Micheal Burry MSN Money Articles 2000/2001 on PDF http://csinvesting.org/wp-content/uploads/2013/07/Michael-Burry-CaseStudies.pdf buffet- what will book value be in the future?

stock picking He does not specialize in one area. He finds out-of-favor industries- and the best companies in them that trade at steep discounts. A stock screener is very useful uses enterprise value/ebitda- acceptance depends on
industy and position in economic cycle. If a company passes the screening- look into off-balance sheet itenms and true cash flow. Ignore price/earnings ratios. Adjust book value to correct number. Also invest in asset plays, arbitrage, and companies selling less than 2/3 of (net working cap less liabilities) Mix in companies with a sustainable competitive advantage, as demonsrated by long stable high returns on invested capital. Granted they are available at good prices. Portfolio mgmt.

Answer the following questions- optimal number of stocks to hold? When t buy? When to sell? Diversify among industries and non/cyclicals? Tax implications? Low turnover? 12-18 stocks diversified among various depressed industries. His portfolio turnover will generally exceed 50% annualy. Mix some technical analysis into buying strategy. Prefer to buy within a 10-15% 52week low that has shown some support. If it breaks to a new low-cut the loss. Real-time account An equity/assets ratio should b used instead of debt/equity for a finance company. He analyzes previous econ cycles to compare to current time period. Calculates the firms market share through previous years..how did he get the info?

He makes a great point when talking about purchasing caterpillar. The short term outlook is poor due to domestic construction slowing down. The point he makes is that a large portion of the intrinsic value is embedded within the terminal value- if the company is likely to survive cyclical/secular lows. He explains well why the market has misperception. Anytime I have some dogmatic notion-I should look into it. I could be a great investor my lateral thinking is what differentiates myself. I would need to have a system though to curtail emotion. I need to fully understand the cfa accounting book and grahams security analysis. A more crisp understanding of accounting for value would also help. He has the ability to see the big picture while others are myopic. In most of the cases, there seems to be shortsightedness by the market. I wonder if its media sources that cloud such judgements? Would it be better for me not to read any secondary stock reports? He has a great understanding into incentives and how they affect other things. For instance, he recognizes that a healthcare company is pondering an acquisition of another-and it will have great synergy. But it is unlikely to be talked about because it may be difficult to pass anti-trust. Uses burn rate Must be wary of integration phase after a series of acquisitions since the seller always knows the biz better than the buyer (they wouldnt be selling if they thought it was worth more-winners curse) Why does he use mental sell-stops instead of programmed stops? Discussing clayton, who has many areas in housing, including a financing arm, he delves into how conservative the underwriting is- surely helped him to make the big bet. Need to check revenue recognition. Looks at executive and employee incentives for conservaives Explains how the professional managers, especially mutual funds, are obsessed with short term results like quarter and yearly. The competitive advantage lies where inefficiency lays and risk is not correlated with return.

In analyzing carnival, he adds ship replacement cost and operating assets. He takes this and subtracts market cap. He claims this prices brand equity below zero. He really like stock with low enterprise value/ebitda In a spinoff similar to FBHS, he says he did not like it from reading the 19k and proxy- but found good info in the annual report. EVA is not perfect, but is useful for gauging executive decisions. Doesnt like to buy more than above 15% technical support. The arbitrage market is pretty efficient Arb: looks at spread between stated price and market price. He says when evaluating the spread in a transaction without a collar, first look at the chance a deal will go through and second-the value of the acquiring companys stock after the deal executes. A spread will be low if there is a high probability that the deal goes through. This happens if the deal makes sense strategically and is structured in a way that financing and anti-trust clearance are non-issues. Accrestion to cash flow He recognizes the importance in people within the tech sector He recognizes the brand value of pixar. That when a kid watches the movie, he sees the previews-and it fuels enw product success.