High Spirits

  For the first time on this blog I will be discussing a 'good business' and I could not be more thrilled. I don't want to spend much time on how I would define a good business, but I will summarize that it is one which is positioned well as to not be impacted by [...]

Random Thoughts and an Interesting Poker Play (GIGM)

  Before moving into any analysis, I would like to first apologize to those who may frequent this website and who are reading this. I haven't posted anything since April, which is most definitely blog ownership malfeasance on my part. I should be writing more often from now on but this site will no longer [...]

A Few More Value Traps

  Some more examples of net-net value traps and why they are poor investments. These ones are super easy to point out so it will be a quick run through. 1. Ocean Power Technologies Inc (NASDAQ: OPTT) OPTT is a company which sells innovative products converting wave power into electricity, mainly for ocean defense systems, [...]

Sears Hometown and Outlet Stores (SHOS) is a Value Trap

I want to make the case for qualitative analysis and research when looking at net-nets. Many deep-value investors apply a blind basket approach and discuss the bias regarding expert opinion- correctly in my opinion, as a glut of information can definitely cloud decision making and affect returns. Despite this I strongly believe that research and [...]

How To Avoid Value Traps

  You can get excellent returns investing in mediocre businesses. Warren Buffett, who advocates investing in businesses with a competitive advantage which generate high returns on invested capital, once said that: “My cigar-butt strategy worked very well while I was managing small sums. Indeed, the many dozens of free puffs I obtained in the 1950s made [...]

What You Can Learn From Warren Buffett’s Career

  In any lecture or interview about investing, Warren Buffett often says that you should buy great businesses at fair prices. The idea being that as long as you purchase a great business at a reasonable price, the firm will generate higher earnings in the future than it does now, increasing dividends while using retained [...]

Netflix’s Pie in the Sky Valuation

  The valuation of Netflix is in the stratosphere and continues to float away from Earth. If we watch long enough, it may reach outer space. I wanted to present Netflix (NASDAQ:NFLX) as an example of what can go wrong when people become optimistic and emotional about stocks. It also shows how valuing earnings can be very [...]

How Many Eggs Do You Need in Your Basket?

  There are two general approaches to diversification in the investor population. The first is to spread your bets and attain an average to somewhat better than average result with basic efforts. The age old quote below sums up this philosophy: "Don't put all your eggs in one basket" - Unknown The second approach is [...]

How to Pick Your Net-Nets for Maximum Returns

  If you’ve read the other articles on this site then you already know the potential of net-net stocks and why you should strongly consider this investment strategy. To help you pick the best net-nets, I want to lay out the most important criteria which will save you a lot of time and heartache when [...]

The Empirical Evidence for Net-Net Stocks

  “It always seemed, and still seems, ridiculously simple to say that if once can acquire a diversified group of common stocks at a price less than the applicable net current assets alone- after deducting all prior claims and counting as zero the fixed and other assets- the results should be quite satisfactory” – Benjamin [...]