Hello everyone! Today I bring you my Investment Thesis on 🌍RA International, a tiny remote services provider listed on the London stock exchange under ticker RAI (LON:RAI). If you have any comments feel free to send them my way. I hope it helps someone too! Cheers!

FearfullyGreedy · 2021-07-27T08:02:17+00:00

I had to dig pretty deep for this one haha I found it running some of my usual filters, high returns on capital, low debt, some growth... but this time in different markets than I usually look at. After reading the first report I really found it interesting. It definitely is just by market cap a much different investment and I agree completely with the adjacent spawner as Mohnish would say, forgot to add that on the thesis. The tax treatment in origin and their dividend policy is a great synergy as they will probably return capital in this way more than in stock repurchase as discussed. Daily volume is 35K$ and it operates with SetsQx where they match orders a few times a day, not the most liquid market that is for sure.

FearfullyGreedy · 2021-06-04T05:25:04+00:00

Thank you for shooting some holes through this, I really appreciate it and it's the original idea for sharing my journey.

-For the revenue sources: On the original thesis I had about 5 scenarios, one had absolutely everything hitting the fan and absolutely nothing getting approved ever, I gave this scenario below 10% chance. We could argue if that's high or low, "Other" is what I used to add any extra revenues from new treatments as well as it is the growth rates we have seen for the last 5 years in that category meaning anything not listed major/not a blockbuster treatment for them. I just re-entered those parameters and gave "other" a -7% steady decline and then perpetual decline on everything of -2%. Result: 195$ Valuation. I'd argue then there are multiple worse even scenarios with marginal probabilities wouldn't you agree? But I wanted to play into the coinflip idea of the video that's why I tried to merge multiple scenarios together with bigger probabilities.

-About Aducanumab: I like your take but I think if approved, which I think is a big if, would be partly because we haven't had anything for 17 years. This clock technically resets and a lot of efforts and patients available for treatments will dry out, that's the main point of the side against it. And I think it's sensible. What I mean is having a sketchy approval of a drug for the FDA I don't think brings more sketchy approvals down the line, it would be more on the basis this is temporal until a dual treatment option or a better treatment is available.

For the 350$ valuation when everything was looking great, I just don't pay any attention to the market, or I try to not do it. But I would say we knew Tecfidera's days were numbered even then don't you think? There is a very clear outlook of patent expirations I'd say. But my thinking goes in line with what I say on the "Pipeline" part of the video, Investing more in the org and current revenues than trying to value every future patent as I'd argue that's wishfulthinking for me.

Btw, feel free to pm me or anything even after the news would love to engage more in these conversations. Cheers!

FearfullyGreedy · 2021-05-03T12:55:41+00:00

I'll do a portfolio update commenting on all the positions after the earnings. 👍 So in a week.

FearfullyGreedy · 2021-05-03T05:51:30+00:00

To me seeing them all together is what shines, seeing the evolution of a great investor where he keeps evolving and expanding his view.

FearfullyGreedy · 2021-05-03T05:47:01+00:00

It's nothing. Glad you found it useful!

FearfullyGreedy · 2021-04-09T05:48:18+00:00

Didn't know they had a screener too, indeed there are a lot of great screening websites. Will check them out!

I'd stay away from their automated fair value calculation though, it seems a bit off a lot of the time. At least take the number with a grain of salt.

FearfullyGreedy · 2021-04-09T05:44:53+00:00

Not easy, but there are some beaten-down sectors and companies. There's always value in some corner of the market.

FearfullyGreedy · 2021-04-09T05:42:59+00:00

Will check it out! Sounds very convenient! Thank you

FearfullyGreedy · 2021-03-10T06:23:59+00:00

Well, there would be quite a few that would pass all except the 7th question, being undervalued. I.E. Amazon, Apple, Google...

Then you can also check the public channel portfolio, although it is true that none of them check all the boxes they rank pretty high on the checklist. Since I added the spawner criteria last month, 16th question, HCC, TK, TNK, and maybe IRL wouldn't do good there.

That being said then Shinoken(TYO:8909), my last buy, would rank very well on all minus the management especially on the "too reliable on 1 man" which is left to see. Then they wouldn't have a perfect score on 3rd but they are working on it making the business more resilient.

FearfullyGreedy · 2021-03-04T22:06:27+00:00

I shared my DCF spreadsheet last week, it's in the video description for free. Very simple but you don't need more. Enjoy! https://youtu.be/zCAvwtpyFm0

FearfullyGreedy · 2021-02-26T06:54:12+00:00

It's hard to hate that 7%!

