THE ACQUIRER’S MULTIPLE (BY TOBIAS CARLISLE)
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- Опубликовано: 25 май 2024
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This is my summary of Tobias E. Carlisle’s The Acquirer’s Multiple, a book that explains how you can beat the stock market through a simple but ingenious quantitative investing method, by zigging when the crowd is zagging.
Learn about “The Magic Formula” from The Little Book that Beats the Market here: bit.ly/38B19Wz
Top 5 takeaways from The Acquirer’s Multiple by Tobias Carlisle:
00:00 1. Zig when everyone else Zag
01:29 2. Regression to the mean
04:58 3. The Acquirer's Multiple
08:06 4. The broken-leg problem
10:12 5. So ... Why doesn't everyone do it?
My goal with this channel is to help you make more money and improve your personal finances. How to become a millionaire? There are many ways to get there - investing in the stock market, becoming a stock trader, doing real estate investing, or why not becoming an entrepreneur? But whether you are interested in how to invest in stocks or investing strategies for creating passive income with rental properties - I hope to be able to provide you with a solution (or at least an idea) here. Warren Buffett - the greatest investor of our time - says that you should fill your mind with competing ideas and then see what makes sense to you. This channel is about filling your mind with those ideas. And in the process - upgrading your money-making toolbox.
Learn about “The Magic Formula” from The Little Book that Beats the Market here: bit.ly/38B19Wz
Hei du! Er ny til "Channelen" din, men fra hva jeg har sett så har du utrolig mye unikt og grundig jeg kan tenke meg å lære fra deg.
Jeg lurte faktisk på, hva er det du bruker til å investere? Og investerer du kun i det Svenske markedet?
Have u ever used acquirer's multiple to invest?
3 years later and I'm still using the strategy, this method is timeless
How are you doing?
I just don't understand the difference btw using EV/Ebit (from Grenblatt) and EV/Ebitda (from Tobias)
@@Parcian- I think using ebit is safer, because ebitda does not take depreciation and amortization into account, but we see that Tobias' method has won in the past
@@clintontavares4613ebita = bull shit earnings per great Charlie munger.
I think this is great!
Summary is brilliant and works for both - Acquirer's and Magic formula.
Explanation why not everyone follows these rules (gym example) is perfect. 👍 Cheers.
Best channel on RUclips! Thanks for sharing, this is gold.
Stefano Chiarelli thanks a million!
Thank you so much for this
Please continue making videos!!! Have watched almost all your videos its really good and educational. More subscribers for you! Videos are gold!!!
Guys thank you so much for you work. I listen almost everyday and it is totally free. Keep going!
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Amazing worth watching it again
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Every nice video, thanks a lot.
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Wow! sharing your channel to my friends
Love it! 🙌
thanks-I use the Magic Formula method and this is first time I heard of Acquirers Method, I am going to check it out. I suppose the main differences are that the AM method like you said takes into account debt and cash and the operating aspect, but curious if any if any comparison between these two by either of the authors?
Also agree on the simple rules, as I have another full time job and cannot devote time to pouring through all financial statements and making sense of them. In addition to the rules, like you said, it is imperative to stick to the plan, do not get cold feet and bail. you must grit it out to be successful.
Super!! You should make videos on fundamental analysis of a company. Step by step method with real example. I guess it will be informative and very much interesting.
Cheers alpha msk! It will come, sooner or later, be sure of it 👍
Great video and education channel - it is in line with my strategy of value growth investing - keep on recording and spreading the knowledge
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Keep it up! I watch all your videos
Love it Earl! 🙌😁 Best of luck to you in your stock picking!
great job again, thanks
😁🙌
Det är helt sjukt att du inte får fler views än du får. Du förtjänar MYCKET mer med tanke på hur bra dina videos är! Sluta aldrig att göra dessa! Det är väldigt sällan jag klickar like men du får fasiken en tumme upp idag!
Sjukt kul att höra att du uppskattar kanalen zackiz! 😁 Kommentarer som denna får mig att bli tagggad på att producera mer, så keep them coming 🙌
Great Summary as always... I am new to this channel i regret not finding it earlier...
I would like to request "Zero to One" by Peter Theil.. it's a good book
Keep up the Good work
Cheers Comic Freaky! I'm glad to hear that you found it too 😁 I've read parts of Theil's book before as I did my Master's Thesis on "Lean Startup". I like what I've seen so far, and maybe I'll make a summary of it in the future, thank you for your suggestion.
Your channel is a gold mine
😍
Thank you🤗❤
Keep on saying you should have a course online. Will enroll immediate!! Power
Videos are better with timestamps!
