StableBread
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Learn how to analyze, value, and manage your stock portfolio from the teachings of successful value investors.
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These aren't minor issues that better management can fix. They're inherent flaws in the banking model itself.
Remember the SVB collapse?
Remember the SVB collapse?
September 15, 2025 at 1:03 PM
These aren't minor issues that better management can fix. They're inherent flaws in the banking model itself.
Remember the SVB collapse?
Remember the SVB collapse?
👉 Full post on why you probably shouldn't invest in bank stocks here:
newsletter.stablebread.com/p/why-not-b...
newsletter.stablebread.com/p/why-not-b...
Why Not Bank Stocks?
Terry Smith explains the three fundamental flaws that make banks uninvestable
newsletter.stablebread.com
September 12, 2025 at 1:03 PM
👉 Full post on why you probably shouldn't invest in bank stocks here:
newsletter.stablebread.com/p/why-not-b...
newsletter.stablebread.com/p/why-not-b...
This is why Smith never invests in anything that requires leverage to make an adequate return.
September 12, 2025 at 1:03 PM
This is why Smith never invests in anything that requires leverage to make an adequate return.
Their assets would need to fall by one-third for equity to be eliminated. A 33% decline from $26B to $17.5B would wipe out the entire $8.5B equity cushion.
In contrast, with NatWest's 20x leverage, assets only need to fall by 5% to eliminate equity entirely.
In contrast, with NatWest's 20x leverage, assets only need to fall by 5% to eliminate equity entirely.
September 12, 2025 at 1:03 PM
Their assets would need to fall by one-third for equity to be eliminated. A 33% decline from $26B to $17.5B would wipe out the entire $8.5B equity cushion.
In contrast, with NatWest's 20x leverage, assets only need to fall by 5% to eliminate equity entirely.
In contrast, with NatWest's 20x leverage, assets only need to fall by 5% to eliminate equity entirely.
Smith found the average S&P 500 company (including banks) has $26B of assets and $8.5B of equity, meaning they operate with leverage of about 3x. The remaining $17.5B in assets is funded by debt.
September 12, 2025 at 1:03 PM
Smith found the average S&P 500 company (including banks) has $26B of assets and $8.5B of equity, meaning they operate with leverage of about 3x. The remaining $17.5B in assets is funded by debt.
This means if just 10% of their loans go bad (£10 in losses on £100 of assets exceeds the £5 equity buffer), shareholders are completely wiped out.
Long before reaching that point, depositors typically panic and trigger a bank run, as happened with SVB.
Long before reaching that point, depositors typically panic and trigger a bank run, as happened with SVB.
September 12, 2025 at 1:03 PM
This means if just 10% of their loans go bad (£10 in losses on £100 of assets exceeds the £5 equity buffer), shareholders are completely wiped out.
Long before reaching that point, depositors typically panic and trigger a bank run, as happened with SVB.
Long before reaching that point, depositors typically panic and trigger a bank run, as happened with SVB.
Terry Smith (from Fundsmith), after the SVB collapse, provided NatWest Group's 2022 balance sheet as an example.
NatWest has just £5 of shareholder equity supporting every £100 of assets, a leverage ratio of 20x.
NatWest has just £5 of shareholder equity supporting every £100 of assets, a leverage ratio of 20x.
September 12, 2025 at 1:03 PM
Terry Smith (from Fundsmith), after the SVB collapse, provided NatWest Group's 2022 balance sheet as an example.
NatWest has just £5 of shareholder equity supporting every £100 of assets, a leverage ratio of 20x.
NatWest has just £5 of shareholder equity supporting every £100 of assets, a leverage ratio of 20x.
Read the post here: newsletter.stablebread.com/p/internet-...
Internet Stock Picking
Learn how a Wall Street tech analyst veteran identifies 10-baggers by focusing on revenue growth, product innovation, massive TAMs, management quality, customer value over margins, and buying during crashes while ignoring P/E ratios
newsletter.stablebread.com
September 11, 2025 at 4:59 PM
Read the post here: newsletter.stablebread.com/p/internet-...
Meanwhile, fintech startups have benefited from years of cheap capital and venture funding that prioritized growth over profitability, allowing them to undercut traditional pricing.
September 11, 2025 at 3:58 PM
Meanwhile, fintech startups have benefited from years of cheap capital and venture funding that prioritized growth over profitability, allowing them to undercut traditional pricing.
Legacy banks struggle with outdated technology systems while new entrants build from scratch without these burdens.
September 11, 2025 at 3:58 PM
Legacy banks struggle with outdated technology systems while new entrants build from scratch without these burdens.
