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From the Knowledgebase:

I look for companies that are growing fast, have recurring income, insider ownership, some kind of moat, a reasonable PE, etc, and hope to find most of these qualities in stocks I'm investing in. I don't try to learn all the financials. While I look for companies that are growing fast, I hope for ones that are not yet discovered and bid up in price. I try to avoid "story" stocks that are always going to make money next year, or in two years, or in five years.

As Saul's latest post shows, he has adapted.

My feelings about PE ratios: Just out of curiosity some time ago I figured the average PE ratio of my eight biggest positions. These were rapidly growing companies but the average PE was 20. Note that that goes against the MF RB idea of picking overpriced stocks, or even ones with no earnings. An exciting company with a PE over 200 or something, may do just fine over the long haul, but I've decided "Not for me." If I can find a rapidly growing stock with a reasonable PE, why buy expensive stocks where you have to hope they'll grow into their price?

He has REALLY adapted....

I want management to be interested in making a profit. That's why I sold out of Amazon some time ago, even though I loved the company. Making a profit just didn't seem to be on Bezo's radar screen. He never even mentioned it. (More recently they have begun to have rapidly increasing positive Cash Flow, and I have bought back in.)

Caveat explained in the last part

4. Go back through at least two years of quarterly reports and pull off at least adjusted earnings and revenue.

Ok, now we are getting somewhere - he is talking adjusted earnings, not GAAP earnings

Given a choice between a low PE company and a high PE company, growing at comparable rates, I'd go for the low PE company every time. Which is why my big positions all have reasonable PE's. What's reasonable?

again, he has adapted - a lot lately

Perhaps a more useful ratio is a one-year PEG looking backward. In other words, the one-year trailing PE divided by the one-year trailing earnings growth rate. It has a major disadvantage or flaw that you are looking backward, but at least you are using a real number, not a guess!

again, some adaption has gone on - but Saul has often featured traditional value stocks in his portfolios too (LGIH) but only the fat top line growers

Please remember that the 1YPEG isn't a magic formula that replaces everything else. It's just a screen of how the PE stacks up to the current growth rate. It doesn't replace evaluating the company, and what it does, reading the conference call transcript, making sure the company isn't weighted down with debt, and all the other factors I've talked about.

And its also important to realize that a low 1YPEG doesn't protect you from a ridiculously high PE.

again, either he has adapted, or there is a terminology question here

I tend to sell a piece if my position has gotten too big for me to be comfortable with. However, I have let rare positions get very big if I was in love with the company.

I tend to sell a piece if I feel the price has shot up wildly. On the other hand, a stock might go up steadily, but if my position isn't too big, the rise isn't too fast, if their revenue and earnings are moving up nicely, and if the PE is still under 25, I may add multiple times along the way instead of selling. In other words I don't sell just because something is going up.

I tend to sell a piece if I feel the story has changed.

not related to PEs (other than the reference), but this is gold and I wanted to reproduce it. :)

could go on and on
sorry, only making a small point
What is a PE is a lot more complicated question than you imagine
esp. if you have read and study's Saul's Knowledgebase
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