Mohnish Pabrai, a renowned value investor, strongly advocates for portfolio concentration rather than diversification. He believes that investors should focus on a few high-conviction bets instead of spreading investments thin across many stocks. According to Pabrai, holding only the best opportunities maximizes returns while minimizing the dilution of gains that comes with over-diversification. He often references Warren Buffett’s approach of putting substantial capital behind ideas with the highest odds of success. Pabrai’s strategy emphasizes deep research, patience, and the courage to invest heavily when the odds are overwhelmingly favorable.
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@FirebrerathingRedhead1
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@YatirimcininSeyirDefteri
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@ATC6014
TheFE,
For you:
The Buffett-Munger Profitability_And_Assets_Productivity_Investing Truism Dharma 165:
Per Unit Quality Relative Valuation Research:
Relative Multiples Over Profitabilities Valuation Ratio (MoP)
&
Relative Multiples Over Profitabilities and Growth Valuation Ratio (MoPG)
( The Lower The Ratio, The More Valuable Per Unit Quality )
i.
∵
P/B ∝ ROE
P/E ∝ ROIC
∴
Relative Multiples Over Profitabilities Valuation Ratio (MoP)
= Multiples ÷ Profitabilities
=
√{ (P/B)×(P/E) } ÷ √{ ROE×ROIC }
=
√
[
{ (P/B)×(P/E) } ÷ { ROE×ROIC }
]
=
√
[
P² ÷ (BPS × EPS × ROE×ROIC)
]
which can be used to replace the well-known Joel Greenblatt's P/E ÷ ROIC ( or ROIC × E/P ) relative valuation.
The higher profitability and the lower price proclaims:
“The Lower Relative Multiples Over Profitabilities Valuation Ratio is, The Greater Bargain Over Quality”
ii.
If take in PEG consideration:
Relative Multiples Over Profitabilities and Growth Valuation Ratio (MoPG)
= Multiples ÷ (Profitabilities × Growth)
=
∛
[
{ (P/B)×(P/E)×(P/E) } ÷ { ROE×ROIC×Gnp }
]
=
∛
[
P³ ÷ { BPS × EPS² × ROE × ROIC × Gnp }
]
where Gnp = Net Profit Growth
ii.
Relative Multiples Over Profitabilities Valuation Ratio (MoP) Calculation Demonstration ::
1.
SMRT: @ 22 Apr 2025
P/B = 4.84
P/E = 14.79
ROE = 32.85
ROIC = 29.25
SMRT Relative Multiples Over Profitabilities Valuation Ratio (MoP)
= Multiple ÷ Profitability
= √((4.84×14.79)÷(32.85×29.25))
= 0.2729456302
2.
INFOTEC: @ 22 Apr 2025
P/B = 4.08
P/E = 15.29
ROE = 26.39
ROIC = 26.16
INFOTEC Relative Multiples Over Profitabilities Valuation Ratio (MoP)
= Multiple ÷ Profitability
= √((4.08×15.29)÷(26.39×26.16))
= 0.3006043489
3.
CLOUDPT: @ 22 Apr 2025
P/B = 4.67
P/E = 18.57
ROE = 25.14
ROIC = 24.93
CLOUDPT Relative Multiples Over Profitabilities Valuation Ratio (MoP)
= Multiple ÷ Profitability
= √((4.67×18.57)÷(25.14×24.93))
= 0.3719808789
4.
INFOM: @ 22 Apr 2025
P/B = 3.29
P/E = 15.82
ROE = 20.76
ROIC = 20.38
INFOM Relative Multiples Over Profitabilities Valuation Ratio (MoP)
= Multiple ÷ Profitability
= √((3.29×15.82)÷(20.76×20.38))
= 0.3507401022
5.
LGMS: @ 22 Apr 2025
P/B = 4.23
P/E = 32.33
ROE = 13.08
ROIC = 12.97
LGMS Relative Multiples Over Profitabilities Valuation Ratio (MoP)
= Multiple ÷ Profitability
= √((4.23×32.33)÷(13.08×12.97))
= 0.8978404673
6.
MRDIY: @ 22 Apr 2025
P/B = 8.01
P/E = 27.3
ROE = 29.36
ROIC = 16.28
MRDIY Relative Multiples Over Profitabilities Valuation Ratio (MoP)
= Multiple ÷ Profitability
= √((8.01×27.3)÷(29.36×16.28))
= 0.6763824892
7.
CNERGEN: @ 22 Apr 2025
P/B = 1.0
P/E = 14.37
ROE = 6.96
ROIC = 6.88
CNERGEN Relative Multiples Over Profitabilities Valuation Ratio (MoP)
= Multiple ÷ Profitability
= √((1.0×14.37)÷(6.96×6.88))
= 0.547809482
8.
Scomnet: @ 22 Apr 2025
P/B = 1.64
P/E = 22.53
ROE = 7.28
ROIC = 7.28
Scomnet Relative Multiples Over Profitabilities Valuation Ratio (MoP)
= Multiple ÷ Profitability
= √((1.64×22.53)÷(7.28×7.28))
= 0.8349705167
9.
Crest: @ 22 Apr 2025
P/B = 1.46
P/E = 14.14
ROE = 9.88
ROIC = 9.60
Crest Relative Multiples Over Profitabilities Valuation Ratio (MoP)
= Multiple ÷ Profitability
= √((1.46×14.14)÷(9.88×9.60))
= 0.4665380221
10.
Plabs: @ 22 Apr 2025
P/B = 1.0
P/E = 28.07
ROE = 3.45
ROIC = 2.81
Plabs Relative Multiples Over Profitabilities Valuation Ratio (MoP)
= Multiple ÷ Profitability
= √((1.0×28.07)÷(3.45×2.81))
= 1.701604004
11.
Alpha: @ 22 Apr 2025
P/B = 7.13
P/E = 25.0
ROE = 28.5
ROIC = 26.36
Alpha Relative Multiples Over Profitabilities Valuation Ratio (MoP)
= Multiple ÷ Profitability
= √((7.13×25.0)÷(28.5×26.36))
= 0.4871016899
@AJohnson0325
Buy good businesses and hold on.