1 00:00:00,040 --> 00:00:02,160 Welcome back everyone to the Joseph Carlson Show. 2 00:00:02,160 --> 00:00:04,000 We have an exciting video to get into. 3 00:00:04,560 --> 00:00:08,000 I always love it when we have these 13 F filing updates from 4 00:00:08,000 --> 00:00:11,120 super investors because it means that we get to see what they did 5 00:00:11,320 --> 00:00:14,520 with their portfolio at the end of Q2. 6 00:00:14,880 --> 00:00:19,120 So this is an update and inside peek into the minds and the 7 00:00:19,120 --> 00:00:22,280 actions of great investors and we have a good list here. 8 00:00:22,280 --> 00:00:24,760 We're going to be seeing what Chuck Awkry did with his 9 00:00:24,760 --> 00:00:26,810 portfolio. He's the one that I just 10 00:00:26,810 --> 00:00:29,810 recently did a video on on my other channel, so you can check 11 00:00:29,810 --> 00:00:32,890 that out if you're interested. But they have beat the market 12 00:00:32,890 --> 00:00:35,770 for a long period of time. Aukri has done exceptional in 13 00:00:35,770 --> 00:00:39,130 buying high quality businesses like MasterCard and owning them 14 00:00:39,490 --> 00:00:41,410 and he typically doesn't do a lot of selling. 15 00:00:41,410 --> 00:00:42,810 So we'll get to see what he's done. 16 00:00:43,090 --> 00:00:46,730 We also have some other great investors, Chris Hohn being one 17 00:00:46,730 --> 00:00:48,770 of them. He's the one that runs the 18 00:00:48,770 --> 00:00:52,230 Children's Fund and he's one that I pay attention to because 19 00:00:52,230 --> 00:00:56,670 Chris Hohn has been crushing the market, even the QQQ, for over a 20 00:00:56,670 --> 00:00:59,310 decade. His companies, the ones that he 21 00:00:59,310 --> 00:01:02,390 buys, they're typically super monopolistic. 22 00:01:02,390 --> 00:01:03,950 They're impossible to compete with. 23 00:01:04,310 --> 00:01:07,110 The companies are just a caliber above other companies. 24 00:01:07,350 --> 00:01:08,950 So see what trades he's been doing. 25 00:01:09,350 --> 00:01:12,590 We also have Terry Smith. He buys high quality companies, 26 00:01:12,710 --> 00:01:14,710 tries not to overpay and then holds them longterm. 27 00:01:15,030 --> 00:01:17,590 We'll see what he considers to be high quality in this market. 28 00:01:18,080 --> 00:01:21,640 We have Josh Terrasoff. This is a bit of a smaller 29 00:01:21,640 --> 00:01:23,880 investor. He only manages a couple $100 30 00:01:23,880 --> 00:01:26,560 million, not the billions of dollars like these other ones. 31 00:01:27,040 --> 00:01:29,760 But I think it's notable to look at his portfolio because he's 32 00:01:29,760 --> 00:01:31,920 more of an exciting investor. He invests in a lot of these 33 00:01:31,920 --> 00:01:34,080 smaller tech companies. Now then, of course, we have 34 00:01:34,080 --> 00:01:35,640 Michael Burry. We're going to be looking at 35 00:01:35,640 --> 00:01:38,280 what he's doing. There is a rumor that he's 36 00:01:38,280 --> 00:01:41,960 shorting the market by up to $1.6 billion. 37 00:01:42,430 --> 00:01:45,510 That's a really scary headline. We're going to be diving into 38 00:01:45,510 --> 00:01:47,750 that and seeing how accurate that actually is. 39 00:01:47,830 --> 00:01:50,030 We have Pat Dorsey. He's the guy that came up with 40 00:01:50,030 --> 00:01:52,230 the Moat rating analysis on Morningstar. 41 00:01:52,590 --> 00:01:55,550 We have Howard Marks. He's written a lot of books 42 00:01:55,550 --> 00:01:57,110 about investing. I've read many of them. 43 00:01:57,110 --> 00:01:59,750 I think he's a great thinker, but he has a different 44 00:01:59,750 --> 00:02:01,710 investment style. We're going to be looking at his 45 00:02:01,710 --> 00:02:03,710 portfolio as well. Then of course, we have Seth 46 00:02:03,710 --> 00:02:06,110 Clarman, another great investor that's beat the market for a 47 00:02:06,110 --> 00:02:09,370 long period of time. He came out recently on CNBC and 48 00:02:09,370 --> 00:02:11,050 said that we're in an everything bubble. 49 00:02:11,290 --> 00:02:14,090 So we get a look at what he's doing with the premise that 50 00:02:14,090 --> 00:02:18,010 we're in an everything bubble. Then we have Thomas Russo and 51 00:02:18,250 --> 00:02:21,610 Monish Prai who will be going over as well. 52 00:02:21,890 --> 00:02:25,010 So as you can see, we have a lot to get into in this video. 53 00:02:25,290 --> 00:02:28,010 I'm going to be going over each of these and trying to explain 54 00:02:28,010 --> 00:02:30,730 both what they've been buying and selling, but also their 55 00:02:30,730 --> 00:02:34,130 overall investing philosophy, the way that they try to run 56 00:02:34,130 --> 00:02:37,050 their fund because these investors, they're all super 57 00:02:37,050 --> 00:02:39,850 investors, but they don't run their fund like each other. 58 00:02:40,090 --> 00:02:42,130 Many of them have different goals and different ways of 59 00:02:42,130 --> 00:02:44,850 looking at things. So having said that, let's go 60 00:02:44,850 --> 00:02:46,850 ahead and jump right in if you haven't already. 61 00:02:46,850 --> 00:02:49,010 Make sure you subscribe to the channel, make sure you have the 62 00:02:49,010 --> 00:02:51,610 Bell notification on. That way you get notifications 63 00:02:51,610 --> 00:02:53,970 every time I post a new video. Now the first one that we'll be 64 00:02:53,970 --> 00:02:57,290 looking at is Chuck Aukri with Aukri Capital Management. 65 00:02:57,330 --> 00:03:01,730 This is a fund that he started that now has $12 billion in 66 00:03:01,730 --> 00:03:04,530 assets under management. So he's running a massive fund 67 00:03:05,020 --> 00:03:08,980 and Aukri Capital Management is really great at focusing on 68 00:03:09,300 --> 00:03:12,660 their three legged stool, which is buying companies that are 69 00:03:12,660 --> 00:03:16,060 exceptional businesses. Qualitatively they're above the 70 00:03:16,060 --> 00:03:19,420 rest of companies in the top 1% of the top 1%. 71 00:03:19,900 --> 00:03:22,100 And they also have to be companies that have exceptional 72 00:03:22,100 --> 00:03:25,740 management, very level headed, well put together management and 73 00:03:25,740 --> 00:03:27,700 then they also have to be companies that have ample 74 00:03:27,700 --> 00:03:30,340 reinvestment opportunity. That's the three legs of the 75 00:03:30,340 --> 00:03:32,580 stool. Now, finding companies that meet 76 00:03:32,620 --> 00:03:36,930 all three of these categories is incredibly difficult. 77 00:03:37,050 --> 00:03:39,970 So when we look at AKRI Capital Management, even though they 78 00:03:39,970 --> 00:03:43,610 have $12 billion in assets under management, half of their money 79 00:03:43,610 --> 00:03:47,370 is focused into four different companies, MasterCard making up 80 00:03:47,370 --> 00:03:52,730 20%, then Moody's Corporation, then American Tower Corp and 81 00:03:52,730 --> 00:03:54,930 Visa. All of these companies have 82 00:03:54,930 --> 00:03:57,370 something in common. They're all monopolistic, 83 00:03:57,410 --> 00:04:00,890 they're highly profitable, they're fast growing and they 84 00:04:00,890 --> 00:04:03,490 are toll booths. They just collect money over and 85 00:04:03,490 --> 00:04:06,360 over again. We can take a look at an example 86 00:04:06,360 --> 00:04:08,880 here. MasterCard is his very top 87 00:04:08,880 --> 00:04:11,800 position and this is one of the biggest positions in My 88 00:04:11,800 --> 00:04:14,640 Portfolio currently. I've invested a lot in the 89 00:04:14,640 --> 00:04:18,079 MasterCard because I agree with Akri Capital Management on the 90 00:04:18,079 --> 00:04:20,519 thesis here. I think this company is 91 00:04:20,519 --> 00:04:25,600 exceptional and it's not looked at as a exciting new tech 92 00:04:25,600 --> 00:04:27,920 company. A lot of retail investors look 93 00:04:27,920 --> 00:04:31,370 at MasterCard and Visa as older companies because they've been 94 00:04:31,370 --> 00:04:32,810 around for a long period of time. 95 00:04:33,050 --> 00:04:37,530 So they're no longer exciting like companies like PayPal or 96 00:04:38,250 --> 00:04:40,090 big tech, those type of companies. 97 00:04:40,530 --> 00:04:44,170 MasterCard is a tech company. They deal with fraud and 98 00:04:44,170 --> 00:04:47,650 security and identification. They deal with marketing and 99 00:04:47,650 --> 00:04:50,130 creating leads for companies, different things through their 100 00:04:50,130 --> 00:04:52,250 data analysis of customer behavior. 101 00:04:52,610 --> 00:04:55,890 MasterCard also is a digital company doing all these payment 102 00:04:55,890 --> 00:04:58,670 transfers. And you look at the, the actual 103 00:04:58,670 --> 00:05:02,950 results of this type of company. And by the way, you can look at 104 00:05:02,950 --> 00:05:06,350 this website, qualtrum.com, it's something that I've created as 105 00:05:06,350 --> 00:05:09,470 part of the Patreon membership. But if we look at Mastercard's 106 00:05:09,470 --> 00:05:14,670 free cash flow, it's growing at an incredibly predictable rate, 107 00:05:14,950 --> 00:05:18,750 around 13 to 14% per year over the past decade. 108 00:05:19,350 --> 00:05:22,030 But then you have the factor that they're highly efficient. 109 00:05:22,480 --> 00:05:25,480 So even though they have free cash flow growth, they can use 110 00:05:25,600 --> 00:05:28,240 all of their free cash flow to buy back shares. 111 00:05:28,680 --> 00:05:32,920 When you do that, we have the free cash flow per share 112 00:05:32,920 --> 00:05:36,200 adjusted for stock based comp or any type of dilution and it's 113 00:05:36,200 --> 00:05:40,680 growing much faster. It's growing at a rate of 17% 114 00:05:41,000 --> 00:05:45,120 over the past 10 years. Now they've talked about 115 00:05:45,320 --> 00:05:47,720 MasterCard many times in the past. 116 00:05:48,320 --> 00:05:52,040 Chuck Aukri and John Neff, the people running Aukri Capital 117 00:05:52,040 --> 00:05:55,640 Management love MasterCard. They love the growth trajectory. 118 00:05:56,000 --> 00:05:59,480 And recently one of them went on an interview and they said that 119 00:05:59,480 --> 00:06:02,840 MasterCard remains such a significant bet for us because 120 00:06:02,840 --> 00:06:04,280 it's such a high quality company. 121 00:06:04,560 --> 00:06:07,440 It's growing quickly and we believe it's undervalued right 122 00:06:07,440 --> 00:06:10,520 now. In fact, he pointed out that in 123 00:06:10,520 --> 00:06:13,160 2020 we can look at the free cash flows here. 124 00:06:13,640 --> 00:06:18,200 In 2020, MasterCard did $6.52 billion in free cash flow. 125 00:06:18,680 --> 00:06:22,520 In 2022 it did 10 billion. So the free cash flow has 126 00:06:22,520 --> 00:06:26,680 increased by around 70%. Even on a per share basis, it's 127 00:06:26,680 --> 00:06:31,440 increased around 70%. Yet since 2020, the stock price 128 00:06:31,440 --> 00:06:35,440 has not increased hardly at all. So you have right here the stock 129 00:06:35,440 --> 00:06:38,520 price and then you have the free cash flow looking like this. 130 00:06:38,960 --> 00:06:43,600 So he says either the company is becoming a not as good of a 131 00:06:43,600 --> 00:06:46,880 company or it's just getting cheaper and they believe 132 00:06:46,880 --> 00:06:48,720 MasterCard is just getting cheaper. 133 00:06:49,080 --> 00:06:51,160 So they really like this bed as well. 134 00:06:51,600 --> 00:06:54,120 Now looking at what they've done over the past quarter, we can 135 00:06:54,120 --> 00:06:57,600 flip over to the activity here and look at changes to their 136 00:06:57,600 --> 00:06:59,840 portfolio. This is something else that I 137 00:06:59,840 --> 00:07:01,880 really like about awkward Capital Management. 138 00:07:02,320 --> 00:07:04,400 They really do hold companies long term. 139 00:07:04,440 --> 00:07:07,120 They don't make a lot of trades. In this case, all they did was 140 00:07:07,120 --> 00:07:10,600 they trimmed Moody's and Adobe a little bit, but these are only 141 00:07:11,030 --> 00:07:14,470 1% of Moody's and then half a percent for Adobe. 142 00:07:14,830 --> 00:07:17,070 So these were small trims to these positions. 143 00:07:17,310 --> 00:07:20,070 A lot of times they do that because of logistic reasons with 144 00:07:20,070 --> 00:07:23,270 managing their fund. It's not always indicative of 145 00:07:23,270 --> 00:07:25,230 how they view the intrinsic value of the company. 146 00:07:25,750 --> 00:07:29,230 Another thing that I'll mention about Chuck Awkri that I really 147 00:07:29,230 --> 00:07:33,470 like is they've decided that they do not sell companies 148 00:07:33,510 --> 00:07:38,320 because of valuation. So in their opinion, it it takes 149 00:07:38,320 --> 00:07:41,800 so much effort to find a company that's of such high quality, 150 00:07:42,280 --> 00:07:45,680 then buying into the company at a discount and then building a 151 00:07:45,680 --> 00:07:47,520 concentrated position in the company. 152 00:07:48,080 --> 00:07:51,600 If a company like MasterCard becomes slightly overvalued, it 153 00:07:51,600 --> 00:07:53,760 goes a little bit higher P/E ratio. 154 00:07:54,240 --> 00:07:57,400 First of all, it's hard to even determine that because these 155 00:07:57,400 --> 00:08:00,080 companies tend to grow faster than investors expect. 156 00:08:00,640 --> 00:08:04,320 But also he just thinks it's not advantageous to sell out of 157 00:08:04,320 --> 00:08:07,910 positions because of slight overvaluation, especially when 158 00:08:07,910 --> 00:08:10,070 they're these high quality compound or companies. 159 00:08:10,070 --> 00:08:13,790 So overall they don't sell because of valuation. 160 00:08:14,110 --> 00:08:16,870 They only will sell out of these companies if they believe 161 00:08:16,870 --> 00:08:19,830 something has gone really wrong with the fundamentals. 162 00:08:20,350 --> 00:08:23,510 Either the management has to have turned to very selfish 163 00:08:23,510 --> 00:08:26,310 management that's not doing a good job, the company has run 164 00:08:26,310 --> 00:08:29,070 out of reinvestment opportunities or it's just not 165 00:08:29,070 --> 00:08:31,270 an exceptional business. That's the only reason they 166 00:08:31,270 --> 00:08:34,110 really sell out of positions and they will dump the entire 167 00:08:34,110 --> 00:08:38,720 position if they do that. Overall, I really like AKRI 168 00:08:38,720 --> 00:08:41,280 Capital Management. I think it's an incredible firm. 169 00:08:41,480 --> 00:08:43,919 They've been able to beat the S&P 500 for a long period of 170 00:08:43,919 --> 00:08:46,960 time and they stick to their investing thesis. 171 00:08:47,120 --> 00:08:49,560 So what they say they're going to do is really what they do. 172 00:08:49,840 --> 00:08:53,320 And it doesn't surprise me that they made hardly any trades over 173 00:08:53,320 --> 00:08:56,280 the past quarter. But that's Akri. 174 00:08:56,360 --> 00:08:59,240 Let's go ahead and move on to the next one here, which is a 175 00:08:59,240 --> 00:09:02,160 big one. We have Chris Hone who is a 176 00:09:02,160 --> 00:09:05,940 force to be reckoned with. He runs one of the largest hedge 177 00:09:05,940 --> 00:09:11,180 funds in the world with a current value of $33.6 billion 178 00:09:11,180 --> 00:09:14,940 in assets under management, 33 billion in assets under 179 00:09:14,940 --> 00:09:16,860 management. This is massive. 180 00:09:17,260 --> 00:09:19,420 Why is Chris Holmes fund so massive? 