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1/ Notes from @mjmauboussin episode at @InvestLikeBest
Anyone who has been following me for a while knows I& #39;m a big Mauboussin fan.
In this episode, they mainly discuss about his recent report: "Public to Private Market Equity in the United States: A Long-Term Look"
Anyone who has been following me for a while knows I& #39;m a big Mauboussin fan.
In this episode, they mainly discuss about his recent report: "Public to Private Market Equity in the United States: A Long-Term Look"
2/ I have a detailed thread on the paper discussed in the episode. (linked to the final tweet of the thread)
This thread is additive to my earlier threads on this paper, so will skip many important bits from the podcast not to repeat too much.
This thread is additive to my earlier threads on this paper, so will skip many important bits from the podcast not to repeat too much.
3/ $FB + $AAPL + $AMZN + $MSFT + $GOOG gains in the first 7 months in 2020 = $1.8 Trillion.
GAINS.
The gains itself is higher than the whole US buyout industry and 4x of VC industry.
Staggering numbers.
GAINS.
The gains itself is higher than the whole US buyout industry and 4x of VC industry.
Staggering numbers.
4/ One of the thesis of buyout funds is they think they can improve the operations of the firms bought.
But as sales to other funds increase, the question arises was the first fund not good enough to finish with all the "operational improvements"?
But as sales to other funds increase, the question arises was the first fund not good enough to finish with all the "operational improvements"?
5/ Why VC is perhaps the only asset class in which persistence remains pretty high: Preferential access.
6/ "High Yield" bonds issued at less than 3%: what an oxymoron!
7/ $WMT was negative FCF for the first 15 years as public company.
8/ SBC as % of operating cash flow is 18% for $SPY
SBC is essentially financing from employees and should be in financing, not operating cash flows
SBC is essentially financing from employees and should be in financing, not operating cash flows
9/ Maybe it& #39;s time to segregate SG&A into two components: maintenance SG&A and investment SG&A.
10/ Intangibles has become such a significant component of the overall investments that we all need to get a better grasp on how to incorporate their impacts in our valuation.
11/ Dealing with intangibles remains very tricky and perhaps why if you get it right, you may generate excess return.
Free Cash Flow still is unscathed from all these adjustments.
But make sure your company is not talking about "Free Cash Outflow" :)
Free Cash Flow still is unscathed from all these adjustments.
But make sure your company is not talking about "Free Cash Outflow" :)
13/ Network effects: a cutting edge investing jargon from...1908. $T
14/ If you could pick to invest in any one sector, which one would you pick?
@modestproposal1: Communications.
"Because you always have some monopoly to pick from"
@modestproposal1: Communications.
"Because you always have some monopoly to pick from"
15/ 40% allocators think private market is going to generate >14% return? Oh boy.
Great explanation why it never hurts to have such outrageous expectations. By the time people figure out the actual returns, you are probably not there to defend yourself.
Great explanation why it never hurts to have such outrageous expectations. By the time people figure out the actual returns, you are probably not there to defend yourself.
16/ What @mjmauboussin has been working on these days. Looking forward to reading these in future.
17/ "You have to deal with the world as it is, not as you want it to be, or you wish it to be, or how you think it should be...
don& #39;t complain about the world, figure out a way to thrive in it."
Never a dull episode with @mjmauboussin
don& #39;t complain about the world, figure out a way to thrive in it."
Never a dull episode with @mjmauboussin
18/ Episode link: http://investorfieldguide.com/michael-mauboussin-great-migration-public-to-private-equity-invest-like-the-best-ep-189/
Transcript">https://investorfieldguide.com/michael-m... link: http://investorfieldguide.com/wp-content/uploads/2020/09/Ep.-189-Michael-Mauboussin-Transcript-Final.pdf">https://investorfieldguide.com/wp-conten...
Transcript">https://investorfieldguide.com/michael-m... link: http://investorfieldguide.com/wp-content/uploads/2020/09/Ep.-189-Michael-Mauboussin-Transcript-Final.pdf">https://investorfieldguide.com/wp-conten...
19/ My long threads on @mjmauboussin& #39;s 56-page paper discussed on the episode https://twitter.com/borrowed_ideas/status/1291530125968912386">https://twitter.com/borrowed_...
End/ If you want to explore my other twitter threads, go here: https://mbi-deepdives.com/twitter-threads/">https://mbi-deepdives.com/twitter-t...