Great video.
Question: do you sell winning stocks after one year if they are still on the list? Same question applies to loosing stocks if they are still on the list.
I just am a bit confused about when to sell each stock
Nice video!
But i guess it's called "mean reversion" in the book
Zigzag zigzag!!
Great video! But how do you do an EV on banks
This is nice along with the magic formula and really describes foundamentals. But trade every quarter? Did you take into account the trading costs? They can easily be 1.5% for a sell/buy operation. Do it 4 times and that is a 6% tax a year.
I have enjoyed Robert Greene's books, aswell as intelligent investor. Currently i am reading Never Eat Alone. But thank you for these i find them inspiring. This is also the mote of confidence I needed regarding my investments.
I'm happy to hear that you enjoy the content James Groomes! I'd advice looking into one of these quantitative investment book - Acquirer's Multiple or The Little Book that Beats the Market and then compare it to a more qualitative approach such as the one of Philip Fisher (Common Stocks and Uncommon Profits)
the more I learn, the more I don't know... keep it up, man
Knowledge paradox indeed! Every piece of new information leads to new information that one craves
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Bravo!
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Is the acquirers multiple just the EV/EBITDA?
Nice video, but why is there no more timestamps like the previous one ? Loving that since sometimes i re-watch alot of your videos
To be honest, I didn't think that they did much for people, so I removed them because I thought it was wasted effort from my side. It's a good thing that you posted this comment though, I will test to re-implement it!
@@TheSwedishInvestor Thanks!
I cannot use the screener Tobias sells as I don't live in the US. So, I'm reliant on a general purpose screener. Appreciate if someone could help with answering the following:
1. If more than one stock appears for the same sector & industry, say X, Y with acquirer's multiple 1.1 and 1.5 respectively, should I favor the one which has the least acquirer's multiple?
2. When I screen again after a year if X's acquirer's multiple becomes 1.24 and Y moves up with an acquirer's multiple of 1, does that mean I should sell off X and buy Y?
Well done.
Hey mate,
First of all I really like your content so thank you! Have you had the chance to try one of the 2 methods (be it yourself or back testing them)?
Hey man. My approach since I started investing in 2013 has been primarily to pick strong and fairly priced individual companies for the long term. Both The Acquirer's Multiple & The Magic Formula are better suited for investors who'd like to be more passive than I am. I have used The Magic Formula on one occasion when I felt that I didn't have enough time to research individual companies, but I think that it would be unfair to draw any conclusion from that of whether it is successful or not, because it wasn't applied repeatedly over many years, which means that the sample size is too small.
@@TheSwedishInvestor thanks for the detailed answer :). Keep it up!
" 'sigh'..regression to the mean.."this really got me.. 🤣
Do a summary of deep value too
Thanks for the video I thoroughly enjoyed it and will buy the two books you mentioned here.
Awesome to hear Ali Sabzabadi! I'd recommend comparing this quantitative approach to the qualitative approach that, for instance, Philip A Fisher has (Common Stocks and Uncommon Profits)
great vid, for enterprise value though should the signs for debt and cash be switched around
No because it’s determining price after factoring cash and debt. If the cash is higher than both debt and market cap the price is less than 0 because theoretically you could buy the company, pay off the debts, and still have more cash then you started with. Negative enterprise value equals “free”. You own whatever is left over of the company after debts for free. The Ben Graham “net nets” or what Buffett called the “cigarette butts approach” did this.
Buffett discovered that some businesses would require large debt to maintain the business and if competition would continue to cause declining or even negative earnings this “free” company could cost you money. To avoid this if a company was in danger of losing its margin of safety he took active management roles by acquiring as much as he could and using his influence plus investing friends to effectively turn the tide of the business and control what they did forcing them to liquidate certain assets and return the cash to shareholders.
He eventually discovered that companies had superior economics and Charlie a Unger taught him that he wasn’t valuing the “quality per share units” that the best companies would provide and would also avoid the capital gains tax and allow the money to compound. Tax free gain of 25% is basically equal to a taxable gain of 50% as he acquired more assets. David Clark and Mary Buffet go into why Buffett analyzes the companies differently now than he did in the 50s and early 60s and then Graham did, but the “Acquirer’s multiple” is a purely quantitative look at price (enterprize value) vs earnings (revenue minus the things mentioned)
@@MrMichaelsu thanks, that really helped with the intuition, appreciate the explanation
Cheers NoJuan Holmes, great explanation. It is quite counter-intuitive yes. But you want the numerator to be as low as possible and the denominator to be as high as possible 👍
Recommend Deep value investing and how to Make a million slowly
Thank you for your suggestions Jeffery Tan! 👍
So, what method do you think is better? This one or the Magic Formula? Or should they both be used. I'd love a compare and contrast video on strategies. Thanks! Big fan.
in bull markets Magic f. and in bear markets acquires multiplet
Can this be combined with the magic formula? Would using both increase the chance of success?
