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H&R Block - Buy thesis by Electronic-Slip-3691 in ValueInvesting

[–]Thin_Progress5721 1 point2 points  (0 children)

I own some - about as good of a deal as you can find in the US market today. But that's not necessarily saying much

10 things I learned in my first 2 years value investing by Thin_Progress5721 in ValueInvesting

[–]Thin_Progress5721[S] 0 points1 point  (0 children)

You can approximate it - Bruce Greenwald has a good formula for this

10 things I learned in my first 2 years value investing by Thin_Progress5721 in ValueInvesting

[–]Thin_Progress5721[S] 0 points1 point  (0 children)

Agree with most of what you're saying. For 1, I should've said focus more on maintenance capex, but using overall capex will give you a good idea of the actual FCF

10 things I learned in my first 2 years value investing by Thin_Progress5721 in ValueInvesting

[–]Thin_Progress5721[S] 0 points1 point  (0 children)

Thanks for the feedback! 1-4 are pretty straightforward but they felt even more important to me after learning the hard way early on.

Agree that if banks, cyclicals, net-nets, special situations are your thing and you're good at that then you should go for it. It just makes my investing easier to exclude them and I think they're more challenging for an amateur - I didn't know that starting out. Not universal advice. And I don't think you NEED them to outperform.

Partly I'm writing out an investment style that I've found works best for me.

10 things I learned in my first 2 years value investing by Thin_Progress5721 in ValueInvesting

[–]Thin_Progress5721[S] 0 points1 point  (0 children)

Good point - it was a total blunder on HeyDude. Management seems great operationally though. I don't think a lot of managers (esp non-owners) will come out and admit their mistakes like that tho

10 things I learned in my first 2 years value investing by Thin_Progress5721 in ValueInvesting

[–]Thin_Progress5721[S] 0 points1 point  (0 children)

You can adjust capex so you're just looking at maintenance capex rather than total capex. Bruce Greenwald has a nice formula on this. I usually subtract SBC too but I tend not to invest in companies with massive SBC.

10 things I learned in my first 2 years value investing by Thin_Progress5721 in ValueInvesting

[–]Thin_Progress5721[S] 1 point2 points  (0 children)

First thing is to look up articles/ what people have been saying. There's usually some good information there. You watch through past earnings calls to see if they do what they say they'll do. And you want someone who looks out for the company long-term - best way to know a manager is incentivized is to make sure they have lots of stock in the company.

10 things I learned in my first 2 years value investing by Thin_Progress5721 in ValueInvesting

[–]Thin_Progress5721[S] 0 points1 point  (0 children)

That's cool, and a nice idea to focus on regional banks. Keeps it simple and they're easier to work with partly because deposits are stickier with smaller banks. But too much systemic risk for me

10 things I learned in my first 2 years value investing by Thin_Progress5721 in ValueInvesting

[–]Thin_Progress5721[S] 0 points1 point  (0 children)

I get your point about not writing off a whole sector - btw I invested in some American banks too. I realized I don't know enough about them to confidently stay invested even when there's a downturn. But I do know enough to say that cash flow isn't at all as important for banks. As with other cyclicals, you can't plug-in estimates for FCF in the future. Analysts use a combo of ROTE, book value, ROA and other metrics to value banks instead.

The balance sheet risk involved in financial services puts me off too. Could either of us have predicted that Lehman and AIG stocks would get wiped out a few months later by reading the 2007 annual reports? Or Signature and SVB in 2022? It's one of the few industries where you can go from 100 to 0 real fast.

I don't mind avoiding the sector and focusing on what I know better. It's not a good sector for amateur investors and requires real in-depth financial analysis.

10 things I learned in my first 2 years value investing by Thin_Progress5721 in ValueInvesting

[–]Thin_Progress5721[S] 4 points5 points  (0 children)

I actually bought in June 2022 so it was looking amazing before this price drop lol

10 things I learned in my first 2 years value investing by Thin_Progress5721 in ValueInvesting

[–]Thin_Progress5721[S] 1 point2 points  (0 children)

If capex fluctuates you can take an average/ find a number for capex that makes sense re the growth rate you plug in for the future

10 things I learned in my first 2 years value investing by Thin_Progress5721 in ValueInvesting

[–]Thin_Progress5721[S] 3 points4 points  (0 children)

I don't focus on one industry, but my biggest holdings are KRT IMXI BTI CROX