When you can't beat them, join them!
Greetings Substack Users!
I’ve been posting articles and my personal investment research on various sites, including my own blog (fatalpha.com). Substack has grown significantly over the years, and can’t be ignored, so I decided to extend to this platform as well. My current plan is simply to share some of my own experiences and knowledge with you.
But first of all, who am I? To cut a long story short, I was born in Canada, grew up in Cyprus, educated in the United States, and worked in asset management all my life while I’ve also taught part-time. I’ve done both emerging and developed markets in both equities and fixed income over the last 2 decades. I’ve managed portfolios, as well as worked as an analyst and advisor to several institutions. Most recently for Zurich-based activist Veraison Capital AG. Of all my work, I’m most proud of the private, by-invitation idea exchange I organize in Cyprus called the Cyprus Value Investor Conference. The reason is that I not only made some great friends but my interaction with them has helped me evolve as an investor.
To quote Vitaliy Katsenelson:
Make investment friends. My life over the last twenty years has been enriched by having great investment friends around me. Today my investment friends are really just my friends, with whom I share and debate stocks, though we also talk about what your normal topics – family, kids, etc. Investing doesn’t have to be a solitary, sterile journey; in fact it should not be one. Every investor, without exception, will go through a period where he or she feels like a complete idiot – the market will do this to you at times (trust me on this one). If you have surrounded yourself with the right (humble, non-arrogant, empathetic, pull-you-up and never-push-you-down) investment friends, they’ll provide the support that will help you cope with this difficult time. Also, if you surrounded yourself with friends who are smarter than you, then you’ll have an endless opportunity to learn from them.
His entire blog post can be found here. By the way, Vitaliy also runs a fantastic event called VALUEx Vail.
As a result of my interactions, my thinking and style have evolved over the years. Remember how the late Charlie Munger got Warren Buffett to move away from cigar butt investing? I’ve been on a similar journey. Guess what the secret is to being a great investor? No, you don’t need to be smart. You need to be open-minded. I’ve lost count of how many people I know who are smarter than me. But many fail as investors. They insist that they are right and everyone else is wrong. Fact about markets: Most stocks are correctly priced, most of the time. Another Fact: That doesn’t mean you can’t beat the market. But that’s a very long subject for another post!
What to expect. There are a zillion blogs and substacks today. So I’ll only post when I have something worth sharing or talking about. No need for more spam. So let’s get into it!
Two weeks ago I was in London at the Weird Shit Conference. There I presented my view on a small company called Gaming Realms. The company is a B2B provider of a unique gaming IP (gambling) in an expanding market that is growing EBITDA at 30%+ yet trades at 8x EV/EBITDA ‘24F. The stock has gone up a little bit since I established my position but I believe the opportunity is still there. You can read more about Gaming Realms in a blog post here.
In London, I also attended the Peel Hunt FTSE 250 Conference. They did a great job of bringing investors and roughly 60 UK companies together to meet in small groups and 1 on 1. I opted for 15 small group meetings. Companies that I thought were interesting were: Mony Group (mainly a price comparison site that helps consumers save), Dominos (UK franchisor), Bytes (4th largest Microsoft reseller in Europe), Mitie (provider of services such as security, cleaning, landscaping, and other) and Inchcape (auto distributor). Not all of these are attractively priced but getting to know them allows you to be better prepared if the opportunity arises. Rather than trying to find an opportunity, investors would be better off working on their watchlist and studying companies. Remember the ‘hold’ scene from Braveheart? Investors are in too much of a hurry to act. Hold (aka sit on your hands) and wait for the right moment is almost always better.
Last month, I created a podcast called “No Fluff, Just Ideas” that focuses on interesting stock ideas from around the world. One of the reasons I started this was because many podcasts I heard did not talk about the numbers and that’s something I always wanted to hear more on. Big picture is all fine and nice but the devil is in the details. I’ve started publishing on YouTube, Spotify, and Apple Podcasts. For links to the episodes go to this page.
In my first episode, I discussed British American Tobacco with Evan Tindell of Bireme Capital. Evan used to be a professional poker player so he definitely knows a thing or two about odds. Over the years I’ve seen him make some great investments so when Evan has a pitch, I always listen. Click on the photo below to go to the YouTube video.
In my second episode, I interviewed Austin Crites of Aurora Asset Management. Austin and I met in Vail last year, and he made a case for Lovesac (with the ticker LOVE). Now that’s a ticker you can’t forget! Their biggest business is “Sactionals” - modular sofas that you put together like legos. Pricy but cool product with high gross margins. If they can get their SG&A in order, this stock could surprise. Click on the photo below to go to the YouTube video.
Podcasts are great. I hope you enjoy mine and if you don’t then please tell me so I can make it better!
Best of luck,
Sophocles