3) Salary payments can go directly to card accounts without needing bank deposits.
September 11, 2025 at 3:58 PM
3) Salary payments can go directly to card accounts without needing bank deposits.
2) Payment processing moves to Mastercard, Visa, Apple Pay, and Android systems.
September 11, 2025 at 3:58 PM
2) Payment processing moves to Mastercard, Visa, Apple Pay, and Android systems.
1) Peer-to-peer lending platforms and credit funds replace traditional bank loans.
September 11, 2025 at 3:58 PM
1) Peer-to-peer lending platforms and credit funds replace traditional bank loans.
👉 Want to learn more?
Read Yartseva's study here: www.open-access.bcu.ac.uk/16180/
Or our detailed summary:
newsletter.stablebread.com/p/research-...
Read Yartseva's study here: www.open-access.bcu.ac.uk/16180/
Or our detailed summary:
newsletter.stablebread.com/p/research-...
Research on 464 10-Baggers
What 464 stocks that returned 10-fold uncovers about identifying exceptional growth opportunities and maintaining value discipline
newsletter.stablebread.com
September 10, 2025 at 12:57 PM
👉 Want to learn more?
Read Yartseva's study here: www.open-access.bcu.ac.uk/16180/
Or our detailed summary:
newsletter.stablebread.com/p/research-...
Read Yartseva's study here: www.open-access.bcu.ac.uk/16180/
Or our detailed summary:
newsletter.stablebread.com/p/research-...
While these findings are compelling, the study likely suffers from survivorship bias—analyzing only successful multibaggers, not the many small, undervalued companies with similar traits that failed.
Findings are also based on NYSE/NASDAQ stocks and may not hold elsewhere.
Findings are also based on NYSE/NASDAQ stocks and may not hold elsewhere.
September 10, 2025 at 12:57 PM
While these findings are compelling, the study likely suffers from survivorship bias—analyzing only successful multibaggers, not the many small, undervalued companies with similar traits that failed.
Findings are also based on NYSE/NASDAQ stocks and may not hold elsewhere.
Findings are also based on NYSE/NASDAQ stocks and may not hold elsewhere.
Traditional growth investing seeks earnings acceleration and momentum.
However, the data shows you should seek cash generation, undervaluation, and contrarian entry points.
That combination, not earnings growth, creates 10-fold returns.
However, the data shows you should seek cash generation, undervaluation, and contrarian entry points.
That combination, not earnings growth, creates 10-fold returns.
September 10, 2025 at 12:57 PM
Traditional growth investing seeks earnings acceleration and momentum.
However, the data shows you should seek cash generation, undervaluation, and contrarian entry points.
That combination, not earnings growth, creates 10-fold returns.
However, the data shows you should seek cash generation, undervaluation, and contrarian entry points.
That combination, not earnings growth, creates 10-fold returns.
Revenue grew 11.1% annually, operating profit 17.3%, net profit 22.9%.
This gradual improvement combined with multiple expansion as markets recognized their value.
This gradual improvement combined with multiple expansion as markets recognized their value.
September 10, 2025 at 12:57 PM
Revenue grew 11.1% annually, operating profit 17.3%, net profit 22.9%.
This gradual improvement combined with multiple expansion as markets recognized their value.
This gradual improvement combined with multiple expansion as markets recognized their value.
These multibaggers weren't exciting high flyers.
Initial margins were modest: 34.8% gross, 3.9% operating, 9% ROE.
They started as ordinary businesses that improved steadily over 15 years.
Initial margins were modest: 34.8% gross, 3.9% operating, 9% ROE.
They started as ordinary businesses that improved steadily over 15 years.
September 10, 2025 at 12:57 PM
These multibaggers weren't exciting high flyers.
Initial margins were modest: 34.8% gross, 3.9% operating, 9% ROE.
They started as ordinary businesses that improved steadily over 15 years.
Initial margins were modest: 34.8% gross, 3.9% operating, 9% ROE.
They started as ordinary businesses that improved steadily over 15 years.
Yartseva's model using these factors successfully predicted 2023 and 2024 market directions.
While conservative, underestimating returns by 6.63% on average, it correctly identified every major turn and proved especially accurate during rising rate periods.
While conservative, underestimating returns by 6.63% on average, it correctly identified every major turn and proved especially accurate during rising rate periods.
September 10, 2025 at 12:57 PM
Yartseva's model using these factors successfully predicted 2023 and 2024 market directions.
While conservative, underestimating returns by 6.63% on average, it correctly identified every major turn and proved especially accurate during rising rate periods.
While conservative, underestimating returns by 6.63% on average, it correctly identified every major turn and proved especially accurate during rising rate periods.