I hope my posts didn't come off as just hype/pump. I know what you mean though. The yahoo message boards are unreadable because of it. There were like a dozen links to articles highlighting insider buying when MNKD's CEO's debt was transfered to equity. Also, the theory that the FDA's decision to issue the second CRL was due to a letter from a hedge fund manager who was short doesn't sound legitimate.

It also doesn't help when Al Mann himself is saying that Afrezza has the potential to be the most significant medical product ever :/

imo the edge that makes MNKD +EV is that they've already received 2 CRLs and the pps was beaten down severely compared to the market potential. The plus to this is that we now have 8+ years of trial data.

u might be right it's just in the wrong thread. u should start a new mnkd thread.

oops sold. IFT too early...what a monster run from $4-7. Phil's probably right that it's worth $8 -- but it's definitely a tough business. (although if you're looking to be invested in something that is not economically sensitive...this might be a good choice for u ).

Finally MRVL is giving me some really nice gains. Started buying it around $10.30 last year -- and bought it all the way down to $8 (didn't buy into the 7s).

YEAH!. I know MOSHI was in this too -- hopefully you've held onto it -- it has been quite a painful hold for quite some time.

Yep, still holding MRVL with a cost basis of a little under $10.

Even if it flatlines revenue and profit wise, I like how aggressive they are in buying their own stock back. Einhorn has been compelled to sell a few million shares just so he can continue to stay under 10% ownership.

I expect to see some good news in the final damages verdict as the next catalyst among others.

I'm not so sure about the final damages verdict being a catalyst -- I see it as almost only a negative surprise. I think at $7-8 it would have been a huge catalyst but I think most investors in the name at this point probalby have dismissed the likelihood of that verdict standing.

http://www.amazon.com/Why-Stocks-Go-...owViewpoints=0

Is this book worth getting for the steep price?

Recommended by this guy, a very good valueinvestor:
http://www.jamescox.com.au/michael-m...scion-capital/

I got the basics of valueinvesting down now. But only the real basics. Im reading now how to better detect frauds , but i would like to know more about catalysts and valuing a company.

I've seen that book recommended in other places as well. If you do buy it/borrow it, let me know what you think of it.

I just read You Can Be a Stock Market Genius by Joel Greenblatt and found it interesting. It's all about finding opportunities in Spin-offs, Bankruptcy, Mergers, etc.

It can be found online for free. PM me if you want the link.

Right now I'm in the process of reading Security Analysis (not getting much of it right now - may have to reread some chapters), and The Most Important Thing Illuminated by Howard Marks. I also need to sit back and concentrate more on reading Margin of Safety by Seth Klarman, but I have a hard time focusing when I'm reading something on my computer.

I'm really, really looking more for something geared towards actual valuations. I need something that is going to tip me over the edge and make the lightbulb light up.

EDIT: Is that book really worth $800? I would try to see if you can borrow it from the library -- which is probably what I'm going to try and start doing.

on valuations, there is no magic formula. why do some businesses get 12x ev/ebitda multiples and others get 5x? its about the art mixed with the science of evaluating businesses and making the call of what a company like this should trade for, what makes sense, what will people pay for it given how it will look in 1 years time. as i've said before dcf is pretty useless.

Yeah I agree. You can't shortcut the valuation process by using simple (or incredibly complex) math.

Not to mention that the biggest part of a valuation is where you think the company will go from here, and why, since other market participants are aware of current valuation metrics. The current numbers are only a rough guide to that; the rest is spidey sense about the market, knowing how businesses and the sector works, evaluating competitors, and seeing the tiny opportunities and threats that can grow into big things (this is usually what analysts miss, and a good source of market-contrary value), and weighing their probabilities, etc.

Math like DCF will only give you a fraction of a valuation.

My problem is just not understanding how to come up with a valuation. Do I read an annual report and then start punching numbers into P/B, P/E, etc?

Right now I'm looking at a company that is trading 35% off its Net Current Asset Value. It's up .44 since I found it. I just don't know if I should make an investment based on the NCAV regardless of their financial statements, or whether it's still a pass because they aren't exactly the leader in their industry.

I just don't have enough value investment market experience to feel comfortable making my own estimations.

I think I read too much theory also. Too many books that don't get to the point. I kept track of how much I read in May, and it came out to be 1,044 pages, which includes books, internet articles, and videos. It's probably time to get more into reading annual reports and just diving into it -- and actually doing it, whether right or wrong.

When I hear Warren Buffett buy something I always go to the financial statements to look at what he's looking at. They are always companies with strong financial statements. But then my question is, how do you know that it's cheap enough to buy it WITH a margin of safety -- that's my real question.

One thing I read two nights ago came from Li Lu:

How much do you guys spend reading?

It would be most likely highly -ev for me to spend a **** tone of time doing a valuation for a company. The capital I use is just not big enough to justify spending a lot of time, considering I make >75$/h playing poker.

For me this is a process, I don`t expect to be good within months, I expect that it is going to take years to fully understand everything. I start getting a feeling for it and my capital I use will grow over time and the amount of time I spend too.

Anyways sold my Stocks I bought in the beginning of May, they rose 22% and 13% respectively. Which gave me a good profit.

At the moment I`m looking into smaller Computer-Security-Companies as I believe the Securityaspect is going to be HUGE in the future(Wish Kaspersky would be public).

So far I took a smaller look into:

Fortinet (FTNT)
Sourcefire(FIRE)
Palo Alto Networks, Inc.(PANW)

The financials looked good for all companies. They traded at high P/E but they got a high growth. PANW lost 10% yesterday, apparently the Quarterlyresults weren`t that good. I couldn`t find the report yesterday, but from what I`ve read the growth was "good" but not top like they expected. I feel like that drop might be a good point to get in.


