Preliminary Analysis Training Video for Client

Preliminary Analysis Training Video for Client

In this video, I made a preliminary analysis training video for a Value Investing Coaching Program client.

In the video, I take the client through everything I do on a preliminary basis.  Explain why I look at everything I do.  Explain what everything means.  And most importantly, why everything I look at is important in the context of evaluating an investment.

Below is an edited transcript of the first part of the video… You can watch the full video further below.

And one last note before getting to the transcript of the video…

The client picked this company for us to do a real-time and real-world analysis on because he was interested in this company as a potential investment.

I’d never seen or evaluated this company before meeting and talking with this client.

***

Since we’ve already talked about this company a bit on a preliminary basis, I’m doing things differently than I normally would on a preliminary analysis.

I’m also going through this slower than usual so I can explain what everything means.

The first thing I do is go to Morningstar, open up the key ratios tab and the financials tab in another page so I have those handy and ready.

The first thing I want to mention here is that I was able to find its ticker on Morningstar unlike the other day when we were talking.

It’s listed on the Frankfurt exchange on Morningstar under the ticker SGQ.

You’ll notice SGQ lists in Euros on Morningstar as well.  Make sure to always notice which currency the company lists on financial sites.

Go to Google Finance, same company but this time the company lists on the Singapore Exchange under the ticker B7K.

I’m going to reference the Google finance listing throughout but I’m going to be using the company’s financials listed on Morningstar because that’s where I do all my preliminary analysis as they have more information.

But because of this difference please keep in mind some of the numbers may be different from the ones you’re seeing.

This is because the Google finance numbers are i n Singaporean Dollars (SGD) and as mentioned above Morningstar lists its numbers in Euros.

The first difference you’ll notice is the difference in market cap of 28.9 million Euros on Morningstar and 44.4 million SGD on Google.

This is likely due to a conversion rate exchange difference and I’ll look at that later.

The next thing I do is get right into the preliminary analysis.  The same one I use for every company I evaluate…

***

To see the full real-time and real world training watch the video below.

And if you’re interested in getting your own one on one Value Investment Coaching please go to the link below.

Value Investing JourneyValue Investment Coaching Program.

Announcing The Value Investing Journey Shop

Announcing The Value Investing Journey Shop

Last week I announced the official launch of the Value Investing Journey – Value Investment Coaching Program…  Something I’d been thinking about for years.

Today, I’m again announcing something else I’ve thought about for years…

The Value Investing Journey Shop.

So far, the shop has all 12 past Press On Research issues.  And no one other than paid subscribers of Press On Research and members of select mailing lists has seen any of these.

Some highlights from these issues are below.

  • As of this writing, the average gain for all 12 picks is 50.3%. These picks are crushing the stock market since April 2015 I began releasing them.
  • As of this writing, the stock market has produced a 15.8% return.
  • This means my exclusive and unreleased picks since April 2015 have outperformed the stock market by 34.5 percentage points.
  • Two companies I recommended grew from sub $500 million market caps to $1 billion plus market caps as of this writing.
  • One company as of this writing is now past $2 billion in market cap.

You can choose to buy each issue individually at its full price or buy all past issues at the current 33% discounted rate.

In these issues not only do I recommend fantastic companies – and one terrible one to avoid – but I continue what I began in How To Value Invest and teach you what the metrics I use mean, why they’re important, and what they mean for the investment thesis.

By buying these issues you’ll also see a bunch of new things since the last time I released a recommendation article.  Some of which are below…

  • Refined valuations
  • Refined and expanded investment processes
  • Analysis and valuation of investment float
  • Some of the new metrics and analysis tools I use including Owner’s Earnings.
  • And more

I’ll continue adding more products to the Shop as time goes so make sure to check back regularly.

If you’re interested in seeing my past stock picks that have destroyed the market since April 2015 and learn along the way go to the page linked below.

Value Investing Journey Shop

Do More, Fail More, Improve Faster

Do More, Fail More, Improve Faster

The video shown below – Do More, Fail More, Improve Faster – was inspired by Gary Vaynerchuk’s – A Five Minute Plea To Do – also known as “Fuck Your Gonna, Go Do It.”

