YouSaid · the spoken record

Andrew Martin

lines on the record: 57
first: 2025-01-19
most recent: 2025-01-19
sittings or episodes: 1
sources: podcast

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“Yeah, well, yeah, to come to our website, I guess, failightcapital.com. We put information out on X as well, starting to use other social media platforms a little bit as well. So yeah, under Fair Light Cap. So yeah, just continue to read our letters.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Lines as well that sales are produced now, Dickie and the SaaS businesses, and that approach can be generating income for a long period of time for those kinds of businesses. That could be a big effect as well. So taking those expenses out is often far too aggressive. So we make adjustments for that to try and normalize earnings. Often it's quite shocking the result that comes out of that you find that something that looks fairly valued or a little bit too expensive turns out to be incredibly cheap. And then what's interesting is then as you follow that through the years, you see that that actually starts pen out that the income goes up and those expenses are starting to come through as having generated that growth that you see.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“But still, the AI technology itself still won't necessarily get valued in the right way. So, yeah, one thing we do is, and again, it's more an art of science, it's difficult, but try and work out what components of the R&D, for example, expenses should be taken out and are really actually true income. And I think that comes down to a lot of things in the income statement. It's easy to think of the income statement as a very certain set of line items, but there's a huge amount of art rather than science in terms of the numbers that take you from revenue to net profit. And I think, you know, this is one example of that where you should really just be accruing those expenses over a much longer lifetime. And for a fast growing business, that can have a huge impact in terms of the amount of expenses being recognized now for growth that's going to come five years down the line and create much more income. And a similar thing as well, not necessarily directly related to technology, but it can be often with software, is the sales and marketing.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, that's a really good point. I think a lot of people are more and more people have started to realize this. The year, say, 50 years ago, a company is building a widget or builds a factory to create the widget, to build the widget. Yeah, and that factory would have an asset value, it'd show up on the balance sheet. Nowadays, you have software companies developing all kinds of very valuable tech assets effectively that don't really get valued correctly and the expenses that kind of go into creating them, you know, always kind of just fall off the balance sheet and get subtracted against the income statement in too aggressive a way. And some companies make adjustments for that, use the accounting we think of as the right way. But yeah, I think that sort of lags a lot behind where these companies should be valued. So you get a lot of much more asset-like businesses than you would have done in previous decades. And it's only going in that same direction. Maybe with the event of AI, you'll have more data center.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“They're doing, they obviously have a lot of hardware manufacturing as well, but you can maybe say that they're 30% technology or 50%. And then that kind of bumps it up and eventually gets to the point where, what is technology? It's kind of a lot of different things that kind of covers almost everything to some extent rather. So yeah, I think that's a real trend. And I think the other thing that kind of made me think about that was Buffett himself, who avoided technology, whatever that meant over the years that he was investing. And then he started investing things like Apple and realized actually that's a really good investment that totally fits inside his circle of competency. And lots of other things probably would have done through the way. And maybe his bias against technology kind of delayed him doing that. Yeah. And it kind of made me think it shouldn't be biased against technology that it can be uncertain. And there are cases where certain businesses are uncertain that technology aspect and high level of competition can be a factor, but there are a lot of businesses out there that are much more stable and much more solid than there would have been if there were technology.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think that people chasing technology was true years ago, so maybe 20 years ago for dot-coms, and there's probably still an element of that, I guess, now with AI. Lots of companies claiming to be doing a lot more with AI than they really are. But I think there is also a trend, a real trend as well, that I started to notice it as we were doing our portfolio reports and the bucket things for investors into different categories. So this is industrial, this is consumer discretionary, this is technology. And our technology buckets start to keep going up. And it was because some of the things we were investing were kind of clear technology companies, software companies. But then some of them, you kind of dug into the business like, well, this probably wouldn't have been called a technology company 20 years ago. Wouldn't have had that element to what it's doing. You know, maybe it would have been called publishing or something else like that. So just kind of made me think that it gets to the point where McCoy, like you say, is probably a good example of that has such a large technology component to what they're doing. It's not just”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Nature of the businesses have high levels of cyclicality, and some businesses are just more uncertain. So, yeah, I'd probably go for the more certain business magazines.