Tag Archives: Hedge Fund Strategies

Business Articles, Investing, Investment Philosophy, Learn About Investing

Qualitative Growth Investment Philosophy

This post will share and demonstrate what is written and communicated inside of Phil Fischer Book which is the origin of Qualitative Growth. A investors greatest concern should be managing Risk. If you manage to understand your business and all it’s unique qualities while considering Risk? It’s likely you have stumbled upon the foundation of Qualitative an Growth Investing Principles.

Asking detailed hard questions. Example: When we buy or invest in any company or security? It is only natural to ask detailed educated pointed questions and do some due diligence before we make that investment. And if we add in the fact we are not seeking dividends? That is basically the foundation of Phillip Fisher’s Investment Philosophy Growth Investing. Let’s get into some examples of questions and details.

Charlie Munger may he rest in Peace long ago when Berkshire was growing. Convinced Warren Buffett to begin considering and partially adopting the Phil Fisher philosophy of investing to implement into the Berkshire’s strategy. If I remember correctly this video should help. Warren Buffett starts by sharing Phil Fisher’s Book is one of the best Books on Investing.

Who is Investor Phillip Fisher

Philip Arthur Fisher was an American stock investor best known as the author of Common Stocks and Uncommon Profits, a guide to investing that has remained in print ever since it was first published in 1958. Mr. Fischer basically began using his insights as a Investment Philosophy. Example, assume If a stock is going to outperform the market longterm? In this case it does not matter what the current price is! Becuase the performance over time will outpace the price volatility and increase if you have done your due diligence and leg work correctly.

Mr. Fisher focused on Qualitative Fact finding and positive assumptions backed by verifying tangible information. The fact he did such heavy investigating is that his findings may lead to a Stocks growth and having the right information for his investment fundamentals over the longterm.

Put another way? Qualitative investing requires assumptions about the future that are made on the basis of quality. An analyst will make judgements on the prospects of the stock based on the qualitative attributes of the company.

Mr. Phil Fisher career began in 1928 when he dropped out of the newly created Stanford Graduate School of Business (later he would return to be one of only three people ever to teach the investment course) to work as a securities analyst with the Anglo-London Bank in San Francisco.

Growth & Qualitative Investing

Mr. Fisher wrote in his book detailing a basic checklist that helps investors sift and sort through Stocks and Investment Opportunities using Qualitative and a checklist of sophisticated questions that arrive at a “YES,NO or Maybe” conclusion. This strategy of investing gave birth to Growth and Qualitative Investing.

Asking Questions that helped Mr. Fisher?

  • Does the company have excellent management teams?
  • How is the Business’s Qualitative Fundamentals on the Balance Sheet rather than using ratios?
  • Stock Price is not evaluated. So if a Stock is Expensive currently Fischer’s reasoning looks towards the long term growth of the business which will outperform short term stock pricing models.
  • If a investment fails any of the questions on the Checklist after investing? Mr. Fischer makes it a point to move on selling the investment.
  • Understanding the Business and what makes the business work? Valuable question.
  • R&D Spending? If target company is outspending and outperforming competitors? This is a good indicator or qualitative fundamentals at work within the business.
  • What makes the Business grow? Very important to understand.
  • Does the Business have repear customers?
  • Business profit margins must be healthy.
  • Does the Executive Management have outstanding community relations?
  • Is the cost analysis and quality controls of the business products and services accounted for? Will this share information about operations?
  • Is the Companies Management Integrity Unquestionable?
  • Would you want your family to work in this business? And does the community value the Business’s presence?
  • Is there room for growth in the space and is the company’s management providing information about current industry forecasts?

These are all questions Mr. Fisher has shared in his Book written in 1958, which have withstood the test of time. And yes many of these questions have evolved with time into my own use. And in all fairness most of these assumptions or questions still very much apply and are used today by Institutional Investors and Professional Investors who manage Fund’s. You may recognize some of the fellow Buffet followers who use these methods of Investigating Investments. Professional Investors and Fund managers like Guy Spier, Christopher Tsai, Li Liu, Chuck Akre, Seth Klarman, Peter Lych, Bill Ackman and many more.

