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Book of value: External takeover
BRAND NEW, Exactly same ISBN as listed, Please double check ISBN carefully before ordering.
- GenresFinancePersonal Finance
360 pages, Paperback
First published June 28, 2013
40 people are currently reading
394 people want to read
About the author
Anurag Sharma
113 books2 followersA UX designer by profession, Anurag is an avid reader. He has found special interest in Entrepreneurship, Business & Management, Psychology, Occult science, Yogic science and Spirituality. Exploring the depth of topic comes quite natural to him. In his free time, he loves to research and explore infinite potential of human mind and its nature.
Presented collection of poems ""Abhipsa - Agyat ki ek anuthi bhent"" is his first creation in the poetry world.
Presented collection of poems ""Abhipsa - Agyat ki ek anuthi bhent"" is his first creation in the poetry world.
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Displaying 1 - 7 of 7 reviews
August 20, 2018
The background here is that a business professor, the author Anurag Sharma, grows increasingly puzzled over the discrepancy between the teachings on finance he meets in his academic environment and the investment customs he witnesses among successful practitioners. After reading up on the subject he rejects his fellow scholars, starts a class in value investing and later writes Book of Value, a book along the lines of Ben Graham’s The Intelligent Investor. Sharma’s thesis is that wise investing comes from making good choices and that investors can learn and internalize the practice of making these. Thus, the aim of the book is to present a framework that helps investors to make better choices.
There are five parts to the book that build up the author’s combined narrative. After the introduction has given the reader a glimpse of academic so-called modern portfolio theory the author in the first part presents a different take on the story, i.e. the behavioral biases witnessed in real life investing, the tendencies of market participants to herd and by the subsequent correlation of faulty opinions create market mispricings. Further, Sharma shows how psychologically shrewd operators – noise producers, fraudsters etc. - can induce behavior that benefit them at the expense of the financial health of investors. In part two a case is made for using the scientific method of falsification in investing. The investor should come up with investment ideas and then have a process to try to shoot them down using logic and data. If they cannot be falsified through a sound process they may constitute an investable idea. The author’s reasoning ends up in a similar place as Charlie Ellis’ views in his classic book The Loser’s Game. In my view Sharma’s text here benefits from systematic thinking of an academic mind but, not being a seasoned practitioner, the examples feel a bit theoretical and the writing in these segments lacks some nerve.
The next two parts of the book bring forward the author’s suggested framework for falsifying an investment idea. First he takes a more quantitative approach in trying to ensure that a company has a satisfactorily strong business and financial standing and that the price of the stock is sufficiently low compared to its value. Then there is a qualitative follow-through of the same areas. The financial strength is checked by controlling the quality of assets and liabilities, reviewing operating leases, pension obligations, off-balance sheet items, lawsuits etc. Business strength is evaluated by Du-Pont analysis, assessment of the business model and the quality of management. Although the writing at times is very basic – in discussing valuation for example – the combined effort of an investor going through all the steps discussed will result in a quite comprehensive picture of the company analyzed. The author is clearly on his home turf discussing business models and management but also in my view shows some good understanding of investment psychology.
In the fifth part of the Book of Value Sharma shows how to assemble a portfolio of stocks that have survived the process of trying to discard them. Essentially a focused portfolio of stocks, each with an asymmetric risk-reward potential and where the investment cases for the stocks depend on a diversified set of drivers, is advocated. After exemplifying this type of portfolio with Berkshire Hathaway’s portfolio of publicly listed stocks the author’s reasoning on how to become a wise investor is summarized in a conclusion with five well-argued main points.
So does Sharma’s sketched framework have the potential to facilitate better investment choices? Yes, clearly. Even if not all details are explicit, it provides the basis for a workflow that will help the investor narrowing down the investment universe, form an opinion on relevant investment considerations and shield him from at least some of the psychological traps of the stock market. Even though nothing new is presented and some text is even a bit basic, in combination I think the author delivers on what he promised.