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, that's probably not enough information, but just to take the general point, I guess I think it would be the one way we can get the most certainty. So yeah, if you can figure out the certainty that maybe it's not as cheap, but you have more certainty for whatever reason it would be, those often you're biased psychologically, I think, to the cheaper one, but often the latter turns out to be the better investment because it will carry on being certain. Maybe it's in the business where the cash flows are more certain and that will kind of steadily grow over time. You know, we've had examples and color both sides where there are some businesses out there that are doing extraordinary things and growing over many, many years rates above 30%. And you can kind of just see that continuing because there's kind of embedded really strong business modes that they have and it kind of comes down to that. And maybe the uncertain one doesn't have as much of a note. It'll be the reasons that go into that. That's causing, you know, you might see quarter to quarter volatility or something that, you know, makes you feel less certain because of the.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Whole portfolio and trying to balance that in this kind of good way to look at things as well because it kind of again changes your mental model because it forces you to sell things that are becoming a little bit too expensive and stops you thinking about the price movement. It's one of the biases that it's easier to get caught up with. It just fundamentally makes you realize this stock is now whatever it would be of 2025. It might be still growing or it's growing okay but it's not three times less cheap than it was when I bought it. So maybe I should be selling a little bit of that and buying that out of the one I've just found that, you know, had a P of 5. So it was. Then yeah, it kind of helps you. And as I say, there's some metrics we use to kind of force ourselves to do that and it kind of stops some of the biases that you have when you look at stock movements and just see the movements on charts. So that's kind of one of the ways we look at it, that thing helps.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“I guess we have a couple of elements to that. I mean, one's kind of as much as anybody does in terms of looking for cheap businesses that are growing. And I think it's probably the second of those that helps with that if you're looking at a lot of different stocks. It's kind of amazing what will pop up, especially if you're looking across the whole world. There'll be things that are kind of jokingly thought about them as gulp stocks or growth. Unbelievably low price. You can find some things if you look hard enough that you're almost surprised they exist and they're that cheap. And then you'll often find somebody else has also found them. So you're not the only one. But if you look across enough stocks, then you see more of those than perhaps other folks would. But I guess the other thing we do, we kind of embed the way we look at individual stocks into the portfolio and do a cross comparison of how cheap they are with a whole bunch of metrics within the portfolio and against the external market and other ideas we're looking at. So looking at the yield or how much cash a company has on its balance sheet, but just looking at across the”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Been a really bad geopolitical issue, or you know, wars breaking out, that kind of thing. But yeah, you have to be kind of mindful of that when you look around the world as well.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Surprising to me over the last couple of years in Canada that people have not really been as invested in Canada as they maybe should be and that seems to have changed the last year or so and there have been some bargains over the years in Canada that there probably shouldn't have been because it couldn't be, you know, it's not that different to the US in terms of a lot of things that are going on over there. And I think you're right. The one thing that has kind of helped us is that when markets were cheap in one place, they've been expensive in another place. We were able to shift. There was a point a few years ago where the US had got very expensive, but East Asia was very cheap, so we kind of shifted, rotated over there. And then it kind of flipped back the other way a little bit. And we found some better ideas in the West again and over the last couple of years, Europe has had some good pockets of good investments. But yeah, I think in general, we kind of look at places where there's kind of good governance, right? It kind of comes down to that and being careful of what the kind of political, geopolitical situation is behind that. Avoiding anything where”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Things that every country's a lot of countries have banks and different kinds of businesses, you do get some quirks in certain countries where things work a little differently in East Asia and Japan. I was doing research sort of through A to Z of Japanese stocks. And I just couldn't get comfortable with most of them because they weren't doing very many buybacks or they didn't pay any dividends. They were just building up cash. And so there's a lot of stocks that are fantastic businesses, but just that capital allocation is atrocious compared to somewhere like the United States where people do lots of good buybacks if they're building up too much cash. But that's starting to change and has been pushed to push companies to do that. And there have been a few that have kind of popped up on our radar. Companies are starting to do or buybacks and things that make more sense in terms of capital allocations. So I think it's understanding the differences and the similarities. So some markets have similarities and some have differences. And then, you know, it's kind of been...”