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GeoInvesting’s Skull Sessions continue with Investor Insights featuring Paul Tschischik (Investmentideen at Twitter), a part time special situations investor/financial analyst. 

Paul is a former Constellation Software employee, a Joel Greenblatt Connoisseur, financial analyst, and contributor at the “Investmentideas” Substack, Value In Special Situations, for “Investors who want to invest against the crowd.” 

In the full video replay of the event, he and Maj Soueidan delve into investment strategies, exploring where they intersect. Paul highlights the importance of:

  • Grasping a business’s operations.
  • Properly valuing stocks.
  • Understanding catalysts for growth, and the role these catalysts play in unlocking shareholder value.
  • Expansion in valuation multiples.
  • Effective capital allocation and share buyback programs.
  • Dividends and EPS growth.

In the end, Paul is not trying to be too predictive in his analyses, but is instead attempting to identify bullish scenarios that are already present in the financials and in positive catalysts that have already materialized.

Paul also pitches a UK-based IT services and installations company, where he’s worried about the potential of a hostile takeover, due the stock’s very low valuation, one of the lowest in the industry.

There is also another quick pitch on a company that operates a cinema advertising network.


Paul Tschichik Discusses His Investing Journey With Maj

Maj Soueidan speaks with Paul, a former employee of Constellation Software and the creator of the “Investment Ideas” substack, which focuses on investing against the crowd and discovering undervalued small-cap businesses. Paul’s investment philosophy opposes the common “buy and hold forever” mentality and seeks new ideas with favorable risk-reward profiles. He emphasizes investing in lesser-known, small-capitalized companies undergoing changes or growth inflections.

Paul’s investment journey began in high school when he learned about fund management. He connected with a friend who became his mentor, teaching him about investing, financial analysis, and due diligence. Early on, Paul analyzed annual reports, created Excel models, and honed his investment style. His current strategy involves identifying smaller cap companies experiencing inflection points, such as ownership changes, capital allocation shifts, or new product introductions. He prioritizes valuation and looks for companies trading at normalized double-digit free cash flow yields, ensuring a margin of safety while considering business growth potential.

Maj Soueidan and Paul Tschichik Discuss Inflection Points In Companies

Paul explains his approach to identifying inflection points in companies. Paul emphasizes that he seeks inflection points primarily through quantitative analysis, focusing on reading quarterly and annual reports to spot changes in financial metrics. He provides examples of companies he discovered by analyzing financial statements and looking for shifts in business strategies or operational changes.

Paul notes that he doesn’t obsess over making watchlists and prefers to thoroughly understand a business before getting involved. However, he mentions cases where promising companies with unclear financial reporting might be tracked on a watchlist until he gains a better understanding of their operations.

Keep reading below for the pitches…

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