Tobias Carlisle (00:02:51):
I’ve paid a little bit more than this, but not much more. I think it’s trading roughly around where we bought it. I think it’s worth about $500, and I’m going to make the case for it here. Where it’s trading now, market cap’s about $12.7 billion, and got about $5 billion in debt total enterprise value. 17.7, 18. Doing about $18 billion in sales. You’re buying it for one-time sales here, and your free cash flow yield’s around 3.2%. That’s just the very high level.

Tobias Carlisle (00:03:21):
The reason I like it so much, it’s got this huge return on invested capital, because it’s a franchise model. Basically, what that means is that, Domino’s, the enterprise, they’re responsible for running the franchise, and then franchisees own all the stores. I think the most interesting statistic is that 95% of Domino’s stores come from people who are formerly drivers for Domino’s, or formally employees for Domino’s.

Tobias Carlisle (00:03:47):
They get inside, and I think that they see that it works. I think that’s really encouraging. That’s a good statistic. It’s not outside capital, it’s people who get inside the business really like the way the business operates. Personally, my family eats Domino’s about once a week. That’s got nothing to do with the reason that I bought it. I just, I very rarely go and do the Peter Lynch thing where you actually go and consume the product.

Tobias Carlisle (00:04:10):
This is one of those ones where I know the product pretty well. One of the things that really stands out is how easy it is to use their digital app. It remembers who you are and knows what you like. It’s a handful of button pushes. Then, when you push that button, it creates this flurry of activity in the store. We go down to pick up our pizza, and you can see them working really hard inside the store. They make those employees work, and there’s not much to the store front. There’s not much stuff in there, which is why it’s got this gigantic return on invested capital, in addition to it being a franchise.

Tobias Carlisle (00:04:43):
One of the things that I think is really interesting about it, everybody has known this forever, but Domino’s was one of the very first delivery companies. They solved that delivery issue that has plagued all of these other firms, Doordash and so on, Uber Deliveries. None of them have been able to figure out how to do it profitably, but Domino’s has been doing it profitably for a very long time.

Tobias Carlisle (00:05:05):
Now, I think one of the reasons why … I think there are a few reasons why it’s trading cheaply now. One of them is that, it was one of those pandemic stocks where, when people were unable to get out as much, Domino’s became a very popular way of ordering, because they had that touchless delivery. It came to in a box, you could stick it in the oven. In the early stages of the pandemic when we didn’t know really how it was coming in, whether it was on services or whatever, we were buying them and cooking them again at home, they’ve also found it very difficult too.

Tobias Carlisle (00:05:37):
That comp has made it difficult. Sorry. That’s one of the reasons why I think that it’s come back a little bit. It kind of got ahead of itself through the pandemic, and it’s come back a little bit as a result, just being too popular. They’ve also got this ongoing driver shortage. One of the problems with all of these competing delivery companies is that there’s just lots of competition for drivers. It’s just hard to find employees at this time in the cycle, for whatever reason. It’s very low unemployment, people have got their choice of jobs.

Tobias Carlisle (00:06:06):
Domino’s is one of the companies that’s suffering a little bit. They’ve increased wages. They’ve spent some more money on wages in an attempt to solve that problem. The other problem for Domino’s has been that pizza is a … They’re made out of dough. There’s lots of wheat. With the Russian invasion, we get a lot of our wheat globally. A lot of wheat comes out of Russia. That has pushed up the price of the commodity, wheat and other commodities that go into pizza. It’s made them a little bit more expensive for Domino’s to produce than they would’ve otherwise been.

Tobias Carlisle (00:06:34):
That’s the bad news. I think all of those problems are reasonably simply solvable, either just through letting time pass, increasing the wages that are paid. I also think that Doordash and Uber are going to … they’re going to struggle, because they’re still losing money on these businesses. Whereas Domino’s does not. Domino’s is hugely profitable, generates a lot of free cash flow. What’s most interesting about Domino’s, it’s the cheapest way to feed a family of four. If you look through all of the other options that people have, Domino’s is the cheapest way to do it.

Tobias Carlisle (00:07:08):
Pizzas are six to $8. They’ve got this new method where you use your app and they’ll bring it out to your car two minutes after you arrive, or you can get it delivered to your house. It’s really, really convenient. It’s a mature business. It’s not one that’s going to see a lot of rapid growth. Having said that, they’ve got pretty reasonable, robust growth internationally from the US.

Tobias Carlisle (00:07:32):
In 2017, they had about 9000 international storefronts. Now they’ve got about 12,000, which is about 30% total growth over about five years. That’s out of 18,800 locations. They’ve got this pretty consistent growth that’s likely to continue for the foreseeable future. They’re very good at doing that. In addition to that, while they’re growing that top line, they’ve been very consistent repurchasers of stock. They’ve taken a lot of that free cash flow. They pay a little dividend, repurchase some stock. Total shareholder yield, I think is something in the order of 6%.

Tobias Carlisle (00:08:05):
Right now I think is a good time to buy it, because it’s the cheapest that it’s been since 2013, which was around about the time it got taken … A little bit after, they changed the model and they’ve had this great run as a result. I think for a variety of reasons, it generates lots of free cash flow, management is sensible, does the right thing with it, repurchases stock at the right time. I think if we go through a inflationary period, which, looks like we probably will, it’s still one of the cheaper things out there.

Tobias Carlisle (00:08:34):
It’s one of the ways that people will continue to feed their families. I don’t think that there’s any risk that, there’s no risk to the business model. That’s my pitch, gents.

Stig Brodersen (00:08:42):
It’s a relatively scalable model. You’ve seen decent growth. You have this business model and you have this circle where, when these franchise costs go down and the company grows, I definitely like that. The way that capital’s been allocated looks relatively well. Actually, talking a bit more about the franchise model, I just pulled up some numbers here. United States, franchises pay 5.5% of the revenue, and outside of the States, it’s 3% under a master franchise agreement.

Stig Brodersen (00:09:13):
I just felt that was there some interesting stats to pull up there.

Hari Hamachandra (00:09:18):
Interesting pick, Toby. Before I talk about this pick, I want to congratulate Toby on one of his previous picks, which was Lockheed Martin. I don’t know whether Toby was in the boardrooms when Putin was discussing strategy, but I don’t know, he timed it really well.

Tobias Carlisle (00:09:40):
Thanks, Hari. Appreciate that.

Hari Hamachandra (00:09:43):
Yeah. The reason I’m also bringing that up is, the disclaimer I’m putting for whoever is listening, because when we are trying to shoot down Toby’s idea, remember, we have also shot down Lockheed Martin.

Tobias Carlisle (00:09:56):
Exactly.

