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Stingy News: Growth Investing

Fair multiples
10/28/22 Value Investing Growth Investing
"Mean reversion of the multiple is so powerful that the only factors other than starting TEV/EBITDA that matter are gross margin, free cash flow conversion and, to a small extent, size and return on capital (EBITDA/assets, this time with the sign in the direction we.d expect)."

Interest rates and growth stocks
09/04/22 Growth Investing
"the growth bubble that we experienced (and arguably are still experiencing) was not truly 'driven' by interest rates falling. They mattered a little bit, mathematically, but Mr. Market's belief in the false-narrative that they were the only thing that mattered perhaps was a main and important driver of growth's outperformance, and value's underperformance."

Demise of the growthsters
03/20/22 Growth Investing
"on the whole the markets and growth stocks overall are far from cheap. If history is any guide, there is a decent chance that the next few years will hold some more market pain for the growthsters."

Bubble stock meltdown
01/31/22 Value Investing Growth Investing
"This breakdown is significant, especially for growth stocks. Remember, growth stocks trend, and value stocks mean revert. The psychology is simple. People hear about a hot stock that's gone up 3x, they buy some, it goes up 2x, they buy more: the whole attraction of buying a hot growth stock is the historic return trajectory. Value stocks are the opposite: you do well buying them when they're down, as our Crisis Investing piece showed. And so, once the trend gets broken, once the magic of the rising stock prices disappears, it's a long way down until valuation becomes the justification for buying."

Growth multiple contraction
01/23/22 Growth Investing
"In 2018, the business was trading at 14.6x sales. Right now it's 6.3x. Yes, the business is generating a lot more revenue and earnings today than it was then, but investors aren't willing to pay the same price. 276x earnings in 2018. 36x today."

Partha Mohanram on his glamour G-Score
07/04/20 Growth Investing
"Partha Mohanram is the John H. Watson Chair in Value Investing and Area Coordinator of Accounting at Rotman. He has published extensively in the areas of financial statement analysis, valuation of growth firms, implied cost of capital and executive compensation." [video]

Trend following in growth and value
05/15/20 Value Investing Growth Investing
"Value returns appear to be inversely correlated to historic returns: the worse value's recent performance, the higher the expected return. Growth appears to be the opposite: the better the historic return, the higher the expected future return. Value is mean reverting. Growth trends."

Meatless future or vegan delusions?
06/15/19 Growth Investing
"With my story, which I believe reflects an upbeat story for the company, the value that I obtain for its equity is $3.3 billion, yielding a value per share of about $47. At the end of June 10, when I completed my valuation, the stock price was close to $170, well above my estimated value."

Haste makes waste
10/22/18 Growth Investing
"In order to go from less than 1,000 stores to 13,000 stores we have had to make a series of decisions that, in retrospect, have led to the watering down of the Starbucks experience."

Whiplash: Value vs. Growth
06/18/17 Markets Value Investing Growth Investing
"With mean reversion, investor behavior, and interest rates all lining up on the same side, things are indeed starting to look up for value."

The Top 200 Canadian Stocks for 2016
06/03/16 Value Investing Dividend Investing Norman Rothery Stingy Investing Growth Investing
"In other words, the All-Star Stocks beat the market by an average of 11.4 percentage points per year."

The Top 500 U.S. Stocks for 2016
06/03/16 Value Investing Dividend Investing Norman Rothery Stingy Investing Growth Investing
"We're very pleased to be able to say that the U.S. All-Stars have outperformed over the last decade - despite getting off to a rocky start. Indeed, they bested the market over the last one, three, five, seven and 10 years, with particularly strong relative gains more recently."

Identify a growth trap
03/19/16 Growth Investing
"Growth Traps are companies that are rapidly expanding their businesses. Rapid expansion requires investment in operating assets. That investment places strain on a firm's infrastructure and results in declining margins. Because investors were overly optimistic for the stocks prospects, it is likely that these high flyers will not grow into their valuations and shareholder returns will suffer."

The persistence of growth
12/05/15 Value Investing Growth Investing
"Both the long term average and time series charts make this very clear: the growth rate advantage of high growth stocks from the past five years does not persist over the next five years. Growth stocks tend to keep growing, but their relative advantage over low growth narrows considerably. If and when the market prices stocks by extrapolating past trends into the future, there is an opportunity to bet against that misguided extrapolation (long value, short growth)."

