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In Episode 156 we welcome back our guest from episode #115, Steve Glickman. To get listeners up to speed, Steve starts with an overview of what Opportunity Zones are, some specifics about the design of the program, and some concepts behind how investors can actually put money to work in Opportunity Zones.

Meb asks about additional insights since updated rules have been announced. Steve discusses clarity on items such as investing timelines on capital gains, and the length of time funds have to invest capital.

When Meb asks about what kind of investments are available, Steve goes on to clarify that just about any asset class is available, but commercial real estate funds, energy, and infrastructure are areas he’s seeing utilized, among others.

The conversation then gets deeper into what needs to happen with investments to qualify to meet the regulations, and what happens if companies no longer qualify under the rules. For real estate specifically, Steve describes the need for projects to fall under one of two categories, either 1) purchased for original use, or 2) must undergo substantial improvement. He then describes some of the rules surrounding other businesses, such as startups and existing businesses. Meb follows up with questions on qualifications of some specific examples from public stocks to REITs.

On the back of details about investments, the pair get into the fund landscape, with Steve mentioning how much of the fund market will consist of professional money managers running funds in their respective industries.

Steve then covers what he’s seen so far from the very early days of the program. He discusses much of what he’s seeing is in commercial real estate, but he’s seeing creative models of asset classes many people haven’t thought of yet. He then shares some thoughts about how some of the early rules may be revisited going forward, and some of the potential issues that could come up with the program.

As the conversation winds down, Steve discusses his firm, and the things he’s working on.

All this and more in episode 156.

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For this special Friday episode, we welcome NYU professor and valuation expert, Aswath Damodaran. As it is Uber IPO day, Meb and Professor Damodaran start with a discussion about Uber and ride sharing valuations.

Next, the two get into Professor Damodaran’s work and his framework for thinking about valuation. He covers the craft of valuation, and how his framework evolves over time. Professor Damodaran then shares details on what he thinks about Amazon and Apple, how he thinks about valuation in the context of each company, what he’s learned, and how his process has changed over time.

Meb then asks Professor Damodaran about his thoughts on dividends and buybacks. Professor Damodaran starts with the corporate finance side of the discussion by describing buybacks and their role in the cash return to shareholders, the impacts buybacks have on corporations and investors, and the psychology behind the thinking about buybacks.

The conversation then shifts to a chat about Professor Damodaran’s work on valuations, and his current take on global valuations and equity risk premiums. He gets into the equity risk premium in the U.S. during 2008 and 2009 and the information that can be gleaned from studying the history of equity risk premiums.

As the conversation winds down, Meb asks professor Damodaran to talk about industries he feels are ripe for disruption. Professor Damodaran responds with some interesting insights into education, publishing, and banking.

All this and more in episode 155.

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In episode 154 we welcome Frank Curzio.

Frank begins with his origin story, learning to conduct financial research from his dad, working for Jim Cramer and the incredible industry and company access he had, and eventually launching Curzio Research.

Meb jumps right into markets by asking Frank what opportunities he’s seeing right now. Frank mentions he’s not seeing a lot of opportunity but likes seeing the separation in company reporting right now, some stocks reporting poorly, some reporting well. Overall, with a decent economy, not much crazy bullishness, and with valuations where they are, he thinks a downturn of 10-15% might create a lot of opportunities.

Frank then gets into tech. He discusses the idea that the leaders can continue to grind higher, and his thesis on why IBM’s Red Hat deal will be a gamechanger. He transitions into biotech and discusses his thoughts as well as some of the difficulties of investing successfully in the industry.

Next, the conversation transitions into energy. Frank talks about natural resources, and some of the “on the ground” research he’s done, and the difference it makes in his understanding of the investments he’s making, as well as some specifics on energy, mining, and resources.

The two then shift to talk about tokenization, and how Frank is tapping this innovative idea to raise capital for Curzio Research.

All this and more in episode 154.

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In episode 153 we welcome Kim Shannon. Kim begins with a discussion of human nature and her value investing framework. She covers the importance of using discipline, the characteristics she and her team look for, the question of value’s efficacy, and the opportunity going forward for value to show its might.

Meb then asks where she’s seeing value right now. Kim talks about Canada and it’s valuation relative to other markets, and that a number of investors are interested in the concept of concentrated investment portfolios. She then gets into potential overvaluation in pockets of the Canadian housing market.

