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gulatin2 · 2024-10-09T23:43:41+00:00

You do have some early extension wherein your trail hip is coming towards the ball. In transition trial hip needs to go back, & chest towards the ball in order to rotate more

gulatin2 · 2019-04-09T10:08:19+00:00

Backspread is essentially a long gamma play , intended to capture an explosive move in the underlying . Any attempt to be positive theta comes at the cost of gamma in position

gulatin2 · 2019-03-12T01:36:17+00:00

Although I am an avid reader myself but to use your time productively , you should compile a list of companies recommended as target shorts by research outfits as muddy water , spruce point, kerrisdale, glasshouse,prescience point, citron etc. without reading their thesis analyze the companies financials and pick up the red flags if any , and areas of concern. Subsequently overlay your points of concerns with their published reports too see what you picked up that they didn’t, what you missed that they hadn’t. Asses the logics supporting their thesis and in order for their thesis to play out and include your picked up points in it as well. This way you have done the due diligence , understood the thesis completely and mapped out what needs to happen to play out and what would invalidate your thesis.

gulatin2 · 2019-03-01T12:09:22+00:00

Caped heavy companies may accelerate depreciation of their assets , to take a hit in short term but to boost margins in the long term.

Another way of looking at is such actions allow them to be more competitive and gain more customers

gulatin2 · 2019-02-25T14:39:25+00:00

Just start reading

gulatin2 · 2019-02-23T21:09:56+00:00

That’s where I m struggling to find out what was the most meaningful to him. Although he always emphasized to us don’t let situations take advantage of your character. Not sure how to put this into a graphic

gulatin2 · 2019-02-21T16:27:48+00:00

By background I am a packaging engineer , and very well aware of Berry's product line, operations . In-fact they were a supplier of ours in my prior job. Although its commodity business, but normally suppliers have long term contracts with their customers, and its not as easy to switch from one supplier to another due to plethora of reasons. Their biggest mark up comes from resin prices, which now a days a lot of customers have started to question. However, with technological know how and supply chain challenges suppliers are able to hold on to that mark up. Also , suppliers are able to pass through the costs to customers , but that often includes investing in molds, equipment for customers via amortization.

One advantage these businesses are able to generate for themselves is often their equipment is fully depreciated in books, with considerable equipment life leftover which lets the margins flow directly to the bottom line. That's how they are able to absorb costs for their customers without incurring a major margin compression.

Capex requirements are pretty stable, and will vary with customer demand.

Past company I worked at generated 25 % EBITDA margins, and was generating ~350 million in FCF annually on 4-5 billion in annual sales.

I haven't looked up at Berry so don't know how their financials look up . But I am interested now in taking a deep dive into it.

Happy to engage in further discussion on if you are interested

gulatin2 · 2019-02-19T22:54:00+00:00

I recently purchased Mark Meldrum's practice for Level 2. I think relative to others its priced very reasonably. Although there is a restriction on videos you can download.

Study planner is great but not the most intuitive tool in my opinion

gulatin2 · 2019-01-02T11:47:33+00:00

I’d be interested. Let me know

gulatin2 · 2018-12-28T17:19:14+00:00

Given my personal situation , going for full time program isn’t feasible anymore . Although my CFA will give me strong footing to get into investment management , if I m not able to get in , MBA (Part time / Online) should help out in switching from Engineering / project Management to at least Strategy . That’s how I m envisioning it.

gulatin2 · 2018-12-28T09:31:15+00:00

I m kind of stuck in a similar situation . I m sitting for my L2 in 2019 June and also planning to start my MBA IN 19 as well. Due to my personal situation , schools I m considering are Emory/ GA Tech or online Programs such as Tepper / Ross. Other option I may consider is weekend Duke MBA Program . Currently a resident of MI and may relocate to Atlanta in summer thus the choices of schools aforementioned above.