181 00:09:20,380 --> 00:09:23,460 For a couple reasons. One of them is that there's a 182 00:09:23,460 --> 00:09:25,980 lot of inflows, a lot of people are giving him money to manage 183 00:09:26,100 --> 00:09:27,580 because he's done an exceptional job. 184 00:09:27,980 --> 00:09:30,420 And the other reason is that he's done an exceptional job. 185 00:09:30,780 --> 00:09:33,340 This is the impact of compounding for a long period of 186 00:09:33,340 --> 00:09:35,870 time. He's grown this fund steadily 187 00:09:35,870 --> 00:09:39,110 over the past decade. Now, a lot of people don't know 188 00:09:39,670 --> 00:09:43,030 the troubled history of Chris Hone and his fund when they 189 00:09:43,030 --> 00:09:47,470 started out before 2007 and 2008 when we got into the financial 190 00:09:47,470 --> 00:09:50,590 crisis. Chris Hone was a value investor 191 00:09:50,590 --> 00:09:53,870 that invested in a lot of low P/E companies, a lot of 192 00:09:53,870 --> 00:09:57,070 financials, a lot of companies that really weren't monopolistic 193 00:09:57,070 --> 00:09:59,830 at all. And what happened in 2008 and 194 00:09:59,830 --> 00:10:03,190 2009 with the destruction of these type of companies and his 195 00:10:03,190 --> 00:10:06,360 fund caused immense amount of stress and pressure. 196 00:10:06,880 --> 00:10:10,440 His fund tanked, It went down even worse than the market and 197 00:10:10,440 --> 00:10:12,280 took a little bit longer to recover. 198 00:10:12,840 --> 00:10:15,720 And he started to make changes to his investing philosophy. 199 00:10:16,040 --> 00:10:18,520 He decided that he never wanted to go through something like 200 00:10:18,520 --> 00:10:21,800 that ever again. So rather than investing 201 00:10:21,800 --> 00:10:24,720 companies that were low PE ratios and a bunch of financial 202 00:10:24,720 --> 00:10:27,560 companies that had a lot of leverage, he decided to go a 203 00:10:27,560 --> 00:10:31,680 different path and changes portfolio to investing almost 204 00:10:31,680 --> 00:10:35,240 exclusively into service based monopolies. 205 00:10:35,560 --> 00:10:39,200 Service based meaning they're not reliant on commodities and 206 00:10:39,200 --> 00:10:42,240 selling different products or goods and monopolies meaning 207 00:10:42,240 --> 00:10:45,440 that their companies that are highly concentrated lack 208 00:10:45,440 --> 00:10:49,840 considerable competition, they have immense pricing power and 209 00:10:49,840 --> 00:10:54,760 high barriers to entry. That investing philosophy change 210 00:10:55,200 --> 00:10:58,120 caused him to outperform the market for the next 10 years, 211 00:10:58,120 --> 00:11:02,790 both the S&P 500 and the QQQ. So very good pivot for his 212 00:11:02,790 --> 00:11:06,190 overall fund. Now he's looked at as one of the 213 00:11:06,190 --> 00:11:08,030 best investors in the market today. 214 00:11:08,350 --> 00:11:12,310 I think he's probably one of the top four and I do look at his 215 00:11:12,310 --> 00:11:14,190 portfolio. I love that it's highly 216 00:11:14,190 --> 00:11:17,390 concentrated. It's not a this isn't something 217 00:11:17,390 --> 00:11:20,630 where you're looking at a closet index and the companies that he 218 00:11:20,630 --> 00:11:22,790 selects are very carefully selected. 219 00:11:22,790 --> 00:11:25,270 Now let's go ahead and take a look at what he did last 220 00:11:25,270 --> 00:11:27,630 quarter. We can look at the changes here. 221 00:11:27,950 --> 00:11:32,640 He did make a number of changes. He did add a lot to General 222 00:11:32,640 --> 00:11:34,360 Electric. We know that. 223 00:11:34,360 --> 00:11:36,880 And that's a company that I don't know too much about. 224 00:11:36,880 --> 00:11:40,360 When I look at GE, it's just way over my head. 225 00:11:40,400 --> 00:11:43,640 It's such a complex business, but that's something that Chris 226 00:11:43,640 --> 00:11:46,040 Hone really studies in depth. He's really good at these type 227 00:11:46,040 --> 00:11:49,160 of industrial companies. The next one that he added to 228 00:11:49,160 --> 00:11:53,640 was Thermo Fisher Scientific. When I do analysis on this, I do 229 00:11:53,640 --> 00:11:56,960 think this company's quite a bit above most healthcare companies 230 00:11:56,960 --> 00:11:59,060 though. So I don't mind the buy here. 231 00:11:59,060 --> 00:12:01,220 I actually think it's a good one from Chris Home. 232 00:12:01,540 --> 00:12:05,420 Next up we have him reducing Microsoft, Google and we have 233 00:12:05,420 --> 00:12:09,820 him reducing Visa as well. My guess would be that this is 234 00:12:09,820 --> 00:12:13,100 because of valuation, especially Microsoft which he trimmed the 235 00:12:13,100 --> 00:12:15,060 most. So it makes sense that after 236 00:12:15,060 --> 00:12:19,180 Microsoft runs up to three 4350 to trim that position down a 237 00:12:19,180 --> 00:12:22,740 little bit, then he also added a little bit to Moody's 238 00:12:22,740 --> 00:12:25,280 Corporation. He bought slightly into a 239 00:12:25,280 --> 00:12:28,160 company called Ferguson. I don't spend too much time 240 00:12:28,160 --> 00:12:30,560 considering this. This is not meaningful. 241 00:12:30,800 --> 00:12:33,200 This position could go to zero and it really wouldn't change 242 00:12:33,200 --> 00:12:36,240 his performance all that much. The big changes to his portfolio 243 00:12:36,440 --> 00:12:40,040 is reducing the way of these big tech companies, bumping up 244 00:12:40,040 --> 00:12:44,080 Canadian National Railway, bumping up GE and then buying 245 00:12:44,080 --> 00:12:48,560 into Thermo Fisher Scientific. Overall, I still really like 246 00:12:48,560 --> 00:12:51,010 Chris Hone. I think again he's one of the 247 00:12:51,010 --> 00:12:53,090 top four. I think he'll continue growing 248 00:12:53,090 --> 00:12:56,810 this fund to over $40 billion. Now Next up we have Terry Smith, 249 00:12:56,810 --> 00:12:58,650 who I really love as an investor. 250 00:12:58,650 --> 00:13:00,250 I think he's a great public speaker. 251 00:13:00,450 --> 00:13:04,450 I think he's a great teacher. He really focuses on the the 252 00:13:04,450 --> 00:13:08,290 concept of returns on capital. He likes to invest in companies 253 00:13:08,290 --> 00:13:12,730 that have high ROCE, which is very similar to ROIC. 254 00:13:13,450 --> 00:13:16,650 It means companies that can reinvest back into themselves at 255 00:13:16,650 --> 00:13:19,840 high rates of return. And typically a lot of evidence 256 00:13:19,840 --> 00:13:23,040 shows those companies do exceptionally well over long 257 00:13:23,040 --> 00:13:26,640 periods of time. But I do I have to mention this, 258 00:13:26,640 --> 00:13:29,320 I do have a little bit of a bone to pick with Terry Smith on some 259 00:13:29,320 --> 00:13:32,160 recent changes he's made. So let's go ahead and take a 260 00:13:32,160 --> 00:13:34,640 look at them. First of all, his portfolio 261 00:13:34,640 --> 00:13:39,280 value right now, $24 billion is this is huge, it's a massive 262 00:13:39,280 --> 00:13:41,320 portfolio. But let's go ahead and take a 263 00:13:41,320 --> 00:13:42,960 look at some of the trades that he did. 264 00:13:43,000 --> 00:13:44,640 We flip over to the activity here. 265 00:13:44,960 --> 00:13:47,770 We can see them. I'll filter them by the top 266 00:13:47,770 --> 00:13:51,170 changes to the portfolio. Now the number one thing that I 267 00:13:51,170 --> 00:13:55,090 have a problem with with Terry Smith's trading is Amazon. 268 00:13:55,570 --> 00:13:59,650 He bought into the company with a great thesis on Amazon that 269 00:13:59,650 --> 00:14:02,530 the company was going to have an advertising market that would be 270 00:14:02,530 --> 00:14:05,490 highly lucrative. The company has a WS, which is 271 00:14:05,490 --> 00:14:08,130 highly lucrative and growing quickly and the company has 272 00:14:08,130 --> 00:14:10,970 their prime business and their, their assets that they can layer 273 00:14:10,970 --> 00:14:14,930 upon their retail business. Terry Smith knew all of this 274 00:14:14,930 --> 00:14:19,400 going into it, but then what he did was he changed his mind and 275 00:14:19,400 --> 00:14:24,040 sold out of Amazon towards the bottom of the dip on Amazon. 