Style swapping
10/04/15 Value Investing Indexing Markets Norman Rothery Stingy Investing Growth Investing
"It's been a hard year for Canadian value investors. Those who wisely steered clear of the resource sector might be down only a little bit. But others will have to do some belt tightening this Thanksgiving." [$]

The Top 200 Canadian Stocks for 2015
05/18/15 Value Investing Dividend Investing Stingy Investing Growth Investing
"Our annual All-Star stock picks, which combine the best growth and value characteristics, have climbed by an average of 17.3% a year since we started 10 years ago. That assumes an equal dollar amount was put into each All-Star stock in first year and rolled into the new All-Stars each year thereafter. By way of comparison, the S&P/TSX Composite (as represented by the XIC ETF) advanced by just 5.3% annually over the same period. The All-Stars beat the market by an average of 12.0 percentage points per year over the last decade."

The Top 500 U.S. Stocks for 2015
05/18/15 Value Investing Dividend Investing Stingy Investing Growth Investing
"The U.S. All-Stars have performed very well since the stock market collapse in 2008. If you had purchased equal dollar amounts of them six years ago and rolled your portfolio into the new list of All-Stars each year, you'd have gained 22.9% per year on average. The market also fared well over the same period with the S&P 500 (as represented by the SPY ETF) advancing 13.6% per year."

The Top 200 for 2014
08/13/14 Value Investing Stingy Investing Growth Investing
"We're thrilled to report our efforts have paid off handsomely since last time. Our All-Star stocks, which combine the best growth and value characteristics, gained an average of 55.0% since last year. By way of comparison the Canadian market, as represented by the S&P/TSX Composite ETF (XIC), gained 7.2% over the same period."

Top 500 U.S. Stocks for 2014
08/13/14 Value Investing Stingy Investing Growth Investing
"Last year's All-Star stocks turned out to be great buys, gaining an average 38.7%. In comparison, the U.S. stock market, represented by the S&P 500 (SPY), climbed only 23.3% since last time. The U.S. All-Stars beat the market by 15.4 percentage points, not including dividends."

Still beating the market after 9 years
12/01/13 Value Investing Stingy Investing Growth Investing
"Finding the right Christmas gift can be difficult and some people are particularly hard to shop for. The combination can, on occasion, make the holiday season feel like an exercise in passing the proverbial brown sweater back and forth. Investors suffer from a similar problem when looking for good stocks. But, in some ways, they have it even worse because they have to wait for months, if not years, before finding out whether their picks turn out to be duds or stars."

The Top 200 for 2013
06/15/13 Value Investing Stingy Investing Growth Investing
"Short term results are one thing but the All-Stars really shine over the long-term. If you had bought equal amounts of the All-Stars and rolled your gains into the new stocks each year, you'd have enjoyed 15.2% average annual returns over the last eight years. By way of comparison, the S&P/TSX Composite (XIC) only climbed 4.5% a year over the same period. The All-Stars outperformed by an average of 10.7 percentage points a year."

Top 500 U.S. Stocks for 2013
06/15/13 Value Investing Stingy Investing Growth Investing
"Canadian stocks have many fine qualities but are far less numerous than their U.S. counterparts. It's only natural to look across the border for bargains to round out a diversified portfolio. That's why we extended the Top 200 methodology stateside and are pleased to present this year's MoneySense Top 500 guide to U.S. stocks."

Top 200 Canadian Stocks for 2012
03/29/12 Value Investing Stingy Investing Growth Investing
"Walking downstairs on Christmas day was a ceremonial affair when I was young. It started by lining up with my brother to descend to the living room in order from eldest to youngest. Aside from heightening the anticipation of good things to come, it allowed my parents to see our reactions to the Christmas tree, fire, presents, and perhaps most delightfully, the stockings stuffed to the brim with treats. The felling of delight I had when pawing through my treat-laden stocking is now, alas, a thing of the past. But these days I get the same sort of excitement when I look through the largest stocks in Canada for this year's MoneySense's Top 200 All-Stars. This year marks the eighth in a row for the Top 200 tradition which, I'm pleased to say, has been very fruitful."