The conversation then shifts with Meb asking about Kim’s event in Omaha this year around the 2019 Berkshire Hathaway meeting, the Variant Perspectives Value Investing Conference, to raise awareness about the gender bias gap in the investment sector.

All this and more in episode 153.

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In episode 152 we welcome Kevin Smith and Tavi Costa of Crescat Capital. Kevin kicks off the conversation with an overview of Crescat’s approach, the long-only strategy, long/short equity hedge fund, and Global Macro Fund.

Tavi then gets into high equity market valuations, their macro model that has timed well in backtests with previous market peaks and troughs in the tech and housing bubbles, 15 countries with 30-year bond yields below the Fed Funds rate, and demand for U.S. Treasuries and the U.S. dollar.  Kevin follows up with some comments on implementation and expressing these views in their portfolio, and why they continue to trust their process and remain net-short equities.

Next, Tavi gets into Crescat’s thesis on China and the potential credit bubble, and the vulnerable Chinese currency as a result.

Meb then asks about Crescat’s bullish thesis on precious metals. Kevin discusses that trade’s role in the portfolio, and its place as a theme in the global macro fund, which includes, a short equity theme, long precious metals theme, and a short Chinese Yuan theme.

Meb asks the pair to get into some of their other themes that stand out as opportunities. Kevin links the Canadian housing bubble and Australian debt crisis themes to China and Chinese capital outflows. He also covers some longs as part of their cybersecurity theme such as Palo Alto Networks.

Meb shifts by asking about what investors should takeaway from Crescat’s thinking, Kevin adds that people should think about more tactical asset allocation, become increasingly defensive, and consider some alternatives. Tavi adds that investors may want to consider cash, precious metals, and perhaps some Treasuries.  

As the conversation winds down, Meb asks about anything else they consider that isn’t covered widely in the media or by investment managers. Kevin discusses consumer confidence, and Tavi adds twin deficits and an alternative view of beta.

All this and more in episode 152.  

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In episode 151 we welcome Divya Narendra, CEO & Co-Founder of SumZero. Divya begins by talking about the beginnings of SumZero and finding its initial traction by Divya calling friends from other funds and politely asking them to submit research. From there, he asked those friends to provide any contacts they could, and the platform grew from there, including a cap-intro side of the business to expose analysts, PMs, and fund managers to potential investors.

Divya then discusses addressing the shortcomings of sell side research with SumZero, in particular, the lack of vested interest and high conviction from the sell-side, and lack of coverage in unknown securities. All contributors are vetted, and their ideas go through Divya.

Meb asks about how people use the site for generating ideas, which brings up some various processes like screens from people with a fundamental approach, to quants who are looking at items like who is getting the most views and best ratings. Divya even gets into some of the best ideas contests he has run, and even submitted a contest winner’s idea to Warren Buffett.

The conversation then shifts to what Divya sees in the future for SumZero, from scaling cap-intro efforts, to a data feed that can serve quantitatively driven analysts, but ultimately looks to expand the scope of the SumZero community.

Catch all this and more in episode 151, including Divya’s thoughts about the future of fundamental stock picking, robo advisors and the private wealth model, and more.

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In episode 150 we welcome Bill Smead. Bill begins with how he came to be a value investor, describing himself as someone who came from a family of educated gamblers, and as a boy, going to greyhound races, learning to put probabilities in his favor, and even developing a criteria system for selecting greyhounds.

Next, Bill talks about his beginnings in the investment business, starting out in an era of high interest rates, and reading about Buffett, Lynch, and some of investing’s great minds. He describes his 8 criteria for selecting investments: 1) Does it meet an economic need 2) Does it have a long history of profitability 3) Does it have a wide moat 4) Does it generate high and consistent cash flow 5) Can the company be purchased at a discount 6) Business must be shareholder friendly 7) The company must have a strong balance sheet 8) The company must have strong insider ownership.

Meb then asks Bill to elaborate on the investment landscape, and what he’s seeing in a specific pocket of the market. Bill discusses the parabolic move in e-commerce companies, and issues he sees in the strategies and valuations of companies like Amazon.