276 00:14:24,360 --> 00:14:29,040 So if we look at how Amazon's traded over the past year, it is 277 00:14:29,200 --> 00:14:32,840 a huge winner. This year it's up 62%. 278 00:14:33,280 --> 00:14:36,680 That's more than any company. Almost every company in Terry 279 00:14:36,680 --> 00:14:40,080 Smith's portfolio, 62 percent's a massive gainer. 280 00:14:40,400 --> 00:14:44,120 And he sold the company at the start of the year, avoiding this 281 00:14:44,120 --> 00:14:47,680 entire gain along the way. And I think it was such a bad 282 00:14:47,680 --> 00:14:50,240 trade for him. And I know that he has his 283 00:14:50,240 --> 00:14:53,000 reasoning behind it. They'll say that Amazon's less 284 00:14:53,000 --> 00:14:55,960 predictable or, you know, different reasons why to sell 285 00:14:55,960 --> 00:14:58,360 out of it. But at the end of the day, when 286 00:14:58,360 --> 00:15:01,040 you sell out of a company like Amazon that you've done research 287 00:15:01,040 --> 00:15:05,160 in during a huge dip in the company, I don't consider that a 288 00:15:05,160 --> 00:15:07,480 good trade. I think this was a mistake, a 289 00:15:07,480 --> 00:15:10,080 clear mistake, and this was a larger position in the 290 00:15:10,080 --> 00:15:13,430 portfolio. So if you held on to this 3% he 291 00:15:13,430 --> 00:15:17,830 would have been up 60% on this 3% waiting which of really would 292 00:15:17,830 --> 00:15:21,510 have helped out his returns. Now the next thing that I don't 293 00:15:21,550 --> 00:15:25,070 agree with Terry Smith on is another company that he recently 294 00:15:25,070 --> 00:15:28,230 sold out of which was into it into. 295 00:15:28,230 --> 00:15:30,950 It's a company that he had a big problem with the stock based 296 00:15:30,950 --> 00:15:34,950 comp of the company. So when I look at into it, this 297 00:15:34,950 --> 00:15:37,510 company is exceptional in a lot of different ways. 298 00:15:37,710 --> 00:15:39,830 It's service based, it's monopolistic. 299 00:15:40,030 --> 00:15:42,470 They have a great multi franchise of products. 300 00:15:42,470 --> 00:15:45,760 They have a lot of different things for small businesses and 301 00:15:45,760 --> 00:15:48,280 they're growing very quickly. So if I look at some of the 302 00:15:48,280 --> 00:15:51,720 fundamentals here, the revenue growth is incredibly fast and 303 00:15:51,720 --> 00:15:54,760 the free cash flow growth of the company's incredibly fast. 304 00:15:55,440 --> 00:15:58,120 The problem that Terry Smith highlighted and the reason that 305 00:15:58,120 --> 00:16:01,440 he sold out of into it was because of the stock based comp 306 00:16:01,640 --> 00:16:03,240 and the way that they did their accounting. 307 00:16:03,840 --> 00:16:06,360 This is a true complaint. When we look at the stock based 308 00:16:06,360 --> 00:16:09,400 comp, it looks like it's going out of control. 309 00:16:09,910 --> 00:16:12,910 It's gone up substantially in the past two years, right. 310 00:16:12,910 --> 00:16:15,510 So we have a big problem with stock based comp. 311 00:16:16,030 --> 00:16:18,670 But when I listened to the earnings calls and I read more 312 00:16:18,670 --> 00:16:22,430 about this company, most of the stock based comp increase over 313 00:16:22,430 --> 00:16:26,310 the past year was because of a one time grant given out to 314 00:16:26,310 --> 00:16:30,270 employees from an acquisition. So this is not something that's 315 00:16:30,270 --> 00:16:32,510 going to be going on long term with the company. 316 00:16:32,790 --> 00:16:35,710 This wasn't just organic growth in their stock based comp. 317 00:16:36,110 --> 00:16:40,290 This is a one time event because they just did an acquisition and 318 00:16:40,370 --> 00:16:44,210 the leadership of Intuit has said that they are going to get 319 00:16:44,210 --> 00:16:46,610 this under control and they're going to be growing the 320 00:16:46,610 --> 00:16:50,370 company's free cash flows and the revenues much faster than 321 00:16:50,370 --> 00:16:53,250 the stock based comp. So this in my opinion is a 322 00:16:53,250 --> 00:16:56,130 temporary problem, not a permanent one. 323 00:16:56,450 --> 00:17:00,010 And Terry Smith sold out of this company stating as though it was 324 00:17:00,010 --> 00:17:02,890 just a really bad decision by the company which I don't agree 325 00:17:02,890 --> 00:17:05,210 with when I look at into it as well. 326 00:17:05,530 --> 00:17:08,720 This is another company that he recently sold out of that has 327 00:17:08,720 --> 00:17:11,240 been a tremendously good performer. 328 00:17:11,599 --> 00:17:14,680 I bought into this company at the beginning of the year and 329 00:17:14,680 --> 00:17:16,760 I'm already up about 20% on the company. 330 00:17:16,760 --> 00:17:20,960 So it's been a great performer. I think it's a great company and 331 00:17:20,960 --> 00:17:24,079 I don't believe that the stock based comp for this one is a 332 00:17:24,079 --> 00:17:26,440 problem. So the first thing I disagreed 333 00:17:26,440 --> 00:17:29,640 with with Terry Smith's changes recently is selling out of 334 00:17:29,640 --> 00:17:32,000 Amazon at the Lowe's. I thought that that was a huge 335 00:17:32,000 --> 00:17:33,960 mistake. The next thing was selling out 336 00:17:33,960 --> 00:17:36,980 of into it because of stockbased compensation. 337 00:17:37,180 --> 00:17:40,940 Without fully investigating the reasons why and seeing that a 338 00:17:40,940 --> 00:17:43,740 lot of it is one time, it's not an ongoing issue with the 339 00:17:43,740 --> 00:17:46,340 company. The third thing that I think is 340 00:17:46,340 --> 00:17:49,980 a mistake from Terry Smith is the biggest buy they did this 341 00:17:49,980 --> 00:17:53,180 last quarter. This is their biggest buy by 342 00:17:53,180 --> 00:17:54,980 far. The thing that they thought was 343 00:17:54,980 --> 00:17:59,020 the most attractive last quarter was Procter and Gamble. 344 00:17:59,380 --> 00:18:03,400 They bought into this one with a 2% position, so sell out of 345 00:18:03,400 --> 00:18:05,800 Amazon and into it. These companies that are moving 346 00:18:05,800 --> 00:18:09,000 along very quickly growing cash flows, they have incredibly 347 00:18:09,000 --> 00:18:12,240 strong businesses and then buy into Procter and Gamble. 348 00:18:12,760 --> 00:18:15,920 Now I don't have any problems with Procter and Gamble. 349 00:18:15,920 --> 00:18:19,320 I think it's an OK company, but this is a company that's already 350 00:18:19,320 --> 00:18:23,080 reached mass maturity. There is no strong growth path 351 00:18:23,080 --> 00:18:26,080 for Procter and Gamble. They've acquired so many brands 352 00:18:26,080 --> 00:18:29,040 and they're already so big that this is likely one that's going 353 00:18:29,040 --> 00:18:31,720 to be growing right along with the S&P 500. 354 00:18:32,220 --> 00:18:33,660 Look at the revenue growth of it. 355 00:18:34,140 --> 00:18:36,500 There's hardly any over the past decade. 356 00:18:36,500 --> 00:18:39,180 In fact, it has around the same amount of revenues it did 10 357 00:18:39,180 --> 00:18:41,980 years ago. And Terry Smith himself has 358 00:18:41,980 --> 00:18:44,380 highlighted a lot of troubles with the reporting and 359 00:18:44,380 --> 00:18:47,780 leadership of this company. So when I look at this one and I 360 00:18:47,780 --> 00:18:52,060 look at the free cash flow, again, barely any growth the 361 00:18:52,060 --> 00:18:55,780 past decade, you have 2.4% free cash flow growth. 362 00:18:56,300 --> 00:18:59,780 Even on a per share basis, it bumps up to 4%. 363 00:19:00,280 --> 00:19:02,720 This is slower growth in the S&P 500. 364 00:19:03,440 --> 00:19:07,480 Is it a resilient company? Sure, it's resilient, has a wide 365 00:19:07,480 --> 00:19:11,000 Moat, can't compete that well with Procter and Gamble, But 366 00:19:11,000 --> 00:19:15,840 it's too mature, it's too big to see ample above market growth. 