What I don't understand about implementing the strategy is when to sell. Sell losers whenever they are out of the screener, or maybe at monthly or quarterly rebalancing moments, or keep them for a year anyway?
And when to sell winners which are out of the screener? Sell these after a year?
Another book we don’t need to read by our own 😂🖤😬
Actually I rsad this book.. And any 50 pages of it has more much more insight than this..
In this case the Swedish investor is doing a trailor for the book..
This book is modern and 10p times more than this video unlike darvas book... Which after the Swedish investor you don t need to read
It’s “by ourselves” or “on our own”.
Nice video
So what’s the better formula, The acquirers multiple or magic formula?
Hello from Indonesia
Could you make video for DEFINITIVE GUIDE TO POSITION SIZING STRATEGIES by Van Tharp dan TRADE YOUR WAY TO FINANCIAL FREEDOM by Van Tharp..
I found this tittle in the web and it said that this books for Money Management aspec. Hope to get notification about this books soon..
Thanks
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Eka D. Adiputra I have a summary of Trade Your Way to Financial Freedom already, you can find it here: ruclips.net/video/Kk7ibQSRyK8/видео.html
I am wondering what happens if we get an acquirer's multiple that is negative? Do we just remove these from our screen? Sometimes operating income is negative where the company does not turn a profit.
I am so lucky that i found your channel in the RUclips
Great video mate. Began watching you a couple of weeks ago and have already invested my first money. Which of these methods do you prefer yourself, if you don't mind me asking :)
You make excellent videos
Request video on Trading in the zone
Beast.
What is best acquires multiple average for a good company
The question is. What is a low multiple and what I is not? I even bought the book for that question and haven’t found the answer
Can you suggest me book on insurance sector???
What if I get a negative number? Do I ignore those?
Is the Acquire's Multiple the same as EV/EBIT?
EV/Ebitda, but i don't know why it was changed to Ebitda
Hi there Swedish Investor, do you know when does Tobias Carlisle consider the aquirer´s multiple to be low and to be high?
love your show, keep it going
It’s all relative to the other stocks assessed in the same manner. The lower the better. They are ranked accordingly.
How to find the 'Cash' in the balance sheet?
Nice ready guys, I realized that the secret of making millions is saving for a better investment.. I always tell myself you don’t need that vacation in Paris just yet and that mindset helps me make more money investing. Fore example last year I invested $45,000 in his platform (with the help of mr Jason McQueen) and made $495,000, but guess what? I put it back and traded with him again and now I’m rounding up to million. Hoping to get to 2 in months time.. You can reach him on Instagram @Jason_real.fx
Guys, I noticed that the magic formula had some issues -for example, doesn't consider debt-. For instance, I developed another magic formula, it goes like this:
magic ratio=EV/EBIT/5.57+0.1/ROA+0.17/earnings price ratio (not PE, but it's inverse)+Shiller's PE/5.57
The lower the better.
By watching this video, I think I'm right with this one. Hope it results useful for you, good luck!
Dude, EV factors in debt....... Market Cap+ Debt, so he does take it into account........ What he doesn't take into account is a normalized EBIT and ROC.
@@Lugiox Dude, original magic formula doesn't use EV...
How can i screen indian stocks based on acquirer's multiple?
It is not yet available at the official site, but you can do this yourself, by using a database such as CapitalIQ (this one is expensive though). Try searching for "stock screener India", "historical stock market data India" or similar. Use the formula listed in takeaway number 3 to calculate the Acquirer's Multiple individually for each company and then sort them based on the results.
Thankyou for your reply.
Hey, could you elaborate what do you mean but " Keeping winners at least for 1 year and 1 day"?
In a taxable account, you want to keep winners slightly longer than 1 year and you want to sell losers a bit before that 1 year mark. It's more efficient with your taxes, it will save you $
@@meanreversion6849 you mean the profit that earned from the trade should be left alone for that 1year and a day period
Great stuff, thanks a lot! Small world -- ran across a good friend from Shanghai in your comments section - Ricardo Sierra.
Haha, cheers Watts Humphrey! I wanted to say that the investing community is stronger together but then I was reminded of herd behavior 😂
Pls how do you find books
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Have a ETF with this strategy?