Top 500 U.S. Stocks for 2012
03/29/12 Value Investing Stingy Investing Growth Investing
"There are a few skills that every Canadian should pick up in childhood and skating is one of them. But no one tells you that it all slips away after spending years reading books and sipping hot chocolate by the fire. That's something I discovered the hard way when I recently squeezed my feet into a pair of skates and tottered out onto the cold hard ice of my local rink. The prospect of falling seemed far less painful when I was younger, slimmer, and closer to the ground. As a result, my first hobble around the rink was more a triumph of will than of good sense. Just as with learning how to skate, the first leap into the world of stocks can be an uncertain one. That's why - in an effort to help you gain your footing - we search high and low for the best stocks in the U.S. to put in the annual MoneySense Top 500."

Groupon has no competitive advantage
06/06/11 Growth Investing
"Groupon, a service that keeps half the proceeds from discounts that connect consumers to local merchants - has no competitive advantage and can't get one."

Bill Miller's Nov 2010 Commentary
11/17/10 Growth Investing
"It is useful to remember that the great bond bull market that began nearly 30 years ago was preceded by a 30 plus year bond bear market that took long term treasury yields from 3% to nearly 15%. The devastating losses people suffered were such that my friend Lee Cooperman dubbed bonds, "certificates of guaranteed confiscation," when he was overseeing the Goldman Sachs research and strategy effort. A common feature of that 30 year bond bear market was the bond swap. Almost every year, investors who owned bonds lost principal value as yields rose, so they sold their bonds in December and took a tax loss, replacing the bonds with others of similar maturity and quality. This continued year after year, inexorably. Finally, in 1982, yields started to fall. One elderly relative of mine had been taking her tax losses year after year, for over 30 years. When she asked me to look at her portfolio in late 1982, I told her there were some things I thought she needed to do. She said, "Oh yes, it's time for my bond swap." I told her that was not necessary as she now had gains in her bonds. She looked startled, and asked, "Is it legal to have gains in bonds?" I suspect that question may again be asked in the next 30 years."

The irrational pursuit of growth
06/16/09 Management Growth Investing
"Why are so few companies opposed to sucking cash out of a business and returning it rather than reinvesting it at sub-par rates of return?"

The Top 200 Canadian Stocks for 2009
03/04/09 Value Investing Stingy Investing Growth Investing
"The market crash of the past few months reminds many people of the Great Depression. But we have a bit of different take on things. As Warren Buffett likes to say, you make money by being fearful when others are greedy and greedy when others are fearful. As agonizing as the past year has been, we think we are now in the middle of a tantalizing buying opportunity."

The Top 500 U.S. Stocks for 2009
03/04/09 Value Investing Stingy Investing Growth Investing
"Warren Buffett famously warned, "unless you can watch your stock holdings decline by 50% without becoming panic-stricken, you should not be in the stock market." Well, U.S. stocks are down nearly 50% in one of the worst bear markets ever. It's hard not to be a little panicky. But take a deep breath because there is reason to hope."

We're not dead yet
11/19/08 Value Investing Growth Investing
"In our opinion someone who says quant equity investing has no future is basically saying that value and momentum will no longer work to pick investments. As we noted above we can see where people get this idea. Many investors using these strategies have had poor recent performance, and it.s clear that these strategies are no longer a secret. Although we can't 'prove' that quant investing has a future, we can demonstrate that quant strategies have had a successful long-term past - and that their recent performance is not inconsistent with this track record."

Small stocks, big profits
03/27/08 Value Investing Stingy Investing Growth Investing
"Each December I grade the largest stocks in Canada for the MoneySense Top 200 ranking. But, as a personal project, I've also been grading Canada's smaller stocks at the same time, using the same methodology. The result? Over the past three years the top small stocks have actually done better than their larger counterparts in the Top 200. In 2004 the top small stocks gained 54.8%. In 2005 the tiny superstars climbed 44.6%. In 2006 the pint-sized overachievers advanced a further 18.3%. If you had bought the top-rated top small stocks in 2004 and rolled your gains into the new bunch each subsequent year, you would now be up 170%, not including dividends. That compares to a gain of about 152% for the top-rated stocks in the Top 200."

The Top 200 Canadian Stocks for 2008
01/01/08 Value Investing Stingy Investing Growth Investing
"This is the fourth annual MoneySense Top 200 and we are pleased to say that connoisseurs have dined out very well on our past reviews. In each previous edition, we picked what we call All-Around All-Stars - stocks that score well on both our growth and value tests. Our All-Stars have consistently produced double-digit returns. The 2006 team achieved average returns of 16%, while the 2005 All-Stars gained 38%, and the 2004 squad soared an amazing 58%. An RRSP investor who put $10,000 into the 2004 picks and rolled his or her gains into the new All-Star team each subsequent year would now have $25,200. And those results don't include the generous dividends that we picked up along the way."

