Welcome back everyone to the Joseph Carlson Show.
We have an exciting video to get into.
I always love it when we have these 13 F filing updates from
super investors because it means that we get to see what they did
with their portfolio at the end of Q2.
So this is an update and inside peek into the minds and the
actions of great investors and we have a good list here.
We're going to be seeing what Chuck Awkry did with his
portfolio. He's the one that I just
recently did a video on on my other channel, so you can check
that out if you're interested. But they have beat the market
for a long period of time. Aukri has done exceptional in
buying high quality businesses like MasterCard and owning them
and he typically doesn't do a lot of selling.
So we'll get to see what he's done.
We also have some other great investors, Chris Hohn being one
of them. He's the one that runs the
Children's Fund and he's one that I pay attention to because
Chris Hohn has been crushing the market, even the QQQ, for over a
decade. His companies, the ones that he
buys, they're typically super monopolistic.
They're impossible to compete with.
The companies are just a caliber above other companies.
So see what trades he's been doing.
We also have Terry Smith. He buys high quality companies,
tries not to overpay and then holds them longterm.
We'll see what he considers to be high quality in this market.
We have Josh Terrasoff. This is a bit of a smaller
investor. He only manages a couple $100
million, not the billions of dollars like these other ones.
But I think it's notable to look at his portfolio because he's
more of an exciting investor. He invests in a lot of these
smaller tech companies. Now then, of course, we have
Michael Burry. We're going to be looking at
what he's doing. There is a rumor that he's
shorting the market by up to $1.6 billion.
That's a really scary headline. We're going to be diving into
that and seeing how accurate that actually is.
We have Pat Dorsey. He's the guy that came up with
the Moat rating analysis on Morningstar.
We have Howard Marks. He's written a lot of books
about investing. I've read many of them.
I think he's a great thinker, but he has a different
investment style. We're going to be looking at his
portfolio as well. Then of course, we have Seth
Clarman, another great investor that's beat the market for a
long period of time. He came out recently on CNBC and
said that we're in an everything bubble.
So we get a look at what he's doing with the premise that
we're in an everything bubble. Then we have Thomas Russo and
Monish Prai who will be going over as well.
So as you can see, we have a lot to get into in this video.
I'm going to be going over each of these and trying to explain
both what they've been buying and selling, but also their
overall investing philosophy, the way that they try to run
their fund because these investors, they're all super
investors, but they don't run their fund like each other.
Many of them have different goals and different ways of
looking at things. So having said that, let's go
ahead and jump right in if you haven't already.
Make sure you subscribe to the channel, make sure you have the
Bell notification on. That way you get notifications
every time I post a new video. Now the first one that we'll be
looking at is Chuck Aukri with Aukri Capital Management.
This is a fund that he started that now has $12 billion in
assets under management. So he's running a massive fund
and Aukri Capital Management is really great at focusing on
their three legged stool, which is buying companies that are
exceptional businesses. Qualitatively they're above the
rest of companies in the top 1% of the top 1%.
And they also have to be companies that have exceptional
management, very level headed, well put together management and
then they also have to be companies that have ample
reinvestment opportunity. That's the three legs of the
stool. Now, finding companies that meet
all three of these categories is incredibly difficult.
So when we look at AKRI Capital Management, even though they
have $12 billion in assets under management, half of their money
is focused into four different companies, MasterCard making up
20%, then Moody's Corporation, then American Tower Corp and
Visa. All of these companies have
something in common. They're all monopolistic,
they're highly profitable, they're fast growing and they
are toll booths. They just collect money over and
over again. We can take a look at an example
here. MasterCard is his very top
position and this is one of the biggest positions in My
Portfolio currently. I've invested a lot in the
MasterCard because I agree with Akri Capital Management on the
thesis here. I think this company is
exceptional and it's not looked at as a exciting new tech
company. A lot of retail investors look
at MasterCard and Visa as older companies because they've been
around for a long period of time.