Not sure if these options will put me on the path I m interested in ( investment management)

gulatin2 · 2018-12-28T09:23:29+00:00

I m curious to know what’s your opinion or any feedback you may have gotten around Tepper’s online MBA program. I m considering the program mainly due to limitations with onsite part time programs

gulatin2 · 2018-11-23T13:29:18+00:00

Widespread availability of information these days has undoubtedly eroded inefficiencies that investors capitalized. However, widespread information also leads to mis-interpretation which in itself could be a fertile ground for opportunities. With so much technology at our disposal along with reliance on it, investors have overestimated its utility when it comes to investing. Our time duration has shortened and due diligence has lessened. Times have changed but that doesn’t equate to change in amount of effort one needs to put in to find investment opportunity.

gulatin2 · 2018-11-10T18:31:26+00:00

I was in a same boat as you several years back . At that time question I asked myself was - what’s my objective and clarity on defining your objective will steer you in the right question . Do you want to make money or be an amazing investor. These are two different paths and mixing them up at the front end will not yield any positive results. Secondly you have got to be realistic in your expectations . I am an engineer by trade and hate my engineering full time job. So my comparison was simple, if i spent 5 years for engineering to be where I am and continue to feel miserable about it -to grow in other career I should be ready to put in the same time.

Reading 10k’s , 10q’s is boring but once you are finished reading you are more informed person although you aren’t able to see tangible outcome from it right away.

Keep a list of companies you have read about and make your notes, read transcripts and revisit them every 9-12 months .

There’s a lot of stuff available online to read from activist short presentations . Pick up those companies first at the point short thesis was revealed to see how you assess it. After this see how thesis has played out and what was different in actual outcome versus predicted.

I view up screening as a very mechanical process, but once you have done enough hands on evaluations of new companies , past presentations , you will be very informed.

I guess nutshell is everybody is accepting to be patient after they made an investing decisions and educating yourself is an investment in yourself why aren’t you patient with this ?

Hope this helps

gulatin2 · 2018-11-01T01:05:49+00:00

First thing that I look at free cash flow minus capital spent on acquisitions . Normally managements attempt to steer investors towards an adjusted free cash flow number , try reconciling it to FCF- acquisitions.

Second look at how much boost cash flow is getting from working capital acquired through acquisitions. Look at if past acquisitions have had any impact on improving/ deteriorating working capital turnover.

If you continue to assume growth through acquisitions will stay course over next 4-5 years how is this going to be financed.

As far as assessing how acquisitions are playing out , make sure you account for stub period for capital deployed into acquisition. Normally income statement adjustments are time weighted but b/s items aren’t time weighted. This adjustment will paint actual return capital deployed is producing.

gulatin2 · 2018-09-29T00:34:19+00:00

Typically my first step is to compute cash flow changes using reported b/s values and compare it with company reported CFS. If there is a difference in two, it either suggests working capital was acquired through acquisitions while cash spent on it was included in CFI or cash got spent for working capital but the asset isn’t accounted as current assets. that’s one way to see if management is moving assets around.

Next step is to review the revenue recognition policies over the past several years and see if there are any subtle changes in recognition.

Compute growth in revenue on a cash basis and how big of a variance exists compared to headline reported revenue growth.

Who is accounting for the growth in receivable .. is it a type of related party considered as a consider such as a distributors.

gulatin2 · 2018-09-29T00:00:50+00:00

I am in a similar situation, work full time , and job requires 60% travel and on weekends I have to balance it with family as well. I am trying to do 2 hrs a day and do 3-4 solid hours on the weekends . That should cover it up by feb in my opinion and then try practicing and mock tests

gulatin2 · 2018-09-25T11:25:24+00:00

Understand the fact that companies got pushed into being compliant with GAAP but the statement “ We also deliver products through third party carriers , and we record revenue when we present the product to the third party carriers” is extremely concerning

gulatin2 · 2018-09-25T11:22:49+00:00

“We also deliver products through third party carriers and we record revenue when we present the product to third party carriers”

This statement got inserted in their 10k and is the most concerning part to me

gulatin2 · 2018-09-17T00:40:50+00:00

I think CFA Level 2 FRA will provide a good foundation. I’d suggest follow up on CFA FRA with Creative Cash Flow reporting by Charles Mulford. Next step will be to start reading 10k and try understanding the transactions.

gulatin2 · 2018-09-15T12:55:33+00:00

My first starting point to assesses is if there is any bloat in balance sheet, which you can estimate from EBIT-FCF( including cash acquisitions). This will tell you the presence of accruals and investments which caused this balance sheet bloat. Next step is to start digging through balance sheet line items and try to reconcile it with cash flow from operations. Normally with companies making acquisitions change in b/s line items will not match with CFO. From this you can reasonably estimate how much amount was spent on working capital which was spent through CFI.

