Welcome to the Investing for Beginners podcast! Today we have a special guest! Joining us today will be Paul, a good friend we met in Twitter (or X now) where he will talk with us a diverse range of topics spanning from his experience working under Constellation software before into good capital allocation, value traps and more. Listen on as he discusses great insights into valuations especially on micro caps and also the key in finding quality businesses. This is such a great episode with so many gems that it’s a pity we only have an hour (almost) of an episode!
Timestamps of the episode:
-Paul shares his investing journey and gives credit on having people showing you the way. [02:10]
-He talks about the first stock he bought and how it started paving the way on doing great due diligence. [04:20]
-The importance of finding your own style in investing even though we all stand on the principles of investing giants. [07:00]
-Overpaying is the most common problem among investors and drags returns overall. [09:28]
-Paul shares his approach on what to do if he is gonna start investing all over again today, the rules to follow and sifting through noise of readily available information. [12:20]
-He breaks down what an earnings yield is and how it drives business return overall. [16:20]
-Differentiating between cheap stocks that deserves to be cheap and the ones that has sustainable earnings but the market values it cheaply. [19:35]
-What are value traps and why year over year fast revenue growth of value traps should not excite you. [21:55]
-Management’s quality in realizing shareholder value is important for every thesis/valuation to play out.[26:00]
-Why looking acutely on the cash position of a company’s balance sheet is relevant in gauging a management’s skill in capital allocation. [30:50]
-Paul shares his experience working under Constellation software before and why most small software companies are not run capital efficiently. [35:29]
-What valuation ultimately means to Paul and how he approaches it. [38:00]
-The key to finding quality businesses is by making the process simple. [42:35]
Note: Timestamps may differ and are approximate, depending on your podcast player.
Paul’s Twitter (X) handle- https://twitter.com/Investmentideen
His substack- https://investmentideas.substack.com
Books and resources mentioned in the episode:
Seth Klarman’s book- Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor
Joel Greenblatt- You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits
Geoff Gannon compilations download link- https://bit.ly/3QyzIpF
For more insight like this into investing and stock selection for beginners, visit stockmarketpdf.com
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You can find the transcript of today’s show below:
