Posts In: Premium Articles-01

Geoff Gannon August 29, 2017 Premium Articles-01

The Market is Overpriced: These 3 Stocks Aren’t

Most stocks are now overpriced. Historically, a normal price for a stock has been about a P/E of 15. And historically, stocks have outperformed other assets. Therefore, it makes sense to buy above average businesses when their shares trade at a P/E of 15. Right now, I see 3 above average businesses trading at about a P/E of 15: Cheesecake Factory (CAKE) Omnicom (OMC) Howden Joinery I’m not buying any of these stocks personally right now. However, if you asked me right now whether or…...

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Geoff Gannon July 27, 2017 Geoff's Answers, Premium Articles-01

How to Read Between the Lines of a 10-K

Question “I have read some of your Singular Diligence content and one of the most interesting parts of the reading are the notes that you and Quan used and published in those reports. So one of the most remarkable things that I have noticed in the notes is that you did not use a lot of information in the annual reports. And this sounds intriguing to me since I am a regular reader of your blog and you have always emphasized how important it is…...

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Geoff Gannon July 17, 2017 Geoff's Answers, Premium Articles-01

How to Judge a Company’s Bargaining Power With its Customers and Suppliers

A Focused Compounding member asked me this question: “…what are the factors we should be thinking about when assessing the bargaining power of a given business relative to its customers and suppliers?” In an earlier memo, I talked about “market power”. My definition of market power is the ability of a company to make demands of its customers or suppliers without fearing that such demands will end their relationship. Why would a supplier or customer agree to demands without considering ending the relationship? Dependency. Recently,…...

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Geoff Gannon June 21, 2017 Premium Articles-01

Finding the Right P/E Multiple – Or How to Handicap a Stock

First, a huge warning about the tables I’ll be showing you in this memo. The P/E multiples shown here are useful as a theoretical tool for getting some idea of how important durability – being able to know a stock will still be turning an annual profit more than 5 years from now – and growth (being able to know a stock will compound intrinsic value faster than the overall market) is in finding the right P/E for a stock. Basically, what I’m saying here…...

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Andrew Kuhn June 13, 2017 Premium Articles-01

A Blast from the Past: Warren Buffett’s 1977 Shareholder Letter

Whenever someone comes to me asking for advice on how to get started in investing, the first place I direct them to is reading all Warren Buffett’s Berkshire shareholder letters. It is no secret that his letters have tons of golden investing-wisdom nuggets laid upon them. I have read them many times but interestingly enough, I always take something new away from them every time I reread them. In this series, we’re going to go all the way back and start from the beginning and…...

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Geoff Gannon May 29, 2017 Premium Articles-01

Over the Last 17 Years: Have My Sell Decisions Really Added Anything?

I get a lot of emails from people saying that my strategy has changed – I’ve become more of a growth investor and less of a value investor – over time.   It’s true that the investments I’ve made in recent years have definitely changed.   But, my philosophy has changed less than it would appear from my stock picks. I concentrate heavily and go where I see opportunities I consider “nearly certain” rather than being the highest return opportunities based on pure probabilities.  …...

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