Paul Lountzis on Value Investing

http://www.valuepodcast.com/425#t=4:29.488

  1. Apply the principles in “The Intelligent Investor” in a broad manner
  2. Refine your ability to assess and manage risk quantitatively
  3. Make big investments in relationships; make people skills a priority
  4. People are the essence of the qualitative value

 

  1. Identify what is knowable and important in a business
  2. What is unique about a business?
  3. What can they do better than others?
  4. What is mis-perceived by others?
  5. How durable or sustainable are the competitive advantages?
  6. Margin of safety is the underlying factor

 

  1. Buy businesses that are selling at low valuations relative to earnings power
  2. Patience is key.  Focus on the long term
  3. Look for businesses with the following characteristics:
    1. structural advantages
    2. sustainable competitive advantages
    3. great managers
    4. high-barriers to entry
    5. high returns on capital
    6. unique competitive positions
    7. attractive price
  4. Find great business, ran be great people, that sell at attractive prices

 

  1. Investing is about finding unique opportunities
  2. Inactivity is normal and important
  3. Exclude the external market noise and focus on the long term value
  4. Default to cash when you can’t invest with conviction
  5. Exploit the short term blips on your long-term holdings to add to your position
  6. Remove yourself from the noise
  7. When things are going well, be extra careful

 

  1. Market volatility is your friend.  Profit from folly, rather and run from it.
  2. Exploit the short term blips on your portfolio businesses to add to positions.  Your research should give you the conviction to act.

 

  1. Assess and manage the risk of each investment
  2. Look at management behavior
    1. how well the allocate capital
    2. look at their vision, their ability to articulate and communicate the vision
    3. their ability to exercise sound judgement
  3. Look at the fundamental economics of the business
  4. Look at the valuation; what multiples are you willing to pay?

 

Leverage:

  1. Clean balance sheets are preferred
  2. Excessive debt must be neutralized by new, recurring revenue streams.

 

  1. Love to learn
  2. Learn every day
  3. Have checklists
  4. Write down the five reasons you bought something, especially operations that were not sound
  5. Engage qualified people to vet your investment ideas.
  6. Learn from other established, successful professionals.

 

  1. Inner score card
  2. Always do what is right no matter what the consequences
  3. Think independently, live with a core value system that you created, that you are comfortable with
  • Share

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>