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48 - David Flood Interview: Dark Stock Investing ($PLWN, $BVERS, $NTIP, $MIRI, $HMGN)

The DIY Investing Podcast: Value Investing | Fundamental Analysis | Mental Models | Business Management

Release Date: 10/27/2019

78 - Earnings Yield on Cost: A valuation rule of thumb show art 78 - Earnings Yield on Cost: A valuation rule of thumb

The DIY Investing Podcast: Value Investing | Fundamental Analysis | Mental Models | Business Management

Stocks must eventually trade at an earnings yield on cost equal to or greater than your discount rate in order to earn your required return on capital as an investor.

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77 - What is the source of your investment return? show art 77 - What is the source of your investment return?

The DIY Investing Podcast: Value Investing | Fundamental Analysis | Mental Models | Business Management

Investing, as opposed to speculation or gambling, is a method of seeking returns while protecting our principal. You are not entitled to investment returns. So what is the source of your returns?

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76 - How to identify 10-bagger investments (10x in 10 years) show art 76 - How to identify 10-bagger investments (10x in 10 years)

The DIY Investing Podcast: Value Investing | Fundamental Analysis | Mental Models | Business Management

In order for an investment to become a 10-bagger and earn 10x your money in 10 years it needs to have certain traits: Low price, operating leverage, turnaround situation, overlooked company, and earnings growth.

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75 - Managing multiple investment strategies in a single portfolio show art 75 - Managing multiple investment strategies in a single portfolio

The DIY Investing Podcast: Value Investing | Fundamental Analysis | Mental Models | Business Management

In this episode, I describe how to incorporate multiple investing strategies into a single stock portfolio. Your portfolio can successfully leverage dividend growth investing, momentum, high-quality stocks, and deep value stocks like net-nets.

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74 - Merger Arbitrage: High returns from high certainty bets show art 74 - Merger Arbitrage: High returns from high certainty bets

The DIY Investing Podcast: Value Investing | Fundamental Analysis | Mental Models | Business Management

Merger Arbitrage is an investing strategy designed to capture the value in price differences between a soon to be acquired company and the acquisition price. Investors can sometimes earn high returns at low risk using this strategy.

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73 - Economic Contagion: How COVID-19 could cause a depression show art 73 - Economic Contagion: How COVID-19 could cause a depression

The DIY Investing Podcast: Value Investing | Fundamental Analysis | Mental Models | Business Management

Investors today are likely underestimating the second-order effects of the coronavirus shutdown. Layoffs and bankruptcies will have long-lasting adverse effects on the economy. COVID-19 is not simply a health crisis. If the number of layoffs and bankruptcies gets too high, the economy will likely exceed a simple recession and enter a medium-term depression.

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72 - Binary Investing Outcomes: How the Coronavirus is impacting stock portfolios show art 72 - Binary Investing Outcomes: How the Coronavirus is impacting stock portfolios

The DIY Investing Podcast: Value Investing | Fundamental Analysis | Mental Models | Business Management

Investors today are likely underestimating the potential for bankruptcy of their favorite companies. Regardless of the long-term return of underlying assets, bankruptcy is possible when debt covenants are breached or a negative liquidity event occurs. 

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71 - Moral Hazard: Why government bailouts are counterproductive show art 71 - Moral Hazard: Why government bailouts are counterproductive

The DIY Investing Podcast: Value Investing | Fundamental Analysis | Mental Models | Business Management

Moral hazard occurs when individuals and groups are incentivized to take greater risk than is prudent because the opportunity exists for private profits and socialized losses. Government bailouts are a key example.

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70 - Oil Majors Clearance Sale 2020 show art 70 - Oil Majors Clearance Sale 2020

The DIY Investing Podcast: Value Investing | Fundamental Analysis | Mental Models | Business Management

During the coronavirus induced stock market crash of 2020, oil stocks, in particular, declined very quickly. The depth of decline created a once-in-a-century opportunity to buy the stocks of oil majors at double-digit dividend yields.

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69 - Why Study Investing? Roth vs Taxable Accounts? (Q&A) show art 69 - Why Study Investing? Roth vs Taxable Accounts? (Q&A)

The DIY Investing Podcast: Value Investing | Fundamental Analysis | Mental Models | Business Management

In this episode, I answer a few questions about investing and personal finance. Why should you study value investing at all? Pros and Cons of Roth IRA vs Taxable Accounts? What to do when friends ask advice about stocks?

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How to connect with David Flood (Elementary Value)

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Show Outline: Interview with David Flood of ElementaryValue.com

The full show notes for this episode are available at https://www.diyinvesting.org/Episode48

Part 1: David Flood's Investing Process

  • How have you developed as an investor over time?
  • David Flood's Investing Process:
    • Basket of Stocks (20-30+ positions - 2.5-5% each)
    • Overlooked stocks (Low liquidity, sub $10 million market cap)
    • Deep Value
    • Price charts to identify stocks at all-time lows and long-term base
  • Investing in Net-Nets vs Nano-Cap Chart-based deep value
  • SEC seeking to ban quotation of Dark Companies
  • Wants to find and own companies no one else has written up

Part 2: Example Stocks

  • Pinelawn Cemetary ($PLWN) - Dividend yield of 9-10%, nearly zero liquidity
  • Beaver Coal Co. ($BVERS) - Misunderstood land company 50,000 acres diversified with coal, gas deposits, timberland, log cabins, and mobile home parks
  • Network-1 Technologies ($NTIP) - A net-net with catalyst. Cash bucket patent troll.
  • Mirriad Advertising (LON: $MIRI) - Video insertion tech company partnered with Tencent
  • Hemagen (HMGN) - Market Cap: $155k USD. Dark since 2013.