⁠Capital Employed
How much of your portfolio is currently in cash?

Do feel free to retweet (or re-x) so we can get a bigger sample size. 👍
- 0-10%
- 11-20%
- 31% +
- 21-30%
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⁠Stock Analysis Compilation
Aristotle on Tokyo Century Corporation $8439 JP

Thesis: Tokyo C’s diversified services, strong global partnerships, and attractive valuation position it well for long-term growth, supported by favorable industry dynamics and strategic investments

(Extract from their Q3 letter) https://t.co/9Bi0ij3Pmm
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⁠Hidden Value Gems
I have taken a closer look at $UBI.PA

The two red flags for me are:

1/ High historical share count growth (dilution)

2/ Practically zero cash returns to shareholders. The company has generated €15.9bn of operating cash flow over FY19-FY24. It spent €15.8bn on games development, paid zero dividends and spent a net amount of just €0.2bn on share buybacks.

I have a bit on this in my latest post on the website.

Enjoyed Sohn London 2025 conference yesterday, quite a few ideas including @muddywatersre short thesis on $ELF.

The ones I found most exciting are:

1/ $UBI.PA

2/ $YOU.L

3/ $BORR https://t.co/Wd4XGEbYgR - Hidden Value Gems
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⁠Stock Analysis Compilation
Ganes on Eagers Automotive $APE AU

Thesis: Eagers Automotive offers a compelling mix of strong dividend yield, growth through acquisitions, and valuable real estate assets, making it a resilient choice despite short-term headwinds

(Extract from their Q3 letter) https://t.co/QVCJDSbtYI
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⁠Startup Archive
Marc Andreessen on handling a crisis: “There are no silver bullets, only lead bullets”

Marc reflects on his partner Ben Horowitz’s essay “Lead Bullets”:

“There’s this temptation - especially when you get into crisis - to think there must be a magic answer or some stroke of genius [similar to Sherlock Holmes]…. There’s this really strong tendency to think that that’s out there. And we see a lot of entrepreneurs cycle through different silver bullets that don’t work. Ben’s point is the answer is probably in firing a whole bunch of lead bullets.”

Marc explains:

“The answer is probably the engineers working later at night for six months and getting the next version of the product out. And the answer is probably for the sales reps to go call on twice as many customers and try to close more deals… I’ve certainly come around to that point of view a lot.”

In other words, there rarely a silver bullet that solves all your problems. So don’t waste a lot of time looking for one. Instead, identify the few key drivers of success for your business and do them extremely well.

Here’s a brief excerpt from Ben’s essay:

“There may be nothing scarier in business than facing an existential threat. So scary that many in the organization will do anything to avoid it. They will look for any alternative, any way out, any excuse not to live or die in a single battle… There comes a time in every company’s life where it must fight for its life. If you find yourself running when you should be fighting, you need to ask yourself: ‘If our company isn’t good enough to win, then do we need to exist at all?’”

Video source: @StanfordGSB (2014)
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⁠Quiver Quantitative
RT @InsiderRadar: 🚨 JUST IN: 3 New Insider Purchases at $IMNM

- $960K purchase by CEO
- $150K purchase by Chief Medical Officer
- $200K purchase by CTO

All three of these trades were filed this morning, shortly before market open.
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⁠Stock Analysis Compilation
TAMIM Fund on F5 Inc $FFIV US

Thesis: F5’s unique, versatile security solutions and strong capital return strategy position it well for sustainable growth and shareholder value in a rapidly evolving IT landscape

(Extract from their Q3 letter) https://t.co/Mme1MLbgaK
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⁠Quiver Quantitative
Look at this graph.

We published this report on politicians' purchase of DT Midstream stock back in June.

$DTM has now risen 76% since the trade was made. https://t.co/VlmQ0OUb4Z
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⁠Dimitry Nakhla | Babylon Capital®
A sober valuation analysis on $PYPL 🧘🏽‍♂️

•NTM P/E Ratio: 18.47x
•All-Time Mean: 29.55x

•NTM FCF Yield: 7.42%
•All-Time Mean: 5.07%

As you can see, $PYPL appears to be trading below fair value

Going forward, investors can receive ~53% MORE in earnings per share & ~46% MORE in FCF per share 🧠***

Before we get into valuation, let’s take a look at why $PYPL is a good business

BALANCE SHEET✅
•Cash & Short-Term Inv: $11.92B
•Long-Term Debt: $9.98B

$PYPL has an excellent balance sheet, an A- S&P Credit Rating, & 20x FFO Interest Coverage

RETURN ON CAPITAL✅
•2019: 12.4%
•2020: 11.5%
•2021: 13.6%
•2022: 12.7%
•2023: 14.8%
•LTM: 16.6%

RETURN ON EQUITY✅
•2019: 15.2%
•2020: 22.7%
•2021: 20.0%
•2022: 11.5%
•2023: 20.5%
•LTM: 22.2%

$PYPL has strong return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2018: $15.45B
•2023: $29.77B
•CAGR: 14.01%

FREE CASH FLOW❌*
•2018: $4.66B
•2023: $4.22B
•Decrease: (9.44%)

*LTM FCF is $7.05B 📈

*Also, FCF in 2017 was $1.86B, so FCF rose ~150% in 2018 start date (“normalizing” the decline above)

NORMALIZED EPS✅
•2018: $2.42
•2023: $5.10
•CAGR: 16.07%

SHARE BUYBACKS✅
•2018 Shares Outstanding: 1.20B
•LTM Shares Outstanding: 1.06B

By reducing its shares outstanding by 11.6%, $PYPL increased its EPS by 13.1% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 40.1%
•LTM Operating Margins: 17.7%
•LTM Net Income Margins: 14.1%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~53% MORE in EPS & ~46% MORE in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $PYPL has to grow earnings at a 9.29% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be greater than the (9.29%) required growth rate:

2024E: $4.57 (-10.3% YoY) *FY Dec

2025E: $4.89 (6.9% YoY)
2026E: $5.43 (11.1% YoY)
2027E: $6.37 (17.3% YoY)

$PYPL has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $PYPL ends 2027 with $6.37 in EPS & see its CAGR potential assuming different multiples

21x P/E: $133.77💵 … ~14.3% CAGR

20x P/E: $127.40💵 … ~12.5% CAGR

19x P/E: $121.03💵 … ~10.6% CAGR

18x P/E: $114.66💵 … ~8.7% CAGR

As you can see, $PYPL appears to have attractive return potential if we assume >19x earnings & aggressive return potential if we assume >20x earnings

The 🔑 isn't a mean reversion in $PYPL's multiple, but a modest increase (still below its historical average) - a reasonable and safe assumption

Everyone wanted $PYPL when it traded 50x earnings, not many wanted it when it traded for 12x earnings ☯️

There’s STILL negative sentiment around $PYPL and this sentiment is already being changed as management continues to make good progress

Today at $88.50💵 $PYPL still appears to be a good consideration for investment (albeit, with some turnaround / competitive risks & a smaller margin of safety)

#stocks #investing
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𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.

𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.

𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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