The Little Book of Investing like the Pros

Stock investing is more prevalent than ever, whether directly or indirectly through brokerage accounts, exchangetraded funds (ETFs), mutual funds, or retirement plans. Despite this, the vast majority of individual investors have no training on how to pick stocks, let alone basic financial literacy. And, until now, there hasn't been a truly accessible, easy-to-understand resource available to help them. The Little Book of Investing Like the Pros : 5 Steps for Picking Stocks was written to fill this void.

About the Authors ix

Foreword by Howard Marks xv

Acknowledgments xix

Disclaimer xxv

Introduction 1

Chapter One

Step I: Idea Generation 19

Screens 22

Bottom-Up Approach 24

Top-Down Approach 59

Chapter Two

Step II: Identifying the Best Ideas 71

Idea Review Framework 73

Investment Thesis 77

Business Overview 82

Management 91

Risks & Considerations 96

Financials & Valuation 99

Chapter Three

Step III: Business & Financial Due Diligence 121

Business Due Diligence 123

Financial Due Diligence 148

Chapter Four

Step IV: Valuation & Catalysts 171

Valuation 173

Market and Intrinsic Valuation 174

Buyout Valuation 194

Catalysts 206

Setting the Price Target 227

Chapter Five

Step V: Investment Decision & Portfolio Management 233

Making the Investment Decision 236

Monitor the Investment 243

Portfolio Construction 250

Portfolio & Risk Management 263

Post-Mortem: Delphi Automotive 279

Bibliography & Recommended Reading 289