Hari Hamachandra (00:09:58):
Now, who’s laughing? With that, Toby, I think it’s interesting pick, because it’s not a classic … It’s neither deep value. It’s not a white moat in a typical sense, because that’s the reason I’m struggling to understand, because pizza is almost a commodity. For example, our favorite pizza go-to is Mountain Mike’s. Each family has their own, but it’s not like Pepsi or Coke. It’s not a Pizza Hut, and there are a lot of local pizza chase that keep coming, and we keep trying that as well.

Hari Hamachandra (00:10:37):
In that sense, one my concern is, if they’re really good, will it be [inaudible 00:10:43] in terms of ROIC, because they don’t really have a mode. Maybe their moat is in distribution. Now coming to distribution, as you said, there is driver shortage. There is input cost escalation due to inflation in general, and gas prices. My concern is, do they have enough pricing power with the amount of competition they have in the market, pass on most of that input cost to the customers?

Tobias Carlisle (00:11:17):
Yeah, I think that’s a good question. I like the way you’re thinking about that. I’m not sure that that’s the way that they think about it, because I think what they’re doing is producing a very consistent product, and they’re doing it at a very low price point. That’s one of the things that we have found too. There’s lots of boutique pizza places around us as well. What we found is that they’re much, much more expensive than Domino’s, just because they tend to be one-offs or family-owned, there’s a lot more inconsistency in what they produce, where Domino’s is very, very consistent, and it’s incredibly cheap.

Tobias Carlisle (00:11:55):
If we get home late from the kids’ sports, which is what typically tends to happen, we need to feed the kids pretty quickly. Domino’s is a really quick, consistent way of doing it, and we know that they want it. The kids love it. It’s easy to solve that problem.

Tobias Carlisle (00:12:13):
As you point out, that is a real issue for them, that commodity cost price inflation does seem to be one of the reasons why the stock is depressed. Honestly, I don’t see that going away anytime soon, but I do think that they’ll be able to price … They have made some changes, they have previously. Some of the deals that you could get, you could get delivered. Now, the deals tend to be, they’re trying to encourage people to come into the store to take away that delivery issue.

Tobias Carlisle (00:12:40):
I do think that that’s one of the risks, the driver shortage and the employee, generally the employee shortage and the commodity inflation. I think those are the two real risks to it. I think that they’ve just got such a great brand in so many locations, that I do think that they have a little bit of protection in that. You travel anywhere, you see Domino’s, you know pretty much what you’re going to get.

Hari Hamachandra (00:13:03):
Yeah. I think that, I agree with, because I would say Doordash probably will be hit first, then Domino’s, because I know what pizzas my kids like, and if there is inflation, I would rather go and get it myself, rather than going through Doordash and paying that extra cost of delivery. I think it might hit them later in terms of consumption patterns, but they will be probably later in the line after DoorDash and others.

Tobias Carlisle (00:13:37):
They still retain that incredibly … They have an incredibly high and consistent return on invested capital. It’s one of the reasons that I’m typically, I think you fade the return on invested capital over time, and this has come down a bit from where it was. It was extraordinary levels, five, six, seven years ago. Even at where it is at 55%, it earns more on its assets than Google does. I think it’s an impressive enterprise.

Stig Brodersen (00:14:06):
To Hari’s point about the industry in itself, it is a bit different than something like Lockheed Martin. The barriers to entry is just very, very different than something like pizza. Domino’s Pizza, I know they have different products, but they do not compete with other pizza chains. They compete with food, and they compete in the segment of food. If wheat is the issue, which is, it is due to Ukraine being …

Stig Brodersen (00:14:30):
We have this saying that Europe’s a bread basket, and a lot of production;s also in Russia, then it’s an issue. You could lose out to those types of foods that do not use wheat. That’s what you’re competing with just as much, or perhaps even more.

Tobias Carlisle (00:14:46):
In defense of Domino’s though, it continues to be the cheapest way to feed a family of four. I have this little graphic that shows it competing against various other fast food options, QSR options, and it continues to be the cheapest one there. I think that that stands it in good stead. If we go into some sort of inflationary, or if the inflationary environment continues.

Hari Hamachandra (00:15:06):
One last point about the valuation, Toby, because you said it’s not like say Google or any of the fast-growing companies. I saw that revenue has been growing consistently around 10% to 15% for the past 10 years, which, for a pizza chain is quite an impressive feat. However, when I look at their PE, is it 25, maybe my data is outdated, but when you look at some of the companies that I’m going to pitch later, the piece seems to be quite rich for a company that’s growing at 10 to 15% ARR. I just wanted to get your take on the values.

Tobias Carlisle (00:15:43):
Yeah, no dispute there. I think the measure, for something like Domino’s, given that it’s mature, I don’t think it’ll grow at that rate that it has grown before. I think that it’ll probably grow, could be eight to 10% in the future. Although, I think that the international growth will be reasonable. I also think that they’ve got a pretty good tailwind in that QSR. People just tend to be ordering out more and more, as time goes by.

Tobias Carlisle (00:16:07):
I think the measure is the free cash flow yield. Then, if you combine that with the fact that they have such a huge return on invested capital, the way that I think about these things, I always add the yield to the reinvestment rate. I think that the two together give it this very, very substantial return.

Tobias Carlisle (00:16:25):
Additionally, the fact that they’re buying back so much stock, particularly, they’ve shown this propensity to buy back stock at opportune times. I think that you’ll probably see that there’s been quite a substantial buyback next time we circle back to this, because it is right now, the cheapest it has been since 2013. I think that they’ll be taking advantage of that.

Tobias Carlisle (00:16:43):
The catalyst for this will be unlike Lockheed Martin, which, I got a little bit lucky, I guess, is the … I don’t really want to say that, but got a little bit lucky that there was a conflict so quickly after that pitch. Domino’s will just report. They were a little bit soft in their last earnings call, which is why they’re a little bit soft now, but they didn’t miss by much. They missed, and they could quite easily reverse that next time, outperform. Then, I think you’ll see the stock leap, if that happens. That’ll the catalyst for Domino’s, which, I anticipate that that happens one of these quarters, in probably this year.

Hari Hamachandra (00:17:18):
I think when he was pitching, he was not hoping for a catalyst in case of Lockheed. I think it was a good … Just based on the merit. Even if Ukraine/Russia war hadn’t happened, a 4% dividend with such a strong mode, I feel it was a very good pick.

Tobias Carlisle (00:17:34):
Thank you. I think I said it was, I expected mid-teens for the foreseeable future. It’s well ahead of what I anticipated.

