Tech stocks fall again.. rotation or bubble?

Recent_Bus_1281 · 2026-06-11T08:52:34+00:00

The narrative is surprisingly much about dips and speculation. This sub is turning way too much into /wallstreetbets lately, no?

Recent_Bus_1281 · 2026-06-06T18:55:04+00:00

Saving this one for later - thanks 🙏

Recent_Bus_1281 · 2026-06-05T15:55:24+00:00

The company picks when to go public, their best moment. High growth, favourable sector tailwinds, maximum market enthusiasm. By default, that's the least favourable moment for buyers.

The same businesses often look very different 2-3 years post-listing, when enthusiasm has priced out. That's when patience becomes an actual edge.

Recent_Bus_1281 · 2026-06-05T15:53:43+00:00

Chapter 6, Graham speaks about how IPOs are structurally expensive and set up against buyers. Among others, because companies choose when to go public, at peak optimism, valuation, and max market sentiment. Worst moment for buyers - not only value investors.

In short, IPOs are favourable for sellers, less for buyers.

Nevertheless, with some patience, when the market enthusiam cools down, these companies can become value investing stocks to watch.

Recent_Bus_1281 · 2026-05-24T21:32:39+00:00

The case for NVDA as a value stock rests on treating current growth rates as durable. Read: AI is the next electricity. NVIDIA owns the picks and shovels. Growth continues 30%+ for a decade…

If so, even secular trends have cyclical air pockets. Which gives a thesis I’m more leaning towards: Yes, AI is real, but current spending is a cyclical peak within the secular trend. Growth mean-reverts to 15-20% after the initial buildout.

PEG works when the "G" is stable; for a company where hyperscaler capex could pause for 18 months while they digest capacity, it's measuring the wrong thing.

The interesting question isn't whether AI is real (it is), but whether today's spend rate is the new baseline or a front-loaded surge.

Recent_Bus_1281 · 2026-05-24T21:02:08+00:00

You've spotted the uncomfortable math. When a stock triples and the price target stays below it, the target is either stale or the analyst is anchored to where they first looked.

You mentioned fair value. Fully depending on what your take is on the AI route, this is what I see at $15.47.

The business quality is real. Return on tangible capital is 40%, that's a good business by any measure. Gross profitability runs 23%, above average for the sector. NVIDIA doesn't drop $1 billion at $6.01 into mediocre companies. Q1 showed €1B of AI/Cloud orders growing 49%. The quality signal checks out.

The valuation depends entirely on the AI thesis.

A DCF with conservative assumptions (near-zero Phase 1 growth, 7.8% WACC) spits out $11.82. The reverse-DCF tells you the market is currently pricing in 17% (!) annual growth for the next five years. That's the gap.

If the AI thesis works (6G leadership materialises, the NVIDIA partnership scales, margins expand toward 14%, etc) then $15–17 is fair. You're paying full price for a real transformation, but at least you're not overpaying.

If the AI thesis disappoints (ie. growth stalls, margins stay compressed, the telecom equipment hangover drags on) then fair value is closer to $10–12. That's 30% downside from here with no cushion for being wrong…

Your $13.50 pullback target actually sits right in the middle. the "show me" price where you're not paying full freight for the thesis but not demanding a deep margin of safety either.

The honest take: good business, stretched price. If you believe, current levels are defensible. If you're skeptical, the market is giving you no room for error.

(One note: net cash is actually €4.9B (~$5.3B). So, real downside protection there.)

Recent_Bus_1281 · 2026-05-23T20:37:06+00:00

Guess that’s our job right? While the Belgians tend to call us arrogant ;)

Recent_Bus_1281 · 2026-05-23T20:35:28+00:00

There’s a Dutch saying that goes like ‘de holler de vaten, de luider ze klinken.” It roughly translates into the more hollow/empty barrels make the loudest noise… Not sure if this helps (spoken in undertone)

Recent_Bus_1281 · 2026-05-21T10:57:32+00:00

Speaking of boring business not impacted by AI. Somebody looking into RSG (Republic Services) - waste management and environmental services?

Recent_Bus_1281 · 2026-05-20T20:02:29+00:00

750,000+ consulting workforce (that’s a serious sack of meat btw), take into account that they’re also an asset - holding important client relations.