There are five parts to the book that build up the author’s combined narrative. After the introduction has given the reader a glimpse of academic so-called modern portfolio theory the author in the first part presents a different take on the story, i.e. the behavioral biases witnessed in real life investing, the tendencies of market participants to herd and by the subsequent correlation of faulty opinions create market mispricings. Further, Sharma shows how psychologically shrewd operators – noise producers, fraudsters etc. - can induce behavior that benefit them at the expense of the financial health of investors. In part two a case is made for using the scientific method of falsification in investing. The investor should come up with investment ideas and then have a process to try to shoot them down using logic and data. If they cannot be falsified through a sound process they may constitute an investable idea. The author’s reasoning ends up in a similar place as Charlie Ellis’ views in his classic book The Loser’s Game. In my view Sharma’s text here benefits from systematic thinking of an academic mind but, not being a seasoned practitioner, the examples feel a bit theoretical and the writing in these segments lacks some nerve.
The next two parts of the book bring forward the author’s suggested framework for falsifying an investment idea. First he takes a more quantitative approach in trying to ensure that a company has a satisfactorily strong business and financial standing and that the price of the stock is sufficiently low compared to its value. Then there is a qualitative follow-through of the same areas. The financial strength is checked by controlling the quality of assets and liabilities, reviewing operating leases, pension obligations, off-balance sheet items, lawsuits etc. Business strength is evaluated by Du-Pont analysis, assessment of the business model and the quality of management. Although the writing at times is very basic – in discussing valuation for example – the combined effort of an investor going through all the steps discussed will result in a quite comprehensive picture of the company analyzed. The author is clearly on his home turf discussing business models and management but also in my view shows some good understanding of investment psychology.
In the fifth part of the Book of Value Sharma shows how to assemble a portfolio of stocks that have survived the process of trying to discard them. Essentially a focused portfolio of stocks, each with an asymmetric risk-reward potential and where the investment cases for the stocks depend on a diversified set of drivers, is advocated. After exemplifying this type of portfolio with Berkshire Hathaway’s portfolio of publicly listed stocks the author’s reasoning on how to become a wise investor is summarized in a conclusion with five well-argued main points.
So does Sharma’s sketched framework have the potential to facilitate better investment choices? Yes, clearly. Even if not all details are explicit, it provides the basis for a workflow that will help the investor narrowing down the investment universe, form an opinion on relevant investment considerations and shield him from at least some of the psychological traps of the stock market. Even though nothing new is presented and some text is even a bit basic, in combination I think the author delivers on what he promised.
June 24, 2021
I am new to the basics of business valuation, and the mathematics behind basic corporate finance concepts.
This book helped me build knowledge on exactly these basics. The author does a fabulous job of helping you arrive at one way of evaluating a company/investment (you could argue there are plenty of other ways, sure there could be). Like I said, for someone who is curious, and wishes to start building up knowledge on how to go about evaluating companies, and thinking of investing in equity markets - this book serves as a perfect 101.
Like the flow, and a running example of a company from start to the end. (Walmart in this case). You will apply, along the way as you learn.
Your ultimate aim to become a successful investor might might not solely depend on this book, but definitely your journey ought to start with a book like this. One which sets you to read more advanced literature on the topic.
This book helped me build knowledge on exactly these basics. The author does a fabulous job of helping you arrive at one way of evaluating a company/investment (you could argue there are plenty of other ways, sure there could be). Like I said, for someone who is curious, and wishes to start building up knowledge on how to go about evaluating companies, and thinking of investing in equity markets - this book serves as a perfect 101.
Like the flow, and a running example of a company from start to the end. (Walmart in this case). You will apply, along the way as you learn.
Your ultimate aim to become a successful investor might might not solely depend on this book, but definitely your journey ought to start with a book like this. One which sets you to read more advanced literature on the topic.
January 13, 2020
It is said that if you get one good idea from a book, one new idea, then it was worth reading it. This book gave me like five. Confirmation bias, risk vs uncertainty, historical PE to name a few. Would recommend this book to anyone who has done mba level finance as it would be particularly valuable to them.
October 22, 2016
Some great next-level thinking in certain parts. I am rating this 4 stars only because the next-level thinking is occasionally alongside rather basic valuation techniques. I would like to see a book by the author consisting only of the next-level thinking. It would be fantastic.
September 15, 2017
One of the most comprehensive texts available on the subject of value investing. Highly recommended for beginning who are looking for a book to start with.
February 10, 2018
More than investing, I think this book is a text book on how companies are valued. The good thing is it focuses on basics.
Displaying 1 - 7 of 7 reviews