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Generic Boi Profile picture
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8 Sep, 4 tweets, 1 min read
Maruti, fundamentals history :

20Y EPS growth CAGR : 12%
10Y growth CAGR: 7%
Current EPS : 140rs /share
Yield at CMP : 2.5%

What is this *Yield? 👍

Explanation in the comments section below 👇 Image

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More from @techlunatic

Generic Boi Profile picture
9 Sep
A short thread🧵

The US armed forces faced a dilemma during WW2, because returning bomber planes were riddled with bullet holes and they needed better ways to protect them.

The army knew they needed armor to protect their planes but the question was, “Where should they put it?”
When they plotted out the damage these planes were incurring, it was spread out, but largely concentrated around the tail, body and wings. So the most natural impulse was to armor the parts with the most bullet holes.

But..
Abraham Wald, a statistician, made an observation—the military would make a terrible mistake by upgrading the armor along these sections.

Why?

Because the military was only looking at the damage on returned planes. They hadn’t factored in damage on planes that didn’t return.
Read 5 tweets
Generic Boi Profile picture
30 Jul
When a stock falls, it opens up deeper arbitrage opportunities during a 'falling knives' scenario. This discount attracts a rapid influx of fresh cash until the arbitrage opportunity gap is filled (i.e the market stabilizes) to the point of 0 alpha.
Earnings yields is mostly stable and smooth curve. It's the stock price that fluctuates due to sentiments, liquidity, news cycle, perception etc.

Let's say the long term earnings yield was growing at 9%. If you bought at

(A), your returns = 5%.
(B), your returns = 15%
If you track yield, you'll get better entry points and get better bang for buck. If you track only price, there's a risk of getting trapped at (A) where all technical indicators are bullish.
Read 7 tweets
Generic Boi Profile picture
29 Jul
Stock prices respond disproportionately to free float availability (or lack thereof) than to theoretical Excel valuations. The growth rate x float decides the PE multiple, that's why every co. can't be 15PE. A co. with just 10% float will deviate that much from its DCF valuation.
If there's 2 similar co.'s, one listed (with 15% float available to investors) vs another co. unlisted. The market will arrive (rightly so) at wildly divergent valuations for both. The second co.'s valuation is based on 100% ownership, while the 1st one on a limited supply basis.
If both were listed with 100% float available to free-market forces, or if both were unlisted, then one can do a side by side DCF, otherwise sharing social media infographics comparing stats of Nestle vs Amul, vs ITC without considering locked up float shows lack of wit.
Read 6 tweets
Generic Boi Profile picture
29 Jul
The central narrative of my investment narrative has never been and will never be :

a) Catching stocks at the bottom
b) Catching potential multibaggers
c) Being obsessed with the chosen few 'potential multibaggers'
d) Buying 'safe' stocks and avoiding errors at any cost.

👇
a) Never caught these at the bottom :

b) Never treated this as a 'potential multibagger' when I bought it, just a better-than-average candidate among others.
Read 6 tweets
Generic Boi Profile picture
29 Jul
"This stock in my portfolio has reported a dip in earnings yield, what to do?"

The answer depends on the yields of other stocks in the PF. Has this yield dipped from 15% to 12%? are others at 10%? this is still your best performer. ADD!

Are there higher yielding stocks? MIGRATE
Keep 30-35 names in the holding, and another ~35 in the watchlist. This is your universe. Don't bother with other names.

Maintain an Excel sheet on all 70 of your candidates to keep track of the yield on each. Keep adding/trimming weights based on relative performance.
You'll get an inkling if you've built a good portfolio when one stock's yield dips, the higher yield alternatives are all found WITHIN your PF.

If all high yield stocks are outside your holding, in your watchlist, then you need to clean your demat and buy your watchlist instead.
Read 4 tweets
Generic Boi Profile picture
23 Jul
A compilation of all my long threads 🧵 :

(One link per comment to keep everything neat.)

Let's begin 👇
Read 100 tweets

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