I’ve added a YouTube video widget to the front page of the blog so you can view this and other future videos posted here on Value Investing Journey.

I’ve already got several videos like this coming in the pipeline but if you have any topics you’d like me to talk about please let me know in the comments below.

Also, make sure to subscribe to my YouTube channel to get future videos as they release.

Interviewed By Eric Schleien of The Intelligent Investing Podcast

Interviewed By Eric Schleien of The Intelligent Investing Podcast

A couple of months ago Eric Schleien – @EricSchleien on Twitter – asked if I’d like to get interviewed for his new podcast titled The Intelligent Investing Podcast.

Eric is great so of course I said yes.

In the 49-minute interview linked above we talked about the following things:

  • Value investing.
  • Valuation.
  • How I got into value investing.
  • The smallest company in my current portfolio.
  • The worldwide spread of where I research.
  • Why I don’t short.
  • The art of value investing.
  • My favorite kinds of businesses to invest in.
  • Red flag indicators when researching insurance companies.
  • Book and website recommendations.
  • And more.

Please check out Eric’s brief description of the interview below:

In this episode Eric Schleien interviews Jason Rivera who is on a mission to build a holding company inspired by Warren Buffett’s Berkshire Hathaway. Really fascinating individual and incredibly talented and smart value investor. He is sure to be someone worth following over the next decade to come.

I meant to post this on the blog when it first released but as I was updating the site the other day I realized I forgot to after I posted it to Twitter and Facebook.  My apologies to Eric about this delay.

His podcast has interviews with other great up and coming value investors as well so make sure to listen to them.

And just last Friday Eric announced a digital marketing company is now managing his podcast for YouTube so congrats on that Eric and thanks a lot for having me on your podcast.

You can listen to the interview at the link above.  And make sure to follow Eric on Twitter, and subscribe to his great podcast.

I hope you all enjoyed the interview and please let me know what you thought in the comments below.

Oh and yes I know the umm’s and pauses are terrible on my part.

Please bear with me, it’s what I do when I’m thinking and gathering my thoughts, I’m aware this needs fixing, and it’s something I’m actively working to improve.

Five Months Of Consistent Failure Leading To Magic

Five Months Of Consistent Failure Leading To Magic

In my last post – 2016 Performance Review – Five Full Years Beating Buffett and Crushing The Market I talked about many great things that happened in 2016.

Today’s post is the complete opposite…  It’s about the five months of consistent failure I’ve endured since October 2016 and the magic this is now leading to.

I planned for this post to come out shortly after the last one.  But until now, I didn’t have enough time to write it.  Or the better term is that I didn’t make enough time to write it until now.

I’ve been busy building the Rivera Holdings investor base.  Busy looking for deals.  Busy building my real estate career.  Busy making connections.  And busy trying to make money.

But those are excuses.

If I really wanted to I could have made time to write this post.  The main reason I didn’t is because it’s about failure.

Failure is hard on the psyche.  Failure isn’t fun.  Failure is hard to talk about.  And it’s certainly not fun to write about.

Even when you’re learning, improving, and growing as I did in 2016 and have continued doing in 2017, failure without much success – or perceived success – takes its toll.

I’m extremely hard on myself, have been ever since I was a kid, and likely always will be.  I’m always trying to improve, learn, and succeed in anything I do.  And no matter how much I do always think I can do more.

Because of this anytime I endure consistent failure, thoughts like the following begin to creep in and lead to even more doubt and frustration.

  • Should I keep going?
  • Why am I doing this?
  • Is this worth it?
  • When is this going to work out?
  • Will this ever work out?
  • When will I begin to succeed?
  • Will I ever succeed?
  • Should I do something else?

But because I’ve gone through this many times now I know this is the process I go through before figuring things out.

While writing How To Value Invest the following process occurred.

I spent a month or two in the “this is terrible” and “I’m terrible” phase while writing, editing, and getting the book ready for publishing.

The whole process from planning the book, to writing it, to publishing it took almost 10 months.  So this means I spent about 20% of the time while working it in the “This is terrible” and “I’m terrible” phases.

