Deep Value Investing | Tobias Carlisle | Talks at Google
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- čas přidán 23. 12. 2014
- "Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations" is an exploration of the philosophy of deep value investment. It describes the evolution of the various theories of intrinsic value and activist investment from Benjamin Graham to Warren Buffett to Carl Icahn and beyond. Filled with engaging anecdotes, penetrating statistical analysis and meticulous research, the book illustrates the principles and strategies of deep value investing and examines the counterintuitive idea behind its extraordinary performance.
About the Book
It is a simple, but counterintuitive idea: Under the right conditions, losing stocks-those in crisis, with apparently failing businesses, and uncertain futures-offer unusually favorable investment prospects. This is a philosophy that runs counter to the received wisdom of the market. Many investors believe that a good business and a good investment are the same thing. Many value investors, inspired by Warren Buffett’s example, believe that a good, undervalued business is the best investment.
The research offers a contradictory view. Deep Value is an investigation of the evidence, and the conditions under which those losing stocks become asymmetric opportunities, with limited downside, and enormous upside. In pursuit of this idea, it canvases the academic and industry research into theories of intrinsic value, management’s influence on that value, and the impact of attempts to unseat management on both market price and value. The value investment philosophy as first described by Benjamin Graham identified targets by their discount to liquidation value. That approach has proven extremely effective; however, those opportunities have all but disappeared from the modern stock market. To succeed, today’s deep value investors have adapted Graham’s philosophy, embracing its spirit while pushing beyond its confines. In Deep Value, I examine Graham’s 80-year-old intellectual legacy using modern statistical techniques to offer a penetrating and highly original perspective: That losing stocks offer unusually favorable investment prospects. The evidence reveals an axiomatic truth about investing: Investors aren’t rewarded for picking winners; they’re rewarded for uncovering mis-pricing. - Věda a technologie
This is amazing. I have seen this video a dozen of times and still find it awesome!
True!
His book is one of the best investing books ever written.
Leggo My Ego agree very good book.
Such a good talk. Good questions too. 5/5 would watch again.
Long video, but well worth the watch.
20:14 The Magic Formula
34:04 The Acquirer´s formula.
Haha, i'm surprised no one mentioned the clip at 13:37 haha.... Love the camera man! :D
i get this strange sensation to go to panda express everytime I watch this video...
Haha, I'm happy someone noticed my comment!
At first I thought I was seeing things to be honest. Had to rub my eyes and rewind.
i came to comment section right away to see if someone else noticed that too lol
Someone please feed the cameraman!
The beauty of this strategy is not only its embedded systematic approach to security selection but its logic behind why it works. The logic is simple, and often times, simple is better
I have read Benjamin Graham's, Security analysis ( reprint of original 1934) and The Intelligent investor, books. You have added a bit more information.
Thanks for sharing this talk with the public!
Still watching this video today with the current pandemic. I hope everyone is doing fine. I can see intel with this investing strategy. Haha!
sorry to be so off topic but does someone know of a method to log back into an instagram account..?
I was dumb lost the password. I love any assistance you can offer me.
Surprisingly I was surprised. Investments in high ROIC businesses underperforms the market.
Jaromír Dvořák There is a known correlation between ROE and P/B ratio. As the ROE gets higher, so does the P/B. I was unable to find a similiar study on ROIC, but I might suspect it's the same story. Not only it's extremely rare for a company to maintain it's ROIC for a decade, people also tend to pay a hefty price for a high-ROIC enterprise.
Good presentation and no marketing stuffs from this guy. Well done!
Thank you for sharing this talk.
insane. Amazing stuff
Tobias Carlise is going to be legendary
Some nice metrics in this discussion.
Let me answer 51:50 question about why Buffett changed from Liquidator to deep value to franchise as I have read Buffett's biography a while back. He changed because he was afraid of confrontation. There was time when the angry workers of a liquidated company went to his office with pitchforks and police were involved and it traumatized him. He went to deep value until he met Munger.
