He's one of the best! Began learning from him when I was looking into the investing world then you understand that his approach is influenced by Buffet. Doing the simple things is often the hardest on multiple levels. Another great insightful video!
Geesh! Terry Smith seems to be a monster... wish I came across this channel before. There is a lot I agree with him on especially those VIE's are not too different then Bitcoins so called value investors are crazy about.
Hey Brad. Finally, you talk about Terry Smith. I've asked about him one year ago or so, but I guess he is not well known in the States and now that Mohnish Pabrai has talked about him there are few Americans who noticed the "English Warren Buffett". 😉
Thanks Brad for another great review. Terry Smith's book has been on my book list so your timing is perfect. Thanks for taking us through your learning curve Brad as you have taught me so much through your journey.
LVMH has a huge amount of goodwill and intangibles. I'd suggest removing Goodwill and Other intangibles from the Capital Employed calculation, which would give you Tangible Capital Employed. That's how Buffett analysis companies.
I would remove the goodwill and intangibles if I wanted to know how much they make on tangible capital employed as you said. But it's worth noting that I think you should include it as it's not like you created the return (net profit or operating profits) from all those assets from scratch, if you did then that would make sense, if you acquired companies then you need to consider the return on the amount you paid as part of the aggregate calculation of return on invested capital. That's the way I view it anyways.
Thanks for the video. Interesting how critical he is about investing in China equities but invests heavily on companies that rely massively on sales in China / sales to Chinese costumers like Starbucks and LVMH. Would love to see his explanation why risks in his opinion is so much lower in foreign companies that rely on China than for Chinese companies.
I guess because these global brands don't rely solely on China. Moreover, they are not controlled by the Chinese government, unlike the Chinese companies.
@@MrPinoCavallo back of the envelope calc: Starbucks has 33,000 stores, 16500 of which they own directly. In China, Starbucks has 5100 stores. They own all of these directly. In other words, one third of the owned stores are in China. Plus: out of a net 1100 new store additions, 600 are in China. Roughly speaking 20-30% of business is China business and probably more investment / value than that. Whoever invests in Starbucks at the current, elevated multiples has the view that there shouldn’t be a discount for that 30% of Starbucks. Reason you mention is that Starbucks in China would be able to either circumvent regulations or that the China subsidiary would not be subject to the same regulation or that regulation in China is not as strict as discussed in western media, but that reason was ruled out by Terry Smith. So I am curious about the logic behind it.
Hi Brad, love your content! Could you please do a breakdown of Phil Town’s latest quarterly report? Looks like he’s made a couple big moves, and I’d love to hear your take on them
That’s strange in regards to the return on capital for Alibaba. I will look into that! I did some economic analysis for return on invested capital (different then the typical version, my version, change in operating cashflow divided CapEx + acquisitions over that period) and I got both Tencent and Alibaba at 60%… So that’s strange!
I believe that the return on invested capital (Net Operating Profits after Tax)/(Assets - Marketable Securities and Debt) is equal to 27.03% for Alibaba based on 2021 annual report end of year results.
Thanks for the video and all the effort you put into providing us with such high-quality content! I recently came across one of your videos where you showed the chinese holdings of Himalaya. Do you have a similar video for Japan?
This is is why intel > micron. Also, you can’t always assume that EBIT = operating income and in the case of BABA, it certainly doesn’t. EBIT is calculated bottom up while operating margin is top down and because of this their ROCE is around 13% versus 7.8% using operating income.
@@matthewhammond859 nothing specifically about BABA, just a general statement that using operating income instead of EBIT isn’t always accurate, especially with businesses as complex as Alibaba. In the case with BABA, there is income being recognized by the company outside of their operating income which isn’t accounted for when using operating income for the ROCE calculation. While it is more conservative in this instance to use operating income, BABA does consistently have material income being generated outside of their core business. Whether it be from currency exchange, investments in their subsidiaries, government grants, or royalties from Ant Group - it really shouldn’t be ignored as it amounts to a significant amount of their net income on a continual basis.
The thing people don't get about amazon is that economies of scale. Nick sleep model of amazon. Terry smith doesn't get it. Cost of delivering one item to a place may be $10 but cost of delivering 20 items to the same place at the same time is not $200. That's economy of scale.
Thanks for the useful videos. I like the way you focus on education rather than "Buy this, buy that, sell that, crash is coming".
So true!
He's one of the best! Began learning from him when I was looking into the investing world then you understand that his approach is influenced by Buffet. Doing the simple things is often the hardest on multiple levels.
Another great insightful video!
Geesh! Terry Smith seems to be a monster... wish I came across this channel before. There is a lot I agree with him on especially those VIE's are not too different then Bitcoins so called value investors are crazy about.
Brad
I’m glad you keep these great videos up.
Hope you are well
Hey Brad. Finally, you talk about Terry Smith. I've asked about him one year ago or so, but I guess he is not well known in the States and now that Mohnish Pabrai has talked about him there are few Americans who noticed the "English Warren Buffett". 😉
stock, Crypto
wahsap,👇
plus one Seven three one three zero seven three six five four..
Wow - the amount of good information in this video is amazing!
Thank you
Terry Smith a legend!!!!!
With his purchase of LVHM, Terry inspired me to add a position to Kering after its recent beating - have a look!
Love the annual meeting and how they own up to their mistakes and take real QA from their fund holders.
Thanks brad . Very useful !! It’s surprising even after a decade of Steve jobs demise and 7x returns apple have to answer innovation question
Good manager, i use him as one of my main benchmarks
It’s very interesting to hear an investor repeat the same stereotypes on Apple, while at the same time talking about the importance of brand power.
stock, Crypto
wahsap,👇
plus one Seven three one three zero seven three six five four..