So they're no longer exciting like companies like PayPal or
big tech, those type of companies.
MasterCard is a tech company. They deal with fraud and
security and identification. They deal with marketing and
creating leads for companies, different things through their
data analysis of customer behavior.
MasterCard also is a digital company doing all these payment
transfers. And you look at the, the actual
results of this type of company. And by the way, you can look at
this website, qualtrum.com, it's something that I've created as
part of the Patreon membership. But if we look at Mastercard's
free cash flow, it's growing at an incredibly predictable rate,
around 13 to 14% per year over the past decade.
But then you have the factor that they're highly efficient.
So even though they have free cash flow growth, they can use
all of their free cash flow to buy back shares.
When you do that, we have the free cash flow per share
adjusted for stock based comp or any type of dilution and it's
growing much faster. It's growing at a rate of 17%
over the past 10 years. Now they've talked about
MasterCard many times in the past.
Chuck Aukri and John Neff, the people running Aukri Capital
Management love MasterCard. They love the growth trajectory.
And recently one of them went on an interview and they said that
MasterCard remains such a significant bet for us because
it's such a high quality company.
It's growing quickly and we believe it's undervalued right
now. In fact, he pointed out that in
2020 we can look at the free cash flows here.
In 2020, MasterCard did $6.52 billion in free cash flow.
In 2022 it did 10 billion. So the free cash flow has
increased by around 70%. Even on a per share basis, it's
increased around 70%. Yet since 2020, the stock price
has not increased hardly at all. So you have right here the stock
price and then you have the free cash flow looking like this.
So he says either the company is becoming a not as good of a
company or it's just getting cheaper and they believe
MasterCard is just getting cheaper.
So they really like this bed as well.
Now looking at what they've done over the past quarter, we can
flip over to the activity here and look at changes to their
portfolio. This is something else that I
really like about awkward Capital Management.
They really do hold companies long term.
They don't make a lot of trades. In this case, all they did was
they trimmed Moody's and Adobe a little bit, but these are only
1% of Moody's and then half a percent for Adobe.
So these were small trims to these positions.
A lot of times they do that because of logistic reasons with
managing their fund. It's not always indicative of
how they view the intrinsic value of the company.
Another thing that I'll mention about Chuck Awkri that I really
like is they've decided that they do not sell companies
because of valuation. So in their opinion, it it takes
so much effort to find a company that's of such high quality,
then buying into the company at a discount and then building a
concentrated position in the company.
If a company like MasterCard becomes slightly overvalued, it
goes a little bit higher P/E ratio.
First of all, it's hard to even determine that because these
companies tend to grow faster than investors expect.
But also he just thinks it's not advantageous to sell out of
positions because of slight overvaluation, especially when
they're these high quality compound or companies.
So overall they don't sell because of valuation.
They only will sell out of these companies if they believe
something has gone really wrong with the fundamentals.
Either the management has to have turned to very selfish
management that's not doing a good job, the company has run
out of reinvestment opportunities or it's just not
an exceptional business. That's the only reason they
really sell out of positions and they will dump the entire
position if they do that. Overall, I really like AKRI
Capital Management. I think it's an incredible firm.
They've been able to beat the S&P 500 for a long period of
time and they stick to their investing thesis.
So what they say they're going to do is really what they do.
And it doesn't surprise me that they made hardly any trades over
the past quarter. But that's Akri.
Let's go ahead and move on to the next one here, which is a
big one. We have Chris Hone who is a
force to be reckoned with. He runs one of the largest hedge
funds in the world with a current value of $33.6 billion
in assets under management, 33 billion in assets under
management. This is massive.
Why is Chris Holmes fund so massive?
For a couple reasons. One of them is that there's a
lot of inflows, a lot of people are giving him money to manage
because he's done an exceptional job.
And the other reason is that he's done an exceptional job.