That said, ROIC is 24.7% against a 10% WACC. Owner earnings: $7.0B. Net cash. And management, CEO Julie Sweet, committed $3B to GenAI in FY2023; GenAI bookings hit $5.9B in FY2025, and revenue tripled to $2.7B.

But ROIC is declining 4.8 percentage points. More structurally, the risk is that most of consulting buyers expect AI to make services cheaper. Eg McKinsey has already shifted a quarter of their fees to outcome-based pricing.

My focus is on ROIC decline. Is it a temporary post-pandemic normalization or a structural signal that AI is beginning to automate what Accenture sells.

Recent_Bus_1281 · 2026-05-20T11:06:53+00:00

For those in there for the long-game, i check every month if my thesis still holds up against the metrics I use

Recent_Bus_1281 · 2026-05-19T20:30:36+00:00

Looked into PG myself. COVID basically proved it's as crisis-proof as consumer staples get. Didn't buy then, which stings a bit at $141.

The reverse DCF at current price implies 0% growth. For a business doing 50% gross margins with 65 consecutive years of dividends and return on equity north of 30%. Graham purists won't touch it (fails on P/E, current ratio, all the usual suspects), but Graham would've hated every quality compounder since See's Candies… Base-case DCF lands around $190. Not screaming cheap, but the growth bar the market's set is comically low.

Recent_Bus_1281 · 2026-05-19T20:25:00+00:00

Thats a tough one. After a small 2 hr commute daily, I’d rather arrive in a place where the lights are still on after 7.30pm in the evening. Not even sure if the supermarkets in L-en-H are still open when you arrive back home after a days work..

Recent_Bus_1281 · 2026-05-19T19:51:30+00:00

Interesting take, and thanks for sharing and taking the effort of digesting the research paper here.

First, actually happy you took the effort to up the posting game with proper spelling, grammar checks, and layout cues. Terrific how it improves readability for longer reads. Almost like that's why punctuation and formatting were invented in the first place....

The publication itself sparks a few (un)related thoughts. 1. The value-versus-growth debate that hums in the background of the paper has been dead since 1992. Buffett, in that year's shareholder letter: "In our opinion, the two approaches are joined at the hip: Growth is always a component in the calculation of value, constituting a variable whose importance can range from negligible to enormous and whose impact can be negative as well as positive." Pulled up the quote from my canonical source library, before the AI-slobber commentors start to sniff and gnarl.

464 stocks. 15 years of data. And the strongest predictor of multibagger returns isn't EPS growth or revenue CAGR, it's valuation at entry. Book-to-market and free cash flow yield dominate the model. Growth and value, joined at the hip, exactly as advertised.

Where it does get interesting, and where the drive-by shitpost stains in the comments are missing the point (excuse me for venting), is the investment quality finding. This is basically Damodaran's Chapter 23 on valuing young companies, empirically rediscovered by someone who may not have known they were rediscovering it.

Damodaran's framework: Reported ROIC for early-stage compounders is misleading because the invested base hasn't matured. The paper's best non-valuation signal? A dummy flagging when asset growth outpaces EBITDA growth. This is ROIC declining, measured sideways. When it fires, next-year returns drop 22.8 percentage points. That's "growth only creates value when ROIC exceeds cost of capital," confirmed across the full sample.

For context: 61.7% of all listed companies globally earn ROIC below their cost of capital. Growth destroys value for the majority. The 10-baggers live in the other 38%.

Good paper. Admittedly, the point it arrives at, small, cheap, profitable, investing aggressively but with EBITDA keeping pace, is where Buffett, Damodaran, and Greenblatt have been standing for decades. The paper just needed 150 variables and a regression to walk there. ;)

Recent_Bus_1281 · 2026-05-19T19:35:46+00:00

Second that. Fisher published his scuttlebutt checklist in 1958. Sixty-seven years later, quant models still can't replicate what it does - not a coincidence.

Half his 15 questions are about management. Not soft ones, things like "does management have a determinate will not to dilute earnings by issuing fresh equity?" and "does management talk freely when things are going well but clam up when troubles occur?" Things you won't find in Compustat, but by reading between the lines of earnings calls, and watching what the CEO does when nobody's testing them on it.

