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Capital Allocation Matters
The Idea Farm
June 09, 2024
Together With
“The most important adage regarding leverage reminds us to ‘never forget the six-foot-tall person who drowned crossing the stream that was five feet deep on average.’”
Research
David Giroux gives an overview of capital allocation, with examples from Danaher, GE & AutoZone, and explains why he believes finding companies that deploy capital well is an still an inefficiency that can be exploited.
Mutiny Funds - The Cockroach Approach (86 pages)
The Mutiny team wrote a long paper on the cockroach portfolio, which shares their framework for portfolio construction to compound wealth in both boom and bust environments.
Facts & Figures
Palm Beach housekeepers are making $150,000 a year due to massive demand from the wealthy. Link
Merrill Lynch is increasing headhunter referral fees to 10% of annual revenue for successful placements in 34 targeted markets. Link
~70% of Y Combinator companies are related to AI. Link
Private capital funds have taken more money from investors than they’ve distributed back to them in gains for six straight years, for a total gap of $1.56 trillion over that period. Link
TSA set a new record for the number of travelers screened in a single day, as 2.95 million airline passengers travelled on Friday, May 24. Link
The number of 401(k) millionaires at Fidelity is up 43% since March 2023. Link
Companies are focusing more on expense management during earnings calls.
Equity mutual funds were working on their 82nd straight month of outflows in May. Link
The relationship between S&P 500 future returns and Wall Street analysts expectations.
Bloomberg shared a quarterly look at the value of individual stocks purchased by retail investors since 2018.
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Podcasts
 5/17/2024 - 45 minutes | Carlyle Group’s Jeff Currie (previously the Global Head of Commodities Research at Goldman Sachs) shares why copper is his highest-conviction trade ever, along with his outlook for oil. |
 1/3/23 - 193 minutes | Rick Rubin and Marc Andreessen have a fascinating discussion about trust, venture capital, and more. It’s worth the 3 hours! |
 5/22/2024 - 53 minutes | Gary Vee shares which of his investments paid off the most and what he’s noticed from hanging out with people like Logan Paul, Mark Zuckerberg, and MrBeast. |
What Else Is Happening
Meb Faber spoke with Eva Shang, a Thiel Fellow, for a deep dive into litigation finance and building an asset management firm.
ICYMI: We shared a list of intern and new hire resources.
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Deal of the Week
YCharts is a one-stop shop for all your investment research and client communication needs. Click here to receive 20% off of YCharts Professional (new users only).*
*Risks associated with investing in farmland include operational risk, commodity price and land value risk, and limited liquidity.