locate stocks in your "playbook"

4. Ingredients for an In-Depth Investment Thesis

• Elements of a logical, consistent thesis

5. Ramping Up on a New Idea

• Getting to know the business beyond the 10-K
• Understanding drivers of historical stock performance
• Separating controllables from uncontrollables

6. Hitting the 10-K

• What is a 10-K
• How to read a 10-K

7. Accounting Deep Dive - Breaking Down the Financial Statements

• Overview of the balance sheet
• Overview of the income statement
• Overview of the statement of cash flows
• How the statements connect

8. Dissecting the Balance Sheet

• Why the balance sheet is important

9. Dissecting the Income Statement

• Why the income statement is important

10. Dissecting the Statement of Cash Flows

• Why the statement of cash flows is important

11. Footnote Fun

• What are footnotes in the 10-K and 10-Q
• What are we looking for in footnotes

12. Conducting Proprietary Research

• The value of scuttlebutt
• How to get information "straight from the horse's mouth"

13. What is it Worth?

• There is no cookie-cutter approach to valuation
• Discounted cash flow analysis
• Comparable transactions
• Multiple analysis
• Excel templates

14. Portfolio Construction

• Risk tolerance
• Sector / macro factors
• Size
• Leverage
• Concentration vs diversification

15. Buy and Sell Discipline

• How some of the best value investors think about it
• Find something that fits your personality

16. Creating Feedback Loops

• Journaling
• Tracking investment decisions
• Lessons learned

17. Favorite Books and Shareholder Letters

18. Other Investment Research Resources