Conclusion

In Conclusion for today’s post on learning more about Growth or Qualitative Investing Philosophy, we must look at what works in the markets as legitimate Investment Philosophy and what doesn’t work. If you consider most individuals investment experience and ability to mitigate and consider investment RISK. Most retail investors who day trade do not have Advisors. This ends up making them lose money and treat the Stock and Credit Markets like a Casino. Their goal is always the same. They are hoping and praying that twenty dollar stock they just bought with their life savings will rise in the next week or few days. But this is absolutely not how the Professionals invest. Nothing about investing can be done from feelings or judging ones own intuition! It takes serious investigation and professional trained discipline.

Individuals who don’t use any Investment Philosophy will likely be humbled by the sudden unemotional Market Volatility. Magellan Fund Manager Peter Lynch loved volatility for this exact reason. He used volatility to invest as a Value Investor during times were Fearful. So in all fairness? I think it’s safe to say after reading the Book by Mr. Phil Fisher the more sophisticated detailed and creative questions we ask about a Investment opportunity? The better off we will likely be years down the road. Thanks for reading everyone Please do read Mr. Phil Fisher’s book. Uncommon Stocks and Uncommon Profits.

I appreciate you reading my Post. It was a blast preparing this for you. And to my fellow Professionals who do run Investment Funds and use Mr. Fisher’s Investment Philosophy? Please do drop me a line to correct anything I may have written or shown in this post that is incorrect. I am doing my best with what I have. Thank you. JS

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Business Articles, Corporate Finance, Finance Articles, Hedge Fund Articles, Value Investing

How to Calculate a Stocks Intrinsic Value

Just like with any profession there are professionally instructed leaders of industry and amateurs. That is the same for Investing. But you should know that if you are not read up on the latest value investing procedures or if you haven’t formed your own personal checklist before investing in a Company or stock? You likely are make big mistakes along the way. But with today’s post on “How to Calculate a Stock or Company’s Intrinsic Value?” This will begin giving you a foundation or basic education to thrive and become successful in Investing.

I see so many people who do let emotions control their investing strategies and future. They are bound to lose almost everything. It’s just like If your a player in the Stock Market using only your gut and other people’s money? Your a borderline Criminal, Moron and most likely a gambling Day Trader at best. And should be taken behind the Building strung up by your ankles smothered with cheap grape jelly packets from the cafeteria and left for the Bears. These day’s Quants run the show. But there is good news! This post is for the bonafide new up and coming Investors wanting to reach that next elite level in Investing. If you have ever wondered where the like’s of Warren Buffet, Seth Klarman, Howard Marks, and other Value Investing Legends get there super secret knowledge from? This post is definitely going to provide you with a foundation of how to Calculate Intrinsic Value of a Stock or Discounted Cash Flow (DCF) of a Business.

So stay tuned…This is a post you do not want to miss. Even if it is Mathematics and heavy Calculations.

Hedge Fund Managers

If you plan on opening your own Hedge Fund Shop in the future or if your a Everyday Sophisticated Investor that plans on using Calculations and Mathematics instead of Gambling and Speculating? Your going to want to lay a foundation around Value Investing using Benjamin Graham’s teachings and procedures. So it’s absolutely vital you read Benjamin Grahams “Intelligent Investor” Book. Question. What makes a Hedge Fund unique to calculating a Stock or Companies Intrinsic value or Discounted Cash Flow? Well for starters Hedge Funds typically focus on trading on the stock market. But before I begin explaining Hedge Funds in depth like so many Financial personalities around me “I have extreme ADD sometimes.” LOL So maybe I should keep on track.

What is Intrinsic Value?

