6/4/11

This book is $2k on amazon.com. I was able to get chapters 5-10 but not the rest. Anyone willing to send me a pdf version if they have it? Would be greatly appreciated. I have lots of books as well ;)

Comments (29)

6/4/11

The WSO Advantage - Hedge Funds

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6/4/11
6/5/11

excellent book - a must for anyone interested in value investing...

6/5/11
6/5/11

But the thing is, its actually not that good of a read. Yes, there are a few chapters that are useful (his descriptions on valuation and investing strategies), but beyond that, most of his work is either rehashed principles from other value books or high level and overly simplistic examples. Everything on how wall street works, how brokers are bad, the philosophy behind value investing, his distressed debt examples, etc, fall under these categories. Anyone who has read through buffet partnership letters, graham's work, or any sort of distressed book, has heard this stuff many times before. Plus the entire last few chapters on portfolio management offer pretty much no value add (you would think they would be good given the title, but I'm pretty sure they sucked). For $2k, no thanks. I wouldn't pay more than $50. Then again, free is always nice :)

In reply to Frank Slaughtery
6/5/11
6/5/11

I am have a full copy, so let me know if you think you are missing anything. Here is some more information about Seth Klarman and his Baupost Group hedge fund

6/5/11

The WSO Advantage - Hedge Funds

Financial Modeling Training

IB Templates, M&A, LBO, Valuation.

Wall St. Interview Secrets Revealed

30,000+ sold & REAL questions.

Resume Help from HF Pros

Land More Interviews.

Find Your HF Mentor

Realistic HF Mock Interviews.

6/6/11

Perfect thanks guys.

I've got:

little book that beats market
stock market genius
big short
fin shenanigans
interp of fin statements
essentials of investmentrs
getting started in VI
merger arb
etc

--
"Those who say don't know, and those who know don't say."

In reply to nutsaboutWS
6/6/11

nutsaboutWS:
Perfect thanks guys.

I've got:

little book that beats market
stock market genius
big short
fin shenanigans
interp of fin statements
essentials of investmentrs
getting started in VI
merger arb
etc

great list

i would add:

Fooling some of the people all the time
the aggressive conservative investor
distressed debt investing
more money than gd

6/6/11

got those too, not aggressive conserv tho.

also inside the house of money and invisible hands. ive dl's so many lol

--
"Those who say don't know, and those who know don't say."

6/6/11

After a while most of these books are just rehashed principles. Once you have the basics down focus on either developing your own ideas or reverse engineering other people's ideas. Grab any of the big fund's annual/quarterly reports, choose an investment that has either been a big winner or loser for the fund and try and figure out why you would invest in it. You will learn 10x as much doing this than going through 30 different books. Its one thing to be given all the metrics in front of you in a book post-trade but quite another to actually go through the 10-ks and manually crunch all the numbers.

6/6/11

Thanks for the link man, appreciate it.

For someone just starting out learning value investing (slowly working through Intelligent Investor), would you guys say this book is a more or less comprehensive collection of information on value investing? Something where someone has no background and can look at value investing and a more educated light? Or stick to II for now and some simpler stuff and move to this later?

"You stop being an asshole when it sucks to be you." -IlliniProgrammer
"Your grammar made me wish I'd been aborted." -happypantsmcgee

6/6/11

Who writes Interp of Fin Statements and Distressed Debt Investing? Kind of unrelated, but the Real Estate Game by Poorvu is also pretty good.

6/7/11

DDI = Moyer (awesome for distressed)
Financial statement = Graham (IMO there are many other better books.)

6/7/11

Anyone know good books for figuring out how to find intrinsic value of a business? As others have mentioned on this thread, I've read some of the classic value investing books, and half the time I feel like I'm reading the same thing over and over again. I understand what the general philosophy behind value investing is and whatnot, but what I need more help with is determining what is a good value for a business, which metrics should be there, etc.

I'm not trying to sound like a punk kid who thinks he's hot shit when it comes to value investing because he's read a few books, but is there something that goes more into the quantitative methods of determining value as opposed to just highlighting what value investing is? I know its an imprecise methods and that one must tweak it, etc. but even an intro to this subject that I can use as an outline would be excellent.

Pretty women make us BUY beer. Ugly women make us DRINK beer.

6/7/11

Figuring out intrinsic value depends on what you are evaluating. If you read say Klarman's book he mentions he uses 3 primary valuation techniques:

1. Calculating NPV of the business' future cash flow (aka DCF).
2. Liquidation value. What would the business be worth if it was fully liquidated?
3. Stock value which is essentially a comp analysis. What is the valuation of similar businesses in public markets or in recent private acquisitions?

Beyond this, you just need to get at it. This is why I suggested reading beyond a certain point is just not helpful. Each valuation is different as each business is different. There are industry nuances where techniques and metrics you would use to value say insurers will be completely different from how you value a consumer facing biz. There are event based nuances where say a divestiture might have a unique debt structure which affects future cash flows. This list goes on.

