Behind the Balance Sheet

Steve’s Sunday Substack has just been released! 🚀 Market insights, strategies, charts and more! Read here: https://lnkd.in/dhU7PXSW

One more podcast for you to listen to. This time Steve is a guest on Christian Billinger show to talk about his book ‘The Smart Money Method’. We did a series of post with excerpts from the book. Scroll down if you want to see them!

The Cyclist 🚴 NEW PODCAST EPISODE 🎙️‼️ Our episode title refers to Peter’s study of cycles in markets, but amusingly for a partner at Goldman Sachs, he arrived for our recording on a bike, not their usual mode of transport. https://lnkd.in/d-ambeJu

Buffett and Apple I was commenting on an excellent post by Sean Peche and i just thought I should repeat my puzzlement re Apple’s stock price shrugging off Mr Buffett’s clear statement that he thinks it’s too dear. It was very clear at the Berkshire AGM that Mr Buffett was a seller of Apple stock. I wrote then in my Substack: “He talked about taxes going up – there’s one important prediction – and he said that it was “extremely likely” that Apple would be their largest holding at the end of the year. He is a seller of the stock at this level was my takeaway. I am slightly surprised that the stock has only lost $1 in the last week.” Given Mr Buffett’s record, I was really surprised that the stock carried on rising after he declared he was a seller in early May - it went from c.$180 it over $230 and is only down c.10% from that recent peak. The world’s best investor has been saying that he can see better value at a 20% lower price - you would imagine that would worry a few people. Of course, the company could be aggressively buying stock, it could even have bought some from Berkshire and buyers will also include ETF flows, but the resilience is surprising, given the high valuation, the lack of growth and the lack of enthusiasm from one of its most important holders. Link to the original article in the comments.

August is the month when we can let the steam off, or at least some of us choose to. That means- sitting on a beach 🏖️ with a book in one hand and a cocktail in the other. 📚 Here Steve gives us his top picks of the books that are essential for investment professionals. Check them out 👉 https://lnkd.in/dqYbK3bq Share your favourite book on investing with others in the comments below.

Want a Job in Asset Management I have built a free course on getting a job in asset management. With the help of recruiters at leading executive search firm Blackwood, who kindly agreed to be interviewed and gave some excellent advice. The course is FREE and full of useful help for anyone considering a career in public or private markets. https://lnkd.in/g3rnWnaJ

❗VALUE TRAPS (cheap price for a business that is eroding) 😱  Huber looks for 4 things in an investment: ➡️ a durable business that passes what Buffett would call the 10-year test. You can close your eyes and look out 10 years and understand what the company’s doing or visualize what the company’s doing. ➡️ a company that’s producing high returns on capital  ➡️good capital allocation, sort of a management test. John now places a greater emphasis on the third criteria of capital allocation. He noticed from some of the investments that have worked often have to do with management doing rational things with the capital. Notably, share buybacks.  Must listen! on your Saturday walk/jog or with a glass of wine 🍷  https://lnkd.in/d-RbVntV

'Built from scratch' original story of Home Depot.  John Huber reveals why this book has been so impactful for him. Learn about 4 things Huber looks for in an investment, his investment in Alphabet and three drivers to make money from an investment.  Go here: https://lnkd.in/d-RbVntV

John Huber is an investor with a small fund managing his family assets and outside capital in a concentrated portfolio. John has written an excellent blog, Base Hit Investing, for many years, explaining his investing principles. We discuss these in this episode, including what John looks for in an investment, why he emphasises capital allocation even more today, where he sees the sweet spot in revenue growth, why he likes Alphabet, why he is focused in North American stocks but is now looking at Japan and US small caps and why Floor & Décor is one of his major positions. Listen here: https://lnkd.in/d-RbVntV

Grant Thornton explores private equity deal I was astonished to read this in The Sunday Times this morning. Well done to Oliver Shah and team for the scoop. But it’s shocking. Remember that Grant Thornton is the firm which couldn’t spot the fraud at Patisserie Valerie, which had so many obvious signals that a competent analyst could spot something wrong in a few minutes. Their fine for this was less than the CEO took home. The Sunday Times reports this audit firm has been cutting high profile clients which meant it attracts less regulatory supervision. Now they are talking of a sale to private equity. Imagine what will happen to auditing standards when the focus is on cost cutting and value creation ahead of a quick sale. The regulator should intervene. Audit firms under private equity ownership should be subjected to higher levels of supervision to ensure quality is maintained. The U.K. quoted sector has had too many frauds. We should be tightening audit standards not boosting audit profits.