The intrinsic value of something is said to be the value that that thing has “in itself,” or “for its own sake,” or “as such,” or “in its own right.” Extrinsic value is value that is not intrinsic. Many philosophers take intrinsic value to be crucial to a variety of moral judgments. STANFORD BUSINESS ENCYCLOPEDIA

If your going to understand Intrinsic Value of a Business or Stock you need to understand that the Market is just voting for the day what they price is of a Stock. It doesn’t actually value the company. We use Intrinsic Value to evaluate and make a opinion to analyse if the Company or Stock we are looking at is undervalued and a bargain. If it is not a bargain and not undervalued? Then we keep looking. What is the formula to calculate Intrinsic Value? Before I answer this basic question you must know I highly recommend you read Benjamin Graham’s “Intelligent Investor” Book. It’s Warren Buffett’s bible of sorts. But first we need to lay out to terms.

Intrinsic Value Formula and Margin of Safety. These Topics are incredibly important for making a educated and professional judgement on a company’s future. And knowing if it is worth investing in.

By the way did you miss Berkshire Hathaway’s 2022 Annual Meeting? WATCH & READ HERE!

How to Calculate Intrinsic Value of a Business?

Click For Link To Website

#1 – Intrinsic Value Formula of a Business

Mathematically, the intrinsic value formula of a business can be represented as,

Intrinsic value Formula 1
  • where FCFEi = Free cash flow to equity in the ith year
  • FCFEi = Net income i + Depreciation & Amortisation i – Increase in Working Capital i – Increase in Capital Expenditure i – Debt Repayment on existing debt i + Fresh Debt raised i
  • r = Discount rate
  • n = Last projected year

Since this formula is mathematically difficult for ADD individuals like myself who struggle with on the page formulas. I would like to make this as easy as I am able for you. Here are a few videos that go in depth. Watch the Videos below to explain the calculation and models in action. This will begin giving you a foundation to grow.

BENJAMIN GRAHAM’S INTRINSIC VALUE CALCULATION MODEL EXPLAINED

Watch this Video below for a in depth explanation by this legendary Value Investor who is Charlie Mungers Bridge Playing Side Kick Mr. Mohnish Pabrai. Mr. Mohnish Pabrai is sincerely a fantastic guy. Mr. Pabrai has been very generous with the lessons and information he gives to up and coming Value Investors/Academics. And for this reason I need to list him in my blog. The way he lay’s out all his information and lessons makes it digestible and simple to newer people like us. His resources for all Value Investors is a must see, and you should watch his Youtube Channel and Videos. 100%

Discounted Cash Flow Model

When evaluating a Company’s (FCF) Free Cash Flow currently and for the next 10 years you need to include a Average Growth Rate and also consider what your “IDEAL” return rate is that you want to include within the DCF Model. For a more easier way of explaining this I need you to watch this video below. It will give you a better understanding of “How to calculate the DCF of a Company”.

Margin of Safety

In conclusion of today’s post it seems like it would be worth it to include what I had touched on earlier, “Margin of Safety”. If you are a Hedge Fund Manager or Value Investor, or everyday Accredited Investor knowing and calculating a Company’s Intrinsic Value is incredibly useful when analysing if it is a Investment you want to make. However even though you do find the Value of a Stock or Company you need to add an extra layer of Safety to the strategy before deciding to invest. The way you do this is by adding a Margin of Safety. Benjamin Graham’s Book will give you more info on this. But if your really a Pro? You will likely want more of a tactical explanation, strategy and guidance. So I highly suggest you read Mr. Seth Klarman’s “Margin of Safety”.

To end this chapter of todays very long post, it’s ideal if I say this in conclusion. Even though you may calculate the Value of a Company or Stock? You must make a educated professional judgement if the company warrants a long term investment. Many everyday investors don’t have the temperament nor experience within Value Investing to make these correct calls. But with time and learning to be Risk Averse by, with and through failures? You will learn. I wish you all happy hunting and I do hope you learned a bunch from today’s post. It’s long over due. And let’s make something clear up front.

