Academics aren’t always well-regarded in investing, but some offer real value.

Then there’s Mauboussin, the perfect blend of academic & real-world insight.

I’ve read tons of his work, including gems from the ’90s.

So, here are 10 must-read Mauboussin papers you can’t miss👇 #1 Size Matters: The Kelly Criterion and the Importance of Money Management

Answer to position sizing question usually is Kelly Criterion.

This paper dives deep into the concept, with real examples of how to apply it in practice.

If you haven’t read it yet, now’s the time.

Investor letters offer a unique window into how top fund managers are positioning for the current market.

Every quarter, I study these letters to sharpen my thinking and discover new fishing ponds.

Here are 10 quotes from 10 different funds that caught my eye in Q4 2024.
👇 1/ Open Insights Capital

"The grift that used to occur in isolated areas of the market is now in full view, fully embraced by everyone as the sign of the times. Meme coins are just a byproduct of that shift, a world where excess liquidity and rampant speculation collide."

2017 VIC pitch on $AXON is the fastest 50-bagger I've ever seen.

In 2017, AXON was a $1bn Mcap virtual monopoly, supplying 95% of U.S. police departments with Tasers and a crown jewel, rapidly scaling SaaS biz.

Yet, the stock had a 36% short interest.

So, what's the deal?👇 1/

Well, to understand $AXON phenomenon you need to realize just how entrenched its moat was in the legacy business.

The company is in 17,000 of 18,000 (~95%) of police departments nationwide and is basically a monopoly in the domestic ‘Conducted Electrical Weapons’ (“CEWs”) space.

Out of the ~600,000 patrol officers in the U.S., ~400,000 carried a TASER.

Now, imagine introducing SaaS solution into that market and what that could do to your topline.

2011 VIC pitch on $AMZN is one of the best educational case studies on investing in multibaggers.

In 2011, this was a huge $85bn Mcap company at 100x PE with major banks calling it overvalued.

How do you push past all that as a die-hard value investor? Let’s dive in 👇 1/

Make sure you understand the moat of the business—how wide it is and how much wider it can grow.

The author doesn’t talk much about the growth potential of the web services business.

However, he does capture the most important piece of the core operation: e-commerce as a percentage of total retail globally was just 3% back then compared to 20% today.

Meanwhile, shorts missed the forest for the trees (see the screenshot).

As you may have noticed, I recently posted an industry deep dive on the Met Coal industry.

So, in the spirit of industry deep dives, here are 10 of my favorite industry deep dives from other bloggers and various sources: #1 Waste Management by @pernasresearch

Very nice and detailed breakdown of the industry and various sub-niches.

Favourite part is the evolution of the industry through time.

Full report here: pernasresearch.com/investment-wri…

Thread/ 'Reflections on the Ten Attributes of Great Investors'

In 2016, Michael Mauboussin wrote an article reflecting on 30 years of researching the greatest investors and identifying the traits made them successful.

Below is a summary of the ten attributes he identified 1/ Be numerate (and understand accounting).

To be a successful investor, you have to be comfortable with numbers. There are rarely complicated calculations but a feel for figures, percentages, and probabilities is essential.

2005 short pitch on Monster Beverage.

$MNST was trading at 25-30x fwd earnings, 16x BV, and 23x EBITDA while facing a fears competition on a seemingly faddish product.

Compelling, isn't it? Yet decades later, $MNST is in 100-bagger+ territory.

Worst short ever?👇

1/ $MNST's case is one of my favorites to look into among all the multi-bagger cases presented here before.

True testament to how hard it is to catch onto ideas like this and hold onto them for dear life to turn the stock into the biggest career winner.

Thread/

‘Nick Sleep on Diversification’

Below is a collection of Nick Sleeps’ comments on concentration vs diversification, from the Nomad Investment Partnership letters.👇 1/

“The church of diversification, in whose pews the professional fund management industry sits, proposes many holdings. They do this not because managers have so many insights, but so few! Diversity, in this context, is seen as insurance against any one idea being wrong”…

Thread/
Peter Lynch popularised the concept of EPS growth driving stock returns, which is backed up with academic literature.

Over the very long-term, 20+ years, EPS growth is by far the main contributor to returns.

But what about for a more typical investment of ~5 years? 2/

As much as we all want to hold a stock for 20 years, the average holding period is just ~6 months. So a more realistic ‘long-term investment’ is 5 years.

Over 5 years, EPS growth contributes to ~40% of returns. Multiple change contributes to over half of returns.

Another GOAT VIC pitch from 2002, this time on a little company called $NVDA.

In Sep '02, $NVDA was a $2 billion market cap company trading at 14x LTM EPS while being the #1 player in a GPU duopoly with an 83% sales CAGR in 5 years.

