Below is our “Top Podcast” episode with our new curator, Colby Donovan! Holler with any feedback!
Today we have a couple of great value investing focused episodes with David Abrams and Bill Miller, the actual story of the tulip bubble, quick episodes on investing in commodities and REITs, how Draymond Green learned to handle his finances, and a great leadership episode with John Calipari and Mike Lombardi.
- We Study Billionaires: TIP 247: Legendary Investor Bill Miller. As they state at the start of the podcast, Miller holds the record for the most consecutive beats of the S&P 500 index with 15 consecutive years. The episode starts with how he views companies that are exposed to external shocks (like Micron, a stock that he owns, with the China trade war). He says he doesn’t worry about recessions because, as Peter Lynch said, more money has been lost worrying about or preparing for recessions than recessions themselves. He elaborates on the idea of viewing the market in cycles, as Howard Marks describes in his most recent book. He goes on to talk more about his investing process: how he pays attention to what others like David Tepper and Leon Cooperman are doing, how he thinks about position sizing, and how he tries to have a high active share (his is among the highest in the business at 100%), but emphasizes you must realize high active share comes with high tracking error. He finishes with touching on a few of his high beta investments and the rationale behind them. He talks about the shift towards cloud computing and that’s a big reason for his position in Amazon due to AWS. Then he talks about investing in both Bitcoin and Intrexon ($XON — a synthetic biology company) — both of which have low probabilities of working but the potential payoffs are very high, so he takes a low position and monitors it as it goes. FYI — his interview ends at 32:30. [June 16, 2019–39 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link
- Value Investing with Legends: Applying a Fundamental and Value-Oriented Approach to Investing. This episode is with investor David Abrams, who is the CEO of Abrams Capital, an investment firm founded in 1999 with over $9 billion in AUM. It begins with his background, working on merger-arb after graduating from UPENN and later going to Baupost to work for Seth Klarman to invest with a broader mandate. Then he started raising capital to start his own fund after the LTCM crash in the summer of 1998. Abrams dives into his investing process at the 13:15 mark. He explains the first thing he does when analyzing a business is ask himself “what are the risks,” and only after that does he look at the potential upside and range of outcomes for the stock. His investments typically fall in one of two categories: one with an upcoming catalyst that you sell as soon as that catalyst occurs, and one where you rely on the company’s future growth, whether that comes from improving operational efficiency, increasing revenues, pursuing acquisitions or returning capital to shareholders. He states that he has a bias towards companies where management owns a lot of stock and has a track record of creating value over the years. He finishes the episode with explaining how he exposes himself to different viewpoints (domestic and foreign, bearish and bullish), position sizing (topping out at cost of 6–7% of the portfolio) and why he doesn’t take on leverage. [June 14, 2019–52 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link
- The Readback: Special Episode: The Myth of the Tulip Bubble. This is a pilot episode from Barron’s new podcast, The History of Finance. The story of the tulip bubble is frequently told to warn against asset bubbles. However, Anne Goldgar, the author of Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age, provides some details that indicate the extent of the bubble has been exaggerated over the years. Based on her research, no one went bankrupt from the prices collapsing, the Netherlands economy wasn’t thrown into an economic crisis, and she found that only 37 people spent, what is in today’s terms, over $3,000 for a bulb (still a lot for a flower…). The story is still a good reminder than sometimes the things we buy aren’t as valuable as we may think, whether it’s a technology stock in 2000 or a house in 2008. [May 8, 2019–12 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link
- Capital Allocators: First Meeting with Patrick O’Shaughnessy — O’Shaughnessy Asset Management. This is the first in a new spinoff of Capital Allocators, where Seides interviews other asset managers to replicate the first meeting an allocator might have with a manager. O’Shaughnessy is — in addition to hosting the Invest Like The Best podcast — the CEO of O’Shaughnessy Asset Management (OSAM), and one of the most intellectually curious people I’ve listened to. He gives an overview of the business and explains they’re a quant firm that focuses on three levers of returns: business growth, multiple expansion, and returning capital to shareholders. All factors they use tie back to those three levers, and results in them holding stocks for roughly 18–24 months. He then moves on to discuss what he describes as the learning loop, and how starting the podcast was part of that idea. He tackles the idea of when and why to share information with others; why would one share with people who are competing with you? If there is a behavior behind why something works, there is a benefit to sharing because others won’t be willing to do it…but if it is a pure informational edge, then it’s another conversation. He finishes the episode with how he has applied the platform business model to OSAM by building out the OSAM Research Partners Program, where OSAM allows others access to their platform to conduct research. [June 10, 2019–1 hour, 13 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link
- The Curious Investor: Commodities: Past, Present, and Futures. This is another great episode from AQR on commodities in general. They explain there are three main categories of commodities: energy, metals and agriculturals and what drives their price isn’t just supply and demand. They also explain the difference between owning an actual commodity and owning a futures contract, the reason commodities perform well with inflation, how commodities are traded via managed futures, and the story of the turtle traders. [June 12, 2019–28 minutes] iTunes Podcast | Spotify| Overcast | Breaker | Website Link
- Animal Spirits: Talk Your Book: The Net Lease REIT ETF. The “Talk Your Book” episodes from Animal Spirits have been really good. They typically focus on a niche product in the market. This episode is about the Net Lease ETF recently released by Fundamental Income ($NETL). They explain that net leases are typically constructed with real estate companies who buy properties and lease them back to the single tenant (typically a CVS, Walgreens, Home Depot, etc.) with a 10–20 year term. They also explain how you should think about where REITs fit in your portfolio and how they compare to the risk/return profile of both stocks and bonds. [June 10, 2019–31 minutes] iTunes Podcast | Spotify | Overcast | Breaker| Website Link
- Kneeding Dough: Draymond Green. This episode is really insightful into how Draymond Green handles his life, mostly his finances. He talks about being drafted and learning how quickly an $850,000 salary can run out and, even though he thought he did a great job handling his money on his own during his rookie season, he later found out he hadn’t when he hired a financial advisor. He talks about the pressures athletes deal with from friends and family asking for money, trying to be cheap in every way possible, including use other people’s GoGo-WiFi, Netflix, Spotify, and ESPN-Insider logins, and becoming educated so he can make smart money decisions on his own. He also mentions after spending time with Team USA and guys like LeBron, Carmelo Anthony, and Kyrie Irving, he learned to splurge on certain things like a personal chef and stylist to make him perform better and his life easier. [June 11, 2019–45 minutes] iTunes Podcast | Spotify | Breaker | Overcast | Website Link
- The Learning Leader Show: 314: John Calipari & Michael Lombardi — Building & Sustaining A Culture Of Excellence. This is a great episode on leadership and culture building that applies to anyone in a leadership position. Calipari is the NCAA Champion basketball coach at the University of Kentucky, and Lombardi worked in the front-office with NFL legends like Al Davis, Bill Walsh and Bill Belichick, and is the author of Gridiron Genius: A Master Class in Winning Championships and Building Dynasties in the NFL. Both talk about establishing your culture before your players are officially signed (when recruiting or meeting with players during free agency), creating buy in from everyone in your program, earning your players trust through honesty and transparency, and ensuring players know the history of the program so they understand they are part of something bigger than themselves. The most insightful part of the episode is when they discuss building out a staff; they touch on what to look for when hiring, how to evaluate your assistants, and how to empower them to grow and move on to become head coaches themselves. They wrap with the importance of seeking out mentors and learning when to rely on them when you face challenges or important decisions. [June 10, 2019–1 hour, 9 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link
Episode #160: John Huber, “Stock Prices Fluctuate Much More Than The Underlying Businesses”