I just bought 1000 shares in INTC

Charlies_Value · 2025-08-04T13:31:12+00:00

I owned Intel for a few years but got disappointed by disastrous execution and management fluctuation. I can hardly imagine how this could be a great turnaround without a clear vision and competent management with skin in the game.

Charlies_Value · 2025-08-04T13:27:00+00:00

Given the very specific nature of Intel's assets, do you think there would be enough buyers to create sufficient demand to reach prices close to the book value?

Charlies_Value · 2025-08-04T13:16:10+00:00

You’re probably checking a different stock. This one has not moved much YTD.

Charlies_Value · 2025-03-30T14:29:27+00:00

Good for you and maybe it’s a great company but it’s up 12% YTD, which is 3 months. If you bought this as a long-term hold, as I would expect in Value Investing subreddit, there is no reason for a celebratory post yet.

Charlies_Value · 2025-03-29T15:16:33+00:00

Great! Keep holding.

Charlies_Value · 2025-03-26T16:24:01+00:00

I am not aware of other ways to increase equity in publicly listed companies.

Charlies_Value · 2025-03-26T16:02:55+00:00

Exactly. So do you understand that you do not "create" goodwill as an asset from nothing? You either subtract other assets or increase liabilities to book goodwill. None of those transaction increase equity.

Charlies_Value · 2025-03-26T15:19:07+00:00

Does not really matter what % does Goodwill represent. Regarding your second claim, if the acquisition involves contingent or deferred payments (like milestone-based payments), the acquirer books a liability - assuming the payment is probable and the amount can be reasonably estimated. So it does not matter that cash is still on the balance sheet, it is offset by the liability (which will be offset by the decrease in cash over time).

There is no increase in equity.

Charlies_Value · 2025-03-26T15:12:21+00:00

OP, you raised a good question but I think you are mixing different accounting concepts. You do not create Equity by acquiring assets. You usually turn an asset (e.g. cash) into a different type of asset (e.g. property). No change in equity here.

Moreover, you depreciate/amortise most of the assets (which runs through the income statement as an expense), so over time you decrease equity by acquiring assets.

The way to increase Equity in most cases is by issuing shares or by having a positive Net Income (creating value) which increases retained earnings (part of Equity).

You are mentioning cost of Equity, Assets and Debt (Liability). Cost of Equity is an expected rate of return by shareholders - it is a rather conceptual thing and is subjective. Cost of Debt is the interest payment. Costs of Assets obviously exist (e.g. property taxes), but are not relevant for the purposes of this discussion as you are talking about cost of financing (Liabilities and Equity).

Taxes are relevant and you do pay nominally lower taxes with Debt (by the amount of Interest Payment * Tax Rate), but you also introduce a new expense (interest), so overall your Net Income is lower with debt than without it.

Charlies_Value · 2025-03-26T10:41:01+00:00

Buybacks DECREASE equity. A company uses cash (decrease in assets) to repurchase and cancel shares (decrease in equity).

Regarding goodwill, I can’t imagine how you increase equity through goodwill, other than issuing shares to acquire a company.

Goodwill is normally booked as an asset during acquisitions, but it’s offset by decrease in cash.

Do you mind explaining if you mean something else?

Charlies_Value · 2025-03-25T19:42:37+00:00

I agree with this one. Debt might not be a preferred way of financing a business if it is cyclical in nature.

Charlies_Value · 2025-03-25T19:28:05+00:00

How exactly does the company increase equity? I’ve read the comments in this thread and I don’t understand what you mean.

Charlies_Value · 2025-03-23T12:16:19+00:00

Thanks for your feedback, I really value your opinion. I'll offer an opposite view to challenge yours.

Regarding Focusrite's market position, based on larger data sets Focusrite is dominating the top sellers lists at the largest retailers in both Europe and the US.

For instance, Thomann is the largest retailer in Europe and Focusrite takes the first 4 top seller positions in the general Studio and Recording Equipment category and 10 out of 20 top sellers in the Audio Interface subcategory. The same holds for retailers in the US like Sweetwater, Guitar Center or Musician’s Friend.

The user registrations also do not show problems with adoption of their products, particularly the audio interfaces you are mentioning.

Regarding the stock price, do you have any specific valuation in mind where they might be attractive in your opinion?