This is the impact of compounding for a long period of
time. He's grown this fund steadily
over the past decade. Now, a lot of people don't know
the troubled history of Chris Hone and his fund when they
started out before 2007 and 2008 when we got into the financial
crisis. Chris Hone was a value investor
that invested in a lot of low P/E companies, a lot of
financials, a lot of companies that really weren't monopolistic
at all. And what happened in 2008 and
2009 with the destruction of these type of companies and his
fund caused immense amount of stress and pressure.
His fund tanked, It went down even worse than the market and
took a little bit longer to recover.
And he started to make changes to his investing philosophy.
He decided that he never wanted to go through something like
that ever again. So rather than investing
companies that were low PE ratios and a bunch of financial
companies that had a lot of leverage, he decided to go a
different path and changes portfolio to investing almost
exclusively into service based monopolies.
Service based meaning they're not reliant on commodities and
selling different products or goods and monopolies meaning
that their companies that are highly concentrated lack
considerable competition, they have immense pricing power and
high barriers to entry. That investing philosophy change
caused him to outperform the market for the next 10 years,
both the S&P 500 and the QQQ. So very good pivot for his
overall fund. Now he's looked at as one of the
best investors in the market today.
I think he's probably one of the top four and I do look at his
portfolio. I love that it's highly
concentrated. It's not a this isn't something
where you're looking at a closet index and the companies that he
selects are very carefully selected.
Now let's go ahead and take a look at what he did last
quarter. We can look at the changes here.
He did make a number of changes. He did add a lot to General
Electric. We know that.
And that's a company that I don't know too much about.
When I look at GE, it's just way over my head.
It's such a complex business, but that's something that Chris
Hone really studies in depth. He's really good at these type
of industrial companies. The next one that he added to
was Thermo Fisher Scientific. When I do analysis on this, I do
think this company's quite a bit above most healthcare companies
though. So I don't mind the buy here.
I actually think it's a good one from Chris Home.
Next up we have him reducing Microsoft, Google and we have
him reducing Visa as well. My guess would be that this is
because of valuation, especially Microsoft which he trimmed the
most. So it makes sense that after
Microsoft runs up to three 4350 to trim that position down a
little bit, then he also added a little bit to Moody's
Corporation. He bought slightly into a
company called Ferguson. I don't spend too much time
considering this. This is not meaningful.
This position could go to zero and it really wouldn't change
his performance all that much. The big changes to his portfolio
is reducing the way of these big tech companies, bumping up
Canadian National Railway, bumping up GE and then buying
into Thermo Fisher Scientific. Overall, I still really like
Chris Hone. I think again he's one of the
top four. I think he'll continue growing
this fund to over $40 billion. Now Next up we have Terry Smith,
who I really love as an investor.
I think he's a great public speaker.
I think he's a great teacher. He really focuses on the the
concept of returns on capital. He likes to invest in companies
that have high ROCE, which is very similar to ROIC.
It means companies that can reinvest back into themselves at
high rates of return. And typically a lot of evidence
shows those companies do exceptionally well over long
periods of time. But I do I have to mention this,
I do have a little bit of a bone to pick with Terry Smith on some
recent changes he's made. So let's go ahead and take a
look at them. First of all, his portfolio
value right now, $24 billion is this is huge, it's a massive
portfolio. But let's go ahead and take a
look at some of the trades that he did.
We flip over to the activity here.
We can see them. I'll filter them by the top
changes to the portfolio. Now the number one thing that I
have a problem with with Terry Smith's trading is Amazon.
He bought into the company with a great thesis on Amazon that
the company was going to have an advertising market that would be
highly lucrative. The company has a WS, which is
highly lucrative and growing quickly and the company has
their prime business and their, their assets that they can layer
upon their retail business. Terry Smith knew all of this
going into it, but then what he did was he changed his mind and
sold out of Amazon towards the bottom of the dip on Amazon.
So if we look at how Amazon's traded over the past year, it is
a huge winner. This year it's up 62%.
