Ep. 36: Micro Cap Mastery & Unit Economics w/ Connor Haley, Alta Fox Capital

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Disclaimer

Nothing you hear on this podcast is in any way, shape or form to be construed as investment advice. The guest on this podcast may hold positions in any/all names mentioned during the podcast. This is not investment advice and investors should always conduct personal due diligence before investing in any security. Past performance of any funds mentioned are not indicative of future returns.

Connor Haley is the founder and managing partner of Alta Fox Capital. If you haven’t heard of Connor Haley, here’s a few highlights:

  • Graduated Harvard University
  • Founded Alta Fox Capital in 2018 and has generated (to date) 40% gross annualized returns
  • #1 Micro Cap Investor on Micro Cap Club

Connor is a fantastic investor and great business thinker. He focuses all his attention on the fundamental unit economics of business, as well as what makes for a lasting competitive advantage.

He fishes in overlooked areas (small-micro cap stocks) and routinely hunts overseas in search of attractive IRRs.

We spend an hour diving into the nuances of business fundamentals, unit economics and why Connor rarely does a DCF model.

Time-Stamp

  • [1:36] Intro Questions
  • [7:12] Traditional Education & Self-Taught Investors
  • [13:36] Lessons From The Best Chess Players
  • [17:21] Skewed Institutional Incentives
  • [19:56] Top-Ranked Micro Cap Club Member
  • [22:17] Connor’s 3-Pronged Strategy During COVID
  • [27:17] Understanding How Competitors Compete
  • [28:41] The Power of Unit Economic Analysis
  • [34:44] Asking Questions Like An Owner
  • [39:52] Stop Worrying About P/E Ratios
  • [47:11] 3-5 Year Time Horizons & Multiples
  • [51:35] Connor’s Q2 Letter & Highlights
  • [55:05] Don’t Focus on the Market Narrative
  • [59:47] Looking International For Ideas
  • [60:00] Closing Questions

If you’re interested in learning more about Connor Haley and Alta Fox, check out the following links:

gautam baid

Ep. 35: Gautam Baid – Compounding Knowledge, Investments and Passion

We all want compounding knowledge, investments and passion in our lives. Our guest this week, Gautam Baid, shows us how to do that.

Gautam Baid, CFA, is portfolio manager at an SEC-registered investment advisor based in Salt Lake City, Utah. Previously, he served at the Mumbai, London and Hong Kong offices of Citigroup. He also worked at Deutsche Bank as senior analyst in their healthcare investment banking teams. Gautam Baid is a CFA charterholder and member of CFA Institute. He was profiled in Morningstar’s Learn From The Masters series in 2018-2019. 

During our chat we discuss passion, flexible thinking and why P/E ratios aren’t everything.

Time-stamp:

  • [1:02] Intro Questions
  • [7:30] Gautam’s First Role as Portfolio Manager
  • [8:45] Resilience & Persistence as a Superpower
  • [14:01] Writing The Joys of Compounding
  • [20:48] The Feynman Technique of Learning
  • [22:45] Using The Feynman Technique for New Stocks
  • [31:25] P/E Anchoring Bias
  • [39:05] The Erosion of Brand-Name Stocks
  • [46:10] Why You Should Journal
  • [51:05] Investor Biases & How To Tell if You’re Wrong
  • [61:21] Insatiable Curiosity
  • [64:57] Closing Questions

I loved this conversation. It went outside investing and focused on an individual’s pursuit of personal excellence. This idea of compounding knowledge and passion applies to every area of our lives. 

Gautam lived his own Pursuit of Happiness movie during the early stages of his career. Baid showed that with passion, anything is possible. I know, it sounds cliche. But it’s true! It’s amazing what can happen when you commit to something. Whether that something is trading, marriage or a fitness routine.

Reflection

Here’s some personal questions I’m asking myself after chatting with Gautam:

  • What would it look like if I fully committed to my passions?
  • What/Who is stopping me from achieving success?
  • Do I fully understand the power of compounding outside the investment community?

Thanks again for listening. Let me know what guest I should have on the show next!

Learn More About Gautam Baid

Want to learn more about Gautam? Check out these resources:

Episode 34: How To Find Long-Term Winners Early w/ Turner Novak, Gelt VC

This episode is brought to you by TIKR. Join the free beta today at TIKR.com/hive. They’re constantly releasing new updates that make the platform better. I couldn’t be more excited to partner with TIKR. I use it every single day. Alright, back to the podcast.

Turner Novak is a venture capitalist and partner at Gelt VC. Turner came from a single-parent, low-income household and worked his way to becoming one of the more popular venture capital thinkers on Twitter today. Through hard work and sharing his thoughts online, Turner began finding his venture voice.

But it wasn’t until Turner created his Fantasy VC portfolio that he got past the hurdle of people taking him seriously.

Turner and I chat about strategies as a venture capital, how VC is different from public markets, key man risk and attaching numbers to narratives in valuation.

Here’s the topic timestamps:

  • [1:11] How Tuner Got Started in Venture
  • [6:40] Strategies as a Venture Capitalist
  • [13:50] How VC Is Different From Public Markets
  • [25:50] Elon Musk & Key Man Risk
  • [27:15] Turner’s Fantasy Portfolio & How He Found His Fantasy Investments
  • [36:20] Attaching Numbers To Narratives
  • [46:00] Child-Care as An Attractive Industry
  • [51:32] Three Industries Turner’s Excited About
  • [57:00] Building Businesses Off Existing Platforms
  • [60:05] Closing Questions

If you like what you heard from Turner, make sure to follow him on Twitter @TurnerNovak. Also, make sure to subscribe to his Substack newsletter (here).  Finally, find out what Turner’s doing over at Gelt VC.

[REPLAY] Episode 33: Long-Term & Differentiated Thinking with Clifford Sosin, CAS Investment Partners

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[REPLAY NOTE]: Due to scheduling and travel I was not able to get a new podcast to you this week. I apologize and do not expect something like this to happen again. I chose Cliff’s episode for a replay because it is one of my favorites, and also one of my first. New listeners will learn so much from Cliff’s thoughts. Thank you for your support!

Clifford Sosin runs CAS Investment Partners. The fund is a value oriented partnership focusing on investing in great businesses at discounted prices to their future value.

Cliff discusses his early days at UBS, the genius of the bankruptcy system, how he finds ideas and mental models. Cliff also reveals how to fix the banking system as we know it.

The conversation covers a wide array of topics and was one of our longer episodes. I hope you find Cliff’s insights as interesting as I did.

Make sure you follow him on Twitter @CliffordSosin

Also, if you’re interested in his co-authored white-paper on global banking, check it out here.

Episode 32: Dissecting Network Effects & Local Economies w/ Keith Smith, Bonhoeffer Capital

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Keith Smith is the portfolio manager of Bonhoeffer Capital. Bonhoeffer is a global-oriented fund focused on finding compound mispricings across the capital structure. The fund looks for misunderstood businesses and poke around unconventional fishing holes on their quest for alpha generation.

Keith joins the show to discuss his investment process, local scale economies and finding hidden opportunities across the globe.

If you want to learn more about Keith, follow him on Twitter @Bonhoeffer_KDS. You can also check out his website here.

Here’s the show outline:

  • [1:33] Intro and Background on Keith
  • [6:05] Viewing Your Job as An Asset w/ Recurring Revenue
  • [13:03] What Keith’s Investments Looked Like in 1990s
  • [34:05] Why Keith Invests Across The Globe
  • [46:19] Investing in South Africa
  • [49:50] Compound Mispricings
  • [59:34] Investing in Businesses w/ Local Economies of Scale
  • [66:32] The Power of Wegman’s
  • [67:03] Bringing Local Economies To The Internet Economy
  • [76:13] Win-Win Investment Opportunities
  • [88:37] How Keith Finds Incentive Structures
  • [95:34] Fallibility & Changing Investment Models
  • [102:32] Closing Questions

If you like what we’re doing, please subscribe and give us a rating on Apple Podcasts, or wherever you listen to this podcast.

Episode 31: ETFs, Deep Value and Lessons From Podcasting w/ Tobias Carlisle, Acquirer’s Funds

This episode is brought to you by TIKR. Join the free beta today at TIKR.com/hive.

We’re stoked to bring you this week’s guest: Tobias Carlisle. Tobias is a Renaissance man in the investing community. He’s written four books, captains two podcasts and runs two ETFs. Along with that he’s a husband and a father to a beautiful family.

Tobias is usually on the other end of these interviews.