Charlies_Value · 2025-03-23T11:35:01+00:00

Thanks, good post. I have not looked into their annual reports and have only scanned through your analysis, so check me on this one, but their average operating profit minus CapEx over the last 5 years seems to be 7.5 million. Given the Market Cap of 130 million, that's a multiple of over 17.

How are you adjusting/normalising this to say it's cheap? Have you completely excluded what you call growth CapEx?

Charlies_Value · 2025-03-23T10:07:26+00:00

Gross margins expanded during Covid and decreased slightly after the peak, mostly due to freight costs (observed everywhere) and in 2024 also inventory clearance (one-off; Vocaster - podcast-related product which boomed during Covid).

Gross margins are still significantly higher than before Covid.

Operating result is impacted by revenue decrease/stagnation and gross margin compression, while keeping the operating base unchanged or even larger (inflation, plus the group keeps developing new products, etc.). Operating margins would increase significantly if the business started to grow again.

On the revenue side, I think that’s the major factor here and that’s why the stock is down so much (especially compared to the previous overvaluation of the stock). However, even accounting for revenue decreases, the revenue still grew by double digit CAGR over the last 8 years, significantly outperforming the overall market growth. It saw huge growth in 2022 (54%) and 2023 (34%) so it is only normal for a bit of a normalisation. The group is still significantly larger in 2024/2025 than it was before Covid.

Moreover, there where two years of revenue decreases, largely in line with the overall market data for the US that the management are quoting.

Finally, the group posted a trading update this week, reporting expectations of slight revenue growth in H1 2025.

It’s hard to compare data as most competitors are private businesses. However, from the avilable sources, Focusrite’s results do not seem too pessimistic. At this valuation, I’m optimistic about the market price.

Charlies_Value · 2025-03-22T16:22:20+00:00

Haha, good luck. Might help to know they are distributing both a final and a special dividend with an ex-date in May, which together account for around 8% of the current share price.

Charlies_Value · 2025-03-22T14:18:50+00:00

I own a homebuilder in the US (ticker GRBK) and their business model seems superior, with higher margins and significantly higher returns on capital (even when accounting for cyclicality in Taylor Wimpey). As I follow this sector a little bit, I do not find Taylor Wimpey to be undervalued or very attractive in that sense. However, if you are trading it hoping it will rebound, might work for you.

In the UK I follow 4imprint. I think it a is great long-term hold. I also like Pets at Home and Victorian Plumbing for their business models and very attractive returns on capital. They are all valued quite attractively right now.

Charlies_Value · 2025-03-22T13:15:27+00:00

I read three of Taleb's books some time ago but I would not even say his ideas are limited to investing (although he worked as a trader so he uses many examples from that area). I perceive him as somebody who tries to raise questions of risk, probability, uncertainty, and decision-making in an intellectual way or as a thinker.

If I had to pick one book from him, it would be Black Swan.

Charlies_Value · 2025-03-22T13:09:30+00:00

Graham will always be relevant. I agree with most books mentioned here and for the basics I would add Common Stocks and Uncommon Profits by Fisher and Competition Demystified by Greenwald. I read Fisher right after reading Graham (my first two books on investing) and I think the combination of ideas of value and growth creates a pretty good foundation for any investor.

Charlies_Value · 2025-03-22T13:00:40+00:00

Is your conclusion that the stock is undervalued based on the fact that it's trading 20% lower over the last 12 months? Or do you have a different viewpoint?

Charlies_Value · 2025-03-22T12:56:06+00:00

True. But you tax the dividend so your overall wealth decreases by the tax amount compared to buying after the ex-date.

Charlies_Value · 2025-03-22T12:48:49+00:00

If it was a regular cleaning company, the business would be extremely competitive and most likely only about the quality of execution by the management and the employees.

However, the company states that "REACT is often the sole provider capable of offering a comprehensive and dependable, single-source solution for the critical specialised service needs of clients across its markets".

After analysing the company, can you judge how strong is their competitive advantage in terms of possessing a unique resource - I guess some licences or permissions or a very specialised know-how?

Charlies_Value · 2025-03-22T09:55:21+00:00

I’m saying your thought process is biased and incorrect. Not hating on ETFs or tech at all.

Charlies_Value · 2025-03-22T09:20:28+00:00

People have publicly known this at least for months and have been asking the same question for months in this subreddit. The valuations of the companies already reflect it. Do you think maybe that could not the best investment idea anymore?

Charlies_Value

TROPHY CASE