That's more than any company. Almost every company in Terry
Smith's portfolio, 62 percent's a massive gainer.
And he sold the company at the start of the year, avoiding this
entire gain along the way. And I think it was such a bad
trade for him. And I know that he has his
reasoning behind it. They'll say that Amazon's less
predictable or, you know, different reasons why to sell
out of it. But at the end of the day, when
you sell out of a company like Amazon that you've done research
in during a huge dip in the company, I don't consider that a
good trade. I think this was a mistake, a
clear mistake, and this was a larger position in the
portfolio. So if you held on to this 3% he
would have been up 60% on this 3% waiting which of really would
have helped out his returns. Now the next thing that I don't
agree with Terry Smith on is another company that he recently
sold out of which was into it into.
It's a company that he had a big problem with the stock based
comp of the company. So when I look at into it, this
company is exceptional in a lot of different ways.
It's service based, it's monopolistic.
They have a great multi franchise of products.
They have a lot of different things for small businesses and
they're growing very quickly. So if I look at some of the
fundamentals here, the revenue growth is incredibly fast and
the free cash flow growth of the company's incredibly fast.
The problem that Terry Smith highlighted and the reason that
he sold out of into it was because of the stock based comp
and the way that they did their accounting.
This is a true complaint. When we look at the stock based
comp, it looks like it's going out of control.
It's gone up substantially in the past two years, right.
So we have a big problem with stock based comp.
But when I listened to the earnings calls and I read more
about this company, most of the stock based comp increase over
the past year was because of a one time grant given out to
employees from an acquisition. So this is not something that's
going to be going on long term with the company.
This wasn't just organic growth in their stock based comp.
This is a one time event because they just did an acquisition and
the leadership of Intuit has said that they are going to get
this under control and they're going to be growing the
company's free cash flows and the revenues much faster than
the stock based comp. So this in my opinion is a
temporary problem, not a permanent one.
And Terry Smith sold out of this company stating as though it was
just a really bad decision by the company which I don't agree
with when I look at into it as well.
This is another company that he recently sold out of that has
been a tremendously good performer.
I bought into this company at the beginning of the year and
I'm already up about 20% on the company.
So it's been a great performer. I think it's a great company and
I don't believe that the stock based comp for this one is a
problem. So the first thing I disagreed
with with Terry Smith's changes recently is selling out of
Amazon at the Lowe's. I thought that that was a huge
mistake. The next thing was selling out
of into it because of stockbased compensation.
Without fully investigating the reasons why and seeing that a
lot of it is one time, it's not an ongoing issue with the
company. The third thing that I think is
a mistake from Terry Smith is the biggest buy they did this
last quarter. This is their biggest buy by
far. The thing that they thought was
the most attractive last quarter was Procter and Gamble.
They bought into this one with a 2% position, so sell out of
Amazon and into it. These companies that are moving
along very quickly growing cash flows, they have incredibly
strong businesses and then buy into Procter and Gamble.
Now I don't have any problems with Procter and Gamble.
I think it's an OK company, but this is a company that's already
reached mass maturity. There is no strong growth path
for Procter and Gamble. They've acquired so many brands
and they're already so big that this is likely one that's going
to be growing right along with the S&P 500.
Look at the revenue growth of it.
There's hardly any over the past decade.
In fact, it has around the same amount of revenues it did 10
years ago. And Terry Smith himself has
highlighted a lot of troubles with the reporting and
leadership of this company. So when I look at this one and I
look at the free cash flow, again, barely any growth the
past decade, you have 2.4% free cash flow growth.
Even on a per share basis, it bumps up to 4%.
This is slower growth in the S&P 500.
Is it a resilient company? Sure, it's resilient, has a wide
Moat, can't compete that well with Procter and Gamble, But
it's too mature, it's too big to see ample above market growth.