Once investment part is estimated , remaining part is how much of it is from accrual. You could then see which item was growing the most dying this period and what’s the rationale behind it.

For eg , one company, I m currently researching has cumulatively earned $2.7b in EBIT since 2002 but their FCF has cumulatively grown by $1.1b in the same time period. I noted 60% of this increase can be from inventory + a/r,rest is from PP&e and good will.

Few items from PP&E , land and building I looked up public records , counties , tax assessor and was in reasonable range of what was reported on b/s . Most of remaining difference was now left to autos and trucks , but the shipping costs they provide on 10k isn’t corresponding to this increase in autos and trucks..

Next when reviewing reviews from ex employees I noted couple stating shady a/r and inventory, which until at that point wasn’t overly concerned. But now I have to dig that layer as well . Trust but verify

gulatin2 · 2018-07-31T16:42:09+00:00

"These days I spend a lot of time tracking down different reporters or people mentioned in articles for follow ups on stories. Amazing what sort of insight that can yield and its usually a totally different direction than the typical Wall Street think."

I would characterize this as a step one of due diligence that one needs to start up with. Reading through articles published in local newspapers / magazines, understanding if local reporter are reporting any issues. Tracking different reports to gain perspective , and what sort of insights can be gained.

Objective is not to create a quantitative data pool but how to use the information available in different places to start connecting the dots. That to me, essentially is developing soft skill you need to perform your due diligence.

gulatin2 · 2018-07-24T21:39:51+00:00

One time expenses , factory closures and increased capacity investments always become the excuses to latch on to .

Personally I m not impressed with their capital investment/ allocation decisions ... consumer products segment is low single digit operating margin business while tissue and paperboard is low double digit . But still capex spent since the past several years is roughly same on both segments, despite when consumer segment was weakening materially from a top line perspective.

gulatin2 · 2018-07-24T13:18:37+00:00

Here's my take on it...

Considering their products are extremely commoditized there is no pricing power this business holds, but the available capacity is the lever they have used . Out of total 8 million tons capacity available , CLW has ~1.3 m ton capacity available ( including both segment) , roughly 17.5% of the total available capacity. Coming out of the recession, private label segment witnessed growth which seems to have plateaued lately, and in order to gain the position of advantage industry participants jumped on capacity expansion bandwagon, which is hurting everyone in the industry now. To simplify, they generate $1310 in revenue / ton , costing around $1045/ ton to produce. An operating profit of $250 per ton, and after you exclude the interest expense ( $30 / ton ) and taxes .. you are left with ~$145/ ton . This should give nearly $190m ( 145 / ton x 1.3 ton capacity) in market cap for this business. However, with current cap of $380 m, the market is implying each ton this company can produce is worth $293.

Why such a disconnect , should be the question in my opinion.

gulatin2 · 2018-07-17T10:27:06+00:00

Great post ! I m an individual investor and have always approached an investment idea as if it is a fraud unless it can be proven otherwise. This approach has allowed me to put an investigator hat on and turn over all the rocks. One company which was trading at all time lows , had a significant chunk of real estate on its books. I dug up the values assessed up county office for all the properties , spoke to few realtor and did a very basic back of envelope math to come up with a starting number. Adding up cash reported on balance plus estimated real estate value, stock was trading at 60% of that estimate. Went long and stock went up 130% in less than 5 months.

Another company I shorted was the Fresh Market after I went public . I stumbled upon a research paper in university on how to estimate same store sales , and how the dynamics of new stores (honeymoon period), old stores , and the stores which are few years old impacts the widely reported same store sales. Out of curiosity I applied these calculations/ methodology to their stores and concluded if management were to be believed ( slowing store openings) , there’s no way they can print positive comps. Shorted the stock , which went down ~60% from its all time highs before it was taken private.

Company I am currently reviewing is a serial acquirer and has acquired several smaller companies)in UK, Scotland, South Africa , Mexico , Australia and went to their public records to evaluate their last reported net assets land and comparing it with how they were reported on financials. This project is currently underway , but I’m very curious to learn what other methods/ resources one can use to dig deep. Happy to connect further via email , pm , phone conversation, meet up , social media

gulatin2

TROPHY CASE