Contrarian Investing In Europe, Japan & Commodity Cyclicals

Here’s what we got in store this week:

  • Steven Wood’s Plan For 2020
  • Machines Beat Analysts
  • Cyclical Stocks Win Big
  • Value Investing in Japan & Europe

Let’s get after it!

Investor Spotlight: Greenwood’s Purpose Driven Decade

GIFs by tenor

Steven Wood ended 2019 with an inspirational call-to-action. The end of 2019 marked a full decade of Greenwood’s business history. Steven’s ringing in the New Year with a defined mission statement and purposeful vision.

The Catalyst He Always Wanted

Steven reaffirmed Greenwood’s purpose and goals for 2020 in his latest blog post. Here’s the mission statement:

Our purpose is to be the catalyst that helps our investors, companies and team members perform at the top end of their range of possibilities.

Most retail investors can’t enact change within a public company. A 5% position in a $5M nano-cap company requires a $250K investment. That’s a lot of money for retail investors.

But there’s one part of Steven’s mission statement weekend warriors can use. It’s the idea of thinking in possibilities, not binary outcomes.

Thinking In Possibilities

Stocks are ownership shares in actual businesses. Because of this, there’s a myriad of outcomes that can arise over time. When analyzing a stock, you should think of the various downside and upside potential. Suggesting one downside case and one upside case isn’t enough.

There’s a few ways I’ve added possibility-analysis into my process:

    1. Run multiple DCF and EV/EBITDA valuation models
    2. Look at the ranges a stock has traded in the past
    3. Read more bear thesis write-ups on my long ideas

Where Steven Wants To Enact Change

Steven mentions three companies in his year-end blog post:

    • TripAdvisor (TRIP)

The stock is at its lowest level since 2013. The last time the stock was here, it shot to over $100/share. I’m not saying that will happen this time. But it’s worth thinking about.

Steven isn’t the only value investor thinking about TRIP. Andrew Walker (@AndrewRangeley) tweeted his thoughts on TRIP after his honeymoon to Vietnam:

The stock trades for 36x current earnings. Expensive on the surface, I know. But looking a year out, the company appears cheap at 16x earnings and 7.5x EBITDA.

  • Rolls Royce (RR.)
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Disclaimer: All statements are solely opinions and are for educational purposes only.

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