Hari Hamachandra (00:17:44):
The stock I’m pitching today is trading a PE ratio of 12. It’s in the deep value territory. I’m just trying to build up the suspense. It is going through a bad patch right now, which they have gone through before as well. It has a management that hasn’t changed, is a management that has delivered in the past. Its reputation has taken a hit. It’s not the most loud stock today.

Hari Hamachandra (00:18:15):
With all these factors, I feel Meta, it was Facebook before, is at a valuation that makes it quite attractive for me, for a couple of reasons. One, the moat of the business hasn’t really changed much, and the business is still going strong. In fact, in their latest report, their monthly active user count actually went up. It’s around 3.64 billion. It has a strong ecosystem of products like Instagram, Facebook, WhatsApp, and they’re coming up with new products like Reels and Stories.

Hari Hamachandra (00:19:01):
These are innovation, or you can say, copying from others. They don’t mind cloning, but they’re going through this bad patch right now, because they have a couple of headwinds. Number one is, Apple’s privacy policy, it is hitting them hard, because it is reducing their effectiveness to target their ads, making it less effective in general for advertisers. That’s the fear the market has.

Hari Hamachandra (00:19:26):
The second thing is, they’re facing some really tough competition from the likes of TikTok and Snap, which are newcomers, but Google as well, for the attention and time of the users. Of course, the regulation risk is always there. That’s a constant threat when it comes to, say, Facebook, because whoever wins in an election, Facebook gets the blame. That’s a constant threat within US, and worldwide too, because anytime there is a social disturbance, government tend to block Facebook first.

Hari Hamachandra (00:20:02):
They’re always at a risk of losing some marginal markets. Secular headwinds like balkanization of internet due to geopolitical shifts can permanently shut off some of the markets. China today is completely shut off for Facebook. The other side of the coin is that, India is shut off for TikTok. We might end up with two camps for social media, or multiple camps wherein each country, if they’re big enough having their own social media.

Hari Hamachandra (00:20:44):
The balkanization of internet is also a secular long-term headwind. Those are some of the risks. Market, I guess, understands these risks. The reason I’m pitching is, my assumption is that the market is overreacting, and not looking at some of the strengths. I would like to handle each headwind one by one, and see how Facebook is navigating it.

Hari Hamachandra (00:21:10):
For example, the first one is privacy policy by Apple. I think Facebook is … Even in their latest earnings call, they’ve talked about how they’re investing in AI, and I, being in this field and having interacted with Facebook employees in some of the conferences, I do know that they’re considered in the Valley as, if not the best, one of the best companies for ML and AI.

Hari Hamachandra (00:21:38):
They’re using the ML and AI to improve the ad targeting and ad experience in general for advertisers. The second thing is, even though their ad targeting has been blunted by Apple, they’re still better than newspapers, television, and other avenues. I think Facebook is much ahead of Snap, in terms of AI, ML and in overall, their technology and their platform.

Hari Hamachandra (00:22:10):
The second thing is, advertisers go where the users are, and Facebook is still among the ecosystem, the largest. The second thing is, Facebook is one place where as an advertiser, I get a ecosystem, and a complete 360 experience for the customer. Whether it’s Instagram, WhatsApp, and Facebook, and the marketplace in the Facebook Stories and Reels, all sorts of media, I can engage my customers with.

Hari Hamachandra (00:22:39):
Then, I can also have Facebook pages or marketplace, where I can draw on my customers for call to action. That experience that advertisers get is unique with Facebook. The second thing is, Facebook is not just focusing on what is the headwind today, which they’re addressing, as I just mentioned, but what I’m happy about the recent foray into Metaverse is that, their culture and Zuck’s tenacity hasn’t diminished over time. They’re still ready to make bold bets, and put meaningful dollars behind their bets.

Hari Hamachandra (00:23:25):
Metaverse is one of them. It’s actually a combination of multiple things, their hardware business. With Apple’s experience, they understood that they can be deplatformed anytime. That’s number one. Number two is that, it’s been more than 10 years now since iPhone first came out to the market, and revolutionized how we interact with computers, from desktop, the form factor changed to mobile.

Hari Hamachandra (00:23:55):
In fact, one of the things that Facebook faced at the time in 2012 was their audience were all moving to mobile. There was a serious concern by investors that whether they’ll be able to come up with the effective monetization strategy for mobile, which then navigated successfully. Same thing happened with Stories in Google in ’17, ’18. When Stories became more popular, they went after Stories. This goes back to their DNA, when even Facebook was founded, Zuck was determined not to monetize initially through advertisements, but to wait till he builds a good community, strong community and a large community.

Hari Hamachandra (00:24:37):
They have exhibited that ability to hold off monetizing time and again. With the new form factor, phone has been around for 10 years or more, it’s obvious that there’ll be new format, whether it is smart glasses or VR and AR devices like Oculus, that’s where the next generation is going to go.

Hari Hamachandra (00:25:05):
Next 10 to 15 years, there will be new hardware form factors. Facebook is smart in making those investments now, so that they’re ready for the next generation of hardware devices. It’s no longer just hardware devices. It would be a combination of hardware and software. In fact, iPhone was exactly the same. It was not just the hardware, but the software that made iPhone superior to any other smartphone.

Hari Hamachandra (00:25:33):
In case of Facebook, Metaverse is basically a combination of hardware, great software and AI. That is what will be a killer product position. Again, it’s uncertain. We don’t know. It’s almost like that’s an optionality, and I would discount Metaverse when I’m valuing Facebook today. Based on my understanding of the business, we know the business has been consistently growing more than 20%, north of 20 to 30% annually, their revenue.

Hari Hamachandra (00:26:11):
Their ROI is also north of 20% today, 27%, I guess, as of now. They’re trading at 12 PE. That’s the reason my pick is Facebook at this time. I wish we had met a couple of weeks back when it was $176, that’s when I thought of Facebook, to pitch Facebook, but it’s already run up a little bit. I still believe this is a good place. With that, but I’m not the valuation expert here. Toby, Stig, I would love to get your thoughts and feedback.

Tobias Carlisle (00:26:45):
I think in full disclosure, I should mention that I also own Meta, and I bought it recently. I bought it in late March. I’m right there with you, Hari. I’m not very good at playing devil’s advocate usually in this podcast I’ve noticed, because I do like the picks. I’m with you on that, I think it’s … Last time I looked at the valuation, I thought it was around half price. That was before they had the last print where they ran up a little bit.

Tobias Carlisle (00:27:14):
I still think that it’s very, very undervalued here, and I think it’s got a long way to run. I just had a few observations about it. One is that, I think what characterizes the difference between TikTok and why TikTok has grown so quickly, and say Instagram, which is their competing product. I think that TikTok is incredibly viral, and creators who go onto TikTok find that they get this enormous exposure. I don’t know whether that’s TikTok helping out early creators and making it appear as if they’re going to get this incredible exposure, whether that’s just a feature of the app.