We chat about ETFs, daily routines, Berkshire Hathaway, asking better questions and more!

Here’s the show outline:

  • [2:12] Tobias’ Daily Routine
  • [4:01] The ZIG ETF
  • [9:21] Accounting For Negative FCF
  • [13:06] Trusting The Process During Uncertainty
  • [16:02] Hertz $HTZ
  • [18:22] CNBC and Buying Mentality
  • [22:07] Randomness in Investing
  • [24:05] Why Tobi Started an ETF
  • [31:19] That Time Tobi Toured Google
  • [39:35] Don’t Watch The Market
  • [40:31] What is Tobias’ Edge?
  • [45:41] Developing a Mental Edge
  • [50:28] Tobi’s Mt. Rushmore of Podcast Guests
  • [54:40] The Trouble w/ Paying For Growth
  • [59:51] Closing Questions

If you want to check out Tobi’s book, click the links below:

Also, check out Tobias on Twitter (here) and his website (here).

Episode 30: Finding Your Competitive Edge (& Lessons From Pro Volleyball) w/ Ryan Doherty

This episode is brought to you by TIKR. Join the free beta today at TIKR.com/hive.

Our 30th episode was one of the most esoteric conversations yet. This week, I had the pleasure of chatting with Ryan Doherty. Ryan was a former professional baseball pitcher (and at one point, the tallest professional player ever) turned professional volleyball player.

Ryan went from never playing volleyball to beating gold medalist team Phil Dalhausser and Todd Rogers.

We spend over an hour discussing passion, competition, mental edge and process improvement. I had a blast.

Here’s the outline:

  • [1:30] Who is Ryan Doherty
  • [7:19] Meeting Hall of Famer Randy Johnson
  • [10:58] Ryan’s Dark Days & Identity Crisis
  • [20:29] Leaving For CA w/ $5K and Nothing Else
  • [26:29] Burnout & Losing The Love of The Game
  • [29:55] The Pressure of Being The Weak Link
  • [34:32] Lessons from Traveling >20 Countries
  • [40:55] Ryan’s Start in Investing
  • [46:26] How Ryan’s Investment Philosophy Changed
  • [50:05] 2020 Doesn’t Look Like The CFA Exams
  • [54:54] Competitiveness as an Edge
  • [57:41] How To Keep Your Ego in Check
  • [65:00] Figure Out What You’re Working On
  • [68:00] Progression Through Self-Reflection
  • [71:10] How To Track Your Investment Progress
  • [74:35] Learning Python for Software Investing
  • [78:10] Closing Questions

If you want to learn more about Ryan, follow him on Twitter @ryandoherty47

Also, if you want to learn more about Python for Investing, check out Quantopian.

Episode 29: Spin-off Extravaganza (OTIS, MSGE, IAC/MTCH) w/ Richard Howe, StockSpinOffInvesting.com

This episode is brought to you by TIKR. Join the free beta today at TIKR.com/hive.

Richard Howe joins the Hive for the second time! It’s our first guest with a second appearance and we’re stoked to bring you this conversation.

This episode is IDEA HEAVY and features 5-6 new spin-off ideas for you to research, study and add to your watchlist. Rich dives deep into the following spin-offs:

  • Otis Worldwide (OTIS)
  • Carrier (CARR)
  • Ecolab (ECL)
  • Madison Square Garden Entertainment (MSGE)
  • IAC/Interactive (IAC)
  • Match Group (MTCH)
  • Kontoor Brands (KTB)
  • Howmet Aerospace (HWM)

We also discuss shorting micro-cap stocks, Rich’s friends asking for stock gambles and how Rich finds interesting, low-risk arbitrage situations in the markets.

Here’s the show outline:

  • 3:25 – Recent Spin-offs (MSGE, OTIS, CARR, ECO)
  • 5:14 – MSGE Bull Thesis
  • 11:24 – How To Capitalize Lease Payments
  • 17:40 – MSGE Pre-Mortum
  • 22:03 – Otis Worldwide (OTIS)
  • 24:25 – Carrier (CARR)
  • 30:00 – Normalizing Cyclical Earnings
  • 34:35 – Ecolab Spin-off Arbitrage
  • 45:54 – Howmet Aerospace (HWM)
  • 52:30 – IAC/Interactive & Match Group (MTCH)
  • 68:11 – Front-Running an ETF with Kontoor Brands (KTB)
  • 76:10 – Shorting Micro-Cap Stocks (ZOOM)
  • 83: 45 – Position-Sizing Shorts
  • 88:25 – When Your Friends Ask For Stock Gambles
  • 91:00 – Closing Questions

As always, thanks so much for listening! If you like what we’re doing, please subscribe and leave a rating and review wherever you’re listening. It goes a long way.