Thanks Brad for another great review. Terry Smith's book has been on my book list so your timing is perfect. Thanks for taking us through your learning curve Brad as you have taught me so much through your journey.
one of the best videos you've done Brad!
amazing video. thank.you wholeheartidly
What are your thoughts on smith's opinion on alibaba and tencent?
Great job Brad! Thanks as always
Your videos keep getting better and better - thanks Brad!
LVMH has a huge amount of goodwill and intangibles. I'd suggest removing Goodwill and Other intangibles from the Capital Employed calculation, which would give you Tangible Capital Employed. That's how Buffett analysis companies.
I would remove the goodwill and intangibles if I wanted to know how much they make on tangible capital employed as you said. But it's worth noting that I think you should include it as it's not like you created the return (net profit or operating profits) from all those assets from scratch, if you did then that would make sense, if you acquired companies then you need to consider the return on the amount you paid as part of the aggregate calculation of return on invested capital. That's the way I view it anyways.
Brilliant Brad. Thank you. Really enjoyed this.
Very nice review of the annual meeting. Great nuggets with lot of meat in there!
Have the book not read yet. Your pumping out quality content these days keep up the good work
Net Income / Invested Capital without deducting excess cashes and goodwill is the best ratio.
Another excellent video. Thank you
Very good work here Brad. Appreciate the effort...
Thanks for the video. Interesting how critical he is about investing in China equities but invests heavily on companies that rely massively on sales in China / sales to Chinese costumers like Starbucks and LVMH. Would love to see his explanation why risks in his opinion is so much lower in foreign companies that rely on China than for Chinese companies.
I guess because these global brands don't rely solely on China. Moreover, they are not controlled by the Chinese government, unlike the Chinese companies.
@@MrPinoCavallo back of the envelope calc: Starbucks has 33,000 stores, 16500 of which they own directly. In China, Starbucks has 5100 stores. They own all of these directly. In other words, one third of the owned stores are in China. Plus: out of a net 1100 new store additions, 600 are in China.
Roughly speaking 20-30% of business is China business and probably more investment / value than that. Whoever invests in Starbucks at the current, elevated multiples has the view that there shouldn’t be a discount for that 30% of Starbucks. Reason you mention is that Starbucks in China would be able to either circumvent regulations or that the China subsidiary would not be subject to the same regulation or that regulation in China is not as strict as discussed in western media, but that reason was ruled out by Terry Smith. So I am curious about the logic behind it.
It's obvious isn't it? Because he actually owns Starbucks. It's right there in the quote.
I got his book today , thanks !
Interesting take on Google. Thanks, Brad, for the review!
Very useful! Great video and overview!
Good video Brad! you deserve a new subscriber ;)
funny how he spoke of Amazon here now owns it but he explains why
Hi Brad, love your content! Could you please do a breakdown of Phil Town’s latest quarterly report? Looks like he’s made a couple big moves, and I’d love to hear your take on them
Great video, thank you.
Terry Smith had a filing in July that revealed he bought Amazon in his personal account.
Hallo Brad, Is there anyway you can share the Spreadsheet? i have a hard time trying to make one
subbed.
Not sure this myopic focus on margins is wise. Look at for example costco, capping margins serves as a moat.
Hi Brad. Thanks for the perspective. Where did you find your ROCE data? Did you just calculate yourself?
Great summary thanks
That’s strange in regards to the return on capital for Alibaba. I will look into that! I did some economic analysis for return on invested capital (different then the typical version, my version, change in operating cashflow divided CapEx + acquisitions over that period) and I got both Tencent and Alibaba at 60%… So that’s strange!
I believe that the return on invested capital (Net Operating Profits after Tax)/(Assets - Marketable Securities and Debt) is equal to 27.03% for Alibaba based on 2021 annual report end of year results.
Looking at babas roce, its gone from 40% to less than 20
Thanks for the video and all the effort you put into providing us with such high-quality content!
I recently came across one of your videos where you showed the chinese holdings of Himalaya.
Do you have a similar video for Japan?
AWS is number one :-)
I like what he says but the multiples on the stocks he holds are crazy for established slow growers and even worse for faster ones.
Kind of weird that he trash talks Bill Ackman but then says his biggest mistake was selling DPZ , ironically Bill Ackman just bought DPZ 🤔
This is is why intel > micron.
Also, you can’t always assume that EBIT = operating income and in the case of BABA, it certainly doesn’t. EBIT is calculated bottom up while operating margin is top down and because of this their ROCE is around 13% versus 7.8% using operating income.
Can you explain more simply what you're trying to say about baba
@@matthewhammond859 nothing specifically about BABA, just a general statement that using operating income instead of EBIT isn’t always accurate, especially with businesses as complex as Alibaba. In the case with BABA, there is income being recognized by the company outside of their operating income which isn’t accounted for when using operating income for the ROCE calculation. While it is more conservative in this instance to use operating income, BABA does consistently have material income being generated outside of their core business. Whether it be from currency exchange, investments in their subsidiaries, government grants, or royalties from Ant Group - it really shouldn’t be ignored as it amounts to a significant amount of their net income on a continual basis.
@@kendallluelf3720 thanks for clarifying
WINGSTOP IS AWESOME
The thing people don't get about amazon is that economies of scale. Nick sleep model of amazon. Terry smith doesn't get it. Cost of delivering one item to a place may be $10 but cost of delivering 20 items to the same place at the same time is not $200. That's economy of scale.
Baby
46:30 Companies he doenst like and likes
First