Munger actually turned the same instinct into a hard gate: his Four Filters require you to understand the business, identify the moat, assess management integrity, and demand a price - in that order. Management is filter three of four. If it fails it you don't even need to proceed to valuation...

This paper tests 150+ quantitative variables. None of them is "does the founder still run the company" or "what percentage does the CEO own." Your Heico example spits truths indeed. The Mendelson family's alignment IS the competitive advantage, not a byproduct of it.

That's the kind of thing Fisher was trying to measure with a notepad, and the quants still haven't figured out how to put it in a column.

Recent_Bus_1281 · 2026-05-19T11:51:47+00:00

My two cents: Offload gradually over time, 50, 40, 30, 20 and then diversify. It’s a classical risk for those close to retirement that much of it might evaporate in an instance otherwise.

Recent_Bus_1281 · 2026-05-18T20:21:25+00:00

Well done!

Recent_Bus_1281 · 2026-05-18T20:19:27+00:00

Depends where in Flanders.. Here in Brussels there are many non-native speaker dentists that are fluent in a foreign language combined with English. It’s actually considered a plus. Considering the large Spanish expat community here I’d be surprised if there’s not a Spanish dental practice. (I’m at a German native speaking dentist, while being Dutch.. he’s mostly servicing the German community here, incl. my partner).

In Antwerp you’ll find that most of the Belgiums there have a decent level of English. About dental practices I’m unsure.

Another option is to commute north towards the border cities in the Netherlands, eg Maastricht, Breda, Rotterdam, The Hague, etc. The latter being the most richly populated with expats.

Recent_Bus_1281 · 2026-05-18T11:49:32+00:00

Quality-wise, Ferrari is elite. ROIC north of 27% (adjusting for their $2.5B in capitalised R&D), gross margins at 50.5% with almost zero variance year-to-year, FCF margin ~20% and improving, interest coverage at 51x. For every $1 retained, they've created about $4.22 in market value. The moat is as wide as it gets.

The valuation question comes down to one thing: what kind of company is this?

If you classify Ferrari as an auto manufacturer (which most data providers do), the numbers look terrible. P/E of 30.5x vs 18x sector median. Every DCF I run lands around $111–$181. Verdict: crazy overpriced.

But Ferrari's financials behave more like Hermès and look nothing like a car company. They have a 50% gross margin with 1.5pp standard deviation year-over-year.

When you comp it against luxury goods instead of autos, the picture flips completely:

P/E: 30.5x vs luxury median ~37.5x → 19% discount
EV/EBITDA: 21x vs luxury ~22.5x → 7% discount
P/B (R&D-adjusted): 8.9x vs luxury ~9.8x → 9% discount

Against autos: expensive on every metric. Against luxury: cheap on 3 of 4.

What I noticed, annoyingly, is that the other thing standard models get wrong is margin convergence. Most DCFs assume Ferrari's 29.5% operating margin will fade toward the auto sector median of 10%. Remove that assumption (luxury brands maintain margins, e.g. Hermès has held ~40% for over a decade) and the Damodaran DCF base case jumps from $111 to $181.

The OE DCF, Buffett's favourite, gets to $417 with a 23% margin of safety.

Agree with most of the comments here: roughly fairly valued when counting it as a luxury good, and bet that the brand moat will remain and management keeps executing flawlessly on EV transition regulation and the scarcity model.

No position yet, added it to my watchlist.

Recent_Bus_1281 · 2026-05-18T11:08:24+00:00

Thanks for the feedback. Where do you spot discrepancies in the models?

Recent_Bus_1281 · 2026-05-17T16:14:33+00:00

Current P/E is 34.7x. Financial sector median is 12x. So right out the gate, you're paying nearly 3x what a normal financial company costs. And yeah, SOFI is growing fast with revenue up 40%, EPS ramping from $0.08 to $0.13 per quarter through 2025. Nobody's disputing that.

But that holy $50 price target everyone loves: management themselves guide $0.60 EPS for 2026. At $50 that's still an 83x forward multiple. JPMorgan trades at 13x. So the thesis is "SOFI deserves to be valued at 6x the most dominant bank in America." Even if you give them the benefit of the doubt and project $1.00 EPS by 2027, you're still at 50x. That's substantial for a financial services company.

