Brian Stoffel Profile picture
Nov 29, 2021 9 tweets 3 min read Read on X
Over the past decade, I've been blessed with:

✅27% annualized returns
📈That's roughly 1,000% total

One of the keys behind those results: Looking for something that's often ignored by analysts...⤵️
OPTIONALITY

The practice of TESTING out a new product or service in an effort to fulfill its mission.

🔴If it doesn't work, it's no big deal -- it was just a test.
🟢If it does work, it's a game-changer.

Critically, the company already needs a wide-moat rev stream to count on
No company is a better example of this than AMAZON $AMZN

In 1999, books and music were the wide moat business. It decided to test:

🔴Amazon Auction (failed)
🟢3rd Party Merchants (huge success)
In the next decade, 3rd Party Merchants were so successful, that business line entered the left (wide-moat) side of the business.

Next, it tested:

🔴Fashion Retail (failed)
🟢AWS, Prime, Fulfillment (ENORMOUS success)
Ten years later, those winners were no longer tests, they were wide-moat businesses.

But the innovation didn't stop there:

🔴Quisdi (failed)
🔴Fire Phone (failed)
🔴Amazon Wallet (failed)
🟢Original video content (succeeded)
The result of all of this:

A simple $10,000 investment at the company's IPO is worth almost $20 MILLION TODAY!

But Amazon isn't alone, there are others you can invest in today.
@BrianFeroldi and I tackled this phenomenon in our recent video on OPTIONALITY.

We introduce
✅One small (~$11B) stock with lots of optionality
✅8 more stocks we're impressed with
✅How to find signs of optionality

We are busy making videos like this every week.

Why?

Because we want to spread financial wellness and help anyone lead a full, whole life (while not worrying too much about finances).

Our videos are completely free, and you can subscribe here:

youtube.com/brianferoldiyt…
To review:

OPTIONALITY is the ability to *test* new products and services that fulfill one's mission.

If they fail, it's not a big deal
If they succeed, it's a game changer

And no one has done this better over the last 20 years than Amazon $AMZN

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More from @Brian_Stoffel_

May 17
The Antifragile Portfolio has made 4 major SELLS recently

The stocks I've dumped👇
The Context:

I want stocks with:

1️⃣ A Wide Moat: Veeva's Moat is a MILE-WIDE
2️⃣ Optionality: Here's the problem👇

For years, Vault came out with new products that were gobbled up. I have the feeling we've reached saturation, but the stock trades like it hasn't. Image
The Context:

Workplace Collaboration competition is RED HOT ( $GTLB, $MNDY, $ASAN -- to name a few)

The big problem: These other companies offer *much* more transparency with regards to net dollar retention and other such metrics.

Without them, $TEAM just doesn't make the cut Image
Read 7 tweets
Apr 29
April 6th

I said: " $TSLA is cheap!"

It's up 37% in the last week alone!

Is it still cheap?

My answer⤵️
First, we need to take into consideration that free cash flow is plunging.

Inventory is up (a very bad sign for a vertically integrated company)

And spending on AI has been huge. Image
Using $1.4 Billion as trailing free cash flow...

FCF needs to grow 53% moving forward

🤯🤯 That's INSANE 🤯🤯

But there's a saving grace...⤵️ Image
Read 9 tweets
Apr 27
Warren Buffett's favorite investing book:

Securities Analysis by Ben Graham

It's FILLED with timeless wisdom that still applies today.

Here are 12 powerful lessons every investor should memorize:⤵️ Image
1. Investing versus speculating

Investors make decisions based on the facts and value of the asset.

Speculators make decisions based on other participants' behaviors.

Know the difference: Image
2. Good business vs. bad business

Graham defines in simple terms what makes a business "good".

The inverse of these conditions makes it "bad."

Investors should focus on buying good businesses. Image
Read 15 tweets
Apr 23
📊 $TSLA valuation: Is the 65% dip a buying opportunity?

What today's price assumes about the future⤵️
Most only look at traditional ratios and say:

"This is WAY too expensive."

🔴 Price/Earnings (P/E): 33
🔴 Forward P/E: 59
🔴 Price/Free Cash Flow (P/FCF): 108
🔴 Forward P/FCF: 113

They aren't wrong, but it's incomplete.

What if we do a reverse DCF?⤵️
The necessary inputs:

1️⃣ Trailing Free Cash Flow: $4,357 million
2️⃣ Terminal Growth Rate: 2% (Probably conservative)
3️⃣ Discount Rate: 10% (Market-Matching over the next decade)

The output:

➡️FCF needs to grow 31% annually...for a DECADE

Knee-jerk reaction⤵️ Image
Read 9 tweets
Apr 9
The P/E ratio sucks It’s a metric that easily deceives investors

Here are 5 reasons why the P/E ratio can be INCREDIBLY misleading (and what metrics to use instead):👇
What is the P/E ratio?

P/E stands for “price-to-earnings”

It’s a simple metric for determining a company’s current valuation

It divides the stock price by the last 12 months of earnings per share Image
There are 3 main P/E ratios

They all use a different denominator

1: P/E TTM earnings (actual)
2: P/E Forward: NTM earnings (estimates)
3: P/E Forward 1 yr: Next Fiscal Year earnings (estimates)

#1 is the most popular & referenced by far Image
Read 14 tweets
Apr 6
I own 16 stocks

Here they are, from most to least "expensive":
Most (13) of these stocks are roughly in STAGE 3/4

The Tool: modified Reverse DCF calculation

My inputs:
1️⃣ A 3% terminal growth rate
2️⃣ A 10% discount rate
3️⃣ An optimized Free Cash Flow margin

The output:
🟢 The assumed TOP LINE growth
🔴 Adjusted for share dilution Image
16/ Shopify $SHOP

If:
⚫ Optimal FCF Margin = 22%
⚫ Assumed dilution = 2%

Then:
📈 10-Yr Rev CAGR needed: 25%
😟 Expected 3-Yr Rev CAGR: 20% Image
Read 19 tweets

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