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“And see if they're selling. That's one thing that you want to be able to do and be able to get this kind of alternative information. And it does make it a little bit difficult if you're looking at a completely different place, which maybe means you have to do a bit more digging around of what's going on over there. But I think there's often a lot more similarities than people think in non-English speaking or in different countries outside the US. A lot of investors I know don't really like looking at non-English speaking countries and don't invest that much outside the US, which then potentially creates opportunities that there are markets like Singapore, Med, there's been some good investments over there and it has historically got some links with the West in ways that other countries maybe don't have the same kind of links other countries like India are very difficult to invest in if you're on the outside, sadly creates a sort of barrier there. But it's really just kind of doing the same kind of analysis. You know, often the businesses are doing similar kinds of things.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it's partly made easier by things like the internet where you can search up a lot of information and go down rabbit holes. It's kind of amazing sometimes what you can find if you really dig down into all kinds of weird and wonderful websites, amazing what information is out there, even in different countries. And I think it's also been recently made easier to some extent with AI and Google Translate. It used to be difficult sometimes that you could kind of just about recognize the income statement numbers and the balance sheet because you could see whether numbers made sense versus how you understand those things fit together. But you wouldn't be able to read the language behind it. Management discussions around it. But now that, you know, the Google Translate and other translation AI tools, that's become a lot easier. But yeah, it makes it a little bit of difficult. I mean, it kind of goes against, I guess, the scuttlebook kind of approach where people actually visiting stores to see products.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, people need to be careful. And I think most people do that in terms of the people I follow on social media do that. And it makes you worry about some of the crypto investors who are maybe putting a large amount of their early wealth or whatever into crypto. And some will make a lot of money. Some might lose it, get burnt by that, which is very sad. But I think you have to fundamentally kind of structure what you're doing, however you do it through money you've saved up if you're working or some other kind of buffer that allows you to give you that time where you can just have that buffer against the volatility because even the best investor in the worlds will have up and down periods and you just need to have that cushion.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think for everybody, you need to try and find a way that you're not in a rush. You're not trying to get rich quick because that's very difficult or impossible in this way of investing. People I read about doing different ways some people have maybe built up a nest egg already so they can kind of use that as a backstop or there are some other forms of income. I think that's what you need to do if you're going to be patient. So yeah, you either need some kind of buffer or cushion if things fall, stocks fall, you're not going to be panicking at thinking, I'm not going to be able to pay my mortgage or my rent next month, then that's going to make you make bad decisions like I need to make that money back because you just lost it. So you've got to avoid that kind of setup. Yeah, and I think it's fundamental thing you have to kind of set up your life in a way that allows you to do that and give yourself years and years of time to be able to figure out what you're doing and work it out that way in at least five years and longer than that if you can but yeah”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“By 60%, and that's, I think, somehow the wrong mindset of what you should be trying to do. You should be trying to say, what's the probability that this doesn't work out? This does work out.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“At the moment, for the bad things to happen to these stocks and for the price to drop precipitously from where they are now, gold would probably have to fall down to $1,600 or $1,800. And that's probably being generous. But what's the probability that's going to happen? In my mind, that's fairly unlikely, have very unlikely. And then if the gold price kind of stays in the range that it's in there, maybe goes up or down a few hundred dollars. say it goes just down a few hundred dollars then the stock price will still be very very cheap so again you assign other probabilities that and then the high probability that gold kind of drifts upwards then in that case the stocks are even more cheap than i'm estimating they are and if you put that kind of probability weighting against those different scenarios you come up with what you're estimate is of what you think is going to happen so i think it's a good way to kind of force your brain into that odds making kind of process not just go is a lot of investors some younger investors i think try and estimate a price and say this is undervalued”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Kind of estimations you're making in the future, trying to work out probabilities of those would happen. So, I mean, you can do things, for example, like coming up with different scenarios as kind of basic one that there's the kind of the middle point of what you think is going to happen, the low end and the high end. And if you kind of force your brain to then think about what's the probability of that's going to happen and the bad case and the good case, it forces you to think in a slightly different way. And I think you come up with a better estimate of what will happen because it's forcing your brain to not say I think the valuation of this stock is X. I don't think that's very helpful. It's saying, well, it's somewhere between X and Y. And there are these kind of bands of good, bad, and fantastic. So, but what are the probabilities those will happen? So what's the probability that the inflection doesn't happen at all? And then your brain can kind of go through that. You basically create a scenario of, I don't know, I guess like the Gold Stocks, that's one thing we did with that. So the gold price is somewhere a little over $2,600.