And I don't think this one's going to be a good performer in
the fund. Year to date, it's up 3% while
the rest of the markets up 16. And I have to imagine that out
of the many great companies that are growing, that are
profitable, that have high returns on capital employed,
there's better options in Procter and Gamble.
If I was there with Terry Smith, I'd be asking him what does he
see that's more attractive and Procter and Gamble than
MasterCard because MasterCard has as wide of a Moat, but it's
growing at five times the speed. So overall, I don't, I don't
mind the portfolio here. I think that overall it's still
very strong construction of a portfolio, but I've seen a
number of things that I think are a little bit of missteps
over the past quarter and I'd like to see better thesis when
entering companies and selling them.
Next up we have Josh Terrasoft, who he was one of the investors
that became a super investor after his original analysis on
Amazon over 10 years ago. He basically predicted how
Amazon retail would grow to the size that it is.
So Josh Terrasoft is good at underwriting these tech
companies. He manages A portfolio with $274
million in assets under management.
Now let's go ahead and take a look at the decisions he's made
over the past quarter. We'll organize these and the
first thing we see is a big sell, big sell of Salesforce.
He exited the position and I think this is such a smart
trade. I did basically the same exact
thing. I didn't know that he was going
to do this, but it's nice to see that we agreed on one of these
trades here. So we have him exiting
Salesforce, which I fully agree with.
I think that that was a wise decision.
Then we have Markel and we have Brookfield as the two companies
that he bought 9% of the portfolio in this one, 4% into
Brookfield. Let's go ahead and take a look
at these two. We have MKL as Marco.
They have a diversified financial holding company that
markets underwrite specialty insurance and products in the
United States, Bermuda and the United Kingdom.
OK. So the first big one that he
bought into is an insurance company.
That's a little bit different. I don't usually see him buying
into insurance companies. The next one was BN, which is a
Brookfield company. This one I think is very
interesting. I actually like Brookfield, both
BAM and BM. The reason that I don't buy into
Brookfield is it just feels like it's out of my area of
competence. When I look at what they're
doing and the scale of what they're doing, all of this
infrastructure, they're buying all of these hard assets.
I can't look at the product that much.
I can't look at the value of these contracts and the deals
that they're making. So I feel like if I invest in
Brookfield or Asset Management, either one of these, it's just
out of my control. I'm basically saying that I
trust the CEO of the company. I hope you do a good job and I
can't really inspect your work. That's what it feels like for
me. So I think these companies are
great, but my lack of competency in this area is part of the
reason that I choose not to invest in them.
Now he also sold out of a couple tech companies, reduced his
position in Google substantially, 31% reduction.
He sold out of BAM and he traded that for Brookfield Corp.
So that's an interesting trade. These are both ran by the same
people, but they have different assets that they hold and
different valuations. Now when we look at his
portfolio overall, we still have Amazon at the top position, 26%
of the portfolio. So still today even after
holding the company for years and years, he has Amazon as the
biggest position. Then we have Brookfield, Then we
have Marco, and then we have Microsoft, Google, Spotify,
Monday and Shopify. Very concentrated portfolio.
I like most of these companies. I especially like the big bet
into Amazon. I think that one's going to do
really well over the next couple of years.
Now Next up we have Michael Burry, and this is 1 where
there's a little bit of excitement going around right
now because apparently there's a bit of news that he has some
puts on the market between the S&P 500 and the QQQ.
We can look at some of the tweets on X now, which used to
be Twitter. We can look at this post here
breaking. Michael Burry just shorted the
market with $1.6 billion. He bought $890 million of SPY
puts and he bought 740 million of QQQ puts.
This now makes up 93% of his entire portfolio.
Look below that seems very crazy, right?
This is a huge amount of shorts that he has on the market, but
this really isn't an accurate portrayal of Michael Burry's
position or what we know about the position.
So let's go ahead and take a look at what he actually did.
The first thing is, is what they're quoting right here,
these numbers. This is simply the total value
of the amount of shares of puts he bought on the market.