This post is just a short taste of what Calculating Intrinsic Value is all about. The topic and subject is so deep and wide this post is nothing compared to the expertise out there in the market. If you are a Beginner or moderate investor? Please find a mentor and study the greats/legends like Warren Buffett, Charlie Munger, Bill Ackman, Mohnish Pabrai, Howard Marks, Seth Klarman and others. Then you will begin to see “How to use this post as a spark of which direction you should go to invest in your education, experience and financial gain.”

Godspeed
JS

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Business Articles, Hedge Fund Articles

Bill Ackman’s Eight Investing Principals That Make It Rain!

If your a serious Speculative Investor? You will definitely want to read todays post on the Eight Investing Principals Wall Street Hedge Fund Manager Bill Ackman uses as a foundational Business strategy.

Most Wall Street Investors do lack depth of strategy and emotional Temperament. So it’s vital you study successful Fund Managers and reengineer or use their strategies. Mohnish Pabrai is always laughing while saying “He is a Shameless Copier in Business.”LOL I admit that’s insightful.

Members of Congress has a incredible investing Track Record. Is it because they have inside knowledge? Or are their Advisors doing shady business on the side? Who knows? However If you haven’t been paying attention to their investments that are publicly listed? You maybe in for a surprise. Be sure to check them out here! If you haven’t know about ValueInvesting.IO? You may want to go check them out. They keep up to date with Congressional Members Investments. And you may reach the conclusion that I have. Something just doesn’t add up. If they are using Material Inside information? That’s highly illegal.

If you think about the members trading strategies? It’s a great example of missed opportunity and I see many people on Twitter copying their trades. It’s surprising how incredible how they often receive above 20 to 30, to 50 percent returns annually. Its almost too good to be true. However I digress. Today I am sharing amazing value. From the Mr. Baby Buffett of Wall Street and the King of Activists Investors, The talented and always respectful Mr. BIll Ackman.

Before I continue, I should share: Even though my name is not known in hardly any Wall Street Investment Firms? My crazy entrepreneurship story is certainly gaining traction. It certainly is unique. How many entrepreneurs do you know who just said screw it and began studying the moves and strategies of Fund Managers like Bill Ackam? After all Professional Investing is something one can learn from just reading and being in the Market. Passion and grit are absolutely required. Most Big Firm Partners value a young guys working incredibly hard and demonstrating results that benefit their future success at the firm. Meritocracy comes to mind. When you put others interests and success first? You make friends an alliances quickly. But sometimes you can make enemies fast and jealous. That’s a Fact.

The basis of most value investors I know? Is to be curious and keep asking questions. If you just keep asking questions a someone who doesn’t know a subject or topic? Your curiosity takes you on a journey of discovery. And sometimes that journey of discovery? Is extremely profitable. Just keep asking questions. And learning as you move forward as a Value Investor. Benjamin Ghraham is a Man you should research if your interested in learning to become the next Bill Ackman. Watching everything Warren Buffett and Charlie Munger has said on video helps as well. The intrinsic value of being among Value Investors does pay massive dividends. But its all up to you! Do the work. And your do your Due Diligence.

So what are the Eight principals Ackman and follow when targeting companies?

Simple Predictable, Free cash flow regenerative dominant companies, With large barriers to entry That earns high returns on capital, With limited exposure to intrinsic risk we can’t control? 
Strong Balance Sheets Don’t need access to capital to survive, Excellent Management, and Good Governance 

Pershing Square Capital Management

– Bill Ackman

What are Bill Ackman's Eight Investing Principals?