As the conversation winds down, Bill lays out the thesis that the Millennials are in position to drive the economy in the future.

All this and more in episode 150, including Bill’s most memorable investment.

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In episode 149 we welcome back our guest from Episode 122, Phil Haslett. Meb and Phil begin the episode with a chat of the IPO environment so far in 2019, and the recent Lyft IPO. Phil then gets into the cyclicality of IPOs in general, and that IPOs tend to be most successful when the market is not so volatile.

Meb asks Phil about the IPO process. Phil starts with banking and how the banking relationship works, and what some companies have done to avoid the high costs of going through the IPO process. Google was the first to give an alternative approach to the IPO process a shot, and Spotify found huge success through a direct listing.

Next, Phil gets into the changing characteristics of what firms look like in today’s IPO cycle, vs. the past. He discusses that the value of which companies go public is far higher than it used to be, and they are going public much later. This stems from companies raising large amounts of capital as private companies. Eventually, though, they’ll need to go public for a couple of reasons. 1) venture capital investors that invested early, may run out of patience waiting for an exit, 2) the need to address liquidity for other shareholders 3) recognition, and 4) be able to issue stock and raise capital for potential future M&A.

The conversation then shifts back to Lyft, and their S-1 filing.

Phil mentions some interesting points he and his team found in the S-1. He discusses Lyft’s $300 million R&D spend, signaling the likelihood it is making major investments, possibly in autonomous driving. They also found that the company has presented itself as a transportation as a service (TaaS) company.

Meb brings up the topic of dilution, and why it is so important in understanding venture capital investing, and Phil walks through the fundamentals of capital raising, and shareholder dilution, and what it really means to early investors.

Next, employee wealth, and how to think about managing it is addressed. Phil shares some advice of being diversified to offset the concentration that comes with both owning shares and earning a paycheck from the same company.

As the conversation begins to wind down, Phil covers his take on the future of the private investment space.

Hear all this and more in episode 149, including the future of EquityZen, and Phil’s predictions for the 2019 IPO market.

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In episode 148 we welcome Paul Lountzis. Paul starts with his background in consulting that led him to develop a skillset in competitive analysis that meant going out into the field to conduct research far beyond the numbers, leading to “differential insights.” He wanted to get into value investing and reached out to a number of firms including Warren Buffett’s assistant, Gladys Kaiser. He ended up interviewing with Chuck Royce’s partner, Tom Ebright, and after Chuck saw his work, he was put on research projects for Chuck. He then went to work for Ruane, Cunniff & Goldfarm before founding Lountzis Asset Management.

Paul then discusses his framework of finding outstanding businesses that are unique, different, and special. He talks about that changes that are taking place and how the qualitative characteristics are becoming significantly more meaningful in company analysis. He highlights the importance of field research primarily to prevent permanent loss of capital, and to drive greater conviction to potentially make bigger bets on companies.

Meb then asks Paul to get into the investment process at Lountzis. Paul emphasizes a long-term holding period, screening on financial metrics like return on investment capital, free cash flow, revenue growth, and covering 600-700 names across the team. Beyond that, the team digs into further insights, from management elements like capital allocation, shareholder friendliness, and the quality of their operating ability, to valuation and the general level of inflation and taxation. He then dives into some examples of how he and his team identify businesses that are unique, different, and special in practice.

Meb then gets into questions on risk. Paul discusses how he and his team look at position sizing and risk based on the clarity in which they understand the business.

The conversation then shifts into a discussion about the current and future state of Berkshire Hathaway. Paul talks about how unique and special Warren Buffett is, how valuable the underlying businesses are that Berkshire owns, and a couple of items that concern him about life after Warren Buffett and Charlie Munger.

All this and more in episode 148, including a special story about a hand he played in helping students meet Warren Buffett.

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Episode 147 is a Meb Short. In this episode, you’ll hear Meb discuss a critical topic to consider for investors…The portfolio that helps you get rich isn’t necessarily the portfolio that’s going to help you remain rich. In this piece, Meb explains that risk-free assets often considered “safe,” aren’t exactly that, if viewed in the proper context. He proposes that with some thought, a strategy can be engineered to offer expected drawdowns similar to T-Bills historically, while at the same time, going above and beyond by historically offering exposure to some positive performance after inflation.

All this and more in episode 147.

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