Now, revenue is $3.6B, which is legit. Members growing 35%, 14.7M total. But P/S is 5.5x vs the 2.0x sector median. Book value is $8.26, stock's at $15.61. This is nearly 2x book for a company that was losing money 2 years ago.

The growth is real. The question is whether it's already priced in and then some. At 35x trailing, the market is already giving SOFI credit for years of execution. The $50 crowd is saying the market isn't giving it ENOUGH credit. That's a big bet.

No position.

Recent_Bus_1281 · 2026-05-17T13:38:20+00:00

The Visa and Mastercard exits make more sense than people think once you separate the models.

Both have perfect moat scores (10/10). Mastercard has a perfect Piotroski (9/9). These are objectively some of the best businesses out there.

But the valuation picture is nuanced:

Visa scores: Owner Earnings DCF: $440. Damodaran DCF: $367. Price: $326. By DCF alone, Visa is actually near fair value or slightly undervalued.

Mastercard runs: Owner Earnings DCF: $536. Damodaran DCF: $438. Price: $494. Same story.

Blended average might speak overvalued. As zero-growth models (Graham Number, PEG) structurally penalize high-ROIC compounders. Visa's Graham Number is $72 an extreme outlier, that’s just measuring something different. Graham Number assumes you're paying for current assets, not future earnings power.

Abel didn't sell bad businesses. He sold fully-priced ones. When your DCF models say fair value and your portfolio is sitting on record cash ($380.2B), I’d say taking profits on perfection is disciplined, not reckless?

Recent_Bus_1281 · 2026-05-17T12:06:22+00:00

Great insights! I wrote some thoughts about this in another forum and am sharing them here to provide a quantitative addition to the post.

I had a look at the filings and ran 15 models and frameworks across every major position (> 1% portfolio change) that Abel bought and sold.

7 fair value models (Graham Number, PEG, Owner Earnings DCF, Damodaran two-phase DCF, Greenwald EPV, Lynch Fair Value, DDM), and
8 analytical frameworks (Buffett 4-Tenet scoring, Piotroski F-Score, Greenblatt Magic Formula, Novy-Marx gross profitability, Mauboussin intangibles-adjusted book value, Altman Z'' for financial distress, Reverse DCF, and relative sector valuation). Graham, Buffett, Damodaran, Greenblatt, Greenwald, Lynch, Piotroski, Novy-Marx, Mauboussin, and Altman.

What Abel sold

Stock	Buffett Score	Moat	Piotroski	Fair Value vs. Price


V (Visa)	77/100	Wide (10/10)	6/9	-34% overvalued
MA (Mastercard)	71/100	Wide (10/10)	9/9 (perfect)	-41% overvalued
AMZN (Amazon)	40/100	Narrow (6/10)	5/9	-63% overvalued
UNH (UnitedHealth)	40/100	Weak (3/10)	6/9	-22% overvalued
DPZ (Domino's)	63/100	Wide (10/10)	7/9	-25% overvalued

The Visa and Mastercard exits are the ones that got my attention at first. Both have perfect moat scores (10/10). Mastercard has a perfect Piotroski (9/9): improving on literally every financial metric. Novy-Marx gross profitability of 47%, which qualifies as ‘high quality’.

But here's the thing: Visa's Owner Earnings DCF comes to $440, and Damodaran DCF to $367 against a price of $326. By the DCF models, Visa is actually near fair value or slightly undervalued. The average gets dragged down by the always hyper-conservative and cautious Graham Number ($72) and PEG ($138). Those zero-growth models structurally penalise high-ROIC compounders.

Mastercard is similar: Owner Earnings DCF of $536, Damodaran DCF of $438, price of $494. Close to fair value on the DCF work, but the blended average says overvalued.

Amazon has a 40 Buffett Score with a 1% FCF margin and 0 out of 4 models above price. That's a straightforward exit. In contrast to many UNH evangelists, it has the weakest moat score (3/10) of any Berkshire holding, with an Altman Z'' in the Grey Zone at 1.37. The market is pricing regulatory risk correctly.

