Estimating mid-cycle, normalized earnings with Alex Fitch and Michael Nicolas from Harris Associates (Oakmark Funds)

How Harris Oakmark thinks about and defines value investing

Mid-cycle earnings and why they are important (using the coin flip analogy)

CBRE example of mid-cycle earnings

Banks and SCHW example of mid-cycle earnings

Additional common adjustments they make to get to true normalized economic earnings power

Estimating normalized earnings for software and faster-growing tech companies (and Salesforce example)

Amazon and Alphabet examples

Even more adjustments for SBC, amortization, and non-recurring items

Lithia Motors example

First Citizens example

Quick discussion on modeling share repurchases and benchmarking capital allocation decisions on buying back stock at a discount

How Harris Associates determines the appropriate P/E ratio for different businesses

Masco example and choosing an appropriate peer comp group

Thoughts around P/E multiple expansion

American Express example for choosing a fair P/E multiple

Dealing with stocks with a wider range of outcomes

How they pick a required rate of return

Idea generation and research process at Harris Oakmark

What Harris looks for in hiring an analyst

Humility and willingness to accept constructive feedback

The primary responsibilities of the Director of Research at Harris Associates

Unique cultural attributes of working at Harris Associates

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