So...how do I read this 1500 page report?
Ok guys so I'm attempting my first investment and so far I came across this spin-off by BHP. I read Joel's book on special sits and it all sounded too persuasive so I decided to give it a go.
Now...here's the problem. BHP submited a 1500 page IM describing their spin-off. I just don't really know how to approach it? Read the whole thing line by line? Focus on some specific sections first? I mean I don't even know what I'm looking for and 1500 pages sounds like 2 weeks of my life!
How do you guys do it? Do you have some checklist when looking at investments? Do you build the op model first? Do you not build the op model at all and do back-of-napkin valuation?
I imagine a good way would be to first check the "must haves". Too bad I have no clue what they are. Advise?:)
Link to the report:
http://www.bhpbilliton.com/home/investors/shareholderinfo/Documents/201…
If you can't spend 2 weeks researching on your first investment, then don't.
First off, it's not a 1500 Page report. It's a 215 Page report and 1285 pages of Annexes, Addendum and Independent Reviews, Consulting Reports, and Reference Materials. In particular, Pages 311 through 1500 cover Annex 6, which is multiple independent reports concerning the land in question.
My advice to you would be to actually look at the Table of Contents and figure out what each section is and then go from there and read what you think is relevant in order to make an investment decision.
"I'm attempting my first investment" "I don't even know what I'm looking for and 1500 pages" Those two things dont add up. If this is your first investment you should stick to something you know and can easily digest. Not saying this isnt a good investment but even if it does well you likely wont understand why it did well which means you wont be learning from your investments which is key when you are young.
@"astfin-juki" @"modestlocke9"
I very much appreciate all the criticism but if you can't add anything valuable - maybe don't add anything at all?
Yes this is my first try and I'm sure during your first try you were flying high and not asking any stupid questions. Good for you. I'm not that smart so I have to ask how to best approach 1500 pages of text. Thanks.
You may not like it but modestlocke was giving you good advice. He wasn't calling you stupid so back off the defensiveness and learn to listen to critical feedback. His point is your goal should be to learn as much about investing and researching as possible, not to find a stock that will be up 3x in 12 months. You said you have no idea what to look for or where to even start for this company. If that is true then skip this company (another favorite piece of advice from Greenblatt). You don't have to choose a complicated spin-off as your first investment ever. Pick a company in an industry you can easily understand, form a thesis and make an investment. Then track that company and compare what really happens to the company (not the stock price!) to what your thesis expected to happen. That is how you learn useful skills. If you buy this spin because Greenblatt said spin-offs are great and even if you make a fortune you haven't really learned anything helpful if you can't understand why you made money or what else could have happened.
If you insist on pursuing this particular stock then you probably will have to read documents in their entirety. The more you read the more you learn how to skip boilerplate language and where to key in on the important issues but unfortunately that comes from experience.
Thanks for this. I did see the part about "learning from your investments" and I appreciate it. The reason I chose a spin-off is not because I want to make 10x return in 2 months and move to Hawaii but rather because I just like the philosophy of special sits. It just makes sense to me -- markets near-efficient most times but not at all times -- when are they least efficient -- when unordinary things happen -- like spinoffs! Therefor I do want to learn from my spinoff attempt. And I still do the fundamental analysis.
You just gotta start somewhere - for me this is both interesting and makes sense.
And also to make it clear I'm not asking "how do I not read 1500 pages and make loads of money" but rather how to BEST approach 1500 pages. I do understand that you need to put in the hours, no question.
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