Signal blog

IOI commentary separates the
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Here is What We Liked in Oracle’s ($ORCL) 3Q17 Earnings Release
March 27, 2017

Oracle reported third quarter results for fiscal year 2017 on March 16th and the share price jumped over 6% the day after the announcement was made. Since we first recommended an investment structure in Oracle, the firm’s st...

VIDEO: Union Pacific’s Monopoly Profits
March 26, 2017

Transcript Hi everyone and welcome to Sunday Morning Coffee with Erik. Today, I’m looking at an article that I published last week in Forbes – What Does A Monopolist Look Like? It Looks Like Union Pacific. I will not go th...

The Elements of an Effective Real-World Investing Framework
March 24, 2017

“To invest successfully, one doesn’t need a stratospheric IQ. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework” – Warren Buffet Over ...

DataBite: The Effect of Dividend Reinvestment on the Long-Run Real S&P 500 Price
March 24, 2017

We have been working with one of our hedge fund clients to apply the IOI model to the valuation of Real Estate Investment Trusts (REITs), and as part of this process, I have been thinking a good deal about the effect of dividends....

IOI Reading List for Week of 20 March 2017
March 24, 2017

In addition to reading through hundreds of pages about railroad pricing and learning something about the economics of airports and air carriers, I couldn’t help keeping up with the news out of Washington. Also, Ray Dalio pu...

What Does a Monopolist Look Like? It Looks Like Union Pacific
March 24, 2017

At the end of last month, I published an investment idea to the members of our service regarding Union Pacific (UNP). The investment expresses a bearish view on the company’s value based on my analysis as a long-time value inves...

The Three Characteristics of a Good Investing Framework
March 17, 2017

“To invest successfully, one doesn’t need a stratospheric IQ. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework” – Warren Buffet In our pi...

Lazard Investments – Investing Frameworks: De-biased Decision Making in Equity Investing
March 17, 2017

As we continue with with our focus on the value of investing frameworks, we have been studying external research on the topic and came across this excellent paper from Nicolas Sordoni, CFA, a Director at Lazard Investments. Th...

Trump’s Anti-Business Presidency
March 15, 2017

A week after Donald Trump was elected the 45th president of the United States, we published an in-depth report detailing our expectations for investing in the Trump Era. The full 25-page report covers three topics – the economi...

VIDEO: Using SEC’s EDGAR Database to Understand Nike ($NKE)
March 13, 2017

Good morning and welcome to Sunday Morning Coffee with Erik. It is, by my estimation, the worst Sunday of the year: that is the Sunday start of Daylight Savings Time. I just got back from Honolulu last week and was nearly recovere...

From Complexity to Insight: The Benefits of a Framework in Investing
March 10, 2017

   “To invest successfully, one doesn’t need a stratospheric IQ. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework” – Warren Buffet ...

IOI Reading List for Week of 6 March 2017
March 10, 2017

Sell! Buy! Markets hate complex headlines (Chicago Booth Review). An academic at University of Chicago’s Booth School of Business looked at the popularity of headlines on the SeekingAlpha stock research site. He found, unsur...

Three Things You Should Know About Union Pacific ($UNP)
March 9, 2017

Much of Union Pacific’s business stands to be hurt by the announced policies of the Trump administration. There’s no way around it – Union Pacific’s business thrives on trade. Intermodal freight – Union Pacific’s large...

How Should I Analyze P/E Ratios?
March 8, 2017

In my Quora feed the other day, someone asked about how one may best use P/E ratios. I took time to answer the questions because ratio analysis is one subject in which I see a lot of investors making mistakes. Ratio analysis is ...

What is the Best Way to Understand the Black–Scholes model?
March 6, 2017

Scrolling through my Quora feed the other day, I found someone asking for an explanation of the Black-Scholes Model. Everyone thinks that option pricing is difficult and arcane, but if you read the brief article below, you will ha...

Getting Better Through Community: IOI’s Growing Partnerships
March 3, 2017

In this special issue of Signal, we are excited to take the wraps off three “partnerships” that we are growing between IOI, The Brier Fund of Superforecasters, Spinoff Advisors and Sheila Chesney of Chesney and Comp...

IOI and The Brier Fund, LLP
March 3, 2017

Forecasting is a skill that is valued the world over. From being able to accurately forecast case by case sales at a small pharmaceutical company, to analysts who are paid to study and forecast world events, forecasting skill can ...

Risky Business: Liquidity Risk vs. Solvency Risk
March 2, 2017

As a follow-on to our recent Sunday Morning Coffee with Erik video contrasting market risk with valuation risk, we thought we would revisit an article Erik wrote in September 2015 which discusses the difference between liquidity r...

Visual Option Primer for Directional Investors
March 1, 2017

Executive Summary Options are directional instruments that allow investors to gain and accept exposure to a company’s value much more flexibly than stocks. Option pricing models show the market’s expectations for future price ...

VIDEO: Market Risk vs Valuation Risk
February 22, 2017

Transcript Welcome to Sunday Morning Coffee with Erik! This is a special Sunday Morning Coffee session. Perhaps you can hear birds in the background. It turns out I’m in Honolulu Hawaii rather than dreary old, cold Chicago, ...

Do ‘Realistic’ Growth Assumptions Help?
February 21, 2017

An institutional consulting client had asked me for my thoughts on reasonable modeling growth rates. Some analysts try to forecast a “realistic” looking series, whereas others (myself included) prefer simply to make st...

Farnam Street Interview: Five Good Questions for Erik
February 17, 2017

It was my great pleasure to be asked by Jake Taylor at Farnam Street Investors to come on his weekly video interview show “Five Good Questions.” The premise of the show is that he asks authors writing about value inve...

IOI Investing Explainer: “Short” Investments
February 17, 2017

Recently, we have featured some option selling ideas and also some bearish investment structures in our work. This has brought up the topic of “shorting,” so we thought a quick explainer article was in order. People ta...

Gilead ($GILD) Case Study: The Dangers of Relying on Investing Anecdotes
February 10, 2017

A few weeks ago, we published an article that characterized Gilead as a “Value Trap.” That article was a follow-up to an earlier article which used our work on Gilead as an example of how a solid conceptual framework could hel...

How Profitable is Under Armour’s ($UA / $UAA) International Segment?
February 6, 2017

A reader has been following IOI Members’ recent work on Under Armour (UA / UAA) and asked a good question about the difference in profitability between the domestic and international segments. This data is available in the f...

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