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How to Find Undervalued Stocks
Tillyhouse builds conservatism into his investment approach by assuming that oil prices in the future will be lower than today's spot price or the 10-year average. In addition to looking for companies with low production costs, he also wants them to be cheap on a PE basis and have little to no debt. Tillinghouse walks through the case study of United Healthcare which he bought in 2010 around $30 a share, and the stock advanced to $150 by 2016.
On today’s episode, Clay Finck reviews Joel Tillinghast’s book, Big Money Thinks Small, and does analysis on two companies built around acquisitions - Brown and Brown Insurance and Constellation Software.
Joel is an incredible long-term investor as he has consistently outperformed the market and currently manages around $70 billion at Fidelity. Peter Lynch, who hired Joel at Fidelity, has described Joel as “one of the greatest, most successful stock pickers of all time.”
IN THIS EPISODE YOU’LL LEARN:
00:00 - Intro
06:04 - Why some level of speculation is required in every investment.
08:07 - What speculations are acceptable in Joel Tillinghast’s conservative investment approach.
10:34 - What you need to understand about a company prior to investing.
13:02 - Why Tillinghast avoids investing in gold.
20:20 - Why investing in countries with the fastest GDP growth rate isn’t a wise investment strategy.
29:52 - Clay’s insights into two acquisition-focused companies - Brown and Brown Insurance and Constellation Software.
37:27 - Why Constellation Software may be worth further investigation for stock pickers interested in high quality businesses.
Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.
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