I don’t remember what got me out of that mindset other than continuing to work and grind every day and then publishing the book.

Earlier, I went through this same process before knowing what it was while beginning to learn about value investing.  And I’ve gone through this process multiple since then when starting businesses, raising capital, and with various other ventures.

I’m talking about all this because from October 2016 until now in Spring 2017 most of what I’ve done has failed.

But through failure comes progress…

We’ll talk about progress soon but let’s finish talking about how much I’ve failed in the last five months.

The Failed Acquisition

In November 2016 I posted that Rivera Holdings was going after its first acquisition target.  The owner and I agreed to an $8 million purchase price for the business and the land.  And we agreed on a 60 day exclusivity period.

The land, property, and equipment by themselves were worth between $6 and $7 million and I valued the business – including operations, land, and equipment – at between $10 and $15 million.

The business produced excess cash flow.  Had long-term competitive advantages.  And with some cost cuts and expansion, I projected cash flow to almost double within the first two years we owned it.

We had the chance to buy a cash flow producing business with long-term sustainable competitive advantages at a cheap price, with a huge margin of safety, and good potential upside.

So what happened?

The short answer is I failed…

Not because I didn’t put in the effort or time to query and pitch to investors.  But because I was a horrible sales person and didn’t have the right connections.

I sent emails, called, Skyped, and talked in person with more than 2,054 people during our 60-day exclusive letter of intent before informing the owner I wasn’t able to raise the capital to buy his business.

Out of the more than 2,054 people I was in contact with about acquiring the business I got no response from more than 90% of them.  Major failure.

The people who did respond to me were receptive and said I impressed them with my analysis and detailing of the business.  But I heard two things over and over about why they wouldn’t invest.

The first was that I lacked experience running a multi-million dollar business like this.

And the second was that because they didn’t know me on a deep personal level we didn’t have enough trust built up between us for them to trust me with millions of dollars of capital.

I had an estimated 98% failure rate talking with people about becoming Rivera Holdings investors so we could buy this business.

But what did all this failure lead to?

It helped me realize I needed to work on several things to get to the level I want to be on.

The first thing I needed to fix was being a horrible sales person.  Because by not closing this great opportunity I failed myself, my investors, and these potential clients.

The second thing was that I needed to gain experience owning and running a business.  This is one of the reasons I got into real estate. I’ll talk about the other reasons in a separate post.

And the third thing it helped me realize is that I needed to grow my network of connections.

This leads us to much more failure…

Much More Failure

After the acquisition failed, I stopped to think about what I needed to do going forward and where I needed to improve.

I talked about these above and then got to work again.

This now leads to major failures – yes multiple – every day.

A typical work day of mine now looks something like the following:

Call 10 to 20 people to talk with them about their home or property.  Either for Rivera Holdings to acquire for investment purposes, or for me to list for sale as a real estate agent.

On average I hear back from only one to two of these people.  Or about a 90% failure rate.

Email 20 to 30 people about the same as above.  Generally, I hear back from 1 to 3 of these people.  Or a 90%+ failure rate.

Go to any appointments I’ve set to either list a home for sale or look to buy it for Rivera Holdings.

Learn by listening to Audiobooks anytime I’m in my car… The only time of my day I’m not failing.

Send out information to potential investors every week on deals I’m looking at now or have looked at in the past.  There’s a 99%+ failure rate here.

Do preliminary due diligence on 5 to 10 assets I’m considering investing in.  This includes looking at single family real estate, multifamily real estate, public companies stock, private businesses, etc.  After doing this I generally only consider one of them a good investment.  Or a 90% failure rate.

After doing more due diligence I generally will put one to two offers in on properties per day.  Or consider doing further due diligence on a public or private business. This is after looking at more than 100 potential assets.

So on average for every 100 assets I look to invest in, after doing due diligence I will only consider investing in at most two of them.  Or a failure rate north of 98%.

As of this writing, I’ve had zero of the 30+ offers I’ve submitted accepted.  Or a failure rate of 100%.

And I have a wife and two young daughters so I get told “no” and am failing on a constant basis at home :).