367 00:19:16,360 --> 00:19:18,520 And I don't think this one's going to be a good performer in 368 00:19:18,520 --> 00:19:20,920 the fund. Year to date, it's up 3% while 369 00:19:20,920 --> 00:19:24,280 the rest of the markets up 16. And I have to imagine that out 370 00:19:24,280 --> 00:19:26,960 of the many great companies that are growing, that are 371 00:19:26,960 --> 00:19:29,720 profitable, that have high returns on capital employed, 372 00:19:30,110 --> 00:19:32,310 there's better options in Procter and Gamble. 373 00:19:32,790 --> 00:19:37,190 If I was there with Terry Smith, I'd be asking him what does he 374 00:19:37,190 --> 00:19:39,710 see that's more attractive and Procter and Gamble than 375 00:19:39,710 --> 00:19:43,190 MasterCard because MasterCard has as wide of a Moat, but it's 376 00:19:43,190 --> 00:19:48,390 growing at five times the speed. So overall, I don't, I don't 377 00:19:48,390 --> 00:19:51,150 mind the portfolio here. I think that overall it's still 378 00:19:51,150 --> 00:19:54,230 very strong construction of a portfolio, but I've seen a 379 00:19:54,230 --> 00:19:56,510 number of things that I think are a little bit of missteps 380 00:19:56,790 --> 00:20:00,170 over the past quarter and I'd like to see better thesis when 381 00:20:00,170 --> 00:20:02,210 entering companies and selling them. 382 00:20:02,490 --> 00:20:06,170 Next up we have Josh Terrasoft, who he was one of the investors 383 00:20:06,170 --> 00:20:09,330 that became a super investor after his original analysis on 384 00:20:09,330 --> 00:20:13,010 Amazon over 10 years ago. He basically predicted how 385 00:20:13,010 --> 00:20:15,690 Amazon retail would grow to the size that it is. 386 00:20:16,050 --> 00:20:18,410 So Josh Terrasoft is good at underwriting these tech 387 00:20:18,410 --> 00:20:21,370 companies. He manages A portfolio with $274 388 00:20:21,370 --> 00:20:23,050 million in assets under management. 389 00:20:23,050 --> 00:20:25,770 Now let's go ahead and take a look at the decisions he's made 390 00:20:25,770 --> 00:20:28,810 over the past quarter. We'll organize these and the 391 00:20:28,810 --> 00:20:34,410 first thing we see is a big sell, big sell of Salesforce. 392 00:20:34,410 --> 00:20:38,050 He exited the position and I think this is such a smart 393 00:20:38,050 --> 00:20:40,850 trade. I did basically the same exact 394 00:20:40,850 --> 00:20:42,730 thing. I didn't know that he was going 395 00:20:42,730 --> 00:20:45,730 to do this, but it's nice to see that we agreed on one of these 396 00:20:45,730 --> 00:20:47,410 trades here. So we have him exiting 397 00:20:47,410 --> 00:20:49,250 Salesforce, which I fully agree with. 398 00:20:49,250 --> 00:20:51,090 I think that that was a wise decision. 399 00:20:51,450 --> 00:20:54,770 Then we have Markel and we have Brookfield as the two companies 400 00:20:54,770 --> 00:20:59,100 that he bought 9% of the portfolio in this one, 4% into 401 00:20:59,100 --> 00:21:00,740 Brookfield. Let's go ahead and take a look 402 00:21:00,740 --> 00:21:03,900 at these two. We have MKL as Marco. 403 00:21:04,180 --> 00:21:07,340 They have a diversified financial holding company that 404 00:21:07,340 --> 00:21:10,580 markets underwrite specialty insurance and products in the 405 00:21:10,580 --> 00:21:12,620 United States, Bermuda and the United Kingdom. 406 00:21:12,740 --> 00:21:14,100 OK. So the first big one that he 407 00:21:14,100 --> 00:21:15,620 bought into is an insurance company. 408 00:21:15,940 --> 00:21:18,140 That's a little bit different. I don't usually see him buying 409 00:21:18,140 --> 00:21:21,540 into insurance companies. The next one was BN, which is a 410 00:21:21,540 --> 00:21:24,540 Brookfield company. This one I think is very 411 00:21:24,540 --> 00:21:26,660 interesting. I actually like Brookfield, both 412 00:21:26,660 --> 00:21:29,900 BAM and BM. The reason that I don't buy into 413 00:21:29,900 --> 00:21:33,980 Brookfield is it just feels like it's out of my area of 414 00:21:33,980 --> 00:21:36,020 competence. When I look at what they're 415 00:21:36,020 --> 00:21:38,860 doing and the scale of what they're doing, all of this 416 00:21:38,860 --> 00:21:41,500 infrastructure, they're buying all of these hard assets. 417 00:21:41,980 --> 00:21:44,180 I can't look at the product that much. 418 00:21:44,180 --> 00:21:47,260 I can't look at the value of these contracts and the deals 419 00:21:47,260 --> 00:21:50,060 that they're making. So I feel like if I invest in 420 00:21:50,060 --> 00:21:54,470 Brookfield or Asset Management, either one of these, it's just 421 00:21:54,550 --> 00:21:56,750 out of my control. I'm basically saying that I 422 00:21:56,750 --> 00:22:00,310 trust the CEO of the company. I hope you do a good job and I 423 00:22:00,310 --> 00:22:02,790 can't really inspect your work. That's what it feels like for 424 00:22:02,790 --> 00:22:05,150 me. So I think these companies are 425 00:22:05,150 --> 00:22:08,590 great, but my lack of competency in this area is part of the 426 00:22:08,590 --> 00:22:10,430 reason that I choose not to invest in them. 427 00:22:11,150 --> 00:22:14,390 Now he also sold out of a couple tech companies, reduced his 428 00:22:14,390 --> 00:22:17,350 position in Google substantially, 31% reduction. 429 00:22:17,980 --> 00:22:21,260 He sold out of BAM and he traded that for Brookfield Corp. 430 00:22:21,700 --> 00:22:24,660 So that's an interesting trade. These are both ran by the same 431 00:22:24,660 --> 00:22:27,500 people, but they have different assets that they hold and 432 00:22:27,500 --> 00:22:29,420 different valuations. Now when we look at his 433 00:22:29,420 --> 00:22:34,220 portfolio overall, we still have Amazon at the top position, 26% 434 00:22:34,220 --> 00:22:37,100 of the portfolio. So still today even after 435 00:22:37,100 --> 00:22:40,020 holding the company for years and years, he has Amazon as the 436 00:22:40,020 --> 00:22:42,700 biggest position. Then we have Brookfield, Then we 437 00:22:42,700 --> 00:22:46,190 have Marco, and then we have Microsoft, Google, Spotify, 438 00:22:46,390 --> 00:22:50,710 Monday and Shopify. Very concentrated portfolio. 439 00:22:50,710 --> 00:22:53,790 I like most of these companies. I especially like the big bet 440 00:22:53,790 --> 00:22:55,470 into Amazon. I think that one's going to do 441 00:22:55,470 --> 00:22:57,230 really well over the next couple of years. 442 00:22:57,350 --> 00:22:59,590 Now Next up we have Michael Burry, and this is 1 where 443 00:22:59,590 --> 00:23:01,670 there's a little bit of excitement going around right 444 00:23:01,670 --> 00:23:05,630 now because apparently there's a bit of news that he has some 445 00:23:05,630 --> 00:23:09,590 puts on the market between the S&P 500 and the QQQ. 446 00:23:09,910 --> 00:23:13,880 We can look at some of the tweets on X now, which used to 447 00:23:13,880 --> 00:23:16,600 be Twitter. We can look at this post here 448 00:23:16,920 --> 00:23:18,840 breaking. Michael Burry just shorted the 449 00:23:18,840 --> 00:23:23,600 market with $1.6 billion. He bought $890 million of SPY 450 00:23:23,600 --> 00:23:26,920 puts and he bought 740 million of QQQ puts. 451 00:23:27,240 --> 00:23:30,400 This now makes up 93% of his entire portfolio. 452 00:23:30,480 --> 00:23:34,680 Look below that seems very crazy, right? 453 00:23:34,680 --> 00:23:37,950 This is a huge amount of shorts that he has on the market, but 454 00:23:37,950 --> 00:23:41,190 this really isn't an accurate portrayal of Michael Burry's 455 00:23:41,190 --> 00:23:43,390 position or what we know about the position. 