Vienna value investing meetup #1
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Transcript of Vienna value investing meetup #1
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Vienna Value Investing Meetup
PRESENTED BY MARTIN BODOCKY
SUPPORTED BY
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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
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Who am I?
MARTIN BODOCKY
CEO OF MINT IT
AI AND FINTECH GEEK
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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.
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Agenda
1.) INTRODUCTION INTO VALUE INVESTING
2.) SIMPLE VALUATION PROCESS
3.) NETWORKING
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Why should we invest?
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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
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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
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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
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Value of patience
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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
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How to learn to value invest
• LEARN PRINCIPLES OF FUNDAMENTAL ANALYSIS
• START TO VALUE COMPANIES
• EXECUTE YOUR IDEAS (WITH VIRTUAL MONEY FIRST)
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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
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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)
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Fundamental analysis
• BALANCE SHEET
• INCOME STATEMENT
• CASH FLOW
• MOAT, COMPETITIVE ADVANTAGE OR FRANCHISE
• FUTURE GROWTH
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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
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ARE WE ABLE TO DECIDE SOLELY ON BALANCE SHEET OR INCOME STATEMENT?
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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.
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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
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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
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What matters in value investing? 1/2
• GOOD RESEARCH
• UNDERSTANDING INDUSTRY
• REVENUES
• P/E, EV/EBIT RATIOS
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What matters in value investing? 2/2
• EXPERIENCE
• INTUITION
• PRACTICE
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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
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Next sessions
• VALUE COMPANY IN SPECIFIC STAGE – GROWTH, MATURITY
• SPECIFIC INDUSTRY SESSIONS(AUTO, BIOTECH, SOFTWARE)
• PLEASE PARTICIPATE
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