Taylor Irwin

Equity Research Associate. CFA Charterholder. Follower of Jesus †

[Taylor Irwin @_taylorirwin]

"Expectations Investing" by @mjmauboussin and Al Rappaport showcases an unconventional, yet powerful method to find the value of a stock called Price-Implied Expectations (PIE).

Here is a breakdown of what it is and how it is used with $CLFD as a case study: 🧵

[Taylor Irwin @_taylorirwin]

https://t.co/HTjFepHbZy

[Taylor Irwin @_taylorirwin]

$ELMD, small med-tech company, reported strong Q2 performance with record revenues and operating profit.

Below is a link to my initial write-up on the company.

[Taylor Irwin @_taylorirwin]

@F_Compounders multiples are always a shorthand to valuation, requiring context of the fundamentals of the business

[Taylor Irwin @_taylorirwin]

Ben Graham illustrated the market's behavior as a pendulum, swinging between excessive optimism and unjustified pessimism.

Knowing where we are at in the swing is critical to minimizing risk and capturing return.

Here are a few barometers according to Howard Marks:

Economy: Vibrant or Sluggish?
Outlook: Positive or Negative?
Lenders: Eager or Reticent?
Capital markets: Loose or Tight?
Capital: Plentiful or Scarce?
Interest rates: Low or High?

Investors: Optimistic or Pessimistic? Eager to Buy or Rushing for the exits?

Recent performance: Strong or Weak?
Asset prices: High or Low?
Prospective returns: Low or High?
Popular qualities: Aggressiveness or Caution?

[Taylor Irwin @_taylorirwin]

@BrianFeroldi price-anchoring is a common behavioral bias: "Stock price rising = great company" and vice versa.

Yet the best opportunities are usually when price and fundamentals diverge.

[Taylor Irwin @_taylorirwin]

One fundamental trait of great investors is second-level thinking.

First-level: "It's a good company. Let's buy the stock."

Second-level: "It's a good company but everyone thinks its a great company, and it's not. So, it's overvalued."

[Taylor Irwin @_taylorirwin]

@RyanReeves_ outstanding company, consistently the top-ranked EDI platform. Just wish we could see a lower multiple

[Taylor Irwin @_taylorirwin]

@BrianFeroldi another helpful framework from @mjmauboussin Expectations Investing

[Taylor Irwin @_taylorirwin]

$PAYS Paysign's Patient Affordability solutions help alleviate costs for both patients and pharma manufacturers by identifying claims impacted by Copay Maximizers.

Paysign's Pharma segment sales have averaged triple-digit growth the past 4 quarters as a result.

[Taylor Irwin @_taylorirwin]

@MnkeDaniel the value vs growth debate is a bit of a misconception. Growth is always part of the value equation - only trying to not overpay for it.

[Taylor Irwin @_taylorirwin]

Paysign $PAYS is driving a dramatic revenue mix shift to its Pharma segment (which generated an avg of 230% growth the past 4 Qs) as its Patient Affordability solutions ramp.

Yet its stock has tumbled 40% the past 4 months.

[Taylor Irwin @_taylorirwin]

The CFA Institute's Financial Analyst's Journal completed a study on the impact of Seeking Alpha articles across two categories:
1. Influence (stock price reactions, popularity)
2. Predictive value (abnormal returns over 3-12 months) of Seeking Alpha articles

The study found that...
- 13% of SA authors were "skilled" with abnormal returns
- The main variables driving predictive value were ideas contrary to professional analysts, "skin in the game", and use of more technical finance terms
- Influential, attention-grabbing articles underperformed
- Readers tend to react and trade more on attention-grabbing articles, causing underperformance

https://t.co/M9pAseLG0e

[Taylor Irwin @_taylorirwin]

A few types of typically successful investments:

1. Stock price diverging from business fundamentals
2. Company going from hated to tolerated
3. Under-appreciated growth catalysts
4. Under-followed to institutional coverage

[Taylor Irwin @_taylorirwin]

“Skepticism and pessimism aren’t synonymous. Skepticism calls for pessimism when optimism is excessive. But it also calls for optimism when pessimism is excessive.”

- Howard Marks

[Taylor Irwin @_taylorirwin]

@thedankoe “Writing is thinking. To write well is to think clearly"

David McCullough

[Taylor Irwin @_taylorirwin]

@Ritholtz forecasting, or assumptions about the future, is inherent to investing.

the difference is whether you’re aware of them or not

[Taylor Irwin @_taylorirwin]

@SebKrog spot on.

also a good case for not copy-pasting someone else’s strategy. know the game you’re playing and build independent conviction

[Taylor Irwin @_taylorirwin]

@Jack_Raines “Writing is thinking. To write well is to think clearly"

David McCullough

[Taylor Irwin @_taylorirwin]

@kevg1412 post-mortems and feedback-loops are critical to progress.

[Taylor Irwin @_taylorirwin]

@MudlarkCapital huge accomplishment, congrats!!