How to Explain a High Return on Invested Capital

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I was trying to think of what factors this could be exposed to because the, when you remove the high return on invested capital and you get better returns, that seems so counterintuitive. So then I was trying to like scratch my brain and think about if that was a strategy, the acquirers multiple was kind of following or what was going on. The problem with all of these sort of metrics is again, you have to sort of understand a little bit what the metric does and why it works the way that it does.

IN THIS EPISODE, YOU’LL LEARN:

02:52 - Breaking down Warren Buffett’s strategy of “buying down wonderful companies at a fair price.”
02:52 - What the Acquirer's Multiple Investing strategy is.
08:35 - Why enterprise value is more useful than market cap to value stocks.
08:35 -The benefits of the Acquirer's multiple strategy vs Warren Buffett value investing strategy.
16:42 - How mean reversion works, what companies and financial metrics typically exhibit mean reversion.
29:28 - Why a competitive advantage is key for a company to sustain a high ROIC.
40:55 - What are things that investors mistake as being moats or sustainable advantages?
50:58 - How to implement this strategy and use the Acquirer's multiple stock screener.
And much, much more!

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Kyle and the other community members.
Tobias Carlisle’s book The Acquirer’s Multiple.
Tobias Carlisle’s book Deep Value.
Tobias Carlisle’s book Quantitative Value.
The Acquirer’s Podcast.
The Acquirer’s Multiple.
The Acquirer’s Fund.
Related Episode: Deep Value Investing W/ Tobias Carlisle - MI025.
Related Episode: Warren Buffett, Charlie Munger, And Berkshire Hathaway W/ Adam Mead - MI084.

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