But that doesn't necessarily mean that he's short that
amount. And the reason why is because
we're missing a lot of data in this calculation.
Notably, we're missing the strike price, we're missing the
premium paid, and we're missing the expiration date.
Without those three pieces of information, we really have no
clue how big his position is. Could it theoretically be up to
1.6 billion? Sure.
But it could also be 100 million, it could be 20 million,
it could be much smaller depending on those three
factors. So based on what we know right
now this short that Michael Burry has on the market, could
just be a nice soft hedge on the market, just a small hedge with
his portfolio or it could be a big doomsday prediction against
the market. But if I was to guess, I would
believe that right now this is likely a hedge, a small hedge on
his portfolio with the market. He does this from time to time
and it's nothing that is doomsday about the market.
He believes that things are slightly overvalued right now
and I believe he's taking out a hedge.
But what you're going to see a lot of over the next couple of
days and probably a lot of videos today and news is that
Michael Burry's short the market because of his notable fame with
the Big Short. Is this The Big Short 2.0?
I don't believe so. I think a lot of that is going
to be excitement and hype built around a lot of unknowns.
So that's the first thing that I want to address with his
portfolio. Another thing that I think is
worth pointing out is Burry changes his mind on things and
changes his positioning and his strategy all the time.
Frequently, this big news right here that's breaking could
already be old news in Michael Burry's mind.
He could have already taken these positions off.
He could have already covered these shorts and moved on.
In fact, I think there's a good chance he's done that because
when we look at the amount of trades that Michael Burry has
done, let's go ahead and just take a look at some of the
trades he's done over the past three months.
Look at the amount of traits. This is all in the same quarter.
He sold JD, he bought Expedia, he sold Alibaba, he bought
Charter, he bought Generac Holdings, He sold Zoom, He sold
Capital One. Sell, sell, buy, buy, sell,
sell, buy Over and over again. This pages, pages of buys and
sells for a single quarter. And this is what he routinely
does. This quarter is not unique.
Throughout his entire history he is trading frequently.
He is a value investor. He looks at valuations, but he's
also positioning and trading into different categories,
different weightings depending on momentum and current
valuations of different industries.
So that's the other thing that I think is highly questionable is
does Michael Burry even have this current position right now?
The chances are unlikely he maybe have bought into this and
sold it by now as well. So I think the big thing I'd
like to highlight with Michael Burry's breaking news today is
don't just buy into the narrative that some people try
to create with this bears on the market will say this is clear
evidence that this great investor who was short the
market in 2007 is short the market again.
And that means that everything's overvalued and everything is
going to come crashing down. So far, we have no information
whatsoever to validate that. And I think the chances of that
being the case are incredibly highly unlikely.
I think it's much more likely that Burry has a temporary short
to hedge his portfolio and he does this type of thing
frequently with the amount of trades that he does.
So that's my thoughts overall on Michael Burry's big trade.
I think a lot of investors would do better with their portfolios
to not focus so much on what Michael Burry's doing quarter by
quarter because his strategy, his thesis, his holdings change
very rapidly. Now Next up we have Pat Dorsey,
who runs his own fun Now, but he used to be the guy that created
the Moat rating analysis from Morningstar.
He basically looked at what Warren Buffett did with the
description of the Moat and he came up with an algorithmic way
to assess a Moat. So we look at Pat Dorsey's
portfolio. He currently manages
$755,000,000. And one of the thing that I
think is ironic about Pat Dorsey is many of the companies that he
chooses to go into. I think it's questionable what
type of Moat they really have. I don't know what the Moat is
for Wix, for example, compared to Squarespace, but there you
have them investing in these type of companies.
Now if we look at his trading over the past quarter, there's a
lot of selling, a lot of selling.
He sold 12% of his portfolio from Meta.
That was one that I think was a good buy from him.