456 00:23:43,670 --> 00:23:45,710 So let's go ahead and take a look at what he actually did. 457 00:23:46,190 --> 00:23:49,710 The first thing is, is what they're quoting right here, 458 00:23:49,790 --> 00:23:52,990 these numbers. This is simply the total value 459 00:23:52,990 --> 00:23:56,670 of the amount of shares of puts he bought on the market. 460 00:23:57,150 --> 00:23:59,870 But that doesn't necessarily mean that he's short that 461 00:23:59,870 --> 00:24:01,770 amount. And the reason why is because 462 00:24:01,770 --> 00:24:04,730 we're missing a lot of data in this calculation. 463 00:24:04,770 --> 00:24:07,090 Notably, we're missing the strike price, we're missing the 464 00:24:07,090 --> 00:24:09,530 premium paid, and we're missing the expiration date. 465 00:24:09,970 --> 00:24:13,090 Without those three pieces of information, we really have no 466 00:24:13,090 --> 00:24:17,610 clue how big his position is. Could it theoretically be up to 467 00:24:17,610 --> 00:24:19,810 1.6 billion? Sure. 468 00:24:19,850 --> 00:24:23,450 But it could also be 100 million, it could be 20 million, 469 00:24:23,770 --> 00:24:25,810 it could be much smaller depending on those three 470 00:24:25,810 --> 00:24:28,370 factors. So based on what we know right 471 00:24:28,370 --> 00:24:32,290 now this short that Michael Burry has on the market, could 472 00:24:32,290 --> 00:24:35,890 just be a nice soft hedge on the market, just a small hedge with 473 00:24:35,890 --> 00:24:39,330 his portfolio or it could be a big doomsday prediction against 474 00:24:39,330 --> 00:24:41,770 the market. But if I was to guess, I would 475 00:24:41,770 --> 00:24:46,050 believe that right now this is likely a hedge, a small hedge on 476 00:24:46,050 --> 00:24:49,410 his portfolio with the market. He does this from time to time 477 00:24:49,810 --> 00:24:52,290 and it's nothing that is doomsday about the market. 478 00:24:52,610 --> 00:24:55,450 He believes that things are slightly overvalued right now 479 00:24:55,810 --> 00:24:57,850 and I believe he's taking out a hedge. 480 00:24:58,170 --> 00:25:01,330 But what you're going to see a lot of over the next couple of 481 00:25:01,330 --> 00:25:04,530 days and probably a lot of videos today and news is that 482 00:25:04,530 --> 00:25:08,090 Michael Burry's short the market because of his notable fame with 483 00:25:08,090 --> 00:25:11,650 the Big Short. Is this The Big Short 2.0? 484 00:25:12,130 --> 00:25:14,410 I don't believe so. I think a lot of that is going 485 00:25:14,410 --> 00:25:18,370 to be excitement and hype built around a lot of unknowns. 486 00:25:18,370 --> 00:25:20,250 So that's the first thing that I want to address with his 487 00:25:20,250 --> 00:25:22,660 portfolio. Another thing that I think is 488 00:25:22,660 --> 00:25:26,420 worth pointing out is Burry changes his mind on things and 489 00:25:26,420 --> 00:25:30,340 changes his positioning and his strategy all the time. 490 00:25:30,620 --> 00:25:34,180 Frequently, this big news right here that's breaking could 491 00:25:34,180 --> 00:25:36,900 already be old news in Michael Burry's mind. 492 00:25:37,140 --> 00:25:38,940 He could have already taken these positions off. 493 00:25:39,140 --> 00:25:41,500 He could have already covered these shorts and moved on. 494 00:25:41,860 --> 00:25:44,340 In fact, I think there's a good chance he's done that because 495 00:25:44,340 --> 00:25:46,420 when we look at the amount of trades that Michael Burry has 496 00:25:46,420 --> 00:25:48,500 done, let's go ahead and just take a look at some of the 497 00:25:48,500 --> 00:25:51,660 trades he's done over the past three months. 498 00:25:52,620 --> 00:25:55,540 Look at the amount of traits. This is all in the same quarter. 499 00:25:56,100 --> 00:26:00,740 He sold JD, he bought Expedia, he sold Alibaba, he bought 500 00:26:01,180 --> 00:26:04,500 Charter, he bought Generac Holdings, He sold Zoom, He sold 501 00:26:04,500 --> 00:26:07,940 Capital One. Sell, sell, buy, buy, sell, 502 00:26:07,940 --> 00:26:12,380 sell, buy Over and over again. This pages, pages of buys and 503 00:26:12,380 --> 00:26:15,980 sells for a single quarter. And this is what he routinely 504 00:26:15,980 --> 00:26:17,460 does. This quarter is not unique. 505 00:26:17,870 --> 00:26:21,070 Throughout his entire history he is trading frequently. 506 00:26:21,550 --> 00:26:24,070 He is a value investor. He looks at valuations, but he's 507 00:26:24,070 --> 00:26:27,310 also positioning and trading into different categories, 508 00:26:27,590 --> 00:26:30,550 different weightings depending on momentum and current 509 00:26:30,550 --> 00:26:32,390 valuations of different industries. 510 00:26:32,950 --> 00:26:36,750 So that's the other thing that I think is highly questionable is 511 00:26:36,750 --> 00:26:39,990 does Michael Burry even have this current position right now? 512 00:26:40,310 --> 00:26:43,670 The chances are unlikely he maybe have bought into this and 513 00:26:43,670 --> 00:26:46,490 sold it by now as well. So I think the big thing I'd 514 00:26:46,490 --> 00:26:50,570 like to highlight with Michael Burry's breaking news today is 515 00:26:50,570 --> 00:26:53,250 don't just buy into the narrative that some people try 516 00:26:53,250 --> 00:26:56,810 to create with this bears on the market will say this is clear 517 00:26:56,810 --> 00:26:59,490 evidence that this great investor who was short the 518 00:26:59,490 --> 00:27:02,410 market in 2007 is short the market again. 519 00:27:02,410 --> 00:27:05,210 And that means that everything's overvalued and everything is 520 00:27:05,210 --> 00:27:08,690 going to come crashing down. So far, we have no information 521 00:27:08,730 --> 00:27:11,810 whatsoever to validate that. And I think the chances of that 522 00:27:11,810 --> 00:27:15,490 being the case are incredibly highly unlikely. 523 00:27:16,010 --> 00:27:19,650 I think it's much more likely that Burry has a temporary short 524 00:27:19,930 --> 00:27:23,290 to hedge his portfolio and he does this type of thing 525 00:27:23,290 --> 00:27:25,490 frequently with the amount of trades that he does. 526 00:27:25,530 --> 00:27:28,290 So that's my thoughts overall on Michael Burry's big trade. 527 00:27:28,610 --> 00:27:32,490 I think a lot of investors would do better with their portfolios 528 00:27:32,810 --> 00:27:36,570 to not focus so much on what Michael Burry's doing quarter by 529 00:27:36,570 --> 00:27:40,460 quarter because his strategy, his thesis, his holdings change 530 00:27:40,540 --> 00:27:43,020 very rapidly. Now Next up we have Pat Dorsey, 531 00:27:43,020 --> 00:27:46,500 who runs his own fun Now, but he used to be the guy that created 532 00:27:46,500 --> 00:27:48,500 the Moat rating analysis from Morningstar. 533 00:27:48,780 --> 00:27:50,980 He basically looked at what Warren Buffett did with the 534 00:27:50,980 --> 00:27:54,220 description of the Moat and he came up with an algorithmic way 535 00:27:54,220 --> 00:27:56,940 to assess a Moat. So we look at Pat Dorsey's 536 00:27:56,940 --> 00:27:58,940 portfolio. He currently manages 537 00:27:58,940 --> 00:28:03,020 $755,000,000. And one of the thing that I 538 00:28:03,020 --> 00:28:06,060 think is ironic about Pat Dorsey is many of the companies that he 539 00:28:06,060 --> 00:28:08,980 chooses to go into. I think it's questionable what 540 00:28:08,980 --> 00:28:11,780 type of Moat they really have. I don't know what the Moat is 541 00:28:11,780 --> 00:28:15,740 for Wix, for example, compared to Squarespace, but there you 542 00:28:15,740 --> 00:28:17,500 have them investing in these type of companies. 543 00:28:17,900 --> 00:28:20,780 Now if we look at his trading over the past quarter, there's a 544 00:28:20,780 --> 00:28:23,460 lot of selling, a lot of selling. 