Whitney Tilson | wealthymatters

9 Ways To Make Money On The Stock Market

March 7, 2011 6 Comments

Here are 9 ways listed by Whitney Tilson to pick diamonds in the stock market:

1. Out-of-favour blue chips. Even the world’s greatest companies encounter problems or otherwise fall out of favor. Correctly differentiating between those suffering temporary rather than permanent issues is the key to success here. As long as the positive fundamentals of the company’s business remain intact, and new management is willing and capable of bringing the company on track buying out of favour blue chips can be very profitable.

2. Distressed industries. Buying a good company in a distressed industry is often a great way to make money.

3. Turnarounds. Turning around a broken business is difficult and often takes much longer than expected — but when it occurs, a stock can rise many-fold.

4. Overlooked small caps. Among the thousands of publicly traded stocks that analysts don’t cover are fine businesses that are cheap because either no one is paying attention to them or their stocks are thinly traded. Read more of this post

Filed under Paper Assets, Theory, Tool Kit Tagged with activist, blue chips, cheap stocks, distressed industries, growth, growth investor, growth stocks, momentum investor, Money, postaday2011, RandomBlog2011, small caps, stock investing, stock market, stock share, turnarounds, valuation, value investing, Whitney Tilson

5 Ways To Lose Money On Stocks

March 7, 2011 Leave a comment

Here are 5 situations that Whitney Tilson lists where investors can lose money:

1. The game has changed.Bargain Hunters and Bottom Fishers Beware!There’s a fine line between opportunity and trouble when a once-strong business goes into decline.

2. High and rising debt. Value investors are naturally drawn to companies in trouble — that’s what makes stocks cheap if the difficulties prove to be temporary. But too much debt can ruin even the best-planned turnaround.

3. Consumer fads. When investors extrapolate far into the future what are highly likely to be impossible-to-maintain growth levels, trouble follows.

4. Serial acquirers or mega-acquisitions. Given the research showing that a significant majority of acquisitions are value destroyers for the buyers, it’s remarkable how frequently investors get excited about roll-up stories or big acquisitions.

5. Aggressive accounting. The gray areas in accounting leave managements considerable leeway in how aggressively or conservatively to represent company operations. When a company’s accounting treatment creates more questions than answers, something is usually wrong.

Filed under Paper Assets, Theory, Tool Kit Tagged with accounting, acquisitions, debt, fads, postaday2011, RandomBlog2011, Stock Share Investing, Whitney Tilson

Confusing Uncertainity With Risk

March 4, 2011 Leave a comment

Here is an extract from the article ‘ Investors will miss out if they confuse uncertainity with risk ‘ by Whitney Tilson published in the Financial Times on 16 Feb 2008.I think confusing uncertainity with risk is precisely what happened pre-budget in India this year. And this confusion is something that happens to a greater or lesser extent every year before the budget.The same thing happens before the final decision is taken on any government policy. So if a stock investor remembers that there is a difference between uncertainity and risk he/she can sometimes buy shares cheap.Risk means the chance of a loss of capital. Uncertainty is the range of different outcomes. So a stock may have high uncertainty but may not be risky, if no one knows what will happen but the worst case scenario would not results in a huge loss.

“Dealing with uncertainty is always a key challenge for investors. But dealing with uncertainty doesn’t mean avoiding it – on the contrary, it is often fuzziness about a company’s future that creates the type of opportunity bargain-hunting investors cherish.Wall Street in the main hates uncertainty, which manifests itself in depressed share prices of companies whose prospects lack “visibility.” But where the market can err is in confusing uncertainty with risk. Just because a company’s future is highly uncertain doesn’t mean an investment in it is risky. In fact, some of the best potential investments are highly uncertain, but have little risk of permanent capital loss. As hedge-fund manager Mohnish Pabrai describes it in his book, The Dhandho Investor: “Heads, I win; tails, I don’t lose much.” Read more of this post

Filed under Paper Assets, Theory Tagged with bankrupt, bargain hunting, buying opportunity, debt fuelled consolidation, debt load, debt problems, doubling share price, Financual Times, free cash flow, Funeral Home Operator Stewart Enterprises, government policy, least likely to fail, Monaish Pabrai, permanent loss of capital, pre-budget, probability, Risk, share investing, stock investing, stock investor, stock share, The Dhandho Investor, Uncertainity, Whitney Tilson

Who Is Whitney Tilson ?

February 22, 2011 2 Comments

Whitney Tilson is a Harvard MBA ,a disciple of the Graham-Dodd -Buffett-Munger school of value investing , an author and a respected value investor.He has also spoken widely on behavioural finance.

He is one of the authors of Poor Charlie’s Almanack.(Click here for more about Poor Charlie’s Almanack https://wealthymatters.com/2011/02/12/poor-charlies-almanack/). He has also authored The Value Investing Course: Essential Strategies for Market-Beating Returns , where he takes the lifelong process of learning how to identify profitable investment opportunities and streamlines these lessons into strategies that will help the reader build a successful investment portfolio’.He also writes a regular column on value investing for the Financial Times and Kiplinger’s and has written for the Motley Fool and TheStreet.com.You can read some of his articles here: http://www.tilsonfunds.com/

Whitney Tilson co-manages T2 Partners LLC with Glenn H. Tongue; this comprises three value-oriented private investment partnerships viz. T2 Accredited Fund, LP ; Tilson Offshore Fund, Ltd ; T2 Qualified Fund, LP and the Tilson Mutual Funds, composed of two value-based mutual funds, Tilson Focus Fund and Tilson Dividend Fund.Whitney Tilson also led the effort to create ICV Partners, a for-profit private equity fund focused on minority-owned and inner-city businesses that has raised nearly $500 million. Read more of this post

Filed under Tidbits Tagged with Financial Times, Glenn H Tongue, Harvard MBA, IVC Partners, Kiplinger, Motley Fool, Poor Charlie's Almanack, postaday2011, Private Equity, Private Investment Partnerships, T2 Accredited Fund LP, T2 Partners LLC, T2 Qualified Fund LP, The Value Investing Course Essential Strategies For Market Beating Returns, TheStreet.com, Tilson Dividend Fund, Tilson Focus Fund, tilson funds, Tilson Mutual Funds, Tilson Offshore Fund Ltd, value investor, Whitney Tilson

Dealing With The Shortcomings Of The Human Brain

February 21, 2011 2 Comments

Since we can’t overcome the tendency of the human brain to make mistakes while working through heuristics , here is a list of things we can do to reduce the effects of the shortcomings of the human brain.The more we can incorporate these points into our investing procedures and systems , the better the quality of our returns.The checklist is form Whitney Tilson’s ‘How to Avoid – and Profit From – Manias , Bubbles and Investor Irrationality’.