Druckenmiller was asked what sort of personality you have to have to be a successful investor. He says:
“I think you have to be a little sceptical and a bit of a contrarian… Bulls make more money than bears, so if anything being an optimist about life and about things in general is a great attribute to have as an investor. You just can’t be starry eyed and naive. I think a better characteristic would be, being able to control your emotions…”
“You need to be intellectually curious, and really, really open minded, and you need to have courage. When I say courage, you need the courage to bet big, and to bet concentrated, but also the courage to fight your own emotions. I’ve never made a buy at a low that I didn;t just feel terrible and scared to death making it. It’s easy to sell at the bottom. You can home that night and it relieves you of your nerves.”
“There’s another saying Drellus used to have… “The higher they go the cheaper they look”. So when things are going up it’s easy to buy them. When they’re going down, it’s hard to buy them”.
You can watch the full interview here:
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The Acquirer’s Multiple® is the valuation ratio used to find attractive takeover candidates.
It examines several financial statement items that other multiples like the price-to-earnings ratio do not, including debt, preferred stock, and minority interests; and interest, tax, depreciation, amortization.
The Acquirer’s Multiple® is calculated as follows:
Enterprise Value / Operating Earnings*
It is based on the investment strategy described in the book Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations, written by Tobias Carlisle, founder of acquirersmultiple.com.
The Acquirer’s Multiple® differs from The Magic Formula® Earnings Yield because The Acquirer’s Multiple® uses operating earnings in place of EBIT.
Operating earnings is constructed from the top of the income statement down, where EBIT is constructed from the bottom up. Calculating operating earnings from the top down standardizes the metric, making a comparison across companies, industries and sectors possible, and, by excluding special items–earnings that a company does not expect to recur in future years–ensures that these earnings are related only to operations.
Similarly, The Acquirer’s Multiple® differs from the ordinary enterprise multiple because it uses operating earnings in place of EBITDA, which is also constructed from the bottom up.
Tobias Carlisle is also the Chief Investment Officer of Carbon Beach Asset Management LLC.
He's best known as the author of the well regarded Deep Value website Greenbackd, the book Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014, Wiley Finance), and Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012, Wiley Finance). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law.
Articles written for Seeking Alpha are provided by the team of analysts at acquirersmultiple.com, home of The Acquirer's Multiple Deep Value Stock Screener.
All metrics use trailing twelve month or most recent quarter data.
* The screener uses the CRSP/Compustat merged database “OIADP” line item defined as “Operating Income After Depreciation.”
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