$IBM Valuation and Momentum Indicators
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- May, 12, 2016
- Sundeep Bajikar
- 4SAFEt, Equity Research Process, Stock Analysis
The chart below suggests that over the last 10 years, IBM’s stock price has tracked NTM EPS estimates with occasional periods of divergence. Over the last few years IBM’s stock price tracked below NTM EPS estimates, as IBM’s P/E valuation multiple compressed. The chart below suggests that over the last 10 years, IBM’s […]
Read More4SAFEt – 4 factors drive margin of SAFEty in tech stocks
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- May, 11, 2016
- Sundeep Bajikar
- 4SAFEt, Equity Research Process
This chart taken from my book, illustrates my equity research framework comprised of 4 factors that drive margin of SAFEty for an investment in a tech stock. I learnt the concept of “Margin of Safety” in Benjamin Graham’s famous book “Intelligent Investor”, and modified Graham’s original process to come up with the 4SAFEt framework for […]
Read MoreDRAM: Select 1Q16 Comments from Samsung and SK hynix
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- May, 09, 2016
- Sundeep Bajikar
- DRAM, Industry Analysis, Stock Analysis
Samsung and SK hynix’s commentary suggests both are expecting improvement in DRAM supply/demand balance later in 2016. Samsung “Currently, as you mentioned, the NAND market outlook is very strong. Actually, our outlook towards the DRAM market is not that bad either. And our production plan going forward as well as our inventory will be managed […]
Read More$AAPL: The Disappointment in 2 Charts
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- May, 05, 2016
- Sundeep Bajikar
- 4SAFEt, Stock Analysis
The chart below suggests that AAPL stock’s recent negative reaction to estimate cuts is similar to its behavior following product/earnings disappointments in 2013. The chart below suggests that AAPL stock’s recent negative reaction to estimate cuts included a compression of its NTM P/E multiple, similar to its behavior following product/earnings disappointments in 2013. The two […]
Read MoreHow Long Does it Take to do Equity Research?
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- May, 03, 2016
- Sundeep Bajikar
- 4SAFEt, Equity Research Process
The table below should give you some idea of the time it takes to execute different research activities required to analyze a given company. Depending on the size of the company, the complexity of its operational history, competitive and supply chain dynamics within the industry, and ease of access to information, it could take more […]
Read MoreWhy Market Participants are tempted to go “Research Lite”
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- May, 03, 2016
- Sundeep Bajikar
- 4SAFEt, Equity Research Process
Equity Research is very time consuming, and in the case of sectors like Tech and Pharma, also requires industry knowledge, which most investment professionals do not possess. Lack of process discipline and short-term performance pressure further compound lack of knowledge into a bigger investment problem. The end result is a collection of investment managers who […]
Read MoreValue vs. Growth – Unfortunate Mutual Fund Taxonomy
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- May, 03, 2016
- Sundeep Bajikar
- Financial Services
As the chart illustrates, confusing institutional nomenclature notwithstanding, value investing does not exclude growth stocks within my framework. When Benjamin Graham first introduced value investing, his focus was on estimating liquidation value of assets underlying a stock or a bond, with less importance placed on product or industry-specific dynamics as a source of potential future […]
Read More“Value” in “Value Stock” is derived through Equity Research
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- May, 03, 2016
- Sundeep Bajikar
- 4SAFEt, Equity Research Process
A Value Stock is one that was vetted through the process of Equity Research to provide adequate Margin of Safety. The goal of equity research is to estimate the intrinsic value of a stock. As illustrated in the chart, the difference between intrinsic value and the purchase price of a stock drives Margin of Safety. […]
Read MoreRobo Advisors to the Rescue?
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- May, 03, 2016
- Sundeep Bajikar
- Financial Services
I am sharing an older WSJ article on Robo advisors below – seems to be the “rage of the day” in the investment market. I have not studied each individual Robo advisor strategy in detail yet, but my first impressions are: 1) Robo advisors aim to shift the focus from stock (or security) selection […]
Read MoreWhy Value Investing in Technology is Difficult for Generalists
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- May, 02, 2016
- Sundeep Bajikar
- 4SAFEt, Equity Research Process
This chart from my book dissects “Company Fundamentals” into “Business Model” and “Industry Dynamics”. While a generalist value investor would be capable of understanding the business model of a technology company, she may not fully understand the influence that various industry dynamics might have on the company’s business model. This affects the process of assessing […]
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