But I must say this talk blew my mind.
I have read his book the snowball as whell. He bought a mill or other company in a small town. And thr company cash and assets minus liabilities where higher then the stock price. Bud when liquidating a company buffet found out, that there where real people working there. So thats why it easier to just buy great bussiness.
What I find is the weakness of this particular strategy is its oversimplicity. It doesn´t lack logic or a track record of outperformance, however like one person in the video asked what if a sufficient number of people used this strategy would it stop working and the answer is yes (maybe it will revert, no one can know for sure). Doing my own backtesting in the Russell 3000 universe with a quarterly rebalance and using the Ebitda/EV ratio, from 01/01/2001 the top decile returned 19% annualized up until 12/24/2014 (the date the video was published). However from this date to today (01/29/2022) the top decile only returned 5% vs 13% for the benchmark. The same is true for other very simple value investing quantitative models (like Greenblatt´s magic formula, or O´Shaughnessy´s models). Maybe this great advantage that Tobias and Greenblatt mention in their books (simplicity) may end up being the very reason for the downfall of their models
The value factor is incredibly hard to arbitrage so there are good reasons to believe it can persist post publication. You are a mutual fund or pension fund manager who needs to put up good numbers every quarter are you really gonna invest into a strategy that can trail the market for 20 year periods? And even if you do, would you like to sit down with your investors and explain why your Emerging Market steel companies or ciggarette companies didn't deliver good returns? It's just not happening. If you wanna keep your job you buy Google instead and that's why the premium can persist even though everybody knows about it.
@@Martin-qb2mw I understand your point but do not think it is that hard to arbitrage at least to a certain level and believe the problem with this strategy is actually that using one multiple does not define value very well. Businesses are very complex and a company is only cheap if the multiple is lower than it should be, not low in a straight forward nominal way, some companies are just crap and deserve low multiples (A company with a 10 EV/EBITDA that should be a 15 is cheaper than one with a 4 that should have a 5). Don´t get me wrong, I would still rather invest in a simple value strategy rather than an index but believe that quantitative value investing can be done in a much smarter way.
@@ericfrost4768 My intuition says that you should be right but there is no data to suggest that stock pick can outperform quantative value. It's pure speculation on your part. Some guy on ARQ says that if the value factor had been arbed then value stocks would behave as noise, but they dont. They behave exactly like they have done in previous cycles which indicates that this factor is still a thing. When I can no longer buy pe10 companies and short pe50 companies then this factor is dead but that is not the case today.
@@ericfrost4768 what do you mean "quantitative value investing can be done in a much smarter way" can you give some tips ? greetings
Very good. Should one take into account unusual gain or loss when calculating the acquire multiple? Or is it just going to give less return?
If you use EBIT, for example, then you are letting unusual profits/losses out of the equation.
high value portfolio- still growing a quite high rate growth but available for much cheaper multiple
Absolutely brilliant
PB used to determine over value of under value. earing for most undervalue shares is falling years and most over value shares is increasing over the years
Great author
Don't be nervous, it's good stuff
brilliant talk and interesting comments, guys :)
GOOD COMPANY WITH FAIR PRICES OF WARREN- HIGH QUALITY AND GOOD VALUE--
SO LOW GROWTH IS BETTER THAN HIGH GROWTH----VERY INTERESTING
Insightful
Tobi is not a marketing guy. We can guess that from the way he explains things.
That makes him more reliable.
I agree. He is a terrible speaker. But hey
@@geospatialindex wtf? I think his skills were on fleek. Usually don't watch presentations, but this was GOLD.
glaumer portfolio has the highest rate of growth --earing, cashflow, book value, operating earning all are growing high.----you have to pay higher multiple to acquire these---19.8 pE, 10.8 PCF higher to acquire very expensive.
HIs books are great too. I have made $135k this year alone using these techniques.
Dude like how?? $135k annually??? Please share your insight!!!
