I couldn’t repair your brakes, so I made your horn louder. –Steven Wright
A Reader shares good news.
Hi John,
Partly motivated by your blog and lectures on value investing, I decided to quit my dead-end Hedge Fund job, and open my own investment management firm, Apatheia Capital. Think Schloss, and early Greenblatt special situations.I intend to use the best from quant and value investing in terms of buying cheap special situation stocks consistently.
So far it has been fun, exciting and anxiety-ridden process, and few friends and family have been misguided to be infected by my optimism. Please keep up the good work! I cannot stop thinking about my ideas (about ever-present fat tails in special situation value stocks). So far in the process, I have filed for state registrations etc. and finalized a mission document for the firm.
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I wish you a great journey. Be flexible and patient. Use your small size to your advantage by going anywhere there is value. Keep good records of your investment journey and keep in touch!
Toby Carlisle Talk:
Recording of Webinar: Portfolio Construction, Concentration and Diversification for Value Investors
Footnotes for Chapter 4 (Deep Value)
Success-equation.com (Mauboussin’s Web-site)
The Relation Between The Enterprise Multiple and Avg Stock Returns 2010 more research on the efficacy of using the enterprise multiple as an indicator of value. Remember to adjust for normalization because at the top of a cycle you will see low EV to EBITDA (like in housing circa 2005/06) or high EV/EBITDA (11 x) BTU VL Dec 2014 near a depressed cycle. Coal reserves are priced low and production doesn’t generate high enough cash flows for the industry to generate a normal return, so mines are being closed, production shuttered, mines consolidated. The cure for low prices is low prices.
Berkshire 1992 Letter on What is an attractive investment.
This post wraps up Chapter 4 in Deep Value so don’t hesitate to comment or ask questions.
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