⁠Invest In Assets 📈
RT @InvestInAssets: Margin of safety is one of the most important concepts for investors to understand 🧠🧵

The term was popularized by Ben Graham and is often used by top investors such as Pabrai and Buffett 📈

Let's take a closer look at Margin Of Safety 🧵👇

=THREAD= https://t.co/Z47AI6k3ld
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⁠Stock Analysis Compilation
Royal London AM on Shaftesbury Capital $SHB LN

Thesis: Shaftesbury Capital's prime London portfolio and post-COVID recovery potential make it a compelling investment at a discount to asset value

(Extract from their Q2 letter) https://t.co/m9Hl1iLwRR
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⁠Invest In Assets 📈
The cost of market timing: https://t.co/5yfnpiEkGJ
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⁠Quality Stocks
1️⃣9️⃣ boring stock sorted by their net profit margin
What are your favorite boring businesses?

🇺🇸 Eagle Materials $EXP 22.3%
🇨🇭 Geberit $GEBN 19.5%
🇺🇸 Cintas $CTAS 16.7%
🇺🇸 Autozone $AZO 14.6%
🇺🇸 Rollins $ROL 14.5%
🇺🇸 O'Reilley $ORLY 14.4%
🇬🇧 Ashtead $AHT 14.1%
🇺🇸 Waste Mgt $WM 13.1%
🇺🇸 Service Corp $SCI 12.4%
🇨🇦 Waste Connections $WCN 12.3%
🇺🇸 Republic Services $RSG 12.0%
🇺🇸 Sherwin-Williams $SHW 11.7%
🇮🇪 CRH $CRH 10.3%
🇺🇸 RPM Int. $RPM 9.4%
🇺🇸 Clean Harbors $CLH 7.0%
🇵🇱 Auto-Partner $APR 6.3%
🇫🇷 Veolia $VIE 2.9%
🇺🇸 The GEO Group $GEO 2.5%
🇺🇸 Corecivic $CXW 2.4%
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⁠Bourbon Capital
PDD Holdings Inc. $PDD missed revenue -15%🔴 pre-market

Revenue: $PDD Holdings reported a revenue of $13.36 billion, which represents an 86% increase year-over-year. However, this figure missed the analyst consensus estimate, which was set at around $14.02 billion.

EPS: The company's adjusted EPS came in at $3.20, surpassing the analyst expectations of $2.73. This indicates a strong performance in profitability, with an increase from the previous year's EPS in Chinese yuan terms.
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⁠Invest In Assets 📈
Friendly reminder:

The purpose of investing in stocks is to make money, not to be right.

Doubling down a loser is the fastest way to lose more money
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⁠Lumida Wealth Management
1/ Daily News Round-Up:

- Bitcoin ETFs see a $250M inflow.
- Wells Fargo revamps REIT ratings: 10 upgrades, 7 downgrades.
- US futures edge up; S&P 500 +0.3%, Nasdaq 100 +0.4%.
- CrowdStrike misses revenue target.
- Uber fined €600K by Dutch regulators for GDPR breach.
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⁠Dimitry Nakhla | Babylon Capital®
A sober valuation analysis on $INTU 🧘🏽‍♂️

•NTM P/E Ratio: 32.13x
•10-Year Mean: 33.68x

•NTM FCF Yield: 3.16%
•10-Year Mean: 3.72%

As you can see, $INTU appears to be trading somewhere near fair value & over fair value

Going forward, investors can receive ~5% MORE in earnings per share & ~17 LESS in FCF per share 🧠***

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

BALANCE SHEET✅
•Cash & Short-Term Inv: $4.07B
•Long-Term Debt: $5.54B

$INTU has a strong balance sheet, an A- S&P Credit Rating & 20x FFO Interest Coverage

RETURN ON CAPITAL✅
•2019: 43.9%
•2020: 25.2%
•2021: 19.7%
•2022: 10.7%
•2023: 13.1%
•2024: 15.5%

RETURN ON EQUITY✅
•2019: 47.4%
•2020: 41.2%
•2021: 27.5%
•2022: 15.7%
•2023: 14.1%
•2024: 16.6%

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

REVENUES✅
•2014: $4.24B
•2024: $16.29B
•CAGR: 14.40%

FREE CASH FLOW✅*
•2014: $1.34B
•2024: $4.63B
•CAGR: 13.20%

NORMALIZED EPS✅
•2014: $16.94
•2024: $3.49
•CAGR: 17.11%

PAID DIVIDENDS✅
•2014: $0.76
•2024: $3.60
•CAGR: 16.82%

SHARE BUYBACKS🆗
•2014 Shares Outstanding: 291.00M
•LTM Shares Outstanding: 280.00M

By reducing its shares outstanding ~3.7%, $INTU increased its EPS by ~3.8% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 79.6%
•LTM Operating Margins: 23.7%
•LTM Net Income Margins: 18.2%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~5% MORE in EPS & ~17% LESS in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $INTU has to grow earnings at a 16.07% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2025 - 2026 EPS growth over the next few years to be less than the (16.07%) required growth rate:

2025E: $19.29 (13.9% YoY) *FY Jul
2026E: $22.13 (14.7% YoY)

$INTU has a great track record of meeting analyst estimates ~2 years out, so let’s assume $INTU ends 2026 with $22.13 in EPS & see its CAGR potential assuming different multiples:

32x P/E: $708.16💵 … ~7.8% CAGR

31x P/E: $686.03💵 … ~6.1% CAGR

30x P/E: $663.90💵 … ~4.3% CAGR

29x P/E: $641.77💵 … ~2.5% CAGR

As you can see, even at 32x $INTU return potential is mediocre

At 34x, $INTU return potential is closer to 11.30%, an attractive rate of return but not an assumption that I am willing to rely on as we’re not left with much of a margin of safety given todays $620💵 share price

I’d consider $INTU a strong purchase with a substantial margin of safety closer to $535💵, or ~28x NTM earnings (~13% below todays price)

Given today’s estimates, at $535💵 I can reasonably expect ~10.6% CAGR while assuming a 29x multiple

#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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⁠Bourbon Capital
PDD Holdings Inc. $PDD -15%🔴 pre-market look like a drama

EPS is up 122% YoY
Revenue is up 85% YoY

and you are getting millions ads daily
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⁠Bourbon Capital
MEDIROM Healthcare Technologies Inc. $MRM is up 180%🟢 pre-market

MEDIROM Healthcare Technologies Inc. has announced a capital and business alliance with NFES Technologies Inc., with the latter becoming the lead investor in MEDIROM’s subsidiary MOTHER Labs’ Series A funding round, valuing the company at 9 billion yen. This partnership aims to promote the MOTHER Bracelet, a recharge-free smart health tracker, and expand its use in various industries including nursing care, transportation, and manufacturing. MEDIROM anticipates this move to attract more investors and support the subsidiary’s growth and product distribution through department stores and e-commerce platforms

Source: https://t.co/NZf6ElxYOy
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⁠Matt McGarry
5 best examples of negative CAC businesses (with $ numbers):
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