Yes but you invested 23 million USD, so it is not that impressive
Whats the difference between enterprise yield and acquirer's multiple with ebit?
good
❤
5 year average return to the portfolio ---contrarian did the best.
OK... Looks impressive... I need a concrete methodology or model
What are the steps I must apply to outperform?
The acquirers multiple?
But I suspect if everyone starts applying the AM screen then prices will be driven up and the model will be confounded...
Even today you can buy companies at 2-3 times EV / EBIT when the market is trading at 13. This has not been arbitraged and it will never get arbitraged because it's too risky and too volatile.
13:34 bone apple tea
Great stocks and I just bought in on them, but I'm interested in making short term profit, let say turn a $150K to $500k in 6months, I'd appreciate tips on how what stocks to buy to make this much profit.
@Samanthwalter Archie That sounds great and how do i connect with her ?
@Samanthwalter Archie Okay i just found her website and left a message for her. thanks.
Buffet would tell you that doesn’t exist and there is no way to properly predict what the market is going to do in 6 months. Focus on knowing how to properly evaluate a company and the stock market will sooner or later agree with you. If you do this over a long term period of time you’ll b very rich.
Yup an investor
Doesn't time the market
What you are searching does not exist. Don’t get scammed by shady advisors who try to convince you otherwise.
goddamn had to watch this twice
This presentation should have started with the slide and statements of 35:53, then it would have been easier to follow. Information was interesting but the presentation was a bit fragmented and camera work didn't help. But thanks for the presentation.
Registered Investment Adviser who write book rarely are worth listening to.
What's the story with @13.40? It seemed like a 'The Office' moment 😂
is this talk done in America?
THE LITTLE BOOK THAT BEATS THE MARKET BY JOE
SIMPLE MODEL HELPS US TO OUTPERFORM
SO WE ARE LOOKING FOR DECLINING EARNINGS AND UNDER VALUATION
somebody help me out here...does he mean that buying companies whose earnings are on the decline will outperform the companies whose earnings are on the rise? how does he know that these companies wont just go bankrupt? is he expecting them to just "mean-revert" (which apparently has no reason whatsoever). I confused, to me it just sounds like: buy failing businesses and they will outperform because they will magically bounce back.
Albert Tseng More or less yes. But the key to remember is as an investor you don't make money based on well or how poorly a company does... You make money on how much better it does than other investors expect.
So if a bunch of companies are expected to perform incredibly well then they have to do even more incredibly well for you to make money. If they are doing terribly all they have to do is survive. And because of human psychology companies that are expected to do well will tend to underperform relative to expectations and ones that are expected to do terribly will do better... Overtime... On average.
this is a really useful exchange thanks guys
Some go bankrupt but the deep value strategy still outperforms. The high returns incorporate some stocks continuing to go down. No way to know in advance which ones will be value traps.
buffet moved from liquidation method to franchise method. shes chandy it earning 2m on 8 capital and he valued 47m which was a discounted price.
IBMs price to book ratio is 10:1, but Warren Buffett still loves that price. Sorting stocks by their p/b ratios is virtually meaningless when trying to find value.
+pools closed p/b ratio is a metric for value stock and only works well for value strategy. Not growth strategy.
+Giraffe Value not to mention, IBM has infinite returns on tangible assets, given the larger composition of intangible assets
Watch Buffett ducking the IBM question in this year's annual meeting on youtube. He's regretting the IBM investment. He went outside his circle of competence and it is biting him. Given the unusual ducking of the IBM question at the annual meeting, I would not at all be surprised if BRK is getting out of it's IBM position right now.
wrong the lowest 10% of stocks by market to book on any stock exchange in any county has outperformed the overall market by 3-5% per year since the 1920's. Over a 65 year investment time horizon that compounds into a difference of about 650-1
A low Price/Book value has been studied and usually outperforms the market.
what bering backs the intrinsic value to market price-mean reversion.