A big Minus with Fortinet was the Amount they spend on R&D, it was compared to FIRE/PANW really low. Considering how competitive this market is and how important it is to stay ahead of the "Dark Side"(Intruders), this was a huge turnoff for me.

I just really like the way Sourcefire does Business, the CTO and Founder is an extremely smart guy. So I`m already pretty sure I`m going to buy, even though the company trades at a really high P/E.

Honestly, there are hundreds of books of pure rubbish on nearly everything. All you really need to do to put it in a sensible framework is to ask yourself some simple questions. These are off the top of my head and what goes on in my head when I think about a company:


1. (Financial) If I could buy the entire business at its market cap:

- How many years would it take me to earn my money back?
- What are the odds I won't get my money back, and why?
- What's the most that the business could grow?
- What are the odds of a much larger than expected return?
- Can I expect long term compound growth from this type of business?

P/E, P/B, etc, are merely numbers to help inform the answers the these questions. They have no meaning in themselves.

2. (Environment) What does the market look like?

- Is there much opportunity for growth for that company within the market? (Tesla vs Ford) Is the company expanding into a large area, or is it jostling for position?
- What are the trends in the market/sector?
- What risks are there in the sector? Is it dependent on the economy? Consumers? Marketing presence and cool? Businesses? Governments?

3. (Competitors)

- What competitors are there?
- How established are they?
- What flaws do they have?
- How could they disrupt your company?

4. (Edges) How does the company differentiate itself from others?

- What competitive edges does the company have?
- How stable and reliable are they? Are they enduring?
- Can these edges be grown into further value?

5. (Market) What is the market opinion of the stock?

- What is your best guess on what has driven the market to value the stock at its current level?
- If the story changes, what is upside/downside expectation?
- Are there news cycles which will drive buying or selling? Is the stock highly visible or more of a hedge fund pick (PRSC vs AAPL)?

6. Reality check & Fundamental Theory of Investing

- Why does the market not agree with your assessment? You better have a very compelling reason.

None of these are quantifiable into DCF or P/E or any pure math based approach, but if you can answer every question competently, you've got 90% of a solid valuation. What's more, you don't need complicated theories or math or books - you just need a brain and willingness to back your view. In many cases you can ignore many of these if a couple of the elements are very strong AND you have a good case for why the market isn't seeing it.

There already is a long MNKD thread. Started by none other than Mr. David Sklansky himself. Interesting read, as always.

http://forumserver.twoplustwo.com/30...lus-ev-186993/

i think reading alot can never be bad. Just stick with businesses that are really easy to understand. Personally i just try to read the 10k's , and if there is something i dont understand i continue reading some books.

I dont think you should read security analysis by graham tho. Its outdated. Lots of new accounting rules now. I got this book recommended:
http://www.amazon.com/How-Read-Finan...cial+statement

when reading about this all i prefer books that are well written. Getting through the intelligent investor can be pretty hard as its pretty dry and long.
I found this book easy to read to get a general idea before reading grahams book:
http://www.amazon.com/Getting-Starte...valueinvesting

But it doesnt go in depth very much, its pretty general.

My aproach to learning this is just reading those 10k's and note everything you dont completly understand. And order books about my bigggest knowledge gaps.

I thought this book was interesting,, but lacked dept. He also didnt write about any of his mistakes, which is pretty damn important to learn from as well. Would like to read a book about this subject that goes more into it.

http://www.amazon.com/Mergers-Acquis...m_sbs_kstore_5

this could be interesting. I guess all the people who know more about this are too busy getting rich from it.

Dear god that's bad. If this thread is any indication of how this subforum was in the past, I for one and happy we have a new crop of posters.

Its an indication of what happens every single time David Sklansky starts a thread.

You're asking great questions and are probably on the right path. A lot of the questions you are asking should be answered by you and every investor will answer them differently. At first, I started to look at companies below NCAV and low PE's but I couldn't get comfortable with management or saw their business being in terminal declined. So my style started shifting towards strong companies and managements trading at low to reasonable valuations. The hard part about this style is trying to identify the future growth rate.

In terms of margin of safety, there are multiple ways of looking at it. One is through price. The other is your understanding of the industry and company.

I try to read a ton. Probably 2 - 3 hours a day, not including work related readings. I started reading investment books only, but I now try to read history and biographies. Given my investment focus, I want to see how industries change over time and reading history allows me to do so.

I am wondering this too. there are so many stocks out there. how do you decide which ones to look at?

I think about an industry I like, then I look on wikipedia/yahoo finance for every company in that industry and start looking. Then you can sort out if you for example only want pureplaycompanies or w/e.

Is there any source out there that lists every publicly trading company in the US in alphabetical order?

Is there anything similar that can be broken down by market cap?

https://www.google.com/finance/stockscreener

this is a pretty good post

I'm wondering if someone could answer a quick question...

I was looking over some balance sheets for companies and noticed that the value of one company's property/real estate seemed way too low for what they own. I mentioned this to a friend who told me that the amount listed on the balance sheet is what the company paid for the real estate and does not include appreciated value. EX: A company purchased a piece of land in 1984 for $500k. Today that land is worth $1M. However, it is still listed on the balance sheet as $500k.

I guess my first question is, where is this $500k in appreciation shown? My friend said, it isn't. If this is true, wouldn't it mean the actual book value is off and there is an additional $500k available if the company were to liquidate tomorrow?

Companies write off depreciating assets for tax purposes. Don't they need to show appreciation on their books even if they are not subject to tax?

Sorry if this is a dumb question. I'm trying to learn how to evaluate a company for investing purposes and obv have a long way to go. I'd appreciate any help. Thanks.

it is not a dumb question