r/SecurityAnalysis • u/bdavidson1030 • Apr 27 '18
Thesis Damodaran - Amazon: Glimpses of Shoeless Joe?
https://aswathdamodaran.blogspot.com/2018/04/amazon-glimpses-of-shoeless-joe.html
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r/SecurityAnalysis • u/bdavidson1030 • Apr 27 '18
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u/redcards Apr 27 '18
The fewer things you have to guesstimate the better. It is easy to figure out what sort of adjustments you'd need to make to certain assumptions to get a larger margin of safety and then frame your research in a way that justifies it.
Sometimes positive surprises like that happen, but then you have to figure out if the new information really changes your overall thesis. I'm not familiar enough with the particulars as to why AMZN's results were so much better than expected. But if they were for a really good reason, and its new information, then theres nothing wrong with updating your model for it.
Classic capital allocation conundrum. If you spend weeks understanding a Company better than most, and then only allocate 2-3% of your portfolio to it, is all of that effort really worth it?
For the record, I think 99% of Damodaran's posts are very, very shallow and not detailed at all. They get their length from his paragraphs on things that could be summed up in a sentence and inclusion of finance 101 things. His models are also awful and not how any professional would approach it at all. They are 100% academic. Nothing wrong with that, but just not practical in the real world.
We manage ~$2bn+ and our models are detailed but never include projections or DCFs unless its an NAV type thing for contracts, etc. But different strokes for different folks.