Tobias Carlisle (00:27:52):
You do … I downloaded TikTok one weekend, and I used it for the weekend, and then I took it off the phone, because it was just like crack cocaine. I was spending way too much time on it. It’s got this, I don’t know if anybody’s tried TikTok before, but it’s got this thing on it where, ordinarily, when you’re scrolling through all of this stuff and you’re seeing … It’s very good at figuring out what you like, and it feeds it to you very quickly.

Tobias Carlisle (00:28:16):
On my phone, if I want to close something down, I swipe to the left, and it would shut down that app. When you do that with TikTok, what it does is it just shuts down the theme that you’re looking at. Then, it shows you another theme. It caught me a few times where I didn’t … I was trying to close the app, and I was like, “Oh, that’s interesting.” I kept on going with this thing that I was looking at, before I realized. That’s why I had to delete it off the phone.

Tobias Carlisle (00:28:40):
Instagram doesn’t do that. They could introduce that … I hope that they don’t introduce that functionality. Instagram, when I first started using Instagram, it was because I wanted to see photos of my friends’ kids, basically. I wanted to share photos of my own kids with a much smaller group of people than I was connected with on Facebook, which, the blue app, which I regarded as being everybody who I knew, like a White Pages almost, whereas Instagram, which is close friends of mine.

Tobias Carlisle (00:29:08):
I don’t use Instagram like that anymore. Now, I use it much more the way that TikTok is used. I just use it to see things that I’m interested in, what those other people are doing, and nobody ever posts on it. I don’t ever post on it either. I think it’s a plus for Instagram, that it has been able to morph like that, from what had been initially social, to what is now, I would characterize as viral.

Tobias Carlisle (00:29:36):
One of the things that surprised me, and I don’t know whether this is plus or a minus for Facebook, do you know how Snap was resurrected? Because I had the feeling that, one of the problems with Snap that people talked about initially was that it lacked that virality, because by its very nature, it was intended to be, you’d share something and it would disappear, so people couldn’t continue to share it on. That lack of virality prevented it from growing probably at the same rate that these other ones had.

Tobias Carlisle (00:30:04):
It made some change. I don’t use Snapchat, so I don’t know, but do you think that the fact that Snapchat has survived and continues to grow is … What is the level of threat there from Snapchat and TikTok to Instagram, Facebook and the rest of the Meta universe? Is that resurrection of Snap something that potentially Instagram could use in the event that it started falling behind? I’m just interested to know. I don’t really understand the mechanics of that well-enough.

Hari Hamachandra (00:30:37):
Yeah. I think those are really good points, Toby. I use the restaurant analogy here. In a marketplace, there is a restaurant that we all like, and let’s say it’s Italian. We go to it every day. Then, some Mexican restaurant opens up nearby. It’s a completely different [inaudible 00:30:57]. Then, when people start going there because something new, and they lose interest in the …

Hari Hamachandra (00:31:02):
It doesn’t mean that they’ll stop going to the old restaurant that was already there, but they might go less. That’s the constant pressure Facebook faces, and they’re gradually turning into a Cheesecake Factory. That means they will offer all sorts of cuisine in their restaurant, so they can still attract, but that doesn’t mean that it’s going to be a monopoly anytime. There will always be something coming up.

Hari Hamachandra (00:31:29):
For example, Snapchat’s proposition was, your messages will be instantly deleted after you share. It has its own monetization problems. For them, I think that’s what they went through. To answer your question, I think they turned around their business by imitating Facebook, to some extent. It’s like the Italian chain adopting some Mexican food, and the Mexican chain adopting some Italian food.

Hari Hamachandra (00:31:57):
Both have appetizers that are different now, but I think that was a very good point you brought up, Toby, I think so. Now with TikTok, it’s a completely new content factor. Short-form videos is what it is. Reels is the competitor actually, from Facebook, not Instagram, for TikTok. Reels is very similar to TikTok. TikTok has other headwinds, very similar to the Facebook in the sense, it’s at a constant of being banned for national security concerns.

Hari Hamachandra (00:32:28):
At the same time, it’s a new form factor they came up with, and the risk with Facebook is, this is going to happen every few years. We’ll always have to see, is Facebook able to compete and adapt? It reminds me a lot of Microsoft in the ’90s and the 2000s, after the 2010s, when they were always having to catch up with somebody else. Their stock was in doldrums for a long time.

Hari Hamachandra (00:32:58):
I think Facebook, unless Metaverse is probably a game plan where they want to leapfrog, instead of always catching up with new trends.

Tobias Carlisle (00:33:07):
What’s the reason for India banning TikTok?

Hari Hamachandra (00:33:11):
Very similar to Russia attacking Ukraine, but not to that extreme. China basically sent its armed forces into Indian borders, and they occupied some territories on the Indian side of what is known as line of actual control, LAC. Of course, Indian troops pushed them back, and they now are in a stalemate over there, where both armed forces are now facing off each other. Since it is a hostile India ban, not just TikTok, but any apps from Shanghai, to ensure, because it was found that, there were some loopholes or whatnot that could be exploited. They just banned everything.

Tobias Carlisle (00:33:54):
Thank you.

Stig Brodersen (00:33:55):
I like the valuation. We always have to look in light of what’s the price and what’s the value of the stock. I like that. I’m worried about Facebook, more long-term than short-term, but as stock investors know, whenever you discount cash flows, it’s the next few years, 10 years call it, that matters. After that, you have to have some really, really high cash flows before they really matter, whenever you discount it back until today.

Stig Brodersen (00:34:21):
I have some worries about Facebook long-term. We were told about these network effects, and that was why these companies could grow so fast. That’s absolutely true. We were also told this narrative about how these network effects would ensure the strength and the moat of these companies. I look at an app like Facebook, I’m not just talking about Meta here, but something like Facebook, how uncool Facebook became all of a sudden. That was just around the time our parents started going on Facebook.

Stig Brodersen (00:34:54):
The reason why I’m saying, obviously I’m joking a bit about it, but whenever you see the usage of something like Facebook right now, young people in rich countries, they don’t really use Facebook anymore. Even if you look globally, people generally don’t spend a lot of time on the legacy app. Then, they have the acquisition of Instagram, everyone talk about, “oh, Facebook can just buy competitors.” That strategy in itself is just very, very difficult. As any venture capitalist would probably tell you, it’s very difficult to predict. Hindsight’s always 20/20, and we would say, oh, TikTok was so obvious.

