vienna value investing meetup #1

Vienna Value Investing Meetup

PRESENTED BY MARTIN BODOCKY

SUPPORTED BY

Why this meetup?

BUILDING COMMUNITY TO HELP EACH OTHER

WE WANT TO BUILD THE RIGHT TOOL FOR VALUE INVESTORS

THIS IS AN OPEN DISCUSSION MEETUP, PLEASE ASK WHENEVER YOU LIKE

Who am I?

MARTIN BODOCKY

CEO OF MINT IT

AI AND FINTECH GEEK

Disclaimer

WE ARE NOT INVESTMENT ADVISORS.

WE ARE NOT RECOMMENDING TO BUY OR SELL.

ANY DECISION YOU CONCLUDED FROM THIS SESSION IS YOURS NOT OURS, YOU ARE IN CONTROL.

Agenda

1.) INTRODUCTION INTO VALUE INVESTING

2.) SIMPLE VALUATION PROCESS

3.) NETWORKING

Why should we invest?

Investing is risky business

• INVEST MONEY WHICH YOU CAN AFFORD TO LOSE

• MARKET CAN REMAIN IRRATIONAL LONGER THAN YOU CAN REMAIN SOLVENT

• DIVERSIFICATION IS A MUST

• PREPARE BUY AND EXIT STRATEGY

What is value investing• VALUE INVESTING IS PROCESS OF DISCOVERING

TRUE BUSINESS VALUE VIA FUNDAMENTAL ANALYSIS

• VALUE INVESTING IS BASED ON FACTS

• VALUE INVESTING TRIES TO IGNORE VOLATILITY ON MARKET

Value investing VS Day Trading

• TRADING IS BASED ON TECHNICAL ANALYSIS AND MOMENTUM

• TRADING IS NOT BASED ON TRUE VALUE OF BUSINESS

• TRADING IS MORE SPECULATIVE

• VALUE INVESTING IS BASED ON FACTS

Value of patience

Investing homework

• COMPOUND INTEREST – LET MONEY WORK FOR YOU

• KNOWING YOURSELF – RISK CAPACITY

• PREPARE FOR BAD OUTCOME – DON’T RISK MONEY YOU CANNOT LOSE

• DIVERSIFICATION – DON’T PUT ALL IN A ONE BASKET

How to learn to value invest

• LEARN PRINCIPLES OF FUNDAMENTAL ANALYSIS

• START TO VALUE COMPANIES

• EXECUTE YOUR IDEAS (WITH VIRTUAL MONEY FIRST)

Basic terminology 1/2

• MARKET CAP – COMPANY SIZE, RISK OF DEFAULT

• OUTSTANDING SHARES – ALL SHARES ISSUED

• TOTAL REVENUE = COMPANY SALES

• NET INCOME = TOTAL REVENUE – OPERATING EXPENSES – TAX

• OPERATING INCOME = TOTAL REVENUE – OPERATING EXPENSES

• DIVIDENDS – RETURN ON INVESTMENT

Basic terminology 2/2

• DEBT – LOANS, BONDS, ALL LIABILITIES

• NET DEBT = LIABILITIES – (CASH AND CASH EQUIVALENTS)

• NET CASH =(CASH AND CASH EQUIVALENTS) -CURRENT LIABILITIES

• ENTERPRISE VALUE = MARKET CAP + TOTAL DEBT –(CASH AND CASH EQUIVALENTS)

Fundamental analysis

• BALANCE SHEET

• INCOME STATEMENT

• CASH FLOW

• MOAT, COMPETITIVE ADVANTAGE OR FRANCHISE

• FUTURE GROWTH

In which company will you invest?Company A Company B

Share Price $12 $22

Market Cap $720m $440m

Debt $100m $200m

Cash & Equiv. $50m $120m

Net Debt -$50m -$80m

Revenue $75m $100m

Net Income $40m $30m

Enterprise Value $790m $420m

ARE WE ABLE TO DECIDE SOLELY ON BALANCE SHEET OR INCOME STATEMENT?

Ratios and margins to rescue

• DEBT / CASH

• ENTERPRISE VALUE / CASH

• EARNINGS PER SHARE = (NET INCOME –DIVIDENDS)/NUMBER OF OUTSTANDING SHARES

• DEBT / OPERATING INCOME

• ENTERPRISE VALUE / OPERATING INCOME

• NET INCOME / REVENUE

• AND MORE.

Fiat VS Tesla 1/2Fiat – 10.44 Euro Tesla - $254.61

Market cap 13b Euro $41,01b

Debt 83,491b Euro $9,912b

Cash & Equiv. (Cash) 17,603b Euro $3,084b

Enterprise Value(EV)

78,888b Euro $47,833b

Debt / Cash 4,74 3,21

EV / Cash 4,48 15,51

Fiat VS Tesla 2/2Fiat – 10.44 Euro Tesla - $254.61

Revenue 81,299b Euro $4,715b

Operating Income (EBIT) 3,656b Euro -$0,400b

Net Income 1,391b Euro -$0,553b

Earnings per Share(EPS) 1,08 Euro -$3,43

Debt / EBIT 22,83 Negative

Net Income / Revenue 0,017 = 1,7 % Negative

What matters in value investing? 1/2

• GOOD RESEARCH

• UNDERSTANDING INDUSTRY

• REVENUES

• P/E, EV/EBIT RATIOS

What matters in value investing? 2/2

• EXPERIENCE

• INTUITION

• PRACTICE

How to predict future?

• DON’T SPECULATE

• UNDERSTAND BUSINESS AND VALUE STREAMS

• UNDERSTAND STOCK VOLATILITY

• BUILD A HABIT

• DON’T FOLLOW ESTIMATION OF PROFESSIONALS!

• ALWAYS DO RESEARCH

Next sessions

• VALUE COMPANY IN SPECIFIC STAGE – GROWTH, MATURITY

• SPECIFIC INDUSTRY SESSIONS(AUTO, BIOTECH, SOFTWARE)

• PLEASE PARTICIPATE