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Mostly Borrowed Ideas

5 Oct, 17 tweets, 7 min read

@modestproposal1

1/ Notes from @modestproposal1 episode @InvestLikeBest

One common denominator for Patrick's guests is just how much they ooze their passion for the great game of investing.

It reverberates through the audio in a tangible manner. This episode was, of course, no different.

2/ Investing is about underwriting the past vs the future.

Multiple-based "value investors" are likely to have their work cut out in the current context of investing landscape.

3/ Base rates are certainly real, but find businesses that escape the base rates.

4/ Every time I come across the data that $FB has ~3 Bn users, I just marvel at the scale.

It's mind numbingly yuge!

@modestproposal1

5/ @modestproposal1 sounds bullish on ridesharing. If you read my "deep dive on Uber", you know I'm bearish.

mbi-deepdives.com/deep-dive-on-u…

6/ One of my bearish points was TAM is lot lower than many people think.

It's telling that this point has always been sort of the case. And $Uber and $LYFT certainly beat expectations in the past.

I would be curious to see if that remains the case in next 5-10 years.

7/ Three obviously better things in the last 15 years.

I. Uber
II. AirPods
III. iBuying

8/ "if you let a business survive long enough, it will eventually sell ads."

Some examples here: Instacart, $AMZN, $EBAY, $UBER, $ETSY

9/ Now that offline players were forced to compete online, competitive intensity will increase manifold which can have dramatic, nonlinear effect on CAC.

10/ Interesting thesis on $SYY. Their competitive intensity is likely to ease in the post-Covid world.

11/ $ANGI bull thesis: "There's almost no reason to believe it won't exist in 10 years. It's just what's the path there."

12/ Find monopolies in the communication sector that is nominally regulated.

13/ Lots of love for $IAC. As a shareholder, I kept nodding in approval.

14/ $IAC history for the uninitiated.

15/ Should $IAC trade at conglomerate discount given the 25-year history of mid to high teen IRR, especially when SPACs are trading 8-20% premium?

16/ $FB, Zuck, and his team have been "hyper aware" of the next platform shift.

If the the next 20 years for Zuck is anything remotely close to last 15 years, Bezos may appear "poor" at some point in front of the Zuck empire!

It won't be easy just as it wasn't for Bezos.

End/ Episode: investorfieldguide.com/modest-proposa…

Transcript: investorfieldguide.com/wp-content/upl…

All my twitter threads: mbi-deepdives.com/twitter-thread…

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More from @borrowed_ideas

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@borrowed_ideas

3 Oct

1/ Thread: The trick to own a stock for the long term

One of the most common mistakes in investing is to sell too soon.

I believe most of us will own the future 10 or 100-baggers at some point, but very few of us will actually realize the full return.

2/ Given that we all know almost every one of us will make this mistake, how can we prepare ourselves better?

One of my answers to this challenge is to deeply care about the business, its mission, and the success of its mission.

3/ If I don't deeply care about the business, I am convinced these are the stocks I am most likely to sell too soon.

Read 14 tweets

Mostly Borrowed Ideas

@borrowed_ideas

28 Sep

@LTwolfe

1/ Notes from @LTwolfe episode at @InvestLikeBest

I first heard Lauren Taylor (Impactive Co-founder) at Sohn Conference in 2019.

ESG has most certainly become one of the prominent narratives in recent years, and it's good to listen to someone who talks so passionately about it

2/ Impactive focuses on quality, valuation, time, and activism. Find businesses where time is your friend.

3/ A study showed activist situations typically settle two years out. So it's just better to avoid the battle and cut to the chase by not having adversarial relationship with management.

Read 11 tweets

Mostly Borrowed Ideas

@borrowed_ideas

24 Sep

1/ Thread: Who are your peers?

Bill Ackman was once asked what's the most influential thing Buffett has ever said.

He referred to the following Buffett quote.

2/ "If you want to be successful, look around the room and think about the classmate you most admire and what qualities they have and just decide to adopt those qualities. If you do that, your chances of being successful go up enormously."

3/ Patrick recently asked Michael Seibel how we can get better at execution.

Seibel emphasized the importance of peers/community.

Read 10 tweets

Mostly Borrowed Ideas

@borrowed_ideas

23 Sep

@packyM

1/ Thread: $TCEHY

I have rudimentary understanding on tech in China. @packyM wrote a fascinating piece on $TCEHY which I came across today and wanted to leave my notes here.

It is a riveting read. So feel free to read the actual piece.

notboring.substack.com/p/tencent-the-…

2/ Born in 1971, Pony Ma, the founder of $TCEHY, built a stock market analysis tool while interning at a leading tech company in China.

He sold it for 50k CNY i.e. 3x his annual salary at that time.

3/ After college, he worked for 5 years at a pager company. In 1998, he finally left the company to start Tencent.

It was a bumpy start. During pre-AWS era, server cost was skyrocketing and it was also sued by AOL for copyright issues.

Read 16 tweets

Mostly Borrowed Ideas

@borrowed_ideas

20 Sep

@rorysutherland

1/ Notes from @rorysutherland episode at @InvestLikeBest

This episode was a reminder of Munger's latticework of mental models, and how much knowledge from other fields can actually be transferable to the world of investing.

2/ "you can double the conversion rate of a call center if you're asking people to choose between three options of subscription, and you simply add the sentence, "Most people choose B."

This reminded me of NZS capital's complexity investing framework.

static1.squarespace.com/static/5ca38f3…

3/ "Apple was the first to wonder about what it felt like while you were doing it. Which is a second-order consideration, which is actually much closer to being customer-centric than asking what functions you can perform for people."

$AAPL

Read 12 tweets

Mostly Borrowed Ideas

@borrowed_ideas

18 Sep

@mjmauboussin

1/ Thread: The role of intangibles in valuation

I feel like a broken record, but @mjmauboussin and Dan Callahan recently published another intriguing piece titled "One Job".

What is "One Job"?

To take advantage of gaps between expectations and fundamentals.

But first a quiz.

2/ Which of the following stocks you want to own?

Stock A: it's profitable for last 15 years. Both sales and net profit CAGR 40%. Dividend initiated in year 3 and grew at 50% CAGR.

Stock B: Negative FCF for last 15 years. Debt grew at 34% CAGR. Cash was 2.5% of sales in yr 0...

3/ ...and it came down to 2.0% in yr 15.

Of course, it's a trick question. Stock A and B are actually the same company. It's $WMT.

If you hated stock B, well, here's a shocker. The stock had 29% CAGR return during this 15-yr period vs 11% for $SPY.

Read 25 tweets

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