E 19: The Non-Warren Buffet Approach to Value Investing

The Pitch Podcast

Show Notes

Today’s guest, Tobias Carlisle, believes that deeply undervalued and out-of-favor stocks offer asymmetric returns, with the potential for a limited downside and a greater upside. Tobias is the founder and managing director of Acquirers Funds. He’s written three books on value investing and has significant experience in investment management, business valuation, and corporate governance. Today he introduces us to the concept of the Acquirer’s Multiple, which is also the title of one of his books, and what he believes is the secret to beating the market. In this episode, he explains how he developed this concept and what it is based on. Tuning in, you’ll hear what is meant by mean reversion and the different ways a discount evaluation is removed. Tobias explains why excess debt doesn’t scare him off, what three factors he uses to determine a margin of safety, and what he looks for when he does a forensic accounting diligence of financial statements. Tune in to find out more about value investing and how Tobias has achieved so much success through it.

Key Points From This Episode

• An introduction to Tobias Carlisle and the strategies for the funds he manages.
• The ways a discount evaluation is removed.
• What mean reversion is and why it’s a safer bet.
• How Tobias developed the concept of the Acquirer’s Multiple and what it is based on.
• Why excess debt doesn’t scare Tobias off.
• The three factors Tobias uses to determine a margin of safety.
• The role of humility and acknowledging what you don’t know when investing in a company.
• The time horizon Tobias looks at for a stock to mean revert and why the valuation is easier the further out you go.
• Thoughts on when to cut your losses if it doesn’t mean revert.
• Business performance versus investor perception and which plays a greater role in stocks that do well.
• The industries best suited to Tobias’s style of investing.
• Thoughts on why people continue to buy expensive stocks when cheap stocks tend to outperform them in the long run.
• How Tobias goes about doing a forensic accounting diligence of stocks, and what he looks for in the results.
• The two schools of thought on why value investing works.
• What Tobias looks for when shorting stocks.
• Whether or not there are currently that many deep value stocks out there, given the overall rise in asset and equity prices.
• Why Tobias believes that value can do well on an absolute basis on a three to five-year time horizon.
• Insight onto the two ETFs that Acquirers Funds run and how they differ.