If you’re interested in Rich’s premium service, click here and use the code “Macroops” for a 25% discount. Make sure to follow Rich on Twitter @Stockspinoffss

Episode 28: Global Investing & Finding Your Edge w/ Brad Hathaway, Far View Capital

This episode is brought to you by TIKR. Join the free beta today at TIKR.com/hive.

This week we chat with Brad Hathaway, managing partner of Far View Capital. Far View Capital invests around the globe on the hunt for special situations. Brad graduated from Yale University with a Political Science degree and quickly found his way to the hedge fund/private equity world.

After honing his skills, Brad set off to start Far View Capital Management (website here).

I loved this conversation. You can tell Brad bleeds Investing, business and continual learning.

Here’s the show outline:

  • [4:08] When Brad’s Investment Passion Clicked
  • [11:56] Taking The Leap & Starting Far View Capital
  • [17:04] Personal Psychology As A Differentiator
  • [23:20] Examples of Early Wins & Early Losses
  • [31:05] Keyword-Based Searching To Find Ideas
  • [38:10] Understanding The Few Key Variables
  • [47:43] The Value of Depth vs. Breadth
  • [53:45] Arrogance vs. Humility
  • [70:10] Why Is This Being Sold?
  • [77:54] Global Spin-offs Are Great Hunting Grounds
  • [81:11] US Frameworks on Non-US Companies
  • [90:36] How Brad Likes To Short
  • [95:10] Spending Time Away From Screens
  • [104:05] Who Can Find Brad Hathaway on Twitter!
  • [105:25] Closing Questions

Big thanks again to Brad for coming on the show!

If you find Brad’s Twitter handle please email me brandon@macro-ops.com for verification. I will personally send you the book You Can Be A Stock Market Genius.

Also, check out Broadview’s Investor letter (and reference to Samurai scoring) here.

Make sure to check out Far View Capital’s website here.

Episode 27: Equity Investing Through a Creditor’s Lens w/ Jeremy Raper

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Today’s guest is Jeremy Raper. Jeremy runs RaperCapital.com and recently launched a premium investment research service.

Jeremy looks at public markets through the eyes of a credit analyst. This gives him a unique perception on markets, companies and capital structure situations. He’s not afraid to invest all along the capital structure, and often writes about unique long/short bond opportunities.

Before launching his premium research service, Jeremy worked over a decade on both the buy and sell side research departments. He even spent time in Japan doing equity/credit analysis.

During our chat we talk about Jeremy’s investment process, the edges gained while living/working in Japan, how he finds ideas and how he thinks about valuation/risk.

Here’s the podcast outline:

  • [1:10] – Lessons From Playing Tennis
  • [3:00] How Jeremy Got Started In Markets
  • [6:15] Lessons From The Buy & Sell Side
  • [8:35] Jeremy’s First Taste in Credit Instruments
  • [26:00] Jeremy’s Four Pillars of Investing
  • [32:12] Portfolio Construction and Allocation
  • [35:24] How To Extract Value From Net Nets
  • [39:51] The Pendulum of Shareholder vs. Customer Focus
  • [43:42] Returns ON Capital vs. Return OF Capital
  • [56:00] How To Avoid Value Traps
  • [60:00] Sustainable Free Cash Flow Definitions
  • [69:00] Jeremy’s Three Buckets of Idea
  • [74:28] How To Prioritize New Investment Ideas
  • [80:00] Kill Your Ideas Quickly
  • [84:33] If The Price Is Right, Look Deeper (CLMT)
  • [93:18] Real-Time Example of Credit Analysis (361 Degrees)
  • [105:46] Finding The Main Drivers of an Investment
  • [108:19] Raper Capital Premium — What To Expect
  • [118:28] Closing Questions

If you want to learn more about Jeremy’s research, head over to his site RaperCapital.com. Also make sure to follow him on Twitter @puppyeh1