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think the probability angle is an important one. And I read something that there was an investor who was talking about it on X about Buffett being a very good kind of probability odds maker. And again, that's not something people associate with him because he probably doesn't talk about it as much. He kind of makes off the cuff comments. But if you go back to some of his early stuff, he's obviously doing a lot of kind of probabilistic weighting of things. And not everything invested in worked out. So Berkshire Hathaway itself didn't do very well. And yeah, I think that's one of the things you have to kind of force yourself to do. asking in one of your previous questions about inflection points and being certain that they're going to happen you're never going to be certain that it's just the probability that you you're going to be going to have that inflection point and being as certain as you can so yeah there's a lot of odds making and it's it's a difficult way to force your brain to think so there are some things i do in terms of i guess almost like a checklist of certain things that i look at in different stocks and depending on what kind of situation it is and what”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“And once the kind of mark to market effects of the mortgage business faded away, it was obviously going to make tens of billions of dollars, which is what then started to happen gradually over the next couple of years. But the market realized within probably a year that that was the inflection point it was happening and the fine wasn't as big as people thought and it's kind of staggered. And then the price tripled within about two years. So that was an example where you do the analysis even with a big name like that worth billions that being kind of contrarian and that kind of yeah made me think that that's a good way to kind of look at businesses. And yeah, I guess then again a bit more earnings focused and then the latter years focusing more on the growth side of it as well. But it's kind of the balance of all those things.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Intensive their handling of the situation. So I think at the very bottom, they were trading somewhere along the lines of if you normalize their earnings and worked out what that business was really worth and could earn, they were all trading at about three and a half, four times earnings. And it was Bank of America and they were going to grow, obviously, over time because some banks had not survived the credit crunch. So there's going to be more of an open playing field. The regulation was obviously going to hamper growth a little bit, but there's still a lot of growth kind of built in there. And yeah, it was one of those situations, again, where it was Bruce Berkwitz. I was reading all the stuff that he'd written about that name. And it just really kind of made sense to me. And obviously the market didn't think, so thought the Bank America was going to get a very large fine and the price that it was trading that the mortgage business was going to blow up completely and the rest of the business didn't exist. Basically, it was making a huge amount of money out of credit cards and the rest of its businesses on the commercial side and retail banking, huge amounts of cash flows coming out of those businesses.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Of things. And I think that's kind of the evolution a lot of investors go through, and I've gone through as well that I was probably more kind of asset focused in the early days. I would look at the assets of a business, whether it's cheap price to book, but it was still kind of a healthy business. And some of those worked out. Some of those didn't work out so well. And then I think for me, that's probably a lot of investors, if not all investors, have one or two stocks maybe that they have a success with very early on that then lights them up and you think, oh, maybe I can actually do this because that worked out really well and I made some good money out of that. So yeah, I'm one of my ideas was Bank of America in 2011. So that was very early on for me in terms of what I was looking at. And it was just very, very cheap name at that point. It was kind of coming out the back of the credit crisis. But it was still having problems with its mortgage book. It took years for that to all kind of play out. And a lot of banks and Bank of America suffered particularly. And they were also waiting to find out the results of a fine they're about to get.