This blog seeks to identify mispriced assets. While markets are efficient in the long-run there is overwhelming evidence that markets and their underlying components are not always efficent in the short run.
The general rule of thumb will be stocks written up must be at least 25% undervalued to warrant an investment.
The following traits are preferable when purchasing a stock:
- Management teams who are focused on generating profits and sharing those profits with shareholders via dividends of buybacks
- Transparent and straight forward financial and accounting metrics
- Low leverage ( Debt/EBITDA, Debt/Equity)
- Current period earnings are preferable to the promised future period earnings.
- Revenues must always be flat-growing, all dips must be demonstrably transitory
- Significant barriers to entry
- High margin