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Seth Klarman: Price is the essential determinant in every investment equation
07-05-2013, 12:57 PM.
Post: #21
RE: Seth Klarman: Price is the essential determinant in every investment equation
(07-05-2013, 09:16 AM)Greenrookie Wrote: I would like to point up that it is a myth that every investors do basic homework like tracking annual and quarter reports. It allow me to keep my cool when price drop below my entry price and courage to accumulate and my head when it run above my calculated fair value.

Indeed, you will be surprised that institutional investors can be quite sloppy in their research work. Apparently, there are many who doesn't do their channel checks and often rely on brokerage reports. Looking through 5 to 10 years of annual reports may sound simple but not many can go through such 'boring' research task. If a good actionable idea only surface once out of every 50 companies, you effectively have to read 250 annual reports to get a good idea. People often wants the shortcut but they don't know that knowledge itself works in the magic of compounding as well. One day, the hard work will pay off.

(07-05-2013, 09:16 AM)Greenrookie Wrote: Of course, it's a must have for me, as I am an novice when investing is concerned and have no exp in running a business. Others with years of experience investing or is a great businessman will definitely see a business than just numbers. But until I gain more insights, I am a super suay person, who always but something then realized something wrong/ or risk I have not accounted for.

To put it short, for fundamental analysis, it never hurts to have another additional point of check. Whether it is the company's 10 years annual report or a competitor's or even speaking to a small-time distributor/dealer of their product, it will add value to your research process. Normally, for long-term investor like us, we have no rush in our research. We can do the essential 70% to have a good picture and subsequently fill up the big picture.

"But until I gain more insights, I am a super suay person, who always buy something then realized something wrong/ or risk I have not accounted for."

Well, sometimes it is also evaluating the impact of the new unaccounted risk. One should not fall to the flaw of anchoring bias. There was once I got invested in a HK-listed company but subsequently realized they have a large amount of A/Rs since their clients are SOEs. I sold out at 0% net gain because of this but the stock doubled one year later. My mistake was that I anchored too much on the receivables. I forgot to realise that the main root of concern was whether the long A/R will end up squeezing working capital demands. In this case, there wasn't because the company has 50% of its marcap in cash. Growth could have been internally funded and they can afford to wait for the A/R to be paid down.
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07-02-2014, 03:00 PM. (This post was last modified: 07-02-2014, 04:07 PM by CityFarmer.)
Post: #22
Information  RE: Seth Klarman: Price is the essential determinant in every investment equation
If you all are interested in his out of print book “Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor”, it could be found here:

[Moderator: We do respect IP here. I appreciate your willingness to share, but I don't think it is distributed with approval. Please take note not to do the similar sharing in the future]

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07-02-2014, 03:53 PM.
Post: #23
RE: Seth Klarman: Price is the essential determinant in every investment equation
I suggest the above link be removed. We must respect IP rights, just like we dont want people (e.g. brokers) to 'steal' our
stock ideas, without permission.
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"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster

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07-02-2014, 04:09 PM.
Post: #24
RE: Seth Klarman: Price is the essential determinant in every investment equation
(07-02-2014, 03:53 PM)opmi Wrote: I suggest the above link be removed. We must respect IP rights, just like we dont want people (e.g. brokers) to 'steal' our
stock ideas, without permission.

Agreed. I removed the link, and put in the reminder, instead of removed the whole post.

Thanks
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07-02-2014, 04:19 PM.
Post: #25
RE: Seth Klarman: Price is the essential determinant in every investment equation
Ops apologies for that.

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18-09-2017, 08:16 AM. (This post was last modified: 18-09-2017, 08:17 AM by specuvestor.)
Post: #26
RE: Seth Klarman: Price is the essential determinant in every investment equation
Good compilation but note the caveat on OPMI below
https://www.scribd.com/mobile/doc/283949...th-Klarman#

(06-05-2013, 01:56 PM)specuvestor Wrote: I'm actually not contradicting MW... I'm adding to what he says Smile

I'm saying the key difference between what Seth said and minorities is the control portion. The latter are usually passive and without control. OTOH the former could for eg buy distressed debt at huge discount and control the company. That's why for them price is the major determinant. They can REALISE the value of an asset by exerting control. This is markedly different from us... hence my caution that we have to read their literature with understanding of the circumstances.
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Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)

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