About

Firm Returns is a value-focused equity research service. Subscribers can expect to receive long-form write-ups of new companies, alongside ongoing coverage of my current and potential future holdings.

Investment criteria

I invest on the basis of business fundamentals, and look for companies selling at a substantial discount to the value they imply.

How substantial a discount?

I'm typically looking for at least 33.3%, but ideally >50%. This allows for the possibility of at least 50% upside if my valuation is correct and the discount closes, while leaving me a degree of protection in the case that my valuation was wrong or events transpire against me.

How do I determine business value?

In an ideal world you'd be able to project out a company's cash flows far into the future and then discount them back to their present value using an appropriate discount rate.

Unfortunately, such long-term projections are rarely possible with any kind of accuracy, and so I tend to focus on current valuation multiples, or those a couple of years out where underlying growth or business recovery is probable.

Another valuation approach is to consider what the business would sell for in a private market transaction between an informed buyer and seller. This could be determined by reference to acquisitions of similar businesses that have occurred recently, or at a lower level, the market value of the assets the company holds.

How long do I hold my investments?

I invest with the expectation that it could take 5 or more years for the valuation gap to close, and so generally set this as my minimum holding period unless something breaks the thesis in the meantime.

I will tend to sell companies when they become fully priced if there isn't much in the way of underlying growth. Where a business is growing strongly however, I am content to remain a shareholder beyond the point at which it becomes fairly valued.

Markets cannot always be relied upon to close a valuation discount, particularly in smaller and less liquid markets. To realise a return in these cases requires appropriate action from management. This can vary, but generally involves returning capital to shareholders by some means. To this extent, I would also be content to hold a slow-growth business indefinitely if it remained undervalued, but made distributions to shareholders equating to a sufficient yield.

Which sectors do I invest in?

I'm fairly sector agnostic so long as I understand the business well enough. Examples of sectors in which I have invested include: media, insurance, banking, shipping, mining, and hospitality.

What size companies do I look for?

Much like the sectors, I'm also pretty size agnostic. I have made investments in companies with market capitalisations ranging from $10m to $40bn.

When it comes to the smaller end of the scale, I generally prefer to choose companies listed in the UK, as this makes it easier to meet management and do the required due diligence.

Example coverage

Here are some examples of companies I've covered. On each page you should find a date ordered list of articles, starting with the most recent and ending with the initial write-up on the company.

tinyBuild

Fuller, Smith & Turner

Ecora Resources

Warner Bros. Discovery

Subscription tiers

I offer two subscription tiers: Firm and Firmer. The former is free and gives you ongoing coverage of the companies in my portfolio or on my watchlist. These typically coincide with earnings releases or other significant events, and you can find a collection of past updates under the Company Updates tab.

The latter is a paid tier that additionally gives you access to long-form write-ups (usually around 2 a year) and notifications whenever I buy or sell shares in a company. You can find past examples under the Research Reports and Portfolio Updates tabs, respectively.

The long-form write-ups can take more than 100 hours to research and write, with subsequent coverage extending well beyond this. So I hope my subscribers feel they're getting a bargain with the subscription price of £15 per month (or £30 per year if paid annually).

Disclaimer

What I've described is my personal investing approach, which is specific to my circumstances and temperament. This may not be appropriate for you and is in no way intended as individual advice. The newsletter and website are for information purposes only and anyone following my recommendations should do their own due diligence. While every effort has been made to ensure the information contained is accurate, this cannot be guaranteed.