vienna value investing meetup #1
TRANSCRIPT
Vienna Value Investing Meetup
PRESENTED BY MARTIN BODOCKY
SUPPORTED BY
Why this meetup?
BUILDING COMMUNITY TO HELP EACH OTHER
WE WANT TO BUILD THE RIGHT TOOL FOR VALUE INVESTORS
THIS IS AN OPEN DISCUSSION MEETUP, PLEASE ASK WHENEVER YOU LIKE
Who am I?
MARTIN BODOCKY
CEO OF MINT IT
AI AND FINTECH GEEK
Disclaimer
WE ARE NOT INVESTMENT ADVISORS.
WE ARE NOT RECOMMENDING TO BUY OR SELL.
ANY DECISION YOU CONCLUDED FROM THIS SESSION IS YOURS NOT OURS, YOU ARE IN CONTROL.
Agenda
1.) INTRODUCTION INTO VALUE INVESTING
2.) SIMPLE VALUATION PROCESS
3.) NETWORKING
Why should we invest?
Investing is risky business
• INVEST MONEY WHICH YOU CAN AFFORD TO LOSE
• MARKET CAN REMAIN IRRATIONAL LONGER THAN YOU CAN REMAIN SOLVENT
• DIVERSIFICATION IS A MUST
• PREPARE BUY AND EXIT STRATEGY
What is value investing• VALUE INVESTING IS PROCESS OF DISCOVERING
TRUE BUSINESS VALUE VIA FUNDAMENTAL ANALYSIS
• VALUE INVESTING IS BASED ON FACTS
• VALUE INVESTING TRIES TO IGNORE VOLATILITY ON MARKET
Value investing VS Day Trading
• TRADING IS BASED ON TECHNICAL ANALYSIS AND MOMENTUM
• TRADING IS NOT BASED ON TRUE VALUE OF BUSINESS
• TRADING IS MORE SPECULATIVE
• VALUE INVESTING IS BASED ON FACTS
Value of patience
Investing homework
• COMPOUND INTEREST – LET MONEY WORK FOR YOU
• KNOWING YOURSELF – RISK CAPACITY
• PREPARE FOR BAD OUTCOME – DON’T RISK MONEY YOU CANNOT LOSE
• DIVERSIFICATION – DON’T PUT ALL IN A ONE BASKET
How to learn to value invest
• LEARN PRINCIPLES OF FUNDAMENTAL ANALYSIS
• START TO VALUE COMPANIES
• EXECUTE YOUR IDEAS (WITH VIRTUAL MONEY FIRST)
Basic terminology 1/2
• MARKET CAP – COMPANY SIZE, RISK OF DEFAULT
• OUTSTANDING SHARES – ALL SHARES ISSUED
• TOTAL REVENUE = COMPANY SALES
• NET INCOME = TOTAL REVENUE – OPERATING EXPENSES – TAX
• OPERATING INCOME = TOTAL REVENUE – OPERATING EXPENSES
• DIVIDENDS – RETURN ON INVESTMENT
Basic terminology 2/2
• DEBT – LOANS, BONDS, ALL LIABILITIES
• NET DEBT = LIABILITIES – (CASH AND CASH EQUIVALENTS)
• NET CASH =(CASH AND CASH EQUIVALENTS) -CURRENT LIABILITIES
• ENTERPRISE VALUE = MARKET CAP + TOTAL DEBT –(CASH AND CASH EQUIVALENTS)
Fundamental analysis
• BALANCE SHEET
• INCOME STATEMENT
• CASH FLOW
• MOAT, COMPETITIVE ADVANTAGE OR FRANCHISE
• FUTURE GROWTH
In which company will you invest?Company A Company B
Share Price $12 $22
Market Cap $720m $440m
Debt $100m $200m
Cash & Equiv. $50m $120m
Net Debt -$50m -$80m
Revenue $75m $100m
Net Income $40m $30m
Enterprise Value $790m $420m
ARE WE ABLE TO DECIDE SOLELY ON BALANCE SHEET OR INCOME STATEMENT?
Ratios and margins to rescue
• DEBT / CASH
• ENTERPRISE VALUE / CASH
• EARNINGS PER SHARE = (NET INCOME –DIVIDENDS)/NUMBER OF OUTSTANDING SHARES
• DEBT / OPERATING INCOME
• ENTERPRISE VALUE / OPERATING INCOME
• NET INCOME / REVENUE
• AND MORE.
Fiat VS Tesla 1/2Fiat – 10.44 Euro Tesla - $254.61
Market cap 13b Euro $41,01b
Debt 83,491b Euro $9,912b
Cash & Equiv. (Cash) 17,603b Euro $3,084b
Enterprise Value(EV)
78,888b Euro $47,833b
Debt / Cash 4,74 3,21
EV / Cash 4,48 15,51
Fiat VS Tesla 2/2Fiat – 10.44 Euro Tesla - $254.61
Revenue 81,299b Euro $4,715b
Operating Income (EBIT) 3,656b Euro -$0,400b
Net Income 1,391b Euro -$0,553b
Earnings per Share(EPS) 1,08 Euro -$3,43
Debt / EBIT 22,83 Negative
Net Income / Revenue 0,017 = 1,7 % Negative
What matters in value investing? 1/2
• GOOD RESEARCH
• UNDERSTANDING INDUSTRY
• REVENUES
• P/E, EV/EBIT RATIOS
What matters in value investing? 2/2
• EXPERIENCE
• INTUITION
• PRACTICE
How to predict future?
• DON’T SPECULATE
• UNDERSTAND BUSINESS AND VALUE STREAMS
• UNDERSTAND STOCK VOLATILITY
• BUILD A HABIT
• DON’T FOLLOW ESTIMATION OF PROFESSIONALS!
• ALWAYS DO RESEARCH
Next sessions
• VALUE COMPANY IN SPECIFIC STAGE – GROWTH, MATURITY
• SPECIFIC INDUSTRY SESSIONS(AUTO, BIOTECH, SOFTWARE)
• PLEASE PARTICIPATE