545 00:28:23,460 --> 00:28:26,980 He sold 12% of his portfolio from Meta. 546 00:28:27,260 --> 00:28:29,260 That was one that I think was a good buy from him. 547 00:28:29,260 --> 00:28:33,460 He did really well on that one. He bought a little bit of HERC 548 00:28:33,460 --> 00:28:35,140 Holdings. I'm not sure what that company 549 00:28:35,140 --> 00:28:38,450 is. He sold out of Roku, 32% of that 550 00:28:38,450 --> 00:28:41,850 one. He cut Smartsheet, Wix, Google 551 00:28:41,930 --> 00:28:45,930 Disney, PayPal and SEM Rush. He's reduced out of every 552 00:28:45,930 --> 00:28:48,490 position in the companies that I think are very high quality. 553 00:28:48,690 --> 00:28:52,290 He's bought heavily into Upwork, which I believe is lesser 554 00:28:52,290 --> 00:28:54,410 quality than a lot of the names that he owns. 555 00:28:54,690 --> 00:28:58,090 So he must have a different reason, some type of specific 556 00:28:58,090 --> 00:29:01,490 insight into why he did that. Overall, my opinion hasn't 557 00:29:01,490 --> 00:29:04,880 changed much with Pat Dorsey. I don't like his portfolio 558 00:29:04,880 --> 00:29:07,440 construction that much or the trades that he does. 559 00:29:07,680 --> 00:29:09,560 I wouldn't want to managing my money. 560 00:29:09,760 --> 00:29:12,800 Now moving on, we get to Howard Marks, I think an exceptional 561 00:29:12,800 --> 00:29:16,280 investor, but I think more than being an investor, Howard Marks 562 00:29:16,280 --> 00:29:18,440 is a teacher. I like his books, I like his 563 00:29:18,440 --> 00:29:22,200 podcasts, I like his memos. When I look at his portfolio and 564 00:29:22,200 --> 00:29:25,560 I try to gauge the trades that he does here, I don't get a lot 565 00:29:25,560 --> 00:29:27,080 of them. They're way over my head. 566 00:29:27,080 --> 00:29:30,320 And a lot of the companies that he buys and sells are ones that 567 00:29:30,320 --> 00:29:33,000 are smaller. A lot of them are distressed 568 00:29:33,000 --> 00:29:34,880 companies are ones that are needing capital. 569 00:29:35,240 --> 00:29:36,880 He also does a lot of work with debt. 570 00:29:37,280 --> 00:29:40,400 But when we look at the equity portfolio here, we have 571 00:29:40,400 --> 00:29:42,760 companies like this. He recently bought into Garret 572 00:29:42,760 --> 00:29:45,400 Motion. I've looked at this one and it's 573 00:29:45,560 --> 00:29:47,960 like a parts manufacturer for engines. 574 00:29:48,120 --> 00:29:50,360 It's not something that I'm interested in investing in. 575 00:29:50,640 --> 00:29:53,200 We have Vistra Corp, which he sold out of. 576 00:29:53,280 --> 00:29:57,240 He reduced the position by 27%. Eagle Bulk Shipping, he sold 577 00:29:57,240 --> 00:30:00,560 100% of that position. Chesapeake Energy, he reduced 578 00:30:00,560 --> 00:30:04,150 that one slightly. Wealth Ford International sold 579 00:30:04,150 --> 00:30:08,870 100% of that, PG&E Corp sold 100% of that and then Hertz 580 00:30:08,870 --> 00:30:11,350 Global, he also reduced that by 80%. 581 00:30:11,670 --> 00:30:14,350 After that, we get to the less than 1% positions. 582 00:30:14,510 --> 00:30:17,630 Now when I look at his overall portfolio, I noticed a theme of 583 00:30:17,630 --> 00:30:21,910 a lot of bets into energy. TRMD is an energy company. 584 00:30:22,110 --> 00:30:25,150 Then we have Chesapeake Energy, we have Vistra Corp, so on and 585 00:30:25,150 --> 00:30:27,550 so forth. All throughout this portfolio, 586 00:30:27,550 --> 00:30:30,310 there's oil companies and utility companies and energy 587 00:30:30,310 --> 00:30:32,160 companies. Then of course, we have some 588 00:30:32,160 --> 00:30:35,440 other ones mixed in here. He used to hold Ally Financial, 589 00:30:35,720 --> 00:30:40,280 he still does, but he reduced the position by 25%, so minor 590 00:30:40,280 --> 00:30:42,960 reduction in Ally Financial. We also have some other 591 00:30:42,960 --> 00:30:47,760 companies like Chinese retailersjd.com and a lot of 592 00:30:47,760 --> 00:30:49,960 different companies. It's difficult to try to reverse 593 00:30:49,960 --> 00:30:53,960 architect why he buys this many companies, what the investment 594 00:30:53,960 --> 00:30:57,680 thesis is on all of them, But Oak Tree has the reasons why. 595 00:30:58,240 --> 00:31:01,880 Overall, when I look at Howard Marks, I view him more as a 596 00:31:01,880 --> 00:31:05,680 teacher of investing principles and concepts, and I think he 597 00:31:05,680 --> 00:31:08,240 offers a ton of value with his podcast and memo. 598 00:31:08,720 --> 00:31:10,800 But I don't think there's as much value for me to gain by 599 00:31:10,800 --> 00:31:13,480 looking at his portfolio. He has an entirely different 600 00:31:13,480 --> 00:31:14,920 investing philosophy than I do now. 601 00:31:15,120 --> 00:31:18,760 Next up we have Seth Klarman. He's had exceptional returns for 602 00:31:18,760 --> 00:31:22,240 a long time period and he doesn't do many interviews. 603 00:31:22,240 --> 00:31:25,920 But then suddenly he came on to CNBC to basically say the 604 00:31:25,920 --> 00:31:28,320 world's over and we're in an everything bubble. 605 00:31:28,740 --> 00:31:31,500 Everything has inflated valuations and it's going to 606 00:31:31,500 --> 00:31:35,460 cause a lot of trouble. Now it's hard to gauge what 607 00:31:35,460 --> 00:31:38,900 people say compared to what they actually do, but we can try to 608 00:31:38,900 --> 00:31:42,580 do that here with his portfolio. We have the portfolio value. 609 00:31:42,620 --> 00:31:45,740 His assets are management of $5.5 billion. 610 00:31:46,020 --> 00:31:48,980 So it's a large portfolio and then we can look at the trades 611 00:31:48,980 --> 00:31:50,580 they've been doing. So let's go ahead and filter 612 00:31:50,580 --> 00:31:53,260 this by the activity here. We can see what they've been 613 00:31:53,260 --> 00:31:55,900 doing over the past quarter. Now we see them reducing 614 00:31:55,900 --> 00:32:01,390 positions and Google, QRVOFI and Skyworks solutions. 615 00:32:01,590 --> 00:32:04,190 So four different companies that he's reduced the position in. 616 00:32:04,630 --> 00:32:06,350 And then we have some new buys here. 617 00:32:06,350 --> 00:32:10,510 We have them buying into Amazon 2.27% position. 618 00:32:10,510 --> 00:32:13,150 So that's a meaningful buy. We also have them buying into 619 00:32:13,150 --> 00:32:17,070 gear at Motion and we have them buying into Fidelity National 620 00:32:17,070 --> 00:32:19,870 Information Services. Those are the biggest trades of 621 00:32:19,870 --> 00:32:22,310 this past quarter. Now looking at his companies 622 00:32:22,310 --> 00:32:25,710 overall, he does invest in a lot of lower valuation companies. 623 00:32:25,990 --> 00:32:30,200 Liberty Global, VSAT, which is a satellite communication company. 624 00:32:30,520 --> 00:32:34,400 He has Alphabet as his third largest holding again at a lower 625 00:32:34,400 --> 00:32:37,640 valuation company and you see the same trend going down to 626 00:32:37,640 --> 00:32:40,440 Warner Brothers Discovery, another lower valued company. 627 00:32:41,000 --> 00:32:43,720 He is a true value investor. A lot of the companies that he's 628 00:32:43,720 --> 00:32:47,680 buying trade at discounted valuations and I believe that 629 00:32:47,680 --> 00:32:51,960 his position is portfolio, so that if the market crashes, he 630 00:32:51,960 --> 00:32:54,800 potentially has less downside than the general market. 631 00:32:55,160 --> 00:32:57,600 Now another great value investor that we recently got to see some 632 00:32:57,600 --> 00:33:02,600 of his trades is Thomas Russo. He manages over $10 billion and 633 00:33:02,600 --> 00:33:04,760 I really like his portfolio construction. 634 00:33:04,760 --> 00:33:07,520 Let's go ahead and take a look at his activity and where he's 635 00:33:07,520 --> 00:33:08,880 seeing value in the market today. 636 00:33:09,440 --> 00:33:12,080 He's only bought a couple companies over the past three 637 00:33:12,080 --> 00:33:14,720 months and one of them is Netflix. 638 00:33:15,080 --> 00:33:17,880 He bought half a percent position into Netflix. 