To get a better understanding you have two options:
1. First look at how the players actually assess investment opportunities. Look at the big plays of fund managers (say General Growth by Ackman), download public filings, and reverse engineer the analysis. Analyze the situation as if you were in Ackman's shoes. What do the fundamentals show? What were the technicals (who holds what and what their motives are)? What are the extrinsic risks v. intrinsic risks?

Beyond that, go to sites like Value Investors Club and use the guest access to see how a proper investment writeup looks like. What metrics do they look at? How do they go about analyzing the financial statements? Are there any trends you see in finding future investment opportunities similar to this?

2. Once you have done that, get at it. Choose a business preferably something simple (say a simple manufacturer or consumer facing biz). Read the 10Ks, analyst comments, research. Use the 10Ks to create a financial model. Run all three (NPV, breakup/liquidation, comp) analysis from scratch. You have excel and your eyes...don't need anything else. Once you have done one, ideally get feedback by showing it to contacts or posting it on an investor forum. Use that feedback in your next valuation. Repeat until you are proficient in that industry and then find another industry and repeat.

There really aren't any shortcuts. But if you focus you can pick this up fast.

6/7/11
6/7/11

for this book and many others, try this website: library.nu

6/7/11

I use it for everything. Good one barkatthemoon.

Doesn't have MoS. 80% of books are on that website though.

--
"Those who say don't know, and those who know don't say."

6/7/11

So ppl have tried library.nu, it isn't suspect or anything? Thanks everyone.

6/8/11

I'd virus scan just to be sure

"You stop being an asshole when it sucks to be you." -IlliniProgrammer
"Your grammar made me wish I'd been aborted." -happypantsmcgee

6/8/11

Interpretation of Financial Statements - It's from 1937. Obviously the fundamentals haven't changed, but is there anything newer you're aware of that might relate the material to tech or something equivalent as opposed to railroads?

6/9/11

I personally think Margin of Safety is a great book, but not worth 2k. I'd really recommend the Essays of Warren Buffett, which I don't think was on your list. I also didn't see the intelligent investor, or security analysis - though I'm guessing if your seeking Margin of Safety you've probably read those two. However, if you haven't, I can't urge you enough to get a hold of those two. Their outstanding.

6/9/11

Got all those down already. Thx nyctola.

--
"Those who say don't know, and those who know don't say."

6/9/11

nyctola, I don't know anyone who has read security analysis and genuinely enjoyed it haha. Terribly boring book, but yeah, it's worth the read.

baddebt88, I definitely agree with most of what you've said. Word of caution would go towards using stock market valuation (Klarman specifically states that he uses precedent transaction multiples with only extreme hesitation and for stock market multiples, he gives the example of valuing a fund I believe, so these are probably not common for him and are not given much weight relative to the other two methods). Another metric to consider is FCF and FCF yield, which can have a lot of implications and be quite relevant in making a decision from a quant perspective.

Also, when you are going through the process of learning how to do a company analysis, don't only spend time learning how to do the valuation. The numbers mean nothing if you don't understand the qualitative (what do you think drives the DCF!) and the risks/trends/etc. Look at a company like RIM -- can you imagine trying to get a valuation without understanding the competitive landscape / company specific factors?

Also, when you do the DCF, have multiple scenario's (no growth, conservative growth, etc.) and play around with how the valuation changes. If you find a company with strong qualitative characteristics that seems properly valued in a no growth scenario and you feel strongly that there will be growth, the risk/reward (assuming you haven't fucked up) is pretty good in that situation. Alternatively, if you need a pretty serious growth % for x number of years for your valuation to go above the current market value, the risk/reward is probably unattractive.

Another thing that can be helpful is thinking about the catalyst time horizon. You don't have to know exactly when a catalyst will occur, but you can certainly make a scenario forecast and look at how your investment return will vary based on the catalyst time frame. This will let you better evaluate your alternatives and it will also let you go back in a year or two and compare your thoughts to what has actually occurred, which can be important for re-evaluating your position and learning from your mistakes.

6/9/11

Big fan of margin of safety. In regards to the people looking for a book that better describes actually calculating intrinsic values- I can't recommend anything more than Value Investing by greenwald. Talks about how to value different types of companies (not by sectors, but by economic and competitive standings) with in depth case studies. For example, if a company is going out of business you would figure out its liquidation value . If the company is an on-going concern it is worth its asset replacement value. If it has a sustainable competitive advantage it is worth its earnings power value. If it has a competitive advantage and has the ability to "grow through its franchise" and produce value through growth, there's an added value to growth. So in other words, it gives a framework to value most types of companies.

For each type, it goes in depth through analyzing a company's competitive position both qualitatively and quantitatively, tells you how to actually calculate each intrinsic value, and does this through long case studies on past investments. Fully recommend from a dedicated value investor.

6/10/11

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Pretty women make us BUY beer. Ugly women make us DRINK beer.

In reply to makers mark
6/10/11

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