loader from loading.io

56 - HemaCare 100-Bagger with Dan Schum

The DIY Investing Podcast

Release Date: 12/29/2019

94 - Japanese companies are worth less than American companies, All Else Equal show art 94 - Japanese companies are worth less than American companies, All Else Equal

The DIY Investing Podcast

This podcast episode outlines some key differences between Japanese culture and American culture which influence how investors should value Japan based stocks versus United States based stocks. Shareholder primacy and culture are important.

info_outline
93 - OTC Markets Business Analysis with Ralph Molina of Midstory Ventures show art 93 - OTC Markets Business Analysis with Ralph Molina of Midstory Ventures

The DIY Investing Podcast

I interviewed Ralph Molina of Midstory Ventures where we discuss a stock pick: OTC Markets. Stock Ticker: $OTCM

info_outline
92 - Discount Rates: Past, Present, and Future show art 92 - Discount Rates: Past, Present, and Future

The DIY Investing Podcast

Discount rates form the foundation for the process of stock valuation. Value investors, therefore, rationally adjust their discount rates based on their expectations for their future. Changing expectations will reduce discount rates over time.

info_outline
91 - GAAP vs non-GAAP Earnings (Amazon Deep Dive) show art 91 - GAAP vs non-GAAP Earnings (Amazon Deep Dive)

The DIY Investing Podcast

GAAP stands for "Generally Accepted Accounting Principles" and GAAP earnings represent net income available to shareholders using these accepted accounting principles. GAAP is foundational for investors trying to calculate the owner's earnings.

info_outline
90 - What is Intrinsic Value? show art 90 - What is Intrinsic Value?

The DIY Investing Podcast

Be very careful when describing an asset's "value." You need to define your terms because they matter. Intrinsic value is the Net Present Value of all future distributions of cash. (Not the NPV of Free Cash Flow) Extrinsic value is the market value as defined by others. 

info_outline
89 - All Securities are owned at all times (Investing First Principle) show art 89 - All Securities are owned at all times (Investing First Principle)

The DIY Investing Podcast

Every security or financial asset MUST be owned by someone at all times until that security is retired. This holds true for stocks, bonds, cash in the bank, QE, and any other similar financial asset. This is an investing first principle. First-principles are useful for investors seeking to develop investing strategies from the ground up. 

info_outline
88 - Satisficing: Why you should avoid attempting to maximize your portfolio returns show art 88 - Satisficing: Why you should avoid attempting to maximize your portfolio returns

The DIY Investing Podcast

Satisficing is defined as accepting an available option as satisfactory. This mental model is useful because consumers use it instead of optimizing for every purchase. Investors can learn from this behavior to improve their portfolio and investing strategy.

info_outline
87 - Cost of Growth Valuation and Asset / Earnings Equivalence show art 87 - Cost of Growth Valuation and Asset / Earnings Equivalence

The DIY Investing Podcast

Growth is not free for most companies. It costs something. The cost of growth valuation model takes into account return on invested capital when valuing stocks. Most companies have to retain earnings in order to grow.

info_outline
86 - The Tyranny of Backtesting: Why Backtests are harmful and counter-productive show art 86 - The Tyranny of Backtesting: Why Backtests are harmful and counter-productive

The DIY Investing Podcast

Investors use backtests in order to test whether a portfolio's asset allocation would have performed well in the past. The use of backtesting is harmful to a portfolio because it ignores uncertainty and overstates the value of empirical evidence.

info_outline
85 - Precisely Wrong, Roughly Right (DCFs) show art 85 - Precisely Wrong, Roughly Right (DCFs)

The DIY Investing Podcast

Discounted Cash Flow calculations and models provide precise estimates of intrinsic value but tend to be flawed. It is much better to improve accuracy by ignoring DCF and using a simple intrinsic value calculation like the Gordon Growth Model.

info_outline
 
More Episodes

How to connect with Dan Schum

Please review and rate the podcast

If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience. 

Follow me on Twitter and YouTube

Twitter Handle: @TreyHenninger

YouTube Channel: DIY Investing

Support the Podcast on Patreon

This is a podcast supported by listeners like you. If you’d like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron.

You can find out more information by listening to episode 11 of this podcast.

Show Outline

The full show notes for this episode are available at https://www.diyinvesting.org/Episode56

Part 1: Dan Schum's Investing Process

  • Large diversification 30-60+ stocks
  • Buy "NoNameStocks" that no one else has heard about
  • Target characteristics:
    • Left for dead companies
    • Often unprofitable
    • Dark or Deregistered from the SEC
    • A long-term chart that shows abandonment by investors

Part 2: Example Stocks

  • HemaCare Corporation $HEMA - Dan's 100 bagger in 4.5 years (From $0.25 to $25.40 buyout on the podcast recording date of 12/16/2019)
  • Clancey Systems International $CLSI - A wild ride on a shell company with no assets leading to a 1000% gain in a few months
  • Dewey Electronics $DEWY - A company that just won't die, but with hidden real estate assets worth more than the market cap.