I spend the majority of most days reading earnings calls, conference transcripts, and annual reports. I don’t think I’m alone in that use of time; I’d guess that’s how most investors spend most of their time (if someone has a better use of their time, I’m always looking to improve my process!).
I think a lot of the signal comes from what exactly they’re quoting of Buffett. In this case, something as general as “build a snowball” (and even disregarding Lowenstein’s superior book!) is a red flag. Whereas if a manager explained why they count stock-based comp as real expense by quoting one of Buffett’s letters, I’d be impressed.
Graham definitely advocated for management to issue stock if the share price was overvaluing the business. While Buffett definitely has his own Graham-influenced approach, I'm not sure it could be ruled out that Berkshire would institute an ATM if the shares started trading at, say, 3x Warren's estimate of intrinsic value.
On the process improvement angle... You might consider using a ChatGPT to help identify whatever you are looking for in earnings reports, etc.
I just started using PrivateGPT (https://github.com/imartinez/privateGPT) for something similar because it allows you to import/analyze specific files you provide. Drop the earnings reports into a folder, then ask your questions. It's a bit more complicated than that, but you get the concept.
I think a lot of the signal comes from what exactly they’re quoting of Buffett. In this case, something as general as “build a snowball” (and even disregarding Lowenstein’s superior book!) is a red flag. Whereas if a manager explained why they count stock-based comp as real expense by quoting one of Buffett’s letters, I’d be impressed.
Graham definitely advocated for management to issue stock if the share price was overvaluing the business. While Buffett definitely has his own Graham-influenced approach, I'm not sure it could be ruled out that Berkshire would institute an ATM if the shares started trading at, say, 3x Warren's estimate of intrinsic value.
Lindsay meant to use the "snowball's chance in hell" graphic but grabbed the wrong template while landing the corporate jet.
Very thought-provoking. Thanks for putting this out there for us!
Excellent work Andrew- applicable in all size levels of companies but especially micro caps! Nice job.
On the process improvement angle... You might consider using a ChatGPT to help identify whatever you are looking for in earnings reports, etc.
I just started using PrivateGPT (https://github.com/imartinez/privateGPT) for something similar because it allows you to import/analyze specific files you provide. Drop the earnings reports into a folder, then ask your questions. It's a bit more complicated than that, but you get the concept.
I guess these CEOs never read the one where Buffett talks about watching what people do instead of what they say ¯\_(ツ)_/¯
Cheers Andrew! 💚 🥃