Notes and links from investing content (March 2025)
There is no lack of content nowadays and it is easy to get overwhelmed. At the same time, much of that content is consumed without being given any thought. I have been struggling with the retaining part of the content. I have written down some bullet-points from the different interviews and podcasts that I have listened to during the month. My idea is to collect these bullet-points in a more structured way going forward and build a sort of a commonplace in order to be able to get back to the different ideas or information points in the future.
Note that nothing in the notes include my opinion. For example, the interview with Scott Bessent includes many points, that one may or may not disaggree with. Other notes include diverse podcast interviews with investors (both recent and older interviews). Even here, the bullet points include my notes without arguing whether one should apply that.
Links to the content are attached in the headlines.
So here we go:
Euro Small Cap Technology Stocks: A Conversation with Mansour Dia (Langdon Equity Partners)
Mansour Dia (Langon Equity Partners) worked at Constellation Software before, learned the best practices, focus on accumulated knowledge.
He was surprised by the low multiples that the company was paying for the acquisitions and the ability to structure good deals.
The company has developed a rich database of companies in diverse verticals which is followed through time.
Criteria: retention rate 80%+, churn <10%, a low customer concentration.
Focus on downside protection.
Rule of 40: sales growth + cash earnings margin (ebitda-mg a good proxy)
If RaoE = 20%, payout 40%, 60%×20% = 12% that is the sustainable growth. This means that you get 12% return + yield 6% --> 18% as a return that you can compare with 18% roe or 18% yield with no growth. Compare that to earnings growth etc.
#380 Four Hundred Pages of Warren Buffett and Charlie Munger In Their Own Words
Create your own luck by being curious & seeking wisdom.
If you dont have an intense interest in something, someone else will and will outperform you.
Pick extreme examples of both successes and failures and study what has led to that.
Invest in "dedicated fanatics".
Always have cash to be prepared for opportunities as it "can start raining gold some day" (inspired by Rockefeller).
Find a wonderful business and it can change your life.
The greatest investors are entrepreneurs who never sold.
All intelligent people think in terms of opportunity cost.
Learning is changing your behaviour.
A brand is a promise on customers mind --> the goal of any brand is to reach that.
TIP706: The Founder's Mindset w/ Cristiano Souza
Cristiano Souza manages a fund in Brazil where the environment has been volatile to say the least.
Competition kills the returns of investments.
Focus on businesses that 1) have a market power that allows earning high ROIC, 2) have ability to reinvest, 3) have a good management. Some examples include LVHM, Linde etc.
E15. Returns, Reinvestment, & Valuation w/ Andy Feldman
Own business that you are enthusiastic to own it and that you enjoy researching.
What to include in reinvestment? Capitalized or expensed R&D? Andy looks at incremental returns / incremental capex (OCF ex NWC)
Great business can support a great valuation. They are like odds --> valuations are often correct.
Andy assumes that there will be no multiple expansion and wants to get as much return as possible from the fundamentals.
The goal is not to sell.
Learnings from journalysm transferred to investments:
Always go to the primary source of data as it can easily get distorted otherwise.
Knowing when to have enough conviction without having perfpect information.
Every skill can be developed over time, e.g., interviewing.
Her strategy is to find good companies, due a very deep due dilligence, focusing on aspects that other investors don't.
She (and her colleagues) always write down an investment thesis and follow up how that unfolds.
Look globally and try to find successful models in one country that have similar characteristics in other countries.
Focus on EV/Owner earnings. Companies with much debt are more expensive than they look and vice versa.
Some comps have high multiples but if they compound OE at +15%, the multiple halves in 5Y.
Emphasis on determining the true organic growth which value investors tend to miss.
Positions are built gradually, determine a range, buy when it is at the lower level.
Best Stocks 2025: A Conversation with Paul Andreola
The biggest winners have similar characteristics, e.g., a small size, high growth in EPS, low amount shares outstanding, high insider ownership, a large market share in a small growing niche --> you want to come in before the discovery phase.
His investment philosophy was impacted by CANSLIM, but he tries to read broadly and takes something from all successful investors, e.g., Market Wizards.
He encourages going where other investors don't.
Interview with Scott Bessent (All In Podcast).
He has worked with George Soros and Stanley Druckenmiller earlier in his career, was the analyst and "on the ground" during the well-known bet against the currency of the UK in the 1990s. He talks about assymmetric bets and taking size when having conviction. Focus not only the trade but also what happens after the trade.
According to him, the US consumers have been hurt due to the inflation. Purchasing power has gone done, while asset prices have gone up. Thus, a squeeze if you don't own assets, which leads to a social unrest --> problems with distributional effects.
Scott Bessent argues that the previous administration found the data to justify their actions, while the new administration questions the reliability of the data. If the inflation numbers are low, but people can't afford much less, is the inflation measured correctly? He argues, that Biden blindly looked at the data and ignored what people were saying/feeling.
He wants to bring down debt and governmental spending in a controlled way. The goal is to have 3-3.5%. The US has not a revenue but a spending problem. The ambition is to reduce the spending and shed excess labor that could be reemployed by the private sector.
Instead of focusing getting prices down, the ambition is to get real wages up. Reordering the international trading system and bringing manufacturing back to the US is one way to do that.
The new administration wants to deregulate, e.g., banking, housing, insurance.
Focus on convincing the investors that the plans work and reducing long term rates in order to refinance the US debt from short to long term debt.
Many actions were taken quickly because "if you don't move fast, it becomes more difficult.
Cheap energy is the crucial part of the hollistic plan. How to incentivize companies to invest in something that may not give payouts in the coming 5 years? Nuclear is going to be a big part of the system, but "not tommorrow".
He is surprised by the extent that the the US Treasury is involved in the questions related to the national security.
It is important not to be dogmatic, e.g., when it comes to electrical vehicles.
He talks about possibility to modernize insurance & home-building (prefab).
Why governments are 'addicted' to debt | FT Film
The biggest risk for that strategy is high inflation that could lead to higher rates. Government debt servicing already squeezes other spending.
There is an argumenta that the government deficit allows for higher private surplus and one should look at the whole picture.
Another argument is that the large government deficit is OK when inflation is low, but it can spiral out when inflation is out of control, which happened in 1970s.
Japan has had high debt but the debt is bought by Japan itself and Japanese people.
Germany is changing its policy on the debt which could have the implications, "joining the debt party".
The big risk is the scenario of 1970s: if Trump comes into conflict with FED, high rates, high inflation --> debt investors get worried. Financial repression is one scenario.