He did really well on that one. He bought a little bit of HERC
Holdings. I'm not sure what that company
is. He sold out of Roku, 32% of that
one. He cut Smartsheet, Wix, Google
Disney, PayPal and SEM Rush. He's reduced out of every
position in the companies that I think are very high quality.
He's bought heavily into Upwork, which I believe is lesser
quality than a lot of the names that he owns.
So he must have a different reason, some type of specific
insight into why he did that. Overall, my opinion hasn't
changed much with Pat Dorsey. I don't like his portfolio
construction that much or the trades that he does.
I wouldn't want to managing my money.
Now moving on, we get to Howard Marks, I think an exceptional
investor, but I think more than being an investor, Howard Marks
is a teacher. I like his books, I like his
podcasts, I like his memos. When I look at his portfolio and
I try to gauge the trades that he does here, I don't get a lot
of them. They're way over my head.
And a lot of the companies that he buys and sells are ones that
are smaller. A lot of them are distressed
companies are ones that are needing capital.
He also does a lot of work with debt.
But when we look at the equity portfolio here, we have
companies like this. He recently bought into Garret
Motion. I've looked at this one and it's
like a parts manufacturer for engines.
It's not something that I'm interested in investing in.
We have Vistra Corp, which he sold out of.
He reduced the position by 27%. Eagle Bulk Shipping, he sold
100% of that position. Chesapeake Energy, he reduced
that one slightly. Wealth Ford International sold
100% of that, PG&E Corp sold 100% of that and then Hertz
Global, he also reduced that by 80%.
After that, we get to the less than 1% positions.
Now when I look at his overall portfolio, I noticed a theme of
a lot of bets into energy. TRMD is an energy company.
Then we have Chesapeake Energy, we have Vistra Corp, so on and
so forth. All throughout this portfolio,
there's oil companies and utility companies and energy
companies. Then of course, we have some
other ones mixed in here. He used to hold Ally Financial,
he still does, but he reduced the position by 25%, so minor
reduction in Ally Financial. We also have some other
companies like Chinese retailersjd.com and a lot of
different companies. It's difficult to try to reverse
architect why he buys this many companies, what the investment
thesis is on all of them, But Oak Tree has the reasons why.
Overall, when I look at Howard Marks, I view him more as a
teacher of investing principles and concepts, and I think he
offers a ton of value with his podcast and memo.
But I don't think there's as much value for me to gain by
looking at his portfolio. He has an entirely different
investing philosophy than I do now.
Next up we have Seth Klarman. He's had exceptional returns for
a long time period and he doesn't do many interviews.
But then suddenly he came on to CNBC to basically say the
world's over and we're in an everything bubble.
Everything has inflated valuations and it's going to
cause a lot of trouble. Now it's hard to gauge what
people say compared to what they actually do, but we can try to
do that here with his portfolio. We have the portfolio value.
His assets are management of $5.5 billion.
So it's a large portfolio and then we can look at the trades
they've been doing. So let's go ahead and filter
this by the activity here. We can see what they've been
doing over the past quarter. Now we see them reducing
positions and Google, QRVOFI and Skyworks solutions.
So four different companies that he's reduced the position in.
And then we have some new buys here.
We have them buying into Amazon 2.27% position.
So that's a meaningful buy. We also have them buying into
gear at Motion and we have them buying into Fidelity National
Information Services. Those are the biggest trades of
this past quarter. Now looking at his companies
overall, he does invest in a lot of lower valuation companies.
Liberty Global, VSAT, which is a satellite communication company.
He has Alphabet as his third largest holding again at a lower
valuation company and you see the same trend going down to
Warner Brothers Discovery, another lower valued company.
He is a true value investor. A lot of the companies that he's
buying trade at discounted valuations and I believe that
his position is portfolio, so that if the market crashes, he
potentially has less downside than the general market.
Now another great value investor that we recently got to see some
of his trades is Thomas Russo. He manages over $10 billion and
I really like his portfolio construction.
Let's go ahead and take a look at his activity and where he's
seeing value in the market today.