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think one thing that I read is built Phil Eckman was saying you either breathe the materials from Benny Graham and Warren Buffett and you have an epiphany or you don't, it's kind of you're more of those two camps and you kind of get it and I did kind of made sense to me and I was kind of surprised at myself and the rest of the human race that there were other people who don't invest that way that you have memento investors and different things obviously that make sense in different ways and do make money But yeah, the whole value investing idea kind of made sense to me that I did, I think what a lot of people do went back and read writings of Buffett I like most for the partnership letters when he was dealing with small amounts of money and doing sometimes quite esoteric things and things that don't people don't associate with him like short selling and you know he's much more activist back then as well so yeah that was all fascinating and then I read through you know over time his letters and he mung them became more of a kind of growth investor I guess so he looked more at the business”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Those two elements as well as the business element kind of worked through the inflection and has the financial results come through. In the very rare cases, the business inflection has happened. Nobody's really picked up on it. And then the financial inflection has also started to happen. And if it's still cheap at that point, then that's usually can have a lot of certainty at that point.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“So you dive into the business, you try and understand. You think there's an inflection point, you try and understand as much as you can to prove to yourself with enough certainty as you can. You're never going to be 100% certainty, so it's probabilistic. If the inflection occurs, that might mean you double or triple your money. So you've got to be, if you become 50% certain, and that's good expected value, you kind of pay off, but you can become more than that, and that's obviously even better. So you don't necessarily have to be even 90% convinced you have a very good idea and you spread it across multiple ideas, of course, that we've got some good examples out of the mode where we're just trying to get as much confidence as we can that these things will play out the way we think they will. And if they do, you probably will make two or three times your money in the next quarter or two because what we think is going to happen will happen and it's kind of started to happen. So these are actually fairly early for us by a few weeks and months. Yeah, so you haven't actually seen like the financial results come through, but you start to see some of the business results.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think it comes down to a lot of the time that kind of inflection points we're looking at, they're not a long way out in terms of time. So they're not years and years out. They're probably in the next year, 18 months. There's lots of times where you look at a business and you can kind of see in the next few quarters I'll know whether this is working out or not. So you don't have a lot of time in the kinds of businesses and inflection points we're looking at. So yeah, you have weeks or probably one quarter usually to do all the analysis that you need to do as much as you can. So it's really a question of kind of diving into the business, trying to understand it as well as you can. Often there's technical and technological components to it again, which makes it can be a little bit more challenging, but you have to kind of do the work. Yeah. And some of it relates to like software and there's a lot of businesses relating to the internet and how that wouldn't have existed 30 years ago, 20 years ago. And so things really, you've got to try and get to the point where you have more certainty as quickly as you can.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“So, I think, yeah, kind of keeping it at that level, I think, is best in terms of you then are a little bit more laser focused on what's happening with those stocks. And as you say, if you need to add to a position that's kind of gone nowhere with the business is doing well, then we would do that. I've had situations where stock we liked went up a lot, sold out of it completely, and then it dropped for various emotional reasons and things that were happening in the market again from a contrarian point of view, I didn't agree with why it had fallen. And then, yeah, and then we bought back in and it's gone back up again. So you get these kind of weird situations, yeah, that's probably, you don't get a lot, but sometimes you get situations we can buy into a stock twice and then, you know, make money out of it, depending on what happens with the emotions and what Mr. Market's thinking about things.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“A lot of the new technologies are coming out. People are starting to talk about quantum computing, but that's even more perhaps in the future, but maybe not as much as I think it is. Yeah, so there's lots of different ideas that come up at different times. And then it's a balance between that and how diverse you want to be. But yeah, I think somewhere between, you know, it could be between 10 and 20 core positions or maybe as low as eight if you have like a period where you've got some very high conviction ideas for the majority of oppositions that's kind of where we've been in terms of diversity. To have much more diversity than that is hard to track everything and be on top of all the businesses in the details you need to be. And often they're in completely different sectors, which makes it hard if you're trying to understand 10, 12, 15, 20 sectors or subsectors. That's kind of hard, especially when a lot of them are quite technical. And there's technical elements to every business. Trying to track that is difficult. So I think that would then start to hurt your outperformance.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it varies. It's sometimes been the case that we've had, say, between eight and twelve kind of core positions and then a smaller tail of positions we're kind of going into or out of, but we're probably well into the 20s at this point. And it's partly a function of what the market's doing, although the market is expensive in lots of regions at the moment. There does seem there's quite a few ideas out there because a lot seems to be changing to me. So things like AI.