Ashva Capital Management LLC

11/16/2024

https://www.linkedin.com/posts/valueinvestorindia_as-of-september-30-2024-ashva-capital-lp-activity-7260632384767729664--ZPG?utm_source=share&utm_medium=member_desktop

As of September 30, 2024, Ashva Capital LP delivered a 23% return, outpacing the S&P 500's 20.8% for the first nine months of 2024. As we approach the end of…

11/16/2024

https://www.linkedin.com/posts/valueinvestorindia_my-first-stock-investment-was-in-tsingtao-activity-7262811655330222080-b2Pi?utm_source=share&utm_medium=member_desktop

My first stock investment was in Tsingtao Brewery. A friend and I were still in high school, but we pooled our money and opened a brokerage account with Dean…

11/16/2024

https://www.linkedin.com/posts/valueinvestorindia_years-ago-i-thought-a-quality-company-activity-7263173973239025666-YK0s?utm_source=share&utm_medium=member_desktop

Years ago, I thought a “quality” company was simply one with a recognizable brand and high returns on capital. But as I continued studying and researching, I…

05/19/2023

Do you know the first rule of compounding?

According to Charlie Munger, it's "never interrupt it unnecessarily."

Naturally, the second rule of compounding is to carefully select your investment vehicle.

Over a 220-year period, stocks have produced a 6.9% annualized return after inflation.

No other asset class comes close.

You can bring up this chart the next time somebody claims gold is an inflation hedge.

Source: Jeremy Siegel's "Stocks for the Long Run, Sixth Edition"

05/17/2023

Constantly underperforming the market is painful for any investor.

Naturally, you keep trying different strategies...

I know, because I've tried them all from trying to game the quarter to deep value.

Nothing in my opinion is as simple or effective as quality investing.

What exactly does quality investing mean?

My definition is the following:

1. Buy good businesses. The single best indicator of quality is ROIC.
2. Own businesses with high gross margins. It signals a company has some form of competitive advantage and will be able to withstand inflationary periods.
3. Pay a reasonable price. Pick your favorite profitability metric from adjusted operating earnings, EBITDA, EBIT or FCF but avoid paying silly multiples.
4. Financial strength - beginning with the balance sheet - is crucial for long-term success.
5. Hold for the long-term.

Want to learn more about my process? Sign up for my weekly newsletter: Consistent Compounding. The link is below:

https://buff.ly/3O8qnUd

Once a week, you'll get actionable advice on how to identify profitable companies, learn about valuation and obtain our latest take on market moving…

05/12/2023

Quality Investing: The Unexpected Downside to Investing in High ROIC Stocks

In my latest post, I discuss one of the major negatives of owning high ROIC companies that generate copious FCF (Free Cash Flow).

High ROIC businesses can sow the seeds of failure by providing management with the opportunity to allocate FCF poorly.

05/10/2023

My Top 10 Takeaways from 'Britain's Warren Buffett' 2023 Investor Meeting:

1) No investment strategy can outperform in all market conditions and time periods. The last investment manager that was able to outperform in all markets was Bernie Madoff.

2) The key to outperforming with an investment strategy is to stick with it during the time it will inevitably underperform.

3) High gross margins are the best indicator that a company has pricing power and can handle inflation by being able to raise prices to customers.

4) You want to own companies that have a high cash conversion ratio (FCF per share) / EPS. Ideally this ratio is 100%.

5) Share based compensation is a real expense and should be factored into valuation.

6) As a value focused manager you need to remain patient. Smith has waited up to 4-5 years to purchase a company at the right price.

7) Valuation matters. Terry Smith stated that META was the most undervalued stock in their portfolio. The stock is currently 165% above its 52-week low.

8) Low turnover doesn't mean you don't exit positions where the underlying investment thesis has changed.

9) Family controlled businesses can produce more value than professionally managed companies over the long-term because they make decisions based on a longer time perspective.

10) High returns on capital aren't enough. A company must have reinvestment opportunities in order to effectively deploy the capital its generating.

FUNDSMITH Annual Shareholders' Meeting February 2023Ian King introduces the 2023 Fundsmith Annual Shareholders' Meeting at Central Hall Westminster. Terry Sm...

05/09/2023

https://ashvacapital.com/cc-002-one-metric-to-rule-them-all/

Why ROIC is the best metric to analyze the quality of a company.

05/09/2023

https://ashvacapital.com/cash-is-still-trash/

Retail investors have fled to money market funds. Historically, when cash on the sidelines has hit a historic high it signals a new bull market.

07/12/2021

https://ashvacapital.com/how-i-used-a-pmcc-strategy-to-4x-the-return-from-a-stock/