14 Knowledge-Packed 🧵s on Fundamental Analysis
Becoming a great long-term value investor is difficult, but luckily it's very learnable for a disciplined mind!
Here are some amazing resource on:
- financial statement analysis
- how to model companies
- growth metrics
& more!
👇
Becoming a great long-term value investor is difficult, but luckily it's very learnable for a disciplined mind!
Here are some amazing resource on:
- financial statement analysis
- how to model companies
- growth metrics
& more!
👇
1/ Financial Statement Analysis (part 1): the Income Statement
First stop on your journey should always be accounting basics. This is a pre-requisite to learning how to analyze 10Ks, earnings calls, reports, etc.
shoutout to @BrianFeroldi
First stop on your journey should always be accounting basics. This is a pre-requisite to learning how to analyze 10Ks, earnings calls, reports, etc.
shoutout to @BrianFeroldi
2/ Financial Statement Analysis (part 2): the Balance Sheet
After learning about all the lines of an income statement, move on to the balance sheet.
(PS: it's way more than just assets=liabilities+equity!)
shoutout to @10kdiver
After learning about all the lines of an income statement, move on to the balance sheet.
(PS: it's way more than just assets=liabilities+equity!)
shoutout to @10kdiver
3/ Financial Statement Analysis (part 3): the Cash Flow Statement
Once you're able to evaluate cash flow from operations vs. cash flow from investments, you'll arleady be 420 miles ahead of every VC!
(JK 🤠)
shoutout again to @BrianFeroldi
Once you're able to evaluate cash flow from operations vs. cash flow from investments, you'll arleady be 420 miles ahead of every VC!
(JK 🤠)
shoutout again to @BrianFeroldi
4/ Compiled Financial Statement Analysis
Now that you understand how and why to read each of the 3 individual financial statements, let's put it all together:
shoutout to @RamBhupatiraju
Now that you understand how and why to read each of the 3 individual financial statements, let's put it all together:
shoutout to @RamBhupatiraju
5/ How to Read & Understand 10Ks
If you got through all the accounting prerequisites, you're now ready to read 10Ks! These tend to be super long and dense -- over 100 pages per company!
Don't worry. This thread tells u exactly what to skim/look for!
If you got through all the accounting prerequisites, you're now ready to read 10Ks! These tend to be super long and dense -- over 100 pages per company!
Don't worry. This thread tells u exactly what to skim/look for!
6/ How to Read & Understand Earnings Calls
10Ks get published once a year. Earnings calls/reports every quarter. Here's how they're different and what you should look for:
10Ks get published once a year. Earnings calls/reports every quarter. Here's how they're different and what you should look for:
7/ Discounted Cash Flow (DCF) Model
There's several ways to model (perform valuation) on a company:
- DCF ("intrinsic valuation")
- public comps
- precedent transactions
@AswathDamodaran is the renowned expert on this topic. Here are his notes on DCF:
pages.stern.nyu.edu
There's several ways to model (perform valuation) on a company:
- DCF ("intrinsic valuation")
- public comps
- precedent transactions
@AswathDamodaran is the renowned expert on this topic. Here are his notes on DCF:
pages.stern.nyu.edu
8/ Valuation Applied to Startups
... And here are @AswathDamodaran's lessons applied to the startup world:
acv-vc.medium.com
... And here are @AswathDamodaran's lessons applied to the startup world:
acv-vc.medium.com
9/ Real example: analysing $FB/Meta
Here's a solid example analysis from @borrowed_ideas on $FB applying a ton of core concepts from fundamental analysis:
Here's a solid example analysis from @borrowed_ideas on $FB applying a ton of core concepts from fundamental analysis:
10/ Another real example: analysing $UPST/Upstart
This is a solid piece from @StockMarketNerd looking beyond the financial statements and also at the governance, founding story/team, etc.
Also thanks to @JonahLupton for the find!
This is a solid piece from @StockMarketNerd looking beyond the financial statements and also at the governance, founding story/team, etc.
Also thanks to @JonahLupton for the find!
11/ Warren Buffett's investment philosophy summarized
Everyone knows of the Oracle of omaha but not everyone has actually done a deep dive on his investment methodology!
To cut to the chase, read this from @SteadyCompound:
Everyone knows of the Oracle of omaha but not everyone has actually done a deep dive on his investment methodology!
To cut to the chase, read this from @SteadyCompound:
12/ Puru Saxena's investment philosophy
I tried finding @saxena_puru's old thread summarizing his investment methodology and discovered it's gone! 😢😢
But here's a podcast summary of it!
Thanks to @FinTwitNotes:
I tried finding @saxena_puru's old thread summarizing his investment methodology and discovered it's gone! 😢😢
But here's a podcast summary of it!
Thanks to @FinTwitNotes:
13/ Interest Rates & Fundamental Analysis
While rates/Fed is typically more of a macro-topic, it's one of the most important factors in the DCF and can mean life-vs-death in terms of company solvency!
An awesome thread from @mansourtarek_ on rates:
While rates/Fed is typically more of a macro-topic, it's one of the most important factors in the DCF and can mean life-vs-death in terms of company solvency!
An awesome thread from @mansourtarek_ on rates:
14/ Corporate Debt
Beginner equity investors often overlook "the debt situation" when analysing companies. But solvency & leverage are absolutely critical factors for long-term value & growth, so don't skip over!
Here's an overview on corporate debt:
Beginner equity investors often overlook "the debt situation" when analysing companies. But solvency & leverage are absolutely critical factors for long-term value & growth, so don't skip over!
Here's an overview on corporate debt:
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