Stig Brodersen (00:35:28):
I don’t think it was obvious to anyone. I think we knew it was coming. This idea about doing it, I think is just really, really difficult, especially something that moves so fast. By definition, something always becomes uncool whenever enough people have been doing it.

Stig Brodersen (00:35:47):
I guess there are multiple challenges for the company, Meta. One of them is that, what are they just going to do with the core market, which is advertising? They’re competing with Google and now increasing with Amazon. That’s just not a fun market to compete in. They always post the daily user in their earnings calls, but you also have to keep in mind, which countries are that they’re adding now. I think it was the last quarter, 2021, they had the last drop. I think it was only a loss of a million users, something like that. It was significant, because it never happened before. A lot of that was attributed to the rise in price of mobile data in India.

Stig Brodersen (00:36:28):
Now, whenever something happens, you also have to think about what’s the GDP in India. Where’s the advertising dollars? Clearly, India’s market, it’s a huge country. There’s a lot of advertising dollars, but you cannot sustain the same type of growth rates as you’ve seen before. A bit concerned about it long-term.

Stig Brodersen (00:36:47):
Another reason why I am is that, they’re betting so heavily on the Metaverse. They’re betting around $10 billion in CapEx a year, which is around 50% of everything they spend right now. They’re a loss leader right now on the hardware part. As such, there’s nothing wrong with that strategy. I think it makes a lot of sense, why they would do that, because they want to make sure that the platform, once it starts to make money … If we can make this comparison to Cloud computing, I know Amazon was keeping it secret for a few years before Microsoft and then Google came on board.

Stig Brodersen (00:37:20):
At least to me, it seemed to make a lot more sense, why you would put a lot of money into that. Now, you’ve, again, hindsight’s always 20/20, and you can see the cash flows coming in, and you’re like, “Oh, it made a lot of sense why all this money was put into it, and you can see how it’s just going to grow and grow in the future.”

Stig Brodersen (00:37:36):
To me, it’s a bit more unclear with the Metaverse, the monetization of that. Again, advertisers will go where people are. I just feel it’s a different game, because just the activities you can do in that Metaverse, as much as it’s liberating, it also limits what you can do otherwise. While using Apple’s products, you can do so many other things in the old world, the real world.

Stig Brodersen (00:38:01):
Whereas, you’re very much, whenever you’re in the Metaverse, that’s what you do, to an extent. Where Facebook used to be, and I’m talking about the old application, it was all about connectivity. It feels like Facebook now acknowledges that they’re not the best in connecting people anymore. That’s not what they do. They have to use the real estate for something else, where they can sell something else.

Stig Brodersen (00:38:27):
Whenever I look at the valuation, that was the bear case. If I’m a bit more optimistic and I’m looking at, let’s say, over the past, I’m looking at past 12, 14 years now, the enterprise value to EBIT here right now, it’s around 12. The median is 27 for Meta. The minimum has been close to 11.

Stig Brodersen (00:38:50):
Historically, it’s a very cheap valuation. I think there is some reason why it is cheap right now, because of the growth prospects. If you look at it and you discount the cash flows, it’s a very cheap company. It’s a cheap, high-quality company. The disruption that you’re going to see, I would say that the moat is probably shrinking, but it’s not going to be at a fast enough pace that you can’t justify buying into to a Meta there, in the stock price at the moment.

Stig Brodersen (00:39:16):
One thing I wanted to ask you about, Hari, because you have a really good feeling with this, where do the best programmers go in the Valley? Do they go to Meta right now?

Hari Hamachandra (00:39:27):
Those are very good points that you raise, Stig. Before I answer your question on the talent, and that’s one of the risks I also see, is the right analogy for Metaverse to compare is not Cloud business, but rather search business, when Google was still a startup. Nobody thought how this can be monetized in first. Google was planning to sell appliances that are search engines appliance, that can be installed in corporates.

Hari Hamachandra (00:39:58):
They were finding it really hard to get buyers even for that, until they figured out a way to monetize it through advertising. That was the innovation. It’s more like venture style investing, rather than value here. When I’m valuing and when I’m buying into Facebook, I would discount anything that would come out of Metaverse, even though Oculus and Portal, lot of their hardware devices are seeing a lot of traction, but they’re really nascent at this point.

Hari Hamachandra (00:40:31):
I would just bet on their continued engagement in terms of their monthly active users, as you said. There is always a risk that the cool kids will go away, as long as their parents are joining Facebook, and their kids don’t want to be on Facebook. That’s always the case, where they want to be in a club where the parents are not there. I think those are the risks. As of now, the numbers don’t tell me that it’s a flashing red, in terms of growth opportunities.

Hari Hamachandra (00:41:02):
Coming to talent, Facebook is no longer where the brightest kids from MIT would go. It used to be 10 years back, or seven years back, because most of them would join startups, because that’s the draw. Facebook was startup initially. Then, it was just a high-growth public company. Every company goes through the cycle. Even Google is not the most preferred destination anymore. It’s always startups in the Valley.

Hari Hamachandra (00:41:32):
The brightest kids will go to startups. At least right now, till we have a downturn. Right now, it’s really hard. Valuations of all startups are unrealistic in many cases. People think all the unicorns will continue to grow. There is no consensus about funding. That is slightly changing now. You might have seen Twitter storm by Bill Gurley. I think there will be a paradigm shift. At that point of time, you’ll see talent migrate back to Googles in the Facebooks of the world.

Hari Hamachandra (00:42:05):
This is a cycle I have seen multiple times in the Valley, that happens. It’s very hard question to answer, because it depends on right now. It might change in the next one or two years, depending upon how the business environment is in the Valley.

Stig Brodersen (00:42:22):
Thank you for putting some color around that, Hari. My pick is actually not a pick, or at least it’s not a specific stock pick. I want to talk to you guys about picking the right asset manager. It’s not something we talked about here in the Mastermind group before. It might surprise some of the listeners that I would talk about it, because after all, the reason why Preston and I started this podcast was to talk about stocks and how to pick stocks.

Stig Brodersen (00:42:52):
I wanted to tell this story and what has changed personally, and why I’m looking into different types of investments. I want to optimize for the best returns. You might be like, I think we all do that, but I want to optimize for the best after tax returns, because that’s what matters to me.

Stig Brodersen (00:43:13):
Whenever Preston and I started The Investor’s Podcast, I had a W2 job, and I ran a personal portfolio on the side, and I would just be taxed, capital gains tax, like what you have in the States. Today, the situation is different. Most of my income is corporate income, and is funneled into a Danish holding company, one way or the other. I’m taxed differently depending on the asset class. If I would buy something like gold, which I’ve talked about here on the show before, I would have to pay a 22% tax whenever I sell. Private investments, I don’t have to pay any tax at all. If I buy into listed stocks with that type of cash flow, I would have to pay unrealized gains.