Simple Predictable, Free cash flow regenerative dominant companies, With large barriers to entry That earns high returns on capital, With limited exposure to intrinsic risk we can’t control? Strong Balance Sheets Don’t need access to capital to survive, Excellent Management, and Good Governance 

In conclusion for today’s post? It’s very sensible to believe that if you adhere to and strictly follow these basic guidelines and principals while investing? You are surely going to be in great shape. If you go back in time and look at the trades or positions Bill and his team has made in the past that failed to perform or wiped out half his Hedge Fund? The principals were not followed. Leaving them exposed. And that is a lesson on keeping true to your education as a Value Investor.

Thank you for reading and I do wish you all Investment success.
Godspeed

JS

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Business Articles

Doing Due Diligence On Wall Street Media

Have you ever got the feeling your missing something critical before moving forward with a Position on Wall Street? I had that feeling as well. And since I did I did some basic research on the Media reports on TV. And what I found was interesting and concerning. I found the Media Wall Street rely’s on is incorrect most of the time. So we need to do some Due Diligence on Wall Streets Media Machine. And I can share with certainty. Those who are Hedge Fund managers and Active Traders will find these resources very useful. Check out this amazing little research group. Muddy Waters Research.

HEDGE FUND MANAGERS & DAY TRADERS RESOURCES

If your like most Day Traders and Hedge Fund Managers or Analysts you don’t have time to monkey around. Time is money, money is time. So you get busy! LOOK Before you stop and take that TV Report on a Public Company serious? I would stop and do some basic research. And this research group I was introduced to by Mr. Bill Ackman at Pershing Square Management is complete and utter gold. Link Below.

https://www.muddywatersresearch.com/

Did you catch the Article I wrote previously Here on the Types of Accredited Investors

Market Research Firm

Ok, here is another resource for you guys that need it. Check out these guys as Wolfe Research Group.

Wether you need Research and Market Insights or Intelligence? This firm won’t disappoint. If they do? Well nothing is without risk. But we would highly suggest looking and meeting Market Research Teams.

If you found value on my little corner on the Web?

All I ask from you is to copy a link and paste it onto your blog or website or social media directing visitors my way as a thank you for the value listed here.

If your interested? Why is Wall Street losing traders? Watch the report or story on CNBC Youtube below.


Thank you and Godspeed to you all who trade.
JS

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Business Articles

Hedge Fund & Stock Traders Research Strategy

This following post is not to be misconstrued as all the information “How to research for Wall Street. It’s meant to take basic tangible information and real market analysis and evaluate or formulate your personal and professional position for market future strategies. And if you watch the video content on this post it will reveal how Hedge Fund Mangers and Market Analysts, or even Stock Traders and Day traders can do their own leg work and research the Market.

Wall Street traders and other businesses do analyze and executing their next long term positions. By, with, and though their own market analysis. Im gonna teach or share with you “How to analyze the market space in real time!”

Im positive Day Traders and Small Stock Pickers will want to stay tuned to my post and blog. Day Traders and Hedge Fund Managers probably will mostly know this already. But please watch the video below. Nothing is perfect in the market. But this shows probabilities.

If you have ever watched Wall Street Warriors which documents the jobs on Wall Street several years ago on Youtube HERE. You will likely see that most of Wall Streets Businessmen and Bankers depend on Publicly traded companies and Wall Street Stock Price in real time. These wall street computerized information boards constantly watch all stock trading and the price of each individual stock that moves up and down erratically. It is said if you can look into the future and watch if stock prices will rise or fall and if you can buy low and sell high? Your likely to make a ton of money. However that isn’t the reality these days. There are all kinds of conspiracies and systems or strategies to look at stock prices and see if they are profitable or falling. But these days Stock trading has gone super high tech.

Please do go read my other post and article about Business Intelligence here.

Admittedly Wall Street trading and business is a fascinating subject. Many Hedge fund mangers and the Traders at Banks now use computer Quants for determining and executing their trading. Learn more about Quants here.

In conclusion information is power. When developing strategies to profit from the Marketplace. It’s up to you and your Financial Team to discern what information is true and where you can profit. Genuinely I hope you learned something from this quick post.

Godspeed

JS

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