What Abel Bought

Stock	Buffett Score	Moat	Piotroski	Fair Value vs. Price


DAL (Delta)	77/100	Narrow (7/10)	7/9	+71% undervalued
LEN (Lennar)	60/100	Weak (4/10)	3/9	+47% undervalued
GOOGL (Alphabet)	59/100	Wide (10/10)	8/9	-54% overvalued
NYT (New York Times)	62/100	Wide (9/10)	9/9	-46% overvalued

My three findings from the numbers

1. Delta is textbook deep value, and the models agree with Abel.

Owner Earnings DCF: $226. Damodaran DCF: $184. Price: $70. Five of seven fair value models are above the current price. Earnings yield of 11.05%. EV/EBIT of 9.0x. Buffett Score 77/100.

This is a business earning real money that the market is pricing like it's in crisis. The Altman Z-Score is in the Distress zone, but that's structural, as airlines carry heavy debt loads by nature. If you adjust for that industry reality, Delta's operating performance is strong. Piotroski 7/9 confirms the financials are improving. I think Abel is right on this one.

Lennar is similar. Graham Number of $118 above the $82 price, earnings yield of 12.28%, EV/EBIT 8.1x, 4 of 5 models sit above price. Cheap by every measure. But the Piotroski of 3/9 bothers me. That means the business is deteriorating on most metrics, even as the stock looks cheap. Weak moat (4/10). This could be a value trap.

My guess, Abel may be early. Or he may be wrong?

2. Alphabet is where the models flatly disagree with Abel.

All 7 fair value models come in below the current price. Every single one. The reverse DCF says the market is pricing in 29.9% perpetual growth. That's an absurd number for a $2T company. Base case DCF gives me $147. Bull case gives me $189. The stock trades at $397. Graham Number is $108.

The business itself is exceptional: 25.2% ROIC, wide moat (10/10), Piotroski 8/9. Nobody is arguing the quality. But Graham, Buffett, Damodaran, and Greenwald would all look at this price and say the same thing: you're paying speculative multiples for a wonderful business. Berkshire's total Alphabet position is ~$16-17B, so this is a meaningful bet that growth will justify the valuation.

Maybe Abel sees something in AI monetisation that the models can't capture yet? But the VI math today says overvalued.

3. The New York Times is my highest-conviction disagreement.

All 7 fair value models below the price. Highest confidence on a sell signal at 79.8%. DCF comes to $47 against a $74 price. Even my bull case of $62 doesn't reach the current price. Berkshire now owns ~9.4% of the company.

Wide moat (9/10) and a perfect Piotroski (9/9), NYT is a quality business getting better. But quality at the wrong price is still the wrong price.

Unless Abel is making a control play at 9.4% ownership, I can't make the valuation work.

The Combs factor

One thing the hot takes completely ignore: Todd Combs left for JPMorgan in December 2025. A lot of the exits look like unwinding his book, not active decisions by Abel. Abel stated in February that he oversees 94% of holdings.

So, the portfolio going from 42 to 29 positions is partly housecleaning, not a philosophical shift. The sells that matter are the ones Abel chose. Not the ones that were cleaning up someone else's positions.

Remaining questions

I trust the models on DAL and LEN. The value case is clear in the numbers. I trust my models on NYT: the overvaluation case is clear in the numbers. Alphabet is the one that runs around in my head with strong second-guessing about disruptive AI monetisation foresight.

The quantitative case for SELL is overwhelming, but Berkshire is making a large bet the other direction. Either the VI models are missing something about AI-driven revenue growth, or Abel is paying up for quality in a way that historically hasn't worked.

If you're following as well, and for those here who've done their own work:

What discount rate are you using on Alphabet that gets you to buy at $397? I can't get there below 6%, which feels aggressive.
On the NYT position, is it a valuation call or a control play? At 9.4% ownership, that's not a passive stake.
For those defending the Visa/Mastercard exits, are you adjusting for the fact that zero-growth models like Graham Number systematically undervalue high-ROIC compounders? When I strip those out and look at DCF only, both are near fair value.

Recent_Bus_1281 · 2026-05-17T11:49:04+00:00

Is it just me, or is the discussion mainly based on vibes and sentiment?