After reassessing what I needed to do after the failed acquisition I now fail every day on a massive scale.  Something I haven’t done on this large of a scale since I began learning about value investing 10 years ago.

I now swim in failure.  But by doing this over the last five months or so something magical has begun happening.

The Magic Of Massive Failure

Image result for grant cardone on failure

For years I’ve known I needed to take more action every day.

That I’ve needed to call and email more people, meet more people in person, research more public and private businesses for investment, and recently to research more properties to invest in and talk to more people about helping them buy and sell their homes.

But this is hard because it involves a lot of failure and discomfort through things like cold calls or sending out mail or email advertisements.

After writing my article about positive obsession – 10 Tips To Becoming A World Class Investment Analyst – and then reading things like Be Obsessed Or Be Average and the 10X Rule both by Grant Cardone, I knew I needed to do even more to get to where I want to be.

Without failure there is no learning or improvement.  Without massive action you’ll never reach your goals because you’ll never be putting anything into practice and others who are doing more will leave you in their dust.

But by doing both of these things you’ll kick learning and improvement into overdrive.  And this will get you towards your goals and dreams faster.

And we all want to succeed faster.

So where has all this massive action and failure over the last five months gotten me?

I outlined some of the great things that happened since putting in massive amounts of effort every day in the 2016 Performance Review post.  And I repost these below:

  • Started Rivera Holdings LLC.
  • Began raising capital.
  • Grew personal connections by an exponential amount due to capital raising efforts.
  • Grew from 320 subscribers between Value Investing Journey and Press On Research to now 455 total subscribers between those two services and now also the Rivera Holdings Mailing List.
  • Read between 50 and 75 books in 2016.
  • Grew from 720 followers on Twitter as of the beginning of 2016 to 1,008 now.
  • Grew from 790 connections on LinkedIn as of the beginning of 2016 to 896 now.
  • As mentioned above we continued helping Mhicaella and her family in the Philippines survive and thrive.
  • For the first time in three years expanded my circle of competence in terms of industries.  I now understand and feel comfortable evaluating three new industries – marinas, hotels, and multifamily real estate.
  • Also expanded knowledge and experience into the private equity/investment arena as well.

But the above aren’t the only things that have begun happening since taking massive action and experiencing massive failure.  I’ve also…

  • Continued expanding my personal network and connections by an exponential amount.
  • Had lunch with, rode in cars with, talked in person with, and talked on the phone, through email, or through Skype with people who are worth more than $700 million combined in the last few months.  And who have access to more than $1 billion in capital.
  • Have even talked with a few about consulting with them on some projects.
  • Built up a huge deal flow.  After losing the original acquisition I had nothing else to attempt to acquire for a couple of months.  I’m now looking at and putting multiple offers in every day on assets.
  • Expanded my knowledge of sales and the sales process immensely.
  • Gotten Rivera Holdings on more than a dozen distribution lists for businesses, homes, investment properties, multi-family properties and more.  These give us access to deals before they hit public market sites like Loopnet.
  • Begun setting and going to more appointments with potential investors, home sellers, business partners, and business brokers.
  • And have hired two part-time independent contractors that I plan to hire full-time within the next month.

Not only am I doing all the above things, but because I’m acting in such a huge way I’m learning faster than I have at any time since first beginning to learn about investing almost a decade ago.

So is failure really failure if you’re learning, improving, and getting closer to your goals?  Or is not trying failing?

Case in point – the picture below is from a post I wrote on Facebook in February.

The picture on the left is truly failure…  While I have always read and learned as much as possible it doesn’t matter if you never put anything into action.

March was almost completely filled up.  And April will be even more productive than March.

So am I failing?  Or am I gaining the wisdom, knowledge, experience, and connections required get to where I want to take Rivera Holdings?

And if you aren’t even trying to achieve your goals and dreams, or you’re thinking about giving up… Read this –  If Charlie Munger Didn’t Quit When He Was Divorced, Broke, and Burying His 9-Year-Old Son, You Have No Excuse.

Let me know some of your personal failures and how this has or will lead to your success in the future in the comments below.