Old School Value Nugget Fest (July 18th Edition)

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What We’re Reading in the Media


  • Ray Dalio – Paradigm Shifts (LinkedIn)
    Super long but well worth the read. “I believe that we are likely approaching such a shift and recently explained the dynamic as I see it in the following report. I thought you might find it interesting.”
  • Joel Greenblatt – Keynote Presentation at Ben Graham VI Conference (CFA Society NY)
    Video is about 45 minutes. It’s not actually a keynote but more of an interview. They talk about the market cycle and the situation today. Is value investing dead? And regression toward the mean & market correction.

Investing & Markets

  • Value Is Dead, Long Live Value (O’Shaughnessy Asset Management)
    Another very interesting longer white paper from OSAM that puts the relative performance of growth and value into a longer historical context and concludes that value typically outperforms after a turning point in technological revolutions.
  • Beyond the Opening Bell: What Do (and Don’t) IPOs Tell Us about Companies? (Andreessen Horowitz)
    A little bit of an insider’s look at how IPOs price. More on the basic side, but if you don’t know much about IPOs, you should familiarize yourself.
  • Forecasting Uncertainty (Euclidean Technologies Q2 2019 letter)
    They updated prior research that predicted future company earnings to produce a distribution of predictions, then took the 25th percentile EBIT prediction to introduce a margin of safety. Using that EBIT, they calculated future EBIT/EV and found that the lowest decile outperformed their previous attempt.
  • Academics do help make markets more efficient (DSGMV)
    This shows that new factors identified in research decline significantly in return after publication, suggesting that investors are reading these papers and employing the strategies right away to make things efficient again. Or it could just be mean reversion.
  • Skill and Fees in Active Management by Robert F. Stambaugh :: SSRN (SSRN)
    “Greater skill allows managers to identify mispriced securities more accurately and thereby make better portfolio choices. Greater skill also means, however, that active management corrects prices better and thus reduces managers’ return opportunities.”

Strategy & Company/Industry Analysis

  • Reading between the lines: What Slack didn’t disclose in its IPO filing (/r/SecurityAnalysis/c)
    An interesting look at the IPO of Slack last month from a Redditor. “This is not a classic IPO, but a ‘direct listing,’ also known a ‘direct public offering.’ This means Slack is not raising money by directly selling shares and instead allows early investors and employees to sell their shares in the public offering.”
  • The Streaming Wars: Its Models, Surprises, and Remaining Opportunities (REDEF)
    “Three decades in and a lot of bucks spent, OTT competition has clarified. Though not in ways that were expected.”

  • Shopify and the Power of Platforms (Stratechery)
    The case for why Shopify is Amazon’s best competition. “This is ultimately the most important distinction between platforms and Aggregators: platforms are powerful because they facilitate a relationship between 3rd-party suppliers and end-users; Aggregators, on the other hand, intermediate and control it.”

Podcast of the Week

Talk Your Book: Agricultural Commodities (Animal Spirits pod)
I don’t know or think much about agricultural commodities (corn, soy, wheat, sugar), so it was interesting to learn about something new.

Image of the Week

This links to the incredible page of Visual Capitalist.
An illustrated post of 40 stock market terms that every beginner should know
Great for experienced investors as well if they need a refresher.

Quote of the week

Investing is a business where you can look very silly for a long period of time before you are proven right.

– Bill Ackman
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