Stig Brodersen (00:43:54):
Whenever you do the math, it’s not a question of pre-tax returns. It’s a question of, what do I get after tax? I’ve started to look into different types of investment vehicles. As it turns out, it makes sense to me to invest in something where the pre-tax return isn’t as interesting, simply because I don’t have to pay tax.

Stig Brodersen (00:44:15):
Take it for what it is. I just think it’s important for people to understand where I’m coming from. Of course, do your own homework. We have listeners from all over the world, and figure that out whenever you want to identify what the right thing is for you to do. Not too long ago, it was on episode 448, we had Dan Hanford on the show, where I explored commercial real estate, which is also something I expect to invest in this year for that same reason. It also means, it’s not because I’m going to stop talking about stock investing, but it means that I have a lot of conviction now in the stock picks that I pick, because I have to pay unrealized tax on them.

Stig Brodersen (00:44:51):
I wouldn’t do that unless I was quite sure, which is why I only have three individual stocks right now. Anyways, regardless of how you are being taxed, I do feel a discussion on how to pick the right asset manager is still relevant. Also, because we have a lot of listeners out there, who might not feel comfortable about picking their own stocks, even if they’re living in a place where you pay very little tax.

Stig Brodersen (00:45:15):
I’ve invested here, starting April 1st, in Pabrai Funds. I actually just want to say that, just to derail there in episode four, the first three episodes Preston and I did together, episode four, we had the first guest on, and that was no other than Hari Ramachandra, who is with us today here. I don’t know if you remember the topic of that specific podcast, Hari?

Hari Hamachandra (00:45:37):
Yes I do. It was Mohnish Pabrai, in fact.

Stig Brodersen (00:45:40):
Yes, the title was, The Next Warren Buffett. We talked about whether or not that would be Mohnish Pabrai. It is certainly someone that’s been on the radar for some time. I haven’t heard about him before you brought him up, Hari. All of this is really traced back to you. I think, I even told the story in another podcast, how we wouldn’t have started TIP in the first place without you. That will be a story for another day, Hari.

Stig Brodersen (00:46:07):
All the disclaimers, I should put them up front, put them up here on the show. Mohnish is a friend. He doesn’t pay me to recommend his fund, I don’t pay him to come on the show, and I don’t have any other preferred type of deal investing in his fund. I don’t pay less in fees than anyone else or anything like that.

Stig Brodersen (00:46:23):
I wanted to talk about this in the format where, I have seven factors that I look at to determine the right asset manager for me. Then, I hope I can ask you guys afterwards, what you’ll be looking for as an asset manager. The first one is a proven track record, and an investment manager with the right age. I would like to see an investment manager with the least 15 years of audited track record, both in the bull and the bear market.

Stig Brodersen (00:46:53):
If you look at Mohnish’s flagship fund, it was founded in January 2000, it has returned 989.1% net of fees, since then compared to 400.5% for the S&P 500. That is equivalent to 11.9 annually, versus 7.9. Pabrai is 57 years old, and it’s of course hard to generalize, and I don’t want to sound ageist in any kind of way.

Stig Brodersen (00:47:18):
We went route to go to Omaha, to listen to Warren and Charlie, it’s not like they’re young. Please don’t get me wrong. You generally want to find someone who have enough experience, have made a lot of mistakes, learned from the mistakes, a long track record where they show they beat the market. At the same time, you want to invest with someone who have decades, where you can invest alongside them, which, I have to say, I hope will still be the case for Warren and Charlie.

Stig Brodersen (00:47:43):
Point number two, you want someone with integrity. It means a lot to me personally, to invest with someone who has integrity and who is not uncomfortable talking about mistakes. Nobody’s perfect. Even the best investors in the world, including Warren Buffett that we talked about before, has made a ton of mistakes.

Stig Brodersen (00:48:01):
It makes me worried to speak with people who just seem too good to be true, if they have this very assertive tone of voice where they just don’t make any mistakes. Then, at the same time, the typically don’t have an audited track record. Whenever that happens, that’s probably not who you want to invest with. I really feel that Mohnish falls into this category, being a constant learning machine, having this great track record, but also have talked openly about the mistakes that he has made.

Stig Brodersen (00:48:27):
If you meet an investment manager who never made a mistake, you’re speaking to someone who just started or certainly is a liar.

Stig Brodersen (00:48:33):
Point number three, putting your money where your mouth is. End of 2021, Pabrai Fund had $543 million under management. Of that, $43 million belonged to the Pabrai family, Pabrai Funds’ team, and Pabrai’s charity foundation, Dakshana.

Stig Brodersen (00:48:50):
I really like that Pabrai wins and loses together with me. I know that it’s a significant part of his net worth. He’s also very open about his net worth. It’s actually a huge thing for him. It’s not everything he owns, but it’s a huge part of what he owns.

Stig Brodersen (00:49:06):
It’s also important to me that the fund manager is already financially independent, and does not need to work, so that managing that money is not a job, but a passion. Whenever you have a job and you need to pay the rent or your mortgage, you often have your own incentives that is not always aligned the way it should be. By investing with someone who is financially independent, with skin in the game, I feel I’m investing alongside Mohnish, rather than being a client.

Stig Brodersen (00:49:31):
Point number four, fee structure. Mohnish uses the 0/6/25 structure that buffet made famous with his buffet partnership back in the day. 0% fees, high commerative 6% watermark, where the fund manager is compensated by 25% in excess of that return. Running a fund is expensive. I really like that there’s no fixed fee. It really aligns the incentives about boosting OM2, but that’s not the only game in town, because you can also be incentivized too much to be a marketing company, and not an investment fund.

Stig Brodersen (00:50:08):
I feel that Pabrai Funds have aligned interest there pretty well. I also like that Mohnish is investing outside of the US. A lot of people who are looking at Mohnish fund, they go to Dataroma or something like that, and they don’t see the full picture. You only see his US holdings. He doesn’t have too much in the US. Right now, he has two holdings. We’re recording this May 5th. This is before the 13F is coming out. We don’t know what it looks like, whenever it’s being published here soon.

Stig Brodersen (00:50:38):
At the time of recording, he has stakes in Micron and Seritage. It looks like that Mohnish is exiting the latter. If you look at the latest filing, at least he’s been trimming his position quite a bit. I’m personally most comfortable investing in the US. Pabrai being a bottom-up investor, who is investing anywhere in the world, where he can find value with a historical competence, that’s something that resonates with me.

Stig Brodersen (00:51:01):
Not that there’s nothing wrong investing in the US, but I’m just already so heavily invested in the US, so I like that diversification piece. I also want to keep in mind that the US is one of the most expensive stock markets in the world. You can still find good stocks in the US. That’s not what I’m saying. I’m just saying that you generally want to fish in the pond where the fish are.

