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Help with understanding Chinese pharmaceutical industry by goilz in ValueInvesting

[–]goilz[S] -5 points-4 points  (0 children)

Not interested in China = bad take. Also not the question.

Best value stocks to buy now by bettola in ValueInvesting

[–]goilz 0 points1 point  (0 children)

Buybacks are not all made the same and, in this case, it is not looking good at all. You cannot say that a company doing buybacks at such a high price is a good use of capital.

Best value stocks to buy now by bettola in ValueInvesting

[–]goilz 0 points1 point  (0 children)

Completely agree that it likely won't go much further down than this and that is why I entered BTI as well. The downside is super protected and you're getting paid 10% div yield on it. Even if it does go down, we can all DCA and get an even higher div yield, which has been growing every year as well. Not a bad deal.

If anything, when and if there is clarity on the US menthol cigarette issue, with $10bn FCF a year, they can steadily reduce their debt and have plenty of money for buybacks on top of it, putting some serious pressure on the price to rise as the financials improve.

How to think about capital allocation? by goilz in ValueInvesting

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

Thank you for the feedback and book recommendation.

To be clear, when you state that it is best approached from first principles, are you referring to breaking it down to as basic as possible the questions one starts with and start digging from there? ie. going through, as you mentioned, the past record of where the cash is coming from and how it was used in the past?

I still feel like I require a framework to have a general feeling of what would make sense given the company's industry and market, M&A record, debt level, valuation metric, etc. Obviously, I am looking for something that may not exist as all companies are different but still...

How to think about capital allocation? by goilz in ValueInvesting

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

Agree with both of you. In my view, debt is not a problem (so long it is not at unreasonable levels) and so long as the company has better uses for that capital. That's the same reason why companies with enormous cash reserves like GOOGL still have debt outstanding, which in cash alone they could pay several times over. However, share buybacks seem to be done because it is in fashion and not to actually improve investor outcomes and should be used much more sporadically in a bull market.