⁠Hidden Value Gems
Q3 Oakmark's portfolio changes:

Sold $AXP $MO $GOOG

Purchased $DGE.L $RI.PA $GPC $MKKGY $AKZA.AS $AZE.BR

Summary of Buy theses 🧵👇🏽

1⃣ Diageo & Pernod Ricard

1/4 https://t.co/7tSE6LlprV
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⁠Librarian Capital
"Buffett Cuts Bank of America $BAC Stake Below 10%" (Bloomberg)

$10.5bn of proceeds from 15 rounds of sales
Remaining stake still worth ~$31bn

Warren Buffett can take his time to reveal trades in Bank of America stock now that his conglomerate’s stake has been trimmed below a 10% regulatory threshold requiring rapid disclosure. https://t.co/f6mV7HyASD - Bloomberg
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⁠Librarian Capital
$JPM 24Q3 ROTCE 19%

Q3 Total revenue +6% y/y (managed basis)
Non-interest expense +4%
Pre-provision profit +10% (+$1.8bn)
Credit costs $3.1bn (Q2: $3.1bn; PY: $1.4bn)
Net income -2% y/y

NII +3% both y/y and q/q (reported basis)
Non-Interest Income +12% y/y

Raises FY outlook https://t.co/TXOGt24hHK
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⁠Startup Archive
Wealthfront CEO Andy Rachleff on why advertising spend makes it harder to find product/market fit

Andy believes paid user acquisition can be a distraction for startups:

“The way that you know you have product/market fit is if you have exponential organic growth. That’s not an easy thing to do, and advertising can make you think you’re doing well because you’re buying customers when in fact you’re not. The only way you drive exponential organic growth is through word of mouth.”

He recalls a Japanese saying in manufacturing: “You can’t see the rocks until you drain the water.”

“By getting rid of the advertising, we could actually see if we were driving exponential organic growth… The great companies were all built through word of mouth and through great products.”

Instead of marketing, Andy has chosen to invest most in building a product that delights customers because, as he puts it, “delight is the greatest form of virality.”

Video source: @Fintechnexus (2018)
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⁠Dimitry Nakhla | Babylon Capital®
A sober valuation analysis on $MTCH 🧘🏽‍♂️

•NTM P/E Ratio: 10.87x
•2-Year Mean: 12.93x

•NTM FCF Yield: 11.59%
•2-Year Mean: 9.42%

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

Going forward, investors can receive ~19% MORE in earnings per share & ~23% MORE in FCF per share 🧠***

Before we get into valuation, let’s take a look at $MTCH quality characteristics

BALANCE SHEET🆗
•Cash & Short-Term Inv: $843.60M
•Long-Term Debt: $3.84B

$MTCH has a decent balance sheet & 6x FFO Interest Coverage Ratio

RETURN ON CAPITAL✅
•2020: 29.4%
•2021: 21.3%
•2022: 22.3%
•2023: 23.1%
•LTM: 23.3%

REVENUES✅
•2018: $1.73B
•2023: $3.36B
•CAGR: 14.19%

FREE CASH FLOW❌
•2018: $956.73M
•2023: $829.38M

•FCF jumped from $341.18M in 2017 to $956.73M — also important to note that FCF grew at a 9.69% CAGR from 2013-2023

NORMALIZED EPS✅
•2020: $2.47
•2023: $3.02
•CAGR: 4.10%

SHARE BUYBACKS❌
•2018 Shares Outstanding: 197.11M
•LTM Shares Outstanding: 287.40M

By increasing its shares outstanding 45%, $MTCH decreased its EPS by 32% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 72.3%
•LTM Operating Margins: 25.7%
•LTM Net Income Margins: 18.7%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~19% MORE in EPS & ~23% MORE in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $MTCH has to grow earnings at a 5.44% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2025 - 2026 EPS growth over the next few years to be more than (5.44%) required growth rate:

2024E: $3.09 (2.4% YoY) *FY Dec

2025E: $3.56 (15.0% YoY)
2026E: $4.32 (21.5% YoY)

$MTCH has a poor track record of meeting analyst estimates ~2 years out, but let’s just assume $MTCH ends 2026 with $4.32 in EPS & see its CAGR potential assuming different multiples

13x P/E: $56.16💵 … ~21.9% CAGR

12x P/E: $51.84💵 … ~17.5% CAGR

11x P/E: $47.52💵 … ~12.9% CAGR

As you can see, $MTCH appears to have attractive return potential if we assume >11x multiple, a valuation that may can be justified by its growth rate assuming the company meets estimates

Yet, it’s important to note the inconsistent history in FCF, heavy share dilution, unattractive balance sheet, & questionable long-term moat & competitive advantage

For the above reasons, while $MTCH does appear like an attractive opportunity today at $36.55💵, I would not invest in $MTCH as it lacks the quality I demand for my investable dollars

#stocks #investing

Thank you @rileysackett1 for the request🫱🏽‍🫲🏻
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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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⁠App Economy Insights
🎮 Could Tencent buy Ubisoft?

Bloomberg reported that the Chinese giant may pursue a buyout or take the company private.

The stock is nearly 90% off its 2021 high.

Who else could step in? 👇
https://t.co/hyCc7Jx3NW
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⁠App Economy Insights
$JPM JPMorgan Chase Q3 FY24.

• Net revenue +7% Y/Y to $42.7B ($1.3B beat).
• Net Income -2% Y/Y to $12.9B.
• Non-GAAP EPS: $4.37 ($0.39 beat).
• Deposits and loans +1% Q/Q.
• FY24 NII ~$92.5B (previously $91B). https://t.co/jNd9wSRj9M
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⁠Capital Employed
Interesting idea by @memyselfandi006 on $FPE Fuchs Se.

Family owned Lubricant manufacturing and distribution company. 👇

https://t.co/UvleQIVpgY
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