Stig Brodersen (00:51:22):
The US is to some extent an exception, because the magnet is so deep, but the point still remains. I like that diversification, like I mentioned before. Whenever I say that diversification, I’m not saying it in any kind of sharp ratio, bogus type of way. I’m saying it as in a, I feel it lowers my actual risk of a permanent loss of capital, to some extent. That’s what I’m looking at. I’m not looking at beta or anything like that.

Stig Brodersen (00:51:48):
Point number six. I like that Mohnish has high conviction bets. A full position is 10%. Mohnish lets his winners run. Three bets quickly becomes 50% of his portfolio. While this might seem very concentrated to some, I love the idea of investing in managers, where I get his best ideas, and not his 50th best idea. Also, if three stocks are … If you feel like that’s too concentrated for you, you can just size your position accordingly. Perhaps you only want to invest 3% of your portfolio on that, and 2%, whatever it is. You can always manage that with your initial investment.

Stig Brodersen (00:52:26):
Point number seven, do understand his investment process. To have high conviction, especially in volatile markets, especially if it’s going against you, that’s probably typically what you mean, whenever you say volatility. Volatility is technically also whenever it goes up, but we often do not mind. Really, to have the conviction whenever the position is moving against you, it’s so important to understand the investment framework and process of that manager you invest with. Being taught at the school of Buffett and Munger, and reading his book, having spoke with him multiple times here on the show, I feel I have a pretty good understanding of how he invests.

Stig Brodersen (00:53:01):
Others might not feel the same way, so they might have a different level of conviction. That’s perfectly fine. I’ve interviewed a few hundred investors here in the podcast since 2014, and Mohnish stood out to me as the investor that has … Just most in line with the investment objectives that I had in the stock market. That’s not the same as saying he’s the best investor, because being good at investing could be many different things.

Stig Brodersen (00:53:25):
We had Ray Dalio on the show. He’s clearly super, super smart, but it’s really hard to compare Ray Dalio and Mohnish Pabrai. They’re playing two different games. If I was playing the game that was, who can I find to make the best macro bets on specific countries, I would go with Dalio any time, but that’s just not the strategy that I’m pursuing. It’s not what I’m looking for. With all of that said, guys, I want to throw it back over to you. What do you look for in investment manager?

Hari Hamachandra (00:53:55):
I think Toby would be more qualified to comment about this than me. I just want to share an anecdote, because one of the things that you brought up was taxes. I know in Denmark, it’s much more extreme, but it’s illustrative, because a lot of us think of returns before tax, not after tax, intuitively. Thank you, Stig. I think that’s a very good reminder for all of us.

Hari Hamachandra (00:54:21):
The anecdote I wanted to share is, there are different fund structures, and there are some which are partnerships, wherein you have an account that is jointly owned by the investor and the investee, and the investor basically invests on your behalf, buys and sells. One of my acquaintances was sharing with me that every year, the returns that is published for the investor that he invest with is very high, but he’s paying taxes through the nose because of the fund structure, because every time the investor is buying and selling in his account, he’s paying a lot of tax.

Hari Hamachandra (00:55:04):
He says, it all looks great for the investor, but I’m paying for it every year. I think it’s also important to look at the fund structure, or the way it is formed, because that can have tax implications. That’s what I would … I think I remembered, and the key takeaway for me here would be, pay attention to taxes. I would share Toby his thoughts, because I think he is in the business. He would be a better person to comment about this. Obviously, I like Mohnish, so I don’t have any … I’m biased, so I would reserve my comments.

Tobias Carlisle (00:55:49):
I couldn’t fault any of the points that you made there, Stig. I thought they’re all really good. I’m also an admirer of Mohnish’s. Who isn’t? This is not so much a specific commentary about Mohnish as it is a commentary, just about the way that I think about other managers, because I’m a manager, I’m a much younger manager. I’m much, much earlier in my journey. I think that May 16 or May 15 will be the end of my third year. I’ve got quite a long way to go before I get as much experiences as Mohnish has.

Tobias Carlisle (00:56:23):
Having said that, I’ve been in the industry for quite a bit longer than that. I think that the observations that I have developed over that period of time, particularly because we went through an unusual period through the pandemic, and we’ve seen … This has been a longer tech cycle too. We’ve had a tech cycle that started for 2010 to now, where higher growth was much more popular than deeper value, which is much closer to my strategy.

Tobias Carlisle (00:56:55):
I think the things that I would say are, you absolutely need a seasoned manager. You need someone who has been through more than one cycle, and you’ll see many, many managers who have phenomenal returns in their cycle. For a value manager, if you were a value manager in the early 2000s, you’ll have very, very good returns for that first decade. Then the second decade, perhaps not great returns. I think a lot of guys folded the hand in that second decade. That’s not what you want from a manager. You want someone who will persist, even when it’s not their cycle, knowing that there’s always a better cycle.

Tobias Carlisle (00:57:32):
There’s another one coming. The fact that there is always another cycle coming, I think should inform the way that you invest as a manager, should inform the way you invest as an investor too. That should be that your objective is not so much to maximize returns at every step of the way. Your objective is to maximize the likelihood of your portfolio surviving. That’s what I look for now.

Tobias Carlisle (00:57:59):
When I talk to somebody who’s a fellow manager, I’m always trying to work out what their sense is of the risk that they’re taking. The way that you can determine those things. This is one of the reasons that I took my shorts off. I don’t know if you guys are aware. I was running a short book until December seven last year, but I’ve taken my short book off.

Tobias Carlisle (00:58:21):
A lot of that has been … There was some unusual short behavior in 2020, but then 2021 was quite a good year for the short book, was quite a good year for my portfolio. In ZIG, had a 37% year, last year. That was largely driven by the short book. I’m very proud of that. Very glad that I was short through that period. I no longer do it for the reason that there is this almost metaphysical risk with the shorts, that you could be in something, even though I size them very small, I rebalance them regularly, I have all these other risk management tools.

Tobias Carlisle (00:58:57):
Even so, even applying all of those risk management tools, there is always a tiny risk of blowing up the shorts, because they do have that leverage embedded in them, and the market can do crazy things. I just thought that my philosophy now is that, I want to survive under all circumstances and shorts, there is this tiny risk of blowing up. I’ve taken them off.

Tobias Carlisle (00:59:21):
That’s how I approach things now. When I invest, I look for, can this business survive under almost all circumstances? Where is the risk in this business? Is it in the balance sheet? Is it in the business model? Is it in the management? Is it in the sizing of the position that I’m putting on? I work backwards through the risk to ensure that I’ve given myself the greatest chance of surviving. I talk to other investors now, and I try to get a sense of how they think about risk. If they’re guys who are chasing very, very high returns, I know what the opportunity set looks like out there.

