The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network TIP253: An Intrinsic Value Assessment w/ Jesse Felder (Business Podcast)
Jul 28, 2019
Jesse Felder, investing expert and host of 'Superinvestors,' dives deep into the intrinsic value of Bed Bath & Beyond. He analyzes the dramatic valuation decline and reveals why heavy shorting can benefit long investors. The discussion covers strategies for navigating commoditized markets, potential private buyout scenarios, and the importance of macro indicators in stock valuation. Jesse also provides insights on insider trading and how understanding financial maneuvers can uncover hidden investment opportunities amid market chaos.
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Normalized P/E
- Avoid using P/E ratios without normalization due to record leverage and profit margins.
- Normalize earnings over a cycle to avoid valuations based on peak earnings.
Valuation and Risk
- Bed Bath & Beyond's low valuation accounts for the competitive risks from Amazon, says Felder.
- The company faces challenges competing with online retailers with near-zero profit margins.
Declining Margins
- Bed Bath & Beyond's declining margins are due to increased online shopping and price competition.
- Reduced foot traffic impacts their ability to upsell higher-margin products.