105: Value Investor Tools Of The Trade (Buffett Weighs In)
Buffett: "There’s all kinds of information around as to businesses."
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In my last post, I talked about my research process. This post will outline the tools I use to accomplish my research, both paid and free resources.
Free Resources
The best research is basic, bottoms-up reading, and thankfully most of that is free. There are LOADS of other data out there, it just takes some looking.
Investor relations pages: A search for “XYZ Company investor relations” is usually sufficient to find a company’s IR site. These pages typically have company presentations, financial summaries, and “SEC filings”, which is my first stop for 10Ks, 10Qs, proxies, etc.
SEC Edgar: This page is a good resource for finding all company filings, especially if the IR site isn’t that great or is limited in its sorting functionality.
Bank-specific: The FFIEC has a nice page to look at FDIC call reports and uniform bank performance reports. Some banks file their SEC filings with the FDIC and these can be found here.
FRED: A good source for economic data can be found at the St. Louis Federal Reserve website.
Other government sites: You can find a wealth of data/statistics from the US Census Bureau, the Bureau of Economic Analysis, The Bureau of Labor Statistics, The Bank for International Settlements, and the World Bank. The list goes on.
Other industry data: I’ve found a ton of free data available in industry periodicals and magazine/news articles. Sometimes they’re free, sometimes you can get a few articles before having to pay, and sometimes they’re paywalled. The latter can be useful even if behind a paywall because you know the data exists and can triangulate it from another (hopefully free) resource. Some free ones I subscribe to include Beverage Daily and Logistics Management.
Trade associations: The Edison Electrical Institute and the National Stone, Sand & Gravel Association are two examples of trade associations that share great data freely with the world. There are others out there too, it just takes some looking.
Substack: There are a ton of great writers on Substack putting out free content. I don’t always read every post or I might skim them. But it’s a good way to expose yourself to new things.
Twitter…okay Elon, X: Fintwit (or is it FinX now?) is a great community that freely shares their research and thinking, including some very well-respected analysts and investors. Avoid the scrolling/media traps and stick to learning and engaging and you’ll gain the most benefit, in my view.
Corner of Berkshire and Fairfax: This site has a nominal one-time cover charge that does a great job of filtering out the riff-raff you find on sites like Yahoo! The participants are generally well informed and have good conversations about companies, which are conveniently grouped under different headings/subjects.
Value Investors Club: I’m not an official member, just a “lurker”. Still, you can get access to some good research just on a time delay of a few months. This is fine for long-term value investors who are looking to get to know companies better not just find the next trade.
Other investor communities: There are Reddit channels, Discord servers, blogs, etc. that are great resources. Often you’ll be able to find someone with access to a paid resource you don’t have who is willing to download a report or file for you.
ROIC.ai: This is a ValueLine-like site that gives you an overview of companies and transcripts all for free on US companies. The paid version gains you access to their worldwide database.
Whale Wisdom: I find this site useful for tracking what other investors are doing. You can sign up for free and view summaries of 13F filings and search by company to see what funds own it.
The library: Don’t be afraid to dust off your old library card! Libraries often have subscriptions to expensive resources like ValueLine and Mergent that you couldn’t justify paying for yourself. And books! Utilize the library for one-off books you don’t need to keep. You can freely load up on half a dozen books to skim through on a topic/industry without any guilt because they’re free.
Microsoft Excel / Google Sheets: I’m an Excel guy, and I’ve been playing around with importing data into spreadsheets. It’s an area I know I can improve upon. I’ve only touched the surface with queries and building charts that can be updated based on an imported ticker symbol. For example, I recently built a worksheet that will make a slick one and five-year chart and automatically update the chart labels accordingly. I know there’s more I can do on this front.
Paid Resources
There are a ton of paid resources / research out there. I suspect each analyst is different and of course, it depends on your area of interest. Here’s what I’ve chosen to pay for, starting with the more general resources and moving toward more specific ones.
Wall Street Journal ($660/year): I pay for the digital and print versions. The e-version has gotten better over the years so I’m considering dropping print to lower this cost. Call me old school, but there’s nothing like holding a paper in your hands.
Economist ($250/year): I find this a great weekly resource. I don’t always read it cover to cover but it gives me a worldwide perspective and curates the important stories. It’s also a great way to practice thinking about economics as they analyze things through the lens of basic supply and demand.
Morningstar ($249/year): Morningstar is a great resource for getting quick information/stats on a company, like its current price, price/book, return on capital, etc. They also have financial statements you can download into Excel. I like to get my data right from primary sources and build my own spreadsheets, but it’s nice to be able to download them for companies you’re looking into quickly. I also find their analysis of companies a good place to check my own work and find out if there’s something I missed. Their framework of looking at companies through the lens of moats resonates with my process, too.
Statista ($490/year): It took me a while to finally decide to pay for this but I’ve found it indispensable. There are loads of great statistics out there, which Statista collects and puts into graphs/charts. There are additional reports and resources available for more money, which I don’t pay for. What I like a lot about this service is it gives you the link to their sources, which you can then go deeper into and explore for yourself.
Bank Director Magazine ($145/year): This is an industry-specific resource with good reporting on the banking industry, lists of top banks, and other interesting company resources. For a bank investor, it’s indispensable.
Newsletters: Currently, the only paid newsletters I use are Scuttleblurb and The Science of Hitting, both of which I highly recommend. Again, they resonate with my way of thinking so they might not be for you. I find it a good way to see what other respected analysts are looking at and how they look at companies.
Farnam Street ($149/year): This isn’t so much an investment resource as a general thinking tool, which is of course useful for investing. Their tagline “Mastering the best of what other people have figured out.” Is a nod to Charlie Munger, the polymath vice chairman of Berkshire Hathaway. j
Watchlist Investing ($249/year): Okay, I couldn’t help but slip in an advertisement for my Deep Dives service. You get access to all 29 back issues featuring in-depth research on great businesses. We also have a private Discord server, monthly subscriber-only meetups, a live BRK valuation spreadsheet, and more.
Other
InPractise: This is a great site that contains interviews with industry insiders and executives. I used it for a year and liked it. However, I found I wasn’t using it enough as their coverage universe wasn’t exactly what I wanted. I might check it out again in the future.
Buffett Opines:
Here’s Buffett talking about what he likes to see in reports and the information he looks for. I’ve started the video at 2:25 where he states:
“It’s amazing how well you can do in investing really with what I call outside information…there’s all kinds of information around as to businesses …”
I’d recommend watching the whole video, it’s a great clip.
What tools do you use in your process? Which one(s) are so good you’d give up last or pay double for?
Stay rational! —Adam
Thanks for the resources