Since then, NVIDIA generated a 571x return👇

1/ At the time of the pitch, $NVDA was cheap due to several one-off issues, including an SEC probe (resulting in relatively immaterial revisions), a pricing dispute and ongoing arbitration with $MSFT, an inventory write-down, and a delay in its next-generation chip.

One of the best VIC pitches ever.

2001 pitch on Apple Computer.

The core $AAPL operating business was valued at $597 million, or about 0.1x expected next year sales.

Most importantly, 87% of Mcap was in cash and marketable securities. 👇

Part of the undervaluation was likely due to significant cash hoard and many investments in other tech companies.

Especially, considering that most of the authorized 1999 buyback plan worth $500m was not still put to use.

Shelby Davis is probably the least-known great of value investing school.

Davis started investing at 38 years old with just $50,000. By the end of his career, he turned that into $900 Million!

He averaged 23.2% annual returns over 47 years! 👇 1/

$1 compounded at 23.2% over 47 years amounts to $18,143!

Shelby Davis’ returns are arguably the best long-term returns ever. Only comparable to Warren Buffett or maybe Walter Schloss.

If Davis began investing earlier in life, he would likely be the greatest of all-time.

1/ Thread on the greatest capital allocator in history.

Henry Singleton.

Founder & CEO of Teledyne from 1960 until 1986. Teledyne is an industrial conglomerate with interests in insurance, special metals, aerospace electronics and even dental appliances. 👇 2/ He Graduated from Massachusetts Institute of Technology (MIT), where he earned his Bachelor’s, Master’s, and Doctorate of Science in electrical engineering.

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Every quarter we get a look into what the best investors in the world are buying and selling as they file their 13F’s.

Here are some of the most noteworthy super-investor activities this quarter 👇 1/ Berkshire continues to buy into $OXY while starting to bet on homebuilders with $NVR, $LEN.B, and $DHI additions in Q2

On the other hand, quite a bit of selling by $BRK, including reduced positions in $GM and $GL, as well as a complete sale of $VTS, $MCK, and $MMC.

🧵

Warren Buffett on special situations and activist investing.

Before Buffett became a long-term GARP investor, he was more focused on special sits, illiquid, small-cap, deep value positions. He was even interested in companies he could take control of. 👇 1/

Interestingly, Buffett's best returns came during the late 50's to 60's when he had a much different approach to investing.

This thread is a series of quotes from Buffett's 1961 partnership letter where he describes some of the opportunities he is looking for at the time.

🧵Joel Greenblatt is one of the most influential investors in recent history, whether it's his founding of VIC, the release of his books, or his Columbia class notes.

Here is a brief overview of his key investing principles.⬇️ 1/ While studying the footnotes is crucial, the big picture is most important: Earnings yield and ROIC are the two most important factors to consider, with the key being figuring out normalized earnings.

New Idea Hive weekly newsletter is out!

Packed with 5 actionable ideas from Value Investors Club and hedge fund letters👇 $ABR (short) - mortgage REIT, which is about to face significant markdowns on loans, dividend cut, and dilutive equity raise. Common equity is likely to be seriously impaired or wiped out.

🧵 The book that Warren Buffett memorised as a child.

"Very early, probably when I was seven or so, I took this book out of the Benson Library called 'One Thousand Ways to Make $1,000’. I pretty much memorised it”
- Warren Buffett

Here’s a synopsis of the book ⬇️ 1/ "One Thousand Ways to Make $1,000" is a classic book on personal finance, first published in 1936 by author Francis Minaker.

The book is filled with inspiring stories of people who have successfully made money using a variety of creative strategies.

🧵 Thread/

A series of polls on the probabilities of outcomes in investing.

I feel most investors are overly confident and unrealistic in considering different probabilities of outcomes.

Take the test ⬇️ 1/4

What probability do you assign to your portfolio being worth more in 5 years from now?

🧵 thread/ In 1939, as WWII was starting, John Templeton was buying US stocks while everyone else sold.

60yrs later in 1999 when everyone was buying, Templeton was short 84 of the most expensive tech stocks.

Below are 6 of Sir John Templeton’s investing principles ⬇️ 1/ Don’t get let astray by the emotions in investing – We should not be excessively careless and optimistic when we have big profits and excessively pessimistic and cautious when we have big losses.

🧵Thread/ My Investing Checklist.

In the past, I have always ‘memorised’ my investing checklist, or even worse, I write down extensive criteria with 100’s of items. Never to be read again.

This thread is an attempt to create a simple 10-point checklist. ⬇️ 1/ Is there a highly-competent, trustworthy and aligned management team with a history of exceptional capital allocation?