SBC Finance: An Update on the Absurd
The Real Cost of Stock Based Compensation Expense -- Stock Based Compensation (“SBC”) doesn’t matter for investors (and employees/employers) until it is ALL that matters.
Anatomy of a Bear Market: Violent Volatility
A Quick Review of Equity Market Declines Post Bubble Peaks - Brutal end to Q1 for investors who buy cheap stocks, quality stocks, or some mix of the two. Quick review.
Private Equity Returns: Are Private Markets “Safe”?
Multiple Expansion and Two Markets to “Three Markets” – The High Risks to Small InvestorsIn his legendary book A Margin of Safety, Seth Klarman explains what few investors can remember ...
Growth Investing Gone Wrong: Avoiding the Double Bogeys
In Fast Growth Stocks, we explained the risks to “growth investors” seeking quick profits in some of the market’s most speculative firms. That rant laid the groundwork for our paper explaining the obvious opportunity to invest in growth companies at reasonable prices. A once in 20-year opportunity, in our view.
Is EOG’s Stock Price Heading Higher?
Is EOG A Good Stock to Buy? The chart below shows the performance of natural gas and crude oil exploration and production firm EOG Resources over the last 3 years. Since the stock’s trough in October of 2020, it has risen over 250%, triggering behavioral errors that often give investors the feeling that they “missed” a stock after it rises that much.
Bear Market Strategies: A Quick History of Value & Growth
What the Past Can Teach Us: Record Valuations, Rock Bottom Interest Rates & Bull Market Peaks. Surviving a Bear Market. Legendary writer and investor Dennis Gartman is fond of saying that the person who loses the least money in bear markets wins.
Undervalued Energy Stocks: The Case for Adding Exposure
Starting in May of 2020, KCR’s research team wrote nearly a dozen pieces making the case for oil. On September 8th, we published Oil Company Stocks to Buy, which summarized our work up to that point and pounded the table for investing in oil stocks. With oil trading below $70, we led out by explaining that oil and natural gas commodity prices did not need to rise to turn oil and gas stocks into powerhouses for investors.
Warren Buffett on Love: How to Measure Success
To long-time friends of KCR we are “breaking cadence” this Friday. Instead of a chart about stocks we found this three-minute video...
Bear Market History & the Lessons of Losing Money
This piece is designed to add color to our Bear Traders post, which showed the five largest market declines since the 1960s. That piece explained the brutal path to getting back to break-even across the history of bear markets using the S&P 500.
Survivorship Bias Free Stock Data is Critical to Investors
Before we show you how quality and reasonable valuations are the breeding grounds of greatness, let’s talk about a common analytical error. When analyzing stocks and investment strategies, using bias-free data is a basic and critical first step. For a beautiful explanation, we guide you to Teddy Koker, a researcher at MIT’s Lincoln Labs, elegant walk-through, complete with programming instructions. For those interested in a less complex example, this post is for you.
Hillenbrand Stock Price = Capital Discipline for Cheap
• We have been proponents of investing in companies that make what you need, not what you want. • Behavioral errors often give investors the feeling that they “missed” a stock after it has risen • KCR believes that Hillenbrand lies at the intersection of two powerful themes we have highlighted: the opportunity in small-cap value stocks and finding growth at a reasonable price
Democratizing Finance: Agency Problems and Investment
This work was inspired by UCLA Professor Michael Brennan’s efficient autopsy of the dot.com bubble. Published in 2004, the piece broke down the mania that led to the historic bubble in 2000. A misplaced belief in Efficient Markets, agency problems on Wall Street, and weak accounting rules figured large in his work.