He's only bought a couple companies over the past three
months and one of them is Netflix.
He bought half a percent position into Netflix.
That's a small position, but his portfolio is not a very
concentrated 1. So he doesn't like piling money
into only a few companies. But we do have Netflix there,
which I fully agree with. I think that Netflix is a
company that's looked at still to this day by most investors as
struggling and trying to get profitable.
And that's not the story with Netflix.
The company is highly profitable.
It's generating a ton of free cash flow.
It'll do over $5 billion in free cash flow this year.
And I think it will have sustainably high free cash flow
in the future because I believe this business has a lot of
operating leverage. Another company that he bought
into is JP Morgan Chase. That is my favorite of every
bank in existence right now. I think JP Morgan Chase is the
best bet. So these two buys, I agree with.
It is more of a conservative traditional portfolio.
He has a lot of recognizable companies.
These are great quality companies, the top one being
Berkshire Hathaway. Then we have Alphabet, we have
Nestle after that and MasterCard.
These are very wide mode indestructible companies, very
difficult to compete with companies now.
Last but not least, we have Monish Barai who is an investor
that there's a lot of controversy right now about the
trades that he's made. So let's go ahead and take a
look at what he's done over the past quarter.
If we look at the activity here, we can see that he did make
significant changes to his portfolio and surprising to a
lot of people, including me, he sold out of some of his most
longterm positions, ones that he's talked about repeatedly as
being these undervalued companies.
He sold entirely his full position in Micron Technology.
And if we look at the stock price of MU over the past year,
the company's traded around a little bit, but it's been mostly
flat. So this one has been one that
he's held for a while, but he's completely exited that one.
We look at the other one that he sold entirely out of, which was
Brookfield Corp. He was in this company with a
lot of other super investors and this was another significant
position. Now this is where we get into
some of the criticisms that Monish Bry is receiving online
today. A lot of people are pointing out
that he was incredibly bullish on Micron, incredibly bullish on
Brookfield, two companies that he talked about frequently as
being these great quality, undervalued compounders.
And then to just suddenly dump them seemingly without
explanation. To buy 2 coal companies, 2
commodity companies is a shift in both your holdings, but not
just your holdings, but your overall investing philosophy.
That is where the criticism comes in.
If someone shifts holdings, but the philosophy is the same,
they're shifting out. Google for Microsoft or some
company that has very similar attributes but might trade at a
different valuation, that's one thing.
But what Monish Bhabra did here from the outside looks as though
it's a change in investing philosophy, going from buying
quality compounders to buying commodity coal companies.
So it's perplexing to look at this and see what he's doing in
my opinion. I'd like to see his explanation
before I rush to judgment. I don't know why he bought these
companies and sold these companies, but I'd like to see
him explain why. When we look at his overall US
portfolio right now, it's just these two companies.
So we can see the the shift here.
Another thing I'd point out is that this is only his US traded
stocks. We have the international ones
right here. So we can see his full
investments right here. So he does have capital outside
the US invested in different companies and I think a lot of
people forget about that as well.
Overall, I do agree that some level of of not really criticism
but some level of inquiry of asking what's going on here is
warranted. When somebody's talking about
one thing and then they suddenly shift their strategy.
I think the monish Propri could come out and explain why he did
this dramatic shift and I think he'll probably get asked
questions about that. But I still think it's
interesting to see his trades and to see what he thinks his
value overall. Monish Babra is someone that I
respect as a as someone that shares investing philosophy and
he's a great storyteller and I enjoyed listening to his videos.
But he is not someone that I'd ever recommend copying his
portfolio. I believe he changes his
investing philosophy frequently and he does dramatic shifts to
his portfolio quite frequently as well.
So that wraps it up. That's all the Super investors
for today. Now if you enjoy this type of
content, make sure you subscribe because we're going to have
another super investor video in the future as more of these
reports are released. But that's all for now.
I'll see you in the next one.