@piggyback

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PiggyBack is a new investment publication.

We study capital allocators. We do so to learn, and to find attractive value investing ideas in stock markets.

Follow along here on Commonstock.
If you like what you see we offer a free edition letter. Welcome!
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Big In Japan? - Berkshire's 2019– Bet On Japan Inc
It was August 31, 2020. U.S. value investor and businessman Warren Buffett’s insurance conglomerate Berkshire Hathaway $BRK.A $BRK.B sent out a press release. The heading may have surprised U.S.-focused Berkshire-watchers:

Berkshire Hathaway acquires 5% passive stakes in each of five leading Japanese trading companies”

Berkshire had acquired stakes in Itochu $ITOCY, Marubeni $MARUY, Mitsubishi $MSBHF, Mitsui $MITSY, and Sumitomo $SSUMY. Via regular share purchases on the Tokyo Stock Exchange over “approximately” 12 months.

But why?
As businesses, $BRKA's Japanese trading houses are very exposed to the physical trading of commodities and goods. They are cyclical. They were already recovering from a cyclical commodities bear market of the mid-2010s before Buffett stepped in.

Notice how the ROE% follows commodities?

What about the price $BRKA paid?

Not surprising to the value investing community, Buffett can still wait for opportunistic discounts. Sogo Shoshas got there after the 2010s commodities bear market.

For our takeaways after "piggybacking" Buffett & Berkshire to Japan, please read this week's @piggyback Letter Buffett's Inflation Bet With The House(s)
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I remember when Buffett made this investment! Nice piece--thanks for sharing it. Do you do much other investing abroad/in Japan?
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Stagflation - Equity Analyst View
"Western central banks' decade of aggressive money printing created strong asset price inflation. Add handout checks and tax relief (fiscal stimulus) and supply issues in the recent pandemic. Inflation has now found its way into real economy prices and wages. With a recession long overdue, Western economies now face threats of stagflation." - @piggyback

How about (1) low-multiple stocks? In (2) trading and financing centers for (3) commodities, (4) goods, and (5) infrastructure? Not a bad combination for trying to keep up with stagflation.

In this week’s first PiggyBack Letter (PBL) Buffett's Inflation Bet With The House(s) we piggyback Warren Buffett’s insurance conglomerate, Berkshire Hathaway. From Berkshire’s Omaha, Nebraska across the Pacific. We study Japanese trading houses, a niche industry theme still in play.


Stagflation poll @commonstock users and creators
How worried are you about the risk that current inflation sticks throughout extended recessionary stagflation? (I.e. rising inflation in weak economy)
17 VotesPoll ends on: 07/05/22
An Equity Value Toolbox - Valuation vs Pricing
*Equity = Assets - Liabilities *

But what asset and liability values are we going to use? The answer as always: it depends on what we are going to use it for.

Below is a map of how different equity value metrics apply in different "value-investing" type situations and in situations well beyond value:

(If the chart becomes too tiny on a smartphone: Try flipping the screen to
horizontal. Or revisit the article on a desktop or reading pad.)

As shown in the chart:

1 @piggyback will try to keep its "piggybacking" research of public capital allocator strategies to the left-most fundamental "Value" parts of the stock market distribution. There we can cover anything from bargain-basement "Liquidations" scenarios to quite richly valued "Growth Franchises" (call this GARP or Quality, depending on terminology).

2 Nothing wrong to move into the rightmost Venture (if you have the special skills and connections) or pure price speculation parts of the stock market. We should just not fool ourselves we can motivate these activities with any precision using fundamental "valuation", whether that is multiples or actual valuation models. It is a different beast.

New and old stock investors interested in fundamental investing find this whole Background in PiggyBack's recent Shades of Value.

Q to @commonstock users below
Q to @commonstock users: If forced to label your current market activities, what would you best characterize yourself as?
66%Fundamental investor
3%Price-driven trader/speculator
14%VC/Entrepreneur
14%All of them, more or less
27 VotesPoll ended on: 06/28/22
Screening Cheap - June 2022 Global Tangible Book Discount Opportunities
The easiest way to short-list asset discount stocks? Screen. Below is a global June 2022 bargain bin tour.

The provided charts are an overview of where to find current Price-to-Tangible Book Value discount stocks (0 < P/TBV < 1). In total were almost 12,000 global P/TBV discount stocks in the TIKR Terminal universe as of June 15.

The first chart shows how this distribution of discount stocks is split across the regional and market capitalization size:

The second chart splits the same distribution by sector classification:

For analysis and further insights on how to think about deep value screening check out the recent article Below Book - Part 2: Screening Cheap over at PiggyBack.

Q to @commonstock users: In what global market segments are you finding the most interesting deep asset value stocks right now, and why are they worth considering?
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Piggyback Investing - Introducing PiggyBack
Piggyback
“To use something that someone else has made or done in order to get an advantage.”Cambridge Dictionary

The most promising ideas we can think of are usually already set in motion by smarter, more resourceful, or better-connected people. Our superiors may turn out to be neighbors down the same street if the idea is very crowded. Or if we got early to the party, they may be niche players on the other side of the world. Tough luck, but learn to be happy with competition for good ideas as a fact in life.

Now, as investors – in particular as minority investors in public stock markets – we have the opportunity to invest in our superiors. And we can afford to wait until we get confident that these superiors are stacking odds in our favor.

The weekly PiggyBack Letter (PBL) brings you free opportunities to learn from proven and promising capital allocators – via their present, past, and potential future public stock market investments.

We will select and analyze “our” capital allocators and investment situations from a value investing lens.

Piggyback investing
"To gain knowledge or resource advantages from active investors by studying or investing in their public securities positions.” — Johan Eklund, CFA, PiggyBack

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Hello Commonstock!

Above is the introduction of the inaugural letter of our free, weekly PiggyBack Letter (PBL) edition. PiggyBack is a brand new (18 days old to be exact) value-investing publication at Substack.

Having been (easily) convinced by @investmenttalk about the investment engagement and smart tools in this growing community we are very happy to join you here @commonstock!

  • We will initially share some of our original value-investment content with an emphasis on fundamental graphs and strategies.
  • As we move further into publication there will be more content relating to current investment themes that readers can research further to invest in or trade around (at their own full responsibility, see full DISCLAIMER).

We really look forward to interact with and learn from investors and other fundamental content providers so please follow us and feel free to reach out!

Kind Regards,

Johan Eklund, CFA
Founder and Analyst/Author of PiggyBack

PS: Consider joining PiggyBack's early free readership or sharing our content if this fundamental value approach is down your alley.
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