Core Molding Technologies: Valuation And Analysis published on Seeking Alpha and more other important links

Core Molding Technologies Valuation And Analysis
Core Molding Technologies Valuation And Analysis

My CMT article has now been published on Seeking Alpha for those who would like to follow the conversation in the comments section.

While I was researching CMT I was also reading and saving some articles that I thought contained some kind of insight or lesson.  While I am looking for another company to research, I will be sharing these links with you over the next several days.

Why Investing is The World’s Most Difficult Profession is an article by John Standerfer about what makes investing so difficult for most people.

There’s Warren Buffett, and Then There’s the Rest of Us is an article from the Financial Post about Warren Buffett’s amazing track record of picking companies since the 70’s.  Always amazing to how well he has done over these many decades, Incredible

Three (Incredibly Simple) Questions The Most Successful People Use to Change the World is an article from Forbes about how successful people think when a problem arises and how they overcome those problems.

Compound Interest is a Very Powerful Thing is an article from The Value Perspective on the massive and mind numbing effects of compounding over a long time period.  Very useful for us value investors.

Test Your Risk Intelligence-And Become A Smarter Investor is an article from Covestor which has a 5-minute test that will test your risk intelligence, the higher the better.

I will keep the links coming over the next several days and will update you when I find another company to research.  I hope you enjoy the links in the meantime.

Good read article on valuations

Before I get back into research and finishing up my checklist I wanted to give you some links that I thought held some kind of insight or knowledge that we all could learn from.

Warren Buffett on his Investment in See’s. See’s is one of his favorite all time investments and I think his reasons for investing should be studied by every investor. Article is from Valuewalk, @Valuewalk on Twitter.

The Secret’s of See’s Candies is an extensive profile of the business, why Buffett bought it, why it is such a good business, its new expansion plans, and how Buffett and Munger almost blew the investment.

Visiting Warren Buffett are notes from someone who visited Berkshire Hathaway on a trip from Columbia Business School in 2006.  These notes are from an interview and speech that was given while on the trip where Buffett gives some very valuable lessons.  The most fascinating thing to me was that Buffett was the following quotes from the article: Emphasis mine.

Question 12: What would you pay for a solid company that is growing earnings at 8-10%/year?

Not many companies will do that. You see a lot of garbage about EBITDA. Depreciation is the worst kind of expense in that it is prepaid. He looks at EBIT/EV. He’ll generally pay 7x for a decent business. For insurance companies, he looks at float and the cost of float.

Looks like that could be a very good starting point for valuations.

Masters of Compounding: Walmart ($WMT) 1968-2012 is an exceptional article from Student of Value on the history of Walmart and what has made it such a fantastic company over time.  I would also recommend following @dgenchev on Twitter if you would like to see his future write ups as they have so far all been fantastic.

How an Average Business Can be a Great Investment by Oddball Stocks has some interesting thoughts about average businesses and their investment potential.  There is some great back and forth in the comments section as well.  I would also recommend reading his two write ups about Hanover Foods that he links to in the article as the analysis he presents is very detailed.

4 Mistakes When Valuing Companies With Large Cash Holdings, and How to Avoid Them is another fantastic write-up by Simple Value Investing.  I would also highly recommend following him on Twitter @SimpleValue as all of his write ups thus far have also been fantastic.  His write ups on Ibersol were very detailed and he laid out a very good investment case for them. Part 1 and Part 2.

I hope you enjoy the links over the next few days as I am now off to finish up my own investment checklist and to research some more companies.

The Investment Checklist, An Epiphany, and My Revised Plans For Deliberate Practice

The Investment Checklist

I would highly recommend that any investor read this book, and I wish that I would have read it sooner.  Not only has it helped flesh out my own checklist, which I will share in the coming days, it will also help me think better, do better research, and hopefully find more companies to invest in.  I have no doubt that reading this book has helped my investment process become much better.

An Epiphany

All of my life I have been a planner, even trying to plan things out years in advance in some cases.  My plan last week that I outlined was a partial testament to that.  While reading The Investment Checklist I had an epiphany and I have also figured out what I thought that I had been missing lately.

I would also like to thank Daniel from ValueFolio in a comment on my posting My Plan for Deliberate Practice  “Great post! I really like your thoughts. Keep up the good work and have fun with it!” Bold is my emphasis.

