11/13/2017 0 Comments Reverse EngineeringOn Friday, I met with three amazing people at Weitz Investments: Mr. Wally Weitz, Mr. Drew Weitz, and Mr. Dan Walker. I got to discuss just about everything related to investing that I knew with them during the four hours that I was there and learned many things such as how exactly to value a company, which no one has ever shown me before.
With Wally, I got to discuss a lot about my ideology and my beliefs about the current market. One of our main topics was the idea of value investors being stuck in a low growth environment. Because of the artificially depressed interest rates that we have had for the past few years, many stocks seem comparatively expensive right now, creating very little obvious opportunity for value investors. This problem, however, can be solved with management that is a bit more aggressive and focused on expansion in a slow economy like the one that we are experiencing today. In the interviews with Mr. Drew Weitz and Mr. Dan Walker, they gave me two separate projects to focus on: doing a stock pitch with a mid-cap, publicly traded company in Texas and learning how to do a basic discount cash flow model. For my first project, Dan recommended that I do a stock pitch on is Sally Beauty Supply, whose headquarters are located in Denton. By starting with a small, easy-to-understand company, I will be able to become more comfortable with doing things like stock pitches and practice my basic analysis skills, which will provide the basis for more advanced work later in the year. For my second project, I will be taking a discount cash flow model that Mr. Drew Weitz made for me and attempt to “reverse engineer” it to fully understand the format of a discount cash flow, how the model works, and most importantly, why the model works. Using these two projects and the discussion that Mr. Wally Weitz and I had, I will be able to effectively value companies, create more ideas for an original work, and ultimately create my own portfolio by the end of the year.
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