Pods & Recs: No. 137
Today we have an episode on why now is the time to invest in Japan, why tobacco stocks have been a great investment over the past 120 years, a couple of great value investing episodes, and a hilarious conversation between Conan O’Brien and Willie Nelson.
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***Must Listen*** The Meb Faber Show: Episode #256: Best Idea Show — Jeremy Schwartz, Jesper Koll, WisdomTree, “Japan Is Trading At The Lowest Valuation In 30 Years.” This is the first episode of Meb Faber’s new “best idea” show and features Jeremy Schwartz, WisdomTree’s Executive Vice President and Head of Global Research, and Jesper Koll, a Senior Advisor to WisdomTree. Their best idea is Japanese equities and they begin by giving some background on the 1980’s bubble in Japanese stocks, which dwarfs the 1999 U.S. technology bubble. Then they explain the tailwinds to Japan now — improving corporate governance with executives more willing to focus on metrics like ROE and shareholder return, a younger generation who is less scared by the 80’s bubble and more willing to invest their money, and and an incredibly cheap valuation (the cheapest it has been in 30 years), all of which have played a role in Warren Buffett purchasing five Japanese stocks recently. [October 16, 2020–44 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
Odd Lots: How Tobacco Became One Of The Greatest Investments In History. This is a great deep dive into the tobacco industry from an investor’s perspective with financial advisor Lawrence Hamtil and Gene Hoots, a financial advisor and the author of Going Down Tobacco Road: R. J. Reynolds’ Tobacco Empire: The Gold Leaf and North Carolina. They explain that even if an industry is declining, if you’re one of the few major players that is selling an addictive product and have a clientele that is loyal to a specific brand over time, it can still be a great investment. They also touch on the ethical implications of holding these stocks in either your portfolio or a client’s portfolio, the impact of ESG and vaping on tobacco companies, and why the cannabis industry is more likely to resemble the alcohol industry than the tobacco industry. They also discuss capital allocation and why the tobacco companies should return cash to shareholders instead of trying to diversity into other industries. [October 14, 2020–56 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
If you had invested $1 in tobacco stocks in 1900, it would be worth over $6 million today.
The Grant Williams Podcast: The End Game Ep. 9 — Felix Zulauf. This is another great episode in The End Game series with Felix Zulauf, President of Zulauf Asset Management and previously worked for UBS. He paints a bleak picture that even if you position your portfolio correctly to make money going forward, you still won’t win because the government will tax your winnings. He explains why he thinks we’re at the end of a 40 year bull market in bonds (something he wrote about in 1981), why the growing divide between the haves and have-nots will lead to more socialist policies, why he believes commodities are bottoming on a secular basis, and why value will outperform, which will also lead to ex-U.S. outperforming. He also thinks that macro investors should do well going forward because there will be a plethora of ideas across the globe. [October 15, 2020–1 hour, 5 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
When growth/value changes in favor of value, it’s the end of the outperformance by the U.S. stock market because all the other indices, in general, are more value oriented.
By the end of this decade, I think the Fed’s balance sheet is $40 or $50 trillion.