Tobias Carlisle (00:59:54):
There are various ways that you can improve your returns. If they’re prepared to do those things, then I discount them as managers a little bit, because I want someone who is almost exclusively focused on survival. That’s an attitudinal thing. Then, that’s the first thing I look at. Largely, that’s informed by, do they have any seasoning, as you say? Have they made those mistakes? Have they learned from those mistakes? Do they have that experience? Have they survived various cycles? Then I look at, are they conscious of taxes? Are they investing in a tax-efficient way?

Tobias Carlisle (01:00:24):
That’s one of the reasons that I run an ETF. ETFs are a phenomenally tax-efficient structure, relative to just about anything else. Managed accounts, hedge funds, limited partnerships, mutual funds, it’s by far and away the best structure. I couldn’t fault anything you say. I’m a great admirer of Mohnish’s. I’ve tried to grow my business in a way, and my own experience as an investor and my own skill as an investor, but really, I’m an enduring fan of Warren Buffett’s and Charlie Munger’s. I look for guys who are like that.

Tobias Carlisle (01:00:56):
For my part, I think Li Lu is one of the guys who, every time I read something that Li Lu says, I couldn’t agree more. I love the way that Li Lu thinks. I love the way that Li Lu invests. I think that he is very, very Buffett-like in his approach to things. For me, it’s Li Lu. I don’t know if you can even invest with Li Lu. I’ve got no idea about any of that at all. I’m just admirer from afar, also an admirer of Mohnish’s.

Tobias Carlisle (01:01:21):
Basically, I’m agreeing with everything you’re saying. Just, that’s my view.

Hari Hamachandra (01:01:26):
Yeah, I think this has been a very good discussion though, Toby and Stig. Thank you, because you’re bringing up key points for all of us. Stig, you highlighted the importance of taxes when we are considering returns. Toby, you’re highlighting the importance of staying power. The miracle of component only works if you are in the game for the long run.

Hari Hamachandra (01:01:50):
That’s where one of the things, the combination of the two, for me personally, I think Mohnish would also recommend this for most of the listeners here, would be indexes. That’s my core foundation. In fact, Mohnish, in many of his talks, he talks about that, if you’re investing with me, it should be your play money, because he is running a concentrated portfolio. It’s a high-octane fund. It’s not a fund that he would recommend to put all your nest egg in.

Hari Hamachandra (01:02:24):
It should be somebody like [inaudible 01:02:26], putting a couple million dollars of his net worth. That would be maybe 5% of [inaudible 01:02:34] … I think [inaudible 01:02:35] was one of his early investors. Mohnish is very clear about the goals of his funds. I think when we are investing with him, we should also understand that very clearly, that, because each …

Hari Hamachandra (01:02:47):
For example, with Toby’s ETFs, I know that he zigs in the market, zags, and vice versa. I know why I would buy into Toby’s ETF, because I want that hedge in case of a market. Whereas, in case of Mohnish, I know why I’m buying into Mohnish, because I want a part of my portfolio to be really high-octane growth, but at the same time, I know it can have serious drawdowns in some years. For example, in 2008, one of his mutual funds that is PIF4, had a 60% drawdown.

Hari Hamachandra (01:03:21):
You should be able to stand up that. If you put all your net worth, maybe you’ll exit out at the wrong time, basically. That, I think clarity of why you’re going with the fund manager or a fund or a ETF, is more important than actually the fund manager themselves, because it’s not their fault if you pull it out at the wrong time. If you invest with Mohnish and you can’t stomach a volatility of 50%, either way, it can go up …

Hari Hamachandra (01:03:50):
Because in fact, one of the years, I think it was 2009, after 2008, 60% down, it was 118% up, but then it was down again in 2020 by 40%. If you’re not able to stomach it, you should not be in that fund, or you should not put all your net worth. Similarly, I really appreciate what Toby is doing, in terms of giving us a hedge with the market, with his ETF.

Hari Hamachandra (01:04:18):
Then, index funds, and then your own picks. I would design my portfolio in such a way, Toby, to your point, that I’m looking at 20, 30 years. I feel ideally for me, what help realized, this I would definitely recommend J.L. Collins, Simple Path to Wealth, if anybody has read that book here, where he lays out the case for index funds, because they’re tax efficient, they have staying power, and they’re self-cleansing. That’s more important, actually.

Hari Hamachandra (01:04:50):
That doesn’t mean that you should not go with fund managers, but I would say that’s my main course. Then, I will embellish my portfolio with the right fund managers to help me smoothen the volatility, like the ZIG ETFs, or give me hyper-growth a little bit more than the index funds with Mohnish. That’s how I think about it. I hope that makes sense. Sorry, that was not a question or anything, but I’m just sharing what I learned from this discussion.

Stig Brodersen (01:05:23):
Fantastic. Thank you for wrapping it up, Hari. Gents, it has been absolutely amazing, as always, having the opportunity to chat with you guys. Before we let you go, I just want to give a quick handoff to episode 442, where I’m speaking with Mohnish, and you can learn more about him and his investment approach. Toby, let’s start with you. Where can the audience learn more about you and your fund?

Tobias Carlisle (01:05:47):
My firm is called Acquirers Funds, and acquirersfunds.com is the place to go. My two funds, I run a mid-cap, large-cap, which is ZIG. It’s long only now, as of December 7th, last year. I have 30 positions, equally weighted, regularly rebalanced, trying to buy that high quality, deep value. Ticker’s ZIG. I have a partnership with Roundhill, which is another ETF firm, for a smaller micro-fund called Roundhill Acquirers Deep Value Fund, which is D-E-E-P, DEEP is the ticker.

Tobias Carlisle (01:06:21):
I also have a little website, Acquirer’s Multiple, where you can see articles and podcasts and a screener for the stocks that we like to buy. I’ve got some books as well, which in Amazon, under my name, Deep Value, Concentrated Value, Acquirer’s Multiple and Quantitative Value. Thanks for having me, Stig. It’s always fun. Good seeing you, Hari.

Hari Hamachandra (01:06:39):
I’m on Twitter, Harirama, H-A-R-I-R-A-M-A is my Twitter handle. My blog is bitsbusiness.com. Happy to engage with you guys, learn from you, and discuss interesting investing topics.

Stig Brodersen (01:06:53):
I think we’ve done this since, what, 2015, ’16? It’s incredible. Gents, thank you so much for your time. Always a pleasure, and see you next quarter.

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Outro (01:07:26):
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