OVER TIME UNECCELLENT OUT PERFORM THE EXCELENT.
global market average yearly returns to portfolio sorted by PE, PB and PCF
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PE, PB, PCF, P operating earing. undervalue slow growth stocks portfolio and overvalue high growth stocks portfolio. 3 types slowest growth, medium growth, highest growth and three type of valuation most undervaluation, average ,most overvalued----9 types has come--- 3 are shown here-----
Its funny how the person posing the question at 57:55 (with all the jargon not withstanding) asks how this strategy (acquirer's multiple) would work in companies which have managements with "motivations that are completely independent of the minority shareholder motivations". He ends up using "countries in Asia" as an example. My question is - why go all across the Pacific and use Asian companies as examples when the company in whose campus you are currently sitting is not that bad an example for this scenario!!
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1929 of the 600 stocks 200 traded less than liquideded value. some of them was selling net cash backing---less than cash after paying all liabilities. $1 was selling for .50c with string attached.
If any of that was in any way intelligible I might give it an upvote. Unfortunately, it is not possible to understand those 3 sentences - at all.
4 years later undervalue shares earing improve and over value shares earing goes down
And the award of dumbest question of the talk goes to 38:45. He sure that Greenblat has enough money and does not care to make more money.
he was right. He basically was trying to say either you or Joel is wrong. if Joel is not right then how did he manage 40% return for about 20 years?now Joel could easily say something and do something else so...
13:38 gotta love the guy fucking munching in front of Tobias…
his investment fund lags far behind the s&p500 after 3 years ...
do you think it's because mean reversion takes longer these days, or it's an anomaly caused by covid.
Problem with his gemicky formulas is, they only work until people catch on
Joel Greenblatt introduced this formula around mid 1980's
What - like a substantial part of the investment world suddenly starts to follow this relatively obscure method? Grow up.....
This has been known for 30 years and people still hasn't caught on. Nvidia still trading at PE 150.
cash flow discountanted to get intrinsic value.
48:29 what he does
SO THE REAL DRIVE WAS UNDER VALUATION NOT THE GROWTH.
glamar underperform and value quinta out perform.
Quantitative value of ra
ASSET GROWTH, EQUITY GROWTH, PB VALUE, RETURN ON CAPITAL, RETURN ON EQUITY, RETURN ON SALES---- EXCELENT AND UNEXCELENT COMPANY
im gonna be rich as fuck!
What's the progress like now? :)
still working on it ;)
Uriel Martinez Haha, good luck and don't forget you're already rich :P
***** thanks man =)
Has the strategy been working for you mate?
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Thanks for this video! i've come back to watch it a couple of times as a form of recap. Just heard of Tobias' new book, i think he did an interesting interview with an Asian perspective too: czcams.com/video/g-ewLObiGnw/video.html
NET CURRENT ASSET MODEL OUTPERFORM---CURRENT ASSESTS
Is it difficult to understand? or I am fool and idiot
BUFFET-YOU ARE MUCH BETTER OF OVER LONG TERM GROWTH RATHER THAN CIGAR BUTTS. HIGH QUALITY+ GOOD VALUE=High ROIC+ high EBIT/Enterprise value
why are you screaming all the time? Who is your conversation partner that you are angry at?
He seems distracted.
LOW GROWTH UNDERVALUE OUTPERFORMS HIGH GROWTH UNDERVALUE.
TL;DW: It's basically EV/EBIT. They call it EBIT/Operating Earnings. It's a ludicrous strategy.
It mostly returns crappy oil/gas, foreign mining and telecom companies, which are depressed for some reason already. Avoid this video and do something productive.
Here's the top holdings in his fund portfolio right now: D R HORTON, BEST BUY, EBAY, MANPOWERGROUP, PULTE GROUP, SCHWAB CHARLES CORP, MOLINA HEALTHCARE, EVERCORE, ALLSTATE CORP. Seems pretty quality... yet cheap on acquirers multiple.
People see the data, see the returns, see the outperformance and still don't trust it. This is exactly why the strategy will work forever.
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misleading title