Investing For Value

Tips E-53: A 1-minute summary of my fundamental analysis of Simpson Manufacturing Co., Inc. (NYSE: SSD)     Investment Thesis Simpson is a resilient, competitively advantaged compounder, but today’s valuation offers long-term investors no margin of safety. Its durable moats support stable margins and cash generation across cycles. However, organic growth is likely to remain GDP-like. Main Business Simpson manufactures structural construction products where brand leadership, local production and customer embeddedness create meaningful competitive advantages. Its engineering specifications embed Simpson products into building designs, creating switching costs and supporting pricing power. Growth Simpson’s underlying growth is modest, with the exceptional 2022 revenue increase reflecting acquisition and pricing rather than structural acceleration. Post-2022 growth slowed to about 3% annually, suggesting long-term organic expansion should broadly track GDP without fur...

Value Investing Case Study 134-1: A fundamental analysis of YTL Power International Berhad to assess whether it is an investment opportunity.       YTL Power is today more than an established business that spans power generation, water and sewerage, and telecommunications. Alongside them, YTL Power is building businesses in renewable energy, data centres, GPU computing, AI and digital banking. The interesting question is whether these are simply new investments - or pieces of a much bigger strategy. Over the past decade, YTL Power's revenue grew strongly, but the journey was far from smooth. Profits declined between 2018 and 2021 before rebounding sharply as the economics of its Singapore power business improved. Returns followed a similar pattern, and despite the recent recovery, its ten-year average returns were not particularly impressive. Yet there is another side to the story. YTL Power owns infrastructure that is difficult to replicate. Water networks, ...

Tips E-52: A 1-minute summary of my fundamental analysis of Rimini Street Inc. (NASDAQ: RMNI)     Investment Thesis Rimini is financially sound and asset-light, but its investment case depends on an operational turnaround not yet proven. Main Business Rimini provides independent enterprise-software support and increasingly offers managed and professional services around major business-critical systems worldwide. Revenue comes from annual support subscriptions, managed services, and project and professional services, although traditional software support remains dominant. Growth A huge addressable market contrasts sharply with slowing revenue growth, raising questions about Rimini’s ability to capture opportunity. Revenue compounded at 13.1% from 2016–2024, but growth has virtually stalled recently.  Profitability Rimini’s limited margin improvement means future profit growth must come primarily from renewed revenue growth and operating leverage. Contribution ...

This is Chapter 19 of my book Mastering Value Investing: Practical Strategies for Real-World Results . Go there for links to the other chapters.   Many investors think the hard part of investing is calculating intrinsic value. It isn't. The harder question comes after you have your valuation: Can you trust it enough to put your money behind it? A spreadsheet can produce an impressively precise number. But that number may be built on assumptions about growth, margins, reinvestment and risk that turn out to be wrong. That is why I don't treat valuation as an answer. I treat it as a decision-making and risk-management tool. One important lesson is never to rely on a single valuation method. I cross-check my primary valuation against asset values, market multiples and alternative valuation approaches. If they point in very different directions, I want to understand why before making an investment decision. For more complex situations, I go further. I may build up the comp...

Tips E-51: A 1-minute summary of my fundamental analysis of Ambarella Inc. (NASDAQ: AMBA)      Investment Thesis Ambarella has differentiated edge-AI technology and a defensible narrow moat, but its economics currently undermine the investment case. There is a path to profitability if revenue scales materially faster than fixed costs.  Main Business Ambarella develops edge-AI vision processors and software embedded in automotive, security, robotics and industrial applications worldwide. Its fabless model serves OEMs, Tier-1 suppliers and ODMs. However, Ambarella remains primarily a component supplier rather than a platform owner. Growth Attractive edge-AI market growth has not translated into sustained revenue expansion, highlighting structural constraints on Ambarella’s business. Profitability Ambarella remains below breakeven, although high operating leverage means sufficient revenue growth could materially improve future profitability. The company has not...