I had become so structured lately, trying to pump out as many investment write ups as possible, that I forgot to have fun, which is what I have been missing lately.  I also went back and looked at some of the previous articles, in particular, my Vivendi,  Dole, Chiquita, and Fresh Del Monte write ups.  Not only are Vivendi and Dole the only companies I have bought this year, I also think that those are my best write ups as they are the most thorough, and I spent the most time researching them.

I have always noticed that my plans do not usually work out, even the short term ones, but I have never really thought about why or any way that I could change my thought process until reading chapter 8 in the Investment Checklist.  That chapter is what led to my epiphany that I should become more flexible and not try to plan everything out. I will now be “Steering the boat daily, instead of trying to plot out the course well in advance.”  Now if I find something that I think could help, something I can learn from, or a potential investment idea, I will jump into that instead of trying to finish whatever I was doing, especially if I know that what I am currently doing is not helpful.  In the past, I would have finished up doing whatever I was doing just because I started it, and I always finished anything that I started. In my opinion, the whole book is fantastic but chapter 8 struck something in me personally, and it helped change my entire outlook on life and investing.

My New Revised Plans For Deliberate Practice

  • Have Fun.
  • Learn Something Every Day.
  • Improve In All Aspects of Life Incrementally Every Day.
  • Become More Flexible.
  • Push Myself Every Day.
  • Become More Confident In My Abilities In All Aspects of Life.

Let me know your thoughts.

Dole research update, some links, and my plans

Dole

I was planning on doing an entire write up on my thoughts on Dole now that it is up almost 50% since I wrote my articles on it and its competitors, but these two links from the Motley Fool and Seeking Alpha respectively, do a good job of talking about most of what I was going to.  Why is This Insider Buying Shares of Dole?  Top Insider Buys Filed on August 15th.

I wonder what Mr. Murdock knows or expects to happen?  Since July 24th he has bought almost 5 million additional shares and he now controls just fewer than 62% of the company.  I wonder if he is thinking about taking the company private again or if he knows or expects a spin off or asset sale to happen.

In any event, it is usually a good sign to see an insider buying this amount of stock before the company is expected to announce some kind of plan to enhance the value of the company.

In my opinion, Dole is still undervalued but it has come to a lot closer to my estimate of intrinsic value. The almost 50% appreciation in stock price thus far has come on almost zero news, so I am excited to see what kind of price movement happens when and if Dole announces some kind of spin off or asset sale. The following are the links to my four articles detailing Dole, Chiquita, Fresh Del Monte, and my concluding thoughts: Part 1, Part 2, Part 3, and Part 4.

Links

From Farnam Street Blog, @farnamstreet on Twitter who I would highly recommend following, they give some quotes on learning.

From Psychology Today, and tweeted by @favillapsych who I would also recommend following, they give you examples of how geniuses think and how to improve your thinking.  I especially like this portion of the article, which I think is very applicable to the investment world, quoting from the article:

GENIUSES PRODUCE.

A distinguishing characteristic of genius is immense productivity. Thomas Edison held 1,093 patents, still the record. He guaranteed productivity by giving himself and his assistants idea quotas. His own personal quota was one minor invention every 10 days and a major invention every six months. Bach wrote a cantata every week, even when he was sick or exhausted. Mozart produced more than six hundred pieces of music. Einstein is best known for his paper on relativity, but he published 248 other papers. T. S. Elliot’s numerous drafts of “The Waste Land” constitute a jumble of good and bad passages that eventually was turned into a masterpiece. In a study of 2,036 scientists throughout history, Dean Kean Simonton of the University of California, Davis found that the most respected produced not only great works, but also more “bad” ones. Out of their massive quantity of work came quality. Geniuses produce. Period.

From Deloitte, The Persistence Project and its associated articles.  Some of the links are pretty dry, and while I do not necessarily agree with everything they put forward I do think the articles contain some very good information about what makes certain companies great in comparison to others.  Quoting from the site:

Discovering the causes of superior corporate performance

Trying to understand what makes great companies great is the defining quest of popular management research. Sadly, like the quests of great literature – from the grail to the fleece – the search seems endless. Even the most famous and influential efforts at uncovering the causes of enduring success have of late been knocked off their pedestals, and often for good reason. Why should we bother even to try?