Another perfect video from you Swedish. You are a God. Tobias has great podcasts on his website too.
I'm grateful for your support a b! I'll make sure to check it out 👍
hmm so what is considered a good acquirers multiple? think it wasnt mentioned...below 10?
That's a tough one. Currently, the lowest multiples in the large cap screener are around 4-9. Considering that the S&P500 has an average P/E of 24.7 right now, I don't think that these numbers are particularly good. I also don't think that you should try to time the market if you choose to invest according to this strategy though. Trust in the system and in that, on average, the stocks with the lowest multiples will outperform the rest of the stock market over time.
@@TheSwedishInvestor hmm... Probably historical comparison or comparison to competitors would be better In that case. Thanks!
Here's a great quote from Stoic philosopher Seneca “Luck is what happens when preparation meets opportunity.” - This is a great insight into luck. So many people fail to be prepared for and capitalise on their good luck. By laying the groundwork for my new RUclips channel in advance, I have been able to make the most of any luck that scan my way. My advice is to prepare and then take consistent action.
u meant mean reversion instead of mean regression?
Does acquirersmultiple.com has an australian equivalent
There are more advanced screeners such as screener.co which could give you the results you want, but for this, you'll have to do some minor amount of coding (database queries)
it's just hopium
reality is in most cases, winners are winners for particular reasons (moats and teams) and they'll keep winning and losers will keep losing
I'm amazed that no one ever speaks About the following matter: holding a year and a day is for tax purposes for USA citizens only??? Or does it effect also EU investors? Or does it affect everyone who invests in the USA? Please be clear regarding this.
The more videos you produce, the more I want !! I'm greedy !! ⭐
Good thing I have a couple more of them in the pipeline then .. 😏 Cheers Jean Police! 😁
The multiple you describe in the video looks like a simple EV/EBIT multiple, doesn't it? I did not see the difference tbh. I can assure you that institutional investors and the sell side work on a daily basis with this metric. It is a key metric on basically every sell side report and appears on the front page of every financial data provider like Bloomberg, FactSet and ThomsonReuters Eikon. It is not really a "hidden gem".
It's a good observation Ma Go. There's a slight difference between EBIT and operating income in that the latter excludes non-operating income/expenses, but you're absolutely correct. In most cases they are very similar. The "hidden gem" doesn't lie in that the information is difficult to obtain though, but in how the information can be used - ie that it has been very profitable historically to buy and hold companies with the lowest multiples, ignoring all of the qualitative factors 😊 As stated in takeaway number 5, this is simple but not necessarily easy to implement in practice.
Hi Erik, I am not able to understand if I am ready to start investing or not. Is there a test , or something which can help me to evaluate if I am ready for stock market or not?
👀🙄🤔
You can always paper trade. Or start with what you can afford to lose. You will make mistakes and you will get burned. Take these moments as the lessons they are and move forward. Good luck.
Right now, it's not hard to make money investing. Just buy an index like SPY. Eventually the up trend will change, but it doesn't appear to be coming anytime soon. Unfortunately it's hard to guage how you will do when the market is choppy until you live through it. You can practice on a "paper" (fake) account, but as long as the market is strong, it will just confirm that it's easy to make money when the market is going up
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In Nederland it's not relevant to stay with stocks for 1 year and a day you should speak out of a USA perspective you should say this is the case if your from USA and these other few countries... For an example in the Netherlands this counts: Net asset value is taxed at a flat rate of 31% on a deemed annual return (the deemed annual return varies by the total value of assets owned).
And in Sweden its just taxed 30 procent as well so why say stay with it for a year and a day?
Don’t know about Ray - isn’t he in questionable water at the moment?
You might say the waters are a little rough under the bridge 😬
Everyone has temporary setbacks in the market (if that's what you are referring to), I but I think his track record speaks for itself. Hahaha Pablo TP 😂
First
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The screener is paid, not free
You can use the large cap screener - acquirersmultiple.com/screener/large-cap/ to see the top 30 companies of the 1000 largest companies. This is free, and it's enough to execute the strategy. It is paid only if you want to look at like small caps or Canadian stocks 😊
Could you do "Follow the Smart Money by Jon & Pete Najarian" next? I see the ad everyday on CNBC
Thank you for your suggestion Nicolas. I'll consider it if he book gains a little more reputation first 😊
You deserve WAY more likes and views...but I think regression to the mean also means that average people are lazy and dumb and excellent outliers like you and your work are not fully appreciated by common folk.
Thanks for this. Tobias is the most boring speaker, I never get anywhere in his speeches.