Startup & Venture Capital Investing
The Meb Faber Show: #254 — Ken Nguyen, Republic — In The Past Ten Years, The Private Market Has Become Larger Because Companies Are Taking Longer To Go Public. Nguyen is the co-founder and CEO of Republic, a founder- and investor-friendly platform to make startup investing truly accessible for the majority of Americans. The first half of the episode is all about Republic — why he wanted to build the company, why he thinks it’s so important for every American (not just accredited investors) to have the ability to invest in private companies, and how Republic is solving that problem by lowering the minimum dollar amount required to invest in a private company. At 34:30, they discuss the recent ‘tokenization/note’ the company did which is fascinating, allowing people who invest in the company to receive ownership and participate in the upside of Republic. It is one of the more interesting fundraising stories I’ve heard and I highly recommend listening.[October 12, 2020–1 hour, 14 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
This Week In Startups: E1120: Shift Co-CEO George Arison on going public via SPAC, lessons from building Uber’s predecessor & innovating in the massive used car market. Shift Co-CEO Arison is the Co-CEO of Shift, an online, peer-to-peer, marketplace for buying and selling used cars. Before diving into Shift, he discusses Taxi Magic, a company he founded before Shift that was essentially Uber before Uber, and what he would’ve done differently looking back. Then he explains the business model of Shift and how their model is better than buying either through Craigslist or a dealership. They remove the ‘safety concern’ from buying from someone on Craigslist, and by using technology they’re able to sell for lower than competitors. Then he explains why he chose to go public via a SPAC after originally planning on having a 2021 IPO and what the benefits were to use a SPAC. [October 6, 2020–56 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
The Twenty Minute VC: 20VC: CRV’s George Zachary on His Relationship To Money and How it has Changed Over Time, Why The Best Founders Have Often Experienced Parental Or Home Instability And The Stories Behind Investing In Unicorns; PillPack, Yammer and Udacity. Zachary is a GP at CRV, one of the oldest and most successful early-stage VC firms with investments including Airtable, DoorDash and DropBox. He explains how he made his way into venture 21 years ago, what surviving the 2000 and 2008 busts taught him, and how he assesses founders. He also explains he believes that some of the best founders are those who actually experienced chaotic upbringings because they’ve developed a mindset to thrive in that type of environment. Then he talks about some investments he’s made, including PillPack where he was the majority of the investment dollars in that specific round, and why a health scare led him to shift from investing in consumer and software to bio-engineering. [October 12, 2020–47 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
The Meb Faber Show: #255 — Matt Peterson, Peterson Capital Management — We’re In A Global Pandemic, In A Recession…People Are Scared; That Creates Opportunity. Peterson is the Managing Partner of Peterson Capital Management, a concentrated, deep-value shop that holds ~12 positions. He begins by giving an example of writing puts in Berkshire Hathaway earlier this year and why he tries to take advantage of writing puts over time. Then he dives into a stock pitch of the Daily Journal Corporation ($DJCO), a ~$350 million market cap company led by Charlie Munger. He explains while the focus is on the newspaper, Munger has developed technology he is selling to municipalities and the related revenue isn’t reflected in the financials yet, which will be bullish for the stock (discussion is from 19:40–36:20). They finish with a broad discussion on investing in the current market environment, with negative bond yields and possible inflation in the future. [October 14, 2020–55 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
The Acquirers Podcast: Applied Value: David Horn on the Columbia Applied Value course. This is a must-listen on value investing and the nuances associated with it. Horn is the Professor of Applied Value Investing at Columbia Business School, who previously ran his own fund. He begins with explaining his background investing in 2000 and 2008 and struggling to understand why his book wasn’t working as well as he expected. He then talks about the underperformance of value and why although P/E multiples haven’t expanded, value investors should still be more comfortable with buying cheap earnings and letting them compound. At 36:30 he talks about teaching students at Columbia about valuation, portfolio construction, and the importance of going against the grain and having active share. He finishes at 52:30 with a few minutes about Tesla and his biggest takeaway being how much narrative matters when investing. [October 12, 2020–57 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
Conan O’Brien Needs A Friend: Willie Nelson. Conan is joined by music legend Willie Nelson who is promoting his new book, Me and Sister Bobbie: True Tales of the Family Band (the interview with the two of them is between 11:00–51:00). Nelson is beyond hilarious and goes toe-to-toe with Conan with jokes during the episode and they both had me dying laughing. Nelson talks about his career, musical influences, his close relationship with his family, and why he raised hogs growing up. [October 12, 2020–54 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
Naval Ravikant (Founder, AngelList):
- Awareness: The Perils and Opportunities of Reality by Anthony De Mello
- The Way to Love: The Last Meditations of Anthony de Mello
- The Untethered Soul: The Journey Beyond Yourself by Michael Singer
- Tao Te Ching: A New English Version by Lao Tzu and Stephen Mitchell
- Finite and Infinite Games by James Carse
Richard Koch (Entrepreneur & Investor):
- Good Strategy, Bad Strategy: The Difference and Why It Matters by Richard Rumelt
- In Search of Excellence: Lessons from America’s Best-Run Companies by Tom Peters and Robert H. Waterman, Jr.
- Antifragile: Things That Gain from Disorder by Nassim Nicholas Taleb
Spike Lipkin (Founder & CEO, Newfront Insurance):