639 00:33:18,240 --> 00:33:21,400 That's a small position, but his portfolio is not a very 640 00:33:21,400 --> 00:33:24,640 concentrated 1. So he doesn't like piling money 641 00:33:24,640 --> 00:33:27,640 into only a few companies. But we do have Netflix there, 642 00:33:27,640 --> 00:33:30,560 which I fully agree with. I think that Netflix is a 643 00:33:30,560 --> 00:33:34,760 company that's looked at still to this day by most investors as 644 00:33:34,760 --> 00:33:37,040 struggling and trying to get profitable. 645 00:33:37,320 --> 00:33:39,040 And that's not the story with Netflix. 646 00:33:39,320 --> 00:33:40,880 The company is highly profitable. 647 00:33:40,880 --> 00:33:42,960 It's generating a ton of free cash flow. 648 00:33:43,240 --> 00:33:46,400 It'll do over $5 billion in free cash flow this year. 649 00:33:46,680 --> 00:33:49,200 And I think it will have sustainably high free cash flow 650 00:33:49,200 --> 00:33:51,840 in the future because I believe this business has a lot of 651 00:33:51,840 --> 00:33:54,270 operating leverage. Another company that he bought 652 00:33:54,270 --> 00:33:57,870 into is JP Morgan Chase. That is my favorite of every 653 00:33:57,870 --> 00:34:00,830 bank in existence right now. I think JP Morgan Chase is the 654 00:34:00,830 --> 00:34:04,030 best bet. So these two buys, I agree with. 655 00:34:04,270 --> 00:34:07,190 It is more of a conservative traditional portfolio. 656 00:34:07,190 --> 00:34:09,389 He has a lot of recognizable companies. 657 00:34:09,630 --> 00:34:12,550 These are great quality companies, the top one being 658 00:34:12,550 --> 00:34:15,429 Berkshire Hathaway. Then we have Alphabet, we have 659 00:34:15,429 --> 00:34:17,350 Nestle after that and MasterCard. 660 00:34:17,670 --> 00:34:21,719 These are very wide mode indestructible companies, very 661 00:34:21,719 --> 00:34:24,320 difficult to compete with companies now. 662 00:34:24,320 --> 00:34:27,560 Last but not least, we have Monish Barai who is an investor 663 00:34:27,560 --> 00:34:30,159 that there's a lot of controversy right now about the 664 00:34:30,159 --> 00:34:32,239 trades that he's made. So let's go ahead and take a 665 00:34:32,239 --> 00:34:34,840 look at what he's done over the past quarter. 666 00:34:34,840 --> 00:34:38,679 If we look at the activity here, we can see that he did make 667 00:34:38,679 --> 00:34:42,400 significant changes to his portfolio and surprising to a 668 00:34:42,400 --> 00:34:45,719 lot of people, including me, he sold out of some of his most 669 00:34:45,719 --> 00:34:49,280 longterm positions, ones that he's talked about repeatedly as 670 00:34:49,280 --> 00:34:50,800 being these undervalued companies. 671 00:34:51,199 --> 00:34:55,320 He sold entirely his full position in Micron Technology. 672 00:34:55,600 --> 00:34:58,560 And if we look at the stock price of MU over the past year, 673 00:34:58,800 --> 00:35:01,400 the company's traded around a little bit, but it's been mostly 674 00:35:01,400 --> 00:35:03,000 flat. So this one has been one that 675 00:35:03,000 --> 00:35:06,120 he's held for a while, but he's completely exited that one. 676 00:35:06,640 --> 00:35:09,560 We look at the other one that he sold entirely out of, which was 677 00:35:09,560 --> 00:35:11,920 Brookfield Corp. He was in this company with a 678 00:35:11,920 --> 00:35:15,360 lot of other super investors and this was another significant 679 00:35:15,360 --> 00:35:17,160 position. Now this is where we get into 680 00:35:17,160 --> 00:35:20,280 some of the criticisms that Monish Bry is receiving online 681 00:35:20,320 --> 00:35:22,400 today. A lot of people are pointing out 682 00:35:22,400 --> 00:35:25,400 that he was incredibly bullish on Micron, incredibly bullish on 683 00:35:25,400 --> 00:35:28,240 Brookfield, two companies that he talked about frequently as 684 00:35:28,240 --> 00:35:30,840 being these great quality, undervalued compounders. 685 00:35:31,360 --> 00:35:34,640 And then to just suddenly dump them seemingly without 686 00:35:34,640 --> 00:35:37,560 explanation. To buy 2 coal companies, 2 687 00:35:37,560 --> 00:35:41,720 commodity companies is a shift in both your holdings, but not 688 00:35:41,720 --> 00:35:45,040 just your holdings, but your overall investing philosophy. 689 00:35:45,400 --> 00:35:47,200 That is where the criticism comes in. 690 00:35:47,670 --> 00:35:50,790 If someone shifts holdings, but the philosophy is the same, 691 00:35:51,070 --> 00:35:54,630 they're shifting out. Google for Microsoft or some 692 00:35:54,630 --> 00:35:57,390 company that has very similar attributes but might trade at a 693 00:35:57,390 --> 00:35:59,910 different valuation, that's one thing. 694 00:36:00,310 --> 00:36:04,110 But what Monish Bhabra did here from the outside looks as though 695 00:36:04,110 --> 00:36:06,950 it's a change in investing philosophy, going from buying 696 00:36:07,350 --> 00:36:10,630 quality compounders to buying commodity coal companies. 697 00:36:11,150 --> 00:36:15,440 So it's perplexing to look at this and see what he's doing in 698 00:36:15,440 --> 00:36:17,640 my opinion. I'd like to see his explanation 699 00:36:17,640 --> 00:36:20,640 before I rush to judgment. I don't know why he bought these 700 00:36:20,640 --> 00:36:22,960 companies and sold these companies, but I'd like to see 701 00:36:22,960 --> 00:36:25,600 him explain why. When we look at his overall US 702 00:36:25,600 --> 00:36:28,560 portfolio right now, it's just these two companies. 703 00:36:29,080 --> 00:36:31,360 So we can see the the shift here. 704 00:36:31,720 --> 00:36:35,640 Another thing I'd point out is that this is only his US traded 705 00:36:35,640 --> 00:36:37,920 stocks. We have the international ones 706 00:36:37,920 --> 00:36:39,640 right here. So we can see his full 707 00:36:39,760 --> 00:36:42,680 investments right here. So he does have capital outside 708 00:36:42,680 --> 00:36:45,360 the US invested in different companies and I think a lot of 709 00:36:45,360 --> 00:36:46,800 people forget about that as well. 710 00:36:47,480 --> 00:36:51,880 Overall, I do agree that some level of of not really criticism 711 00:36:51,880 --> 00:36:56,080 but some level of inquiry of asking what's going on here is 712 00:36:56,080 --> 00:36:58,240 warranted. When somebody's talking about 713 00:36:58,240 --> 00:37:00,960 one thing and then they suddenly shift their strategy. 714 00:37:01,280 --> 00:37:05,000 I think the monish Propri could come out and explain why he did 715 00:37:05,000 --> 00:37:07,480 this dramatic shift and I think he'll probably get asked 716 00:37:07,480 --> 00:37:10,000 questions about that. But I still think it's 717 00:37:10,000 --> 00:37:12,480 interesting to see his trades and to see what he thinks his 718 00:37:12,480 --> 00:37:15,090 value overall. Monish Babra is someone that I 719 00:37:15,090 --> 00:37:18,930 respect as a as someone that shares investing philosophy and 720 00:37:18,930 --> 00:37:21,890 he's a great storyteller and I enjoyed listening to his videos. 721 00:37:22,130 --> 00:37:24,490 But he is not someone that I'd ever recommend copying his 722 00:37:24,490 --> 00:37:26,650 portfolio. I believe he changes his 723 00:37:26,650 --> 00:37:29,930 investing philosophy frequently and he does dramatic shifts to 724 00:37:29,930 --> 00:37:31,930 his portfolio quite frequently as well. 725 00:37:32,610 --> 00:37:34,930 So that wraps it up. That's all the Super investors 726 00:37:34,930 --> 00:37:37,220 for today. Now if you enjoy this type of 727 00:37:37,220 --> 00:37:39,460 content, make sure you subscribe because we're going to have 728 00:37:39,500 --> 00:37:42,540 another super investor video in the future as more of these 729 00:37:42,540 --> 00:37:44,780 reports are released. But that's all for now. 730 00:37:44,940 --> 00:37:45,780 I'll see you in the next one.