Well, if George Mallory wanted to climb Everest because it was there, then, following Thomas Berger, we determined to try our hand at the recipe for persistent superior performance precisely because it isn’t there.

To make any progress, we recognize we’ll have to try a different approach. We’ve begun with advances in statistical techniques to define a unique sample. You can read more about that in our monograph, A Random Search for Excellence.

 

My Plans

I was planning to get right into my 2-week plan that I outlined here a couple days ago, but since my internet was out yesterday I decided to start The Investment Checklist.  On top of hearing that this book is fantastic, I hope it helps me refine my checklists and also helps me figure out a way to more efficiently maximize my research and analysis time.

After I get done the reading I will officially start my version of deliberate practice that I talked about the other day.

 

My Plan for Deliberate Practice, fixing a problem, and free books

I first mentioned a problem I have been having about how to budget my time in this post at the beginning of August.

I have been doing a lot of thinking and reading lately and I wanted to share my thoughts here to see if anyone has any input.

After my post on Aceto, which is now an article on Seeking Alpha for those who want to follow the discussion in the comments section, I went straight into evaluating another company.  It has been my first time in truly trying to evaluate a bank, and about half way through its annual report, I quickly realized that I did not know enough about banks or the banking industry to fully evaluate its prospects properly.

I finished up reading its most recent annual and quarterly reports, did a P/B valuation where I found the company to be fairly priced, and was going to do a full valuation and analysis write up like I have been doing. However, my evaluation up to this point is pretty poor, and I realized I need to learn more about banks and the banking industry before I do the write up.

I have been seeing a lot of sites lately talking about deliberate practice and how to constantly get better, and I have been trying to figure out how best to personally accomplish my goals, and here is what I have come up with so far.

My Plan For Deliberate Practice and How to Fix My Time Budgeting Problem

Here are my ideas so far.

  1. I look at multiple companies as potential investment ideas on a daily basis, but I am fully committing myself to completely evaluating at least one new company every two weeks.  By fully evaluating I mean researching the company and its competitors, valuing the companies, evaluating its investment potential at this time, and writing an article about the company.  I think this will help me become a better investor on several levels: Thinking about and bettering my investment process, becoming better at putting my ideas into writing, better and more thorough investment write ups, and this will enable me to learn more about new industries and companies. Originally I wanted to fully evaluate a new company every week but that left little time for learning new things, which gets me to my second idea.
  2. I have known for a while now that I have a lot to learn still but after my foray into the banking industry, I realized I needed to set up some more time where I would specifically be learning, instead of trying to write an article or research another company.  The remainder of the two week period after I have finished up my article(s), I will spend learning: New techniques, new industries, reading books, finding better ways to think, etc.
  3. While I am researching and learning, I will again be posting more links that I think we all could learn from.
  4. I would also really encourage you the readers to post some ideas on The Readers Investment Ideas and Analysis Page.  If you are not comfortable doing an entire write up, I would be fine with your stating which company you have researched and giving a few points on why they are a buy or sell at this time in your opinion.  Again, I do not care if you are a beginner or have advanced knowledge, all ideas are welcome.  Also the free book giveaway is still in tact so the first person to put an idea on the page will receive a free book from my collection, and I will also continue to give free books away to other investment ideas that are put on the page as well. That page is also for any questions anyone might have.  I want us to all learn from each other, and since I am relatively new to investing I hope some of the more experienced viewers give some of their advice.
  5. I am giving you my email here as well if you would like to contact me for any reason.  I would be extremely excited to meet new people and discuss ideas or address any questions you might have in the privacy of email if you are not comfortable posting them on the site.  JMRiv1986@gmail.com

So far these are my ideas and I would like to hear your feedback on them.  I will be adding to, and tweaking the list periodically when I come across something that I think will help this process.  I will stick to the time frame as best as I possibly can, but will allow for some flexibility if some kind of issue, good or bad arises.

I am excited to see what kind of feedback I get as lately I have felt that my investment process has been lacking something that I cannot quite put my finger on.  I do feel that I have been getting better with every article I write and I am hopeful that I will find whatever it is that I think I am missing though my version of deliberate practice.

In the meantime I cannot wait to hear from you and to discuss your ideas and thoughts.