weekly wrap 06/10/17


“Risk means more things can happen than will happen.”

– Elroy Dimson


stock news

ITL Health Group (ASX:ITD) announced they sold their Custom Pack business for $14.4m & they will be in a net cash position of ~$10m post the transaction. This is interesting when you consider it currently has a market cap of around $40m and the vast majority of profits are generated from the non-disposed side of the business. Therefore, if we take last years EBITDA of ~$4.5m and assume they can maintain $4m of that, the multiple drops from 9x to ~7.5x. Given the stock has not materially moved post the announcement, it seems like there should be an arbitrage here as the multiple moves back towards 9x when the market realises the profitability has remained mostly intact. This is not financial advice and it is an assumption that most of the last years profitability should remain post the divestment.


weekly links

Time Harford discussing the psychological biases that leave us unprepared for disaster

A full collection of Michael Mauboussin’s research papers

Eric Cinnamond discussing small cap investing

The Peridot Capital discussing the recent decline in Equifax

Forager funds discussing Fallen Angels

Wylde Street on the importance of thinking in probabilities

September update from Auscap – worth reading

How the Hidden Higgs could reveal our Universe’s dark sector

September update from EGP Capital

The Intercept discovers Seth Klarman is one of the largest holders of Puerto Rican debt

20 of the most important things proposed by Howard Marks

globalstockpicking.com outlines a new spinoff investment

Everyone Lies. Dan Ariely Explains Why – Farnam Street

Horizon Kinetics discussing the role of the Active Manager:

Part 1

Part 2

When (not) to sell a great company?

An interesting tale of investment highlighting the importance of patience

Has the meteoric rise of passive investing generated the “greatest bubble ever”?

Buffett’s latest purchase: Pilot Flying J

Aussie retail suffers biggest two-month fall in seven years

Q3 letter from Askeladden Capital

Q3 fact sheet from RV Capital

How Smart Machines Are Creating New Business Models

Wylde Stree on the pros & cons of being an individual investor

Why is value investing so difficult?

Hugh Hendry shuts down his hedge fund – farewell letter

Rob Shiller discussing the coming bear market

Loss avoidance: The power of long-term thinking

Financial Market History

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