Luck, persistence, and what to do about it
12/18/07 Growth Investing
"Despite earnest and diligent study, analysts often produce company models that are wildly off the mark, usually erring on the side of optimism. Even analysts who consider ranges of value outcomes attach probabilities to favorable scenarios that are too high. Some researchers attribute this inaccuracy to overconfidence, but that is only part of the story. Another way to understand the challenge is based on what renowned psychologist Daniel Kahneman calls the inside-outside view. An inside view considers a problem by focusing on the specific task and the information at hand, and predicts based on that unique set of inputs. This is the approach analysts most often use in their modeling, and indeed is common for all forms of planning. In contrast, an outside view considers the problem as an instance in a broader reference class. Rather than seeing the problem as unique, the outside view asks if there are similar situations that can provide useful calibration for modeling. Kahneman notes this is a very unnatural way to think precisely because it forces analysts to set aside all of the cherished information they have unearthed about a company. This is why people use the outside view so rarely."

The Top 500 U.S. Stocks for 2008
12/14/07 Stocks Value Investing Stingy Investing Growth Investing
"Some extraordinary qualities are needed to make our list of top stocks. On the value front, all our chosen stocks pay a dividend and sell for modest price-to-sales and price-to-book-value ratios. On the growth side, they demonstrate strong increases in sales per share and earnings per share. In addition, most generate healthy returns on equity, carry relatively little debt, and enjoy rising share prices. Keep in mind, though, that these stocks are controversial. After all, strong growth is rarely to be had at rock-bottom prices without some risk."

The Top 200 Stocks
01/26/07 Value Investing Stingy Investing Growth Investing
"Want to go hunting for buried treasure? Then join us as we once again dig up the shiniest prospects among Canada's largest 200 stocks in the third annual MoneySense Top 200. We're pleased to say that the first two versions of the Top 200 have been a great success. Look, for instance, at our All-Around All-Stars from last year. These were the handful of stocks that scored well for both good value and good growth prospects. Since we selected them in November 2005, they have gone up in price by an average of 37.6%. Fold in the 57.6% return from the 2004 version of the All-Around All-Stars and our top picks are up 116.8% over the past two years. Yes, you heard that right. Someone who invested in our All-Around All-Stars from 2004 then rolled their gains into our top picks from 2005 would have more than doubled their money in two years - and their 116.8% gain doesn't even include the dividends they would have collected along the way."

Southern stars: The Top 500 U.S. Stocks
12/18/06 Value Investing Stingy Investing Growth Investing
"If you're intrigued by the results of our Top 200 listing of Canada's largest stocks, you may be interested in extending your search for good investments beyond Canada's borders. If so, we invite you to join us as we embark on a road trip through the largest 500 stocks in the U.S. Our goal? To find tomorrow's stars today."

Zero to $1 billion
04/30/06 Growth Investing
"After interviewing dozens of executives at billion-dollar firms, Thomson boiled down their management practices to what he calls the Seven Essentials. Some of these principles are strategic: Create a killer value proposition. Some are operational: Manage for positive cash flow from the start. And some involve leadership: Hire a second-in-command who can take care of the day-to-day while you think big picture. It has long been a business school staple that successful companies sell emotional benefits, not just products. Yet few entrepreneurs can explain why their business proposition is any better than the competition's. Not so with our Blueprint companies."

Think quality over cost
05/02/04 Growth Investing
"When Philip Fisher died recently at the age of 96, it suddenly struck me that being a wise and patient stock-market guru may be the best route to a long life."

The rewards of a long view
04/23/04 Growth Investing
"Phil Fisher began managing money in 1931. He was teaching at Stanford University 70 years later. In between, Fisher formulated a clear and sensible investing strategy, wrote one of the best investment books of all time, "Common Stocks and Uncommon Profits," and made a good deal of money for himself and his clients."

Microsoft and the great game
02/20/02 Growth Investing
"The world's biggest software firm is pushing into the mobile telephone and computer-games businesses with a series of announcements this week. These are no interesting diversions, but a desperate attempt to stop new consumer products from stealing large parts of Microsoft's market over the coming years"

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Disclaimers: Consult with a qualified investment adviser before trading. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, financial advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. More...