The Valuation Shop

On a quest to understand valuation and separate price from value in the stock market (without losing my mind)

[The Valuation Shop @Valuation_Shop]

This quote is such a simple concept, but I really think it is one of Charlie Munger's great contributions to the value investing world.

One unique insight into a company or investment can be all it takes to become wealthy. Don't underestimate your own intuition.

$BRK.A $BRK.B

[The Valuation Shop @Valuation_Shop]

Interesting

https://t.co/nUlBWhm6SG

[The Valuation Shop @Valuation_Shop]

If you're new to investing you're probably noticing the word yield used a lot (as in FCF yield, earnings yield, etc.)

It almost always refers to one simple thing: the return you can expect compared to the price you pay.

Think of it like a bond: If you buy a $100 bond at face value that pays 5% interest, you get $5. Your yield is 5%.

Stocks are a bit more nuanced, but the idea is exactly the same:
If a stock costs $100 per share and generates $4 per share in Free Cash Flow, the FCF yield is 4%.
If that $100 stock earns $6 per share in net income, the earnings yield is 6%.

[The Valuation Shop @Valuation_Shop]

$META now contemplating a similar equity raise to the one $GOOGL just completed to fund AI data center build-outs. No specific numbers yet, but Google raised $85B.

$META stock is down on the news.

[The Valuation Shop @Valuation_Shop]

@DimitryNakhla Looking at it like the famous "Buffett equity bond" could mean you're getting around an 8% yield after year 3. Assuming competition doesn't get in the way.

[The Valuation Shop @Valuation_Shop]

@FromValue This is a helpful article and sheds light on a few questions I had about $CELH. Thanks for sharing.

[The Valuation Shop @Valuation_Shop]

I found this to be a helpful article for anyone looking to understand $CELH

Specifically, why do the numbers look good, but the stock is down so much?

John Fieldly, CEO addressed concerns at recent conference and this article shares the highlights

https://t.co/lrtBdbIV5G

[The Valuation Shop @Valuation_Shop]

@ariaradnia That's a stretch, c'mon

[The Valuation Shop @Valuation_Shop]

@dividendology When you buy at these low prices you get all the EPS growth and any multiple expansion is just the cherry on top, never the actual bet.

[The Valuation Shop @Valuation_Shop]

@FromValue I'm 100% with you on this. I think $ASML is the widest moat out there.

[The Valuation Shop @Valuation_Shop]

@thekostadinoff @BourbonCap Appreciate the reply! It's a fact that stablecoins might not impact $V and $MA. I'll be the first to admit I don't know what will happen or how it will play out. But it is technology that CAN go around the companies, whereas that technology wasn't a threat in the past.

[The Valuation Shop @Valuation_Shop]

Nike’s problems started a long time ago. Even before they alienated their retail partners, $NKE missed out on sponsoring Steph Curry because a Nike exec mispronounced his name. This was a historic fail as athletes like Michael Jordan and Lebron are vital to their brand.

[The Valuation Shop @Valuation_Shop]

"A huge thank you to our investors, including Berkshire Hathaway who invested $10B."

Greg Abel is already making moves $GOOGL

[Sundar Pichai @sundarpichai]

On Monday we announced an equity offering for Alphabet - part of our multi-year investment strategy to meet the AI opportunity ahead and support the demand we’re seeing from enterprises and consumers. Pleased to share the offering was well over-subscribed. We raised a total of ~$45B, with an additional $40B to come as part of an “at the market” program starting in Q3 (for a total of ~ $85B). A huge thank you to our investors, including Berkshire Hathaway who invested $10B.

[The Valuation Shop @Valuation_Shop]

@TmarketL Significant player in the book I just finished, 1929 by Andrew Ross Sorkin

[The Valuation Shop @Valuation_Shop]

Will Greg Abel be the Tim Cook to $BRK.B? Both very efficient and competent operators. Taking the reigns from the "intelligent fanatic" founders (Warren Buffett and Steve Jobs) and growing shareholder value.

[The Valuation Shop @Valuation_Shop]

Stick to the "four certainties" framework when looking for investable businesses.

Certainty of the cash flows (how predictable)
Certainty of management (how trustworthy)
Certainty of capital allocation (track record)
Certainty of valuation (margin of safety)

PUT A SCORE ON EACH

[The Valuation Shop @Valuation_Shop]

@BrianFeroldi That's the goal

[The Valuation Shop @Valuation_Shop]

@realroseceline I find EBITDA more useful for asset light companies, like software. If they don't have a lot of capex then depreciation and amortization aren't as crucial as in an asset heavy business. EBITDA makes no sense to use for companies that invest in a lot of physical assets.

[The Valuation Shop @Valuation_Shop]

@OrbayInk @RobertGreene 😀