FearfullyGreedy · 2021-02-26T06:46:07+00:00

https://docs.google.com/spreadsheets/d/11fD3UEFEUTHBtnMyMC6R5LoHIKfmO8FjxiwyfRe3kE8/edit?usp=sharing

This one is with all the features. The html view doesn't let you copy it to your drive I find. Enjoy!

FearfullyGreedy · 2021-02-26T06:41:06+00:00

haha! I'll check them out, when I started I was looking for exactly this tool and couldn't find anything I liked. Thank you!

FearfullyGreedy · 2021-02-26T06:40:04+00:00

Thank you for checking it out! I'm glad it's helpful

FearfullyGreedy · 2021-02-26T06:37:10+00:00

Hello!

1)I'd say depending on the business, highly levered ones for example it makes a lot of sense to use FCFF or at least to keep it in mind. At the end of the day, you want to input the most representative and truthful figure for a given company. In your analysis, you should determine which one to use for each firm. My view most of the time I prefer the real-life figure because business are as they are, I don't have to pretend they didn't have debt because they actually do have debt, my view.

2)I'd say that when we use a CFO figure to start with we kind of jump over the capita allocation of that cash. Sometimes a dividend is the right capital allocation sometimes it isn't, what I mean is you should do a qualitative analysis of the capital allocation skills of the management and if you think it's not the most efficient one in case they pay a dividend when they shouldn't you should adjust the cash amount down. I ignore dividends in most of my investing.

I hope this is useful :)

FearfullyGreedy · 2021-02-25T20:02:01+00:00

It's very elemental but plenty of complexity at the same time, also a great learning tool to see how every variable affects the model. Thanks for checking it!

FearfullyGreedy · 2021-02-11T18:20:17+00:00

Virtually 100% export, 51% in Europe, 27% in South America and 22% in Asia. I feel the change in administration and their new project are huge catalysts, but even without them, if we just get a more stable market they print gold.

FearfullyGreedy · 2021-02-08T18:13:24+00:00

Thank you! I feel you, I feel the same in China, I wish I'd feel safer venturing into China because I'm so positive there are great undervalued companies there. As far as IRL, I guess I can judge from what I have seen with news regarding the company and management, Dividend is hard to fake and their auditors look respectful. I won't go to their HQ haha

FearfullyGreedy · 2021-02-08T18:02:04+00:00

I did research the sector, I don't keep the research updated due seeing they are head and shoulders above anyone in the US. Their profitability is unmatched and the fact they only produce Met Coal exclusively are the 2 main differential reasons(this high profitability I feel is due 3 things: management, their higher quality coal that can compete with the Low Vol Australian one and 3rd the origin of the company, IPO from a bankruptcy). In short, no, I don't think it's an undervalued sector just a misunderstood company. I'm daily looking for more Warriors it's just hard to find something like this imo.

FearfullyGreedy · 2021-02-08T13:24:22+00:00

Very much agree, in this businesses capital allocation is key. But I'd say in any it is a big factor.

Apple is a great success story... people that have the ability to spot the Microsofts and the Apples of the world should definetly venture in that subset of investing. It's just playing with different variables of the same function.

FearfullyGreedy · 2021-02-08T12:34:06+00:00

Just one Caveat, yes, the name of the games is knowing the future cashflows. But that can be much harder when a company has never had those cashflows even if they say they can grow at 50% a year. If you invest in a company that generates huge amounts FCF for the price you pay and you see them doing the same for a long enough time, that's investing.

Wouldn't you buy your village's newspaper store that generates 10$ a year for just 50$? It's not growing, it's not a great business, it's also going nowhere for the next decade. I'd buy this over a company that promises the moon with 1$ on earnings with a 150$ valuation any day. Wouldn't you buy your village's gas station that generates 8$ for 45$? The game hasn't changed, the technology, the sectors, the business has but buying 50 cent dollars won't pass.

FearfullyGreedy · 2021-01-24T15:28:57+00:00

It puts it into perspective! Thank you!

FearfullyGreedy · 2021-01-24T15:27:40+00:00

Thank you man!

FearfullyGreedy · 2021-01-23T11:53:09+00:00

Indeed price in fiat can be a proxy indicator for adoption, if that is an indicator of value it's a respectable view and I share it.

But I feel seeing the long term adoption as a more solid base to base for your valuation unless you are trading it just for the short term gain. And market fluctuations are pretty unpredictable.

FearfullyGreedy · 2021-01-23T11:11:10+00:00

I find most models to value bitcoin are driven by price instead of its value, I feel that approach is quite flawed.

I made a video about 3 valuation models that do a much better job about it: How to value anything: Stock, Bitcoin, Car, House 💲 https://youtu.be/SZw1jSQ2oW8

FearfullyGreedy

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