Martin

#finance #investing #financialmodels #stocks #research

[Martin @mI0cap]

@LeopoldATracker all of them about to tank when cpi comes out on 10th june, one week later fed comes out raise interest based inflation fears. Stocks about to cool off, those mentioned probably tank heavily

[Martin @mI0cap]

@__paleologo a disgrace - how could get that through the comittees?

[Gappy (Giuseppe Paleologo) @__paleologo]

Nicolai Tangen has interviewed all the most important CEOs and investors in the world (that's what $2T AUM buy you: lots of access). He has also interviewed a fair number of HF managers. Here are my favorites. Even so, it's almost 4 hrs. But I recommend actually listening, over the gemini summary.

Chris Hohn: https://t.co/5CdNm3fHI6
Paul Singer: https://t.co/DLq2U0atoa
Marc Rowan (not a HF, still interesting): https://t.co/k2BHwbPJFv
Stan Druckenmiller: https://t.co/H4sOAC1mU4
Ken Griffin: https://t.co/iepjcVwGOZ

[Brett Caughran @FundamentEdge]

The senior analyst at a Tiger Cub who trained me on financial modeling back in '08 (shoutout Chris Laporte) walked me through the importance of deeply detailed cash flow builds. So much of the world is focused on EPS (certainly the sell-side), that you can generate a lot of insights on business performance by focusing closely on the cash flow statement.

Everyone agrees that Free Cash Flow is the purest driver of net present value, but modeling FCF is a very messy exercise whereas EPS has the benefit of accounting treatment that will smooth out the FCF lumpiness. Thus, much of the world defaults to EPS.

Great analysts spend a lot of time to see through the FCF messiness to uncover true cash flow generation capabilities. How much is operating cash flow impacted by working capital changes? How much of OCF is "fake" SBC add-backs that show up in dilution? How much of net income is actually recurring cash charges that are added back to Adj Net Income to flatter headline numbers? How much of FCF is actually distributable via dividend or buybacks?

To build all of these analyses into your financial model, there is no shortcut to having 10+ years of historical, quarterly cash flow statements. And this is a super annoying exercise to build, since companies report "cumulative" cash flows in Q2 and Q3, so it requires layering in the 9m cumulative cash flow, then subtracting Q1 and Q2, copying formulas as values. Ugg. I've never found a shortcut to doing this.

And while I completely agree that there are elements of financial modeling that help me learn the business, updating 5 years of cash flow statements isn't one of them.

I tried this exercise in 5 AI Excel co-pilots. Most failed on this exercise, but I was able to get Scout by Daloopa (not sponsored though do have free access) to do this reliably, with click through visibility.

While AI Excel still cannot one-shot a complicated model like my DHR model (not even close), AI Excel can do simple things like update my 5-year outdated BS & CF that save immense time and brain damage. I'll call that a big win.

(Will walk through this step by step on my AI Excel seminar April 30th).

[Martin @mI0cap]

@inwoodcapital network of people = alpha

[Martin @mI0cap]

@Bencera People think this is great until the first law suit, negative customer feedback, product retours etc… It is basically a black box and it is not a good idea to outsource all operations to an ai. You did not program it, you don’t know how it works but u r still responsible.

[gemchanger @gemchange_ltd]

https://t.co/bVArkKPyv1

[Gregory Blotnick @gregoryblotnick]

https://t.co/S55nKD91l8

[Gregory Blotnick @gregoryblotnick]

https://t.co/tRjRnO9ZgO

[Martin @mI0cap]

@TripleNetInvest did not know that was a secret 😂

[Martin @mI0cap]

@CromanCher @baroneiof @TheCinesthetic everyone feels the same about this show in the world, season 1 outstanding, season 2 good, season 3 okay, and there from there i stopped watching…

[Martin @mI0cap]

@lexbacker @TheCinesthetic i miss billions, position tbd

[Martin @mI0cap]

@PalmerLuckey @exec_sum do u plan to ipo erebor in the next two years?

[Brett Caughran @FundamentEdge]

Will be interested to follow this. Agree the biggest funds have been slow to adapt to AI, not because they are complacent, but because there hasn't been a clear alpha signal from large language models (yet). LLMs are trained on a giant web scrape and can correctly complete quantitative tasks about 75% of the time..."unreliable world calculator" isn't necessarily a tool that has the big quant firms shaking in their boots, even though there are elements of the investment research process where LLMs can be highly useful.

Fwiw, large quant funds also generally capture small gross alphas (single digits) that they produce into impressive ROE with incredible amounts of leverage & intense focus on slippage, fed with massive computing & data budgets. That's a pretty hard incumbent to unseat if you are "two guys and a swarm of agents", but good luck! (makes the task of unseating Bloomberg look like child's play)

The much bigger opportunity is to help fundamental investors become more "quanty" by regaining some of the stacked alpha into the fundamental process that quants have eating for the last 10+ years. Building the "Iron Man" suit that becomes an AI Native operating system about both internal & external data (i.e. a swarm of agents can't walk the floor of a tradeshow or attend the JPM HC conference). No one has really done this yet, because it is an incredibly difficult, but incredibly high ROI task if done right.

[Martin @mI0cap]

@MaxAnderson thats why you wait until 1 has past after the ipo. Maybe the World looks different

[Arpit Gupta @arpitrage]

I'm teaching a new course at Stern on AI in Finance and opening it up!

Syllabus/slides on Github: https://t.co/YLYrvk1F6d

Weekly summaries on Substack
https://t.co/ctawgxoKT2

First post is on Amdahl's Law, Jevons' Paradox, and why finance was slow to learn the bitter lesson

[Martin @mI0cap]

@reidhoffman “love island” on another level 😂😂😂

[Martin @mI0cap]

@ick_real yes, with an average 6% return per year u are a millionaire in 5 years by doing absolutely nothing.

[Martin @mI0cap]

The names showing up in those files is incredible. I would freeze the status of the investigation to prevent statute of limitations.

This is so big, no one can tell me that they at least heard rumors at some point. You did not act and now pay is due.

[Martin @mI0cap]

@dnlkwk @aakashgupta genuine question: how do u put ur investment thesis for a stock in prospective or plausible if u don’t run the numbers in a dcf? Not saying it is the deciding tool or something, but just curious how its done because buyside courses are all about dcf. @FundamentEdge