Acquirers Funds, LLC is a deep value investment firm managed by Tobias Carlisle.
Our investment process begins with The Acquirer’s Multiple®, the measure used by activists and buyout firms to identify potential targets. We believe deeply undervalued, and out-of-favor stocks offer asymmetric returns, with limited downside and a greater upside.
The returns to deep value are potentially realized in two ways:
- First, through mean reversion in the underlying business, and
- Second, through a narrowing of the discount to valuation, either through the passage of time or the intervention of activists and buy-out firms.
We take a holistic approach to valuation, examining assets, earnings, and cash flows, to understand the economic reality of each company. An important part of this process is a forensic-accounting diligence of the financial statements, particularly the notes and management’s discussion and analysis, to find information that a quantitative screen may miss.
Acquirers Funds applies risk-management principles drawn from both qualitative and quantitative value investment.
Qualitatively, we adhere to the principles of traditional Grahamite value investment. We seek a margin of safety in three ways:
- a robust business capable of generating free cash flows,
- a wide discount to a conservative valuation, and
- downside protection in a strong, liquid balance sheet.
The objective of the quantitative value approach is to limit behavioral errors and cognitive biases. We draw from a consistent opportunity set to prevent style drift, diversify the portfolio, and restrict position sizes. We also examine each stock using statistical measures of fraud, earnings manipulation, and financial distress.
Finally, we concentrate the portfolio into our best ideas. We hold about 30 positions. Our aim is to maximize the portfolio's discount to underlying value.
Deep Value: Talks at Google
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