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“But then there's a couple we're looking at at the moment which are much more recent, and you kind of see why they've only just started inflecting now because really you get obviously the operational leverage effects start to kick in. So some businesses, they just started off very, very small, have grown and then hit an inflection point and people start to notice them and bigger customers come along. And then that can be a good inflection point. But maybe the market hasn't kind of noticed that yet. But the growth is still there. So yeah, it's a mixture of those things, I think.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, we don't look at so much a turnaround. So, yeah. Investors like Paul. Often it's a mixture in terms of how long a history a company has had. Sometimes the stocks we look at have maybe IPOed, say, five years ago, and they've kind of grown steadily, but then they hit the inflection point and something big changes. Other stocks might be two, three years old in terms of their journey along the markets. And then an inflection point. But then I think, again, maybe come back to McCoy Global is a much older idea in terms of a company's been going for decades and decades has been listed for a long period of time, but then has kind of come to a point where it was very cheap and was growing more quickly and had inflected in terms of its business strategy. So it changed fundamentally in various ways what it was doing. And it just happened. And when you tracked back through the history, there are lots of very complicated reasons why it got to it, where it had in its journey. So, yeah, so you get ones like that that are, you know, a bit longer in the tooth, as it were.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Could only invest a small amount because they were so illiquid, they end up doubling, of course, and then you sell out of them. But yeah, you kind of have to limit yourself to, I think, ideas where you can kind of sell out of them in a reasonable amount of time, like say a few months, something like that. Kind of beyond that, then you kind of, there are often good investments, but you're kind of a bit more stuck into them. And I prefer to have a bit more liquidity in that.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Suddenly, there'll be a whole new cohort of people you want to buy in this stock, and maybe it's dropped 20, 30%, but then you can perhaps more easily sell out of that if you need to. So yeah, it's kind of worked out in both directions really in terms of the liquidity side of things. And I think we try and impose a limit as well in terms of liquidity. So there's been a few really good ideas that if we was only managing like a few thousand dollars, then they would have been fantastic investments.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Is possibly or probably causing some of the illiquidity people don't want to invest in particular lanes. And then if you're right in the stock appreciates in the ideal case, then they tend to become a bit more liquid. So they grow. So a $50 million market cap stock will become a 500 billion, an extreme example, and that's going to become a lot more liquid. And then it's much, much easier to sell. And then if there's an idea that doesn't really go anywhere, then hopefully you've got a bit more time. Oftentimes we'll have an idea and it doesn't quite pan out the way you'd predicted. And so nothing necessarily bad happens to it, but then you just kind of sell out of it over time. Yeah. And so I think that kind of helps your app performs that kind of effects that things will become more liquid as they appreciate if you're right. But then you do get obviously the converse problem where you might be wrong, but then I guess the opposite to that is that that can often increase liquidities or people will be suddenly selling. Maybe the buyers disappear.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“It's an interesting point that I guess. I mean, most of the, we don't set out a rule that says we will only invest in ideas below a billion. That just tends to be where most of the ideas are. We've had a couple, or in my history, I've had a few as well, that we've been multibillion dollar names that were very liquid household names, but they just go through a certain point in time where they become good investments that kind of fit inside the framework of what we do. But it tends to be that most are below a billion. So yeah, you do end up sometimes having less liquid names, but it's kind of surprising that just a stock at a particular market kept level, some will be liquid and some won't be as liquid, even at the same size. And it varies by market and region, of course. And over time, but I think one of the things we've found is that the kind of lucky element of if you are writing what you're looking for and you find an undervalued stock, and again, you're investing against the crowd.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Does well and becomes a large percentage of the fund, you can run that up to a point, but I think still have to manage that a little bit because, yeah, you've got the kind of liability side of it. So I think it's kind of a liquidity management question that's kind of interesting that not that many people talk about it, but it's a fundamental part of what you do because you don't want to end up in the position where you have to sell this stock that you think is very cheap and the business is very cheap because you're having to manage that against maybe another position that's more liquid. You have to try and balance all those factors. So yeah, that's kind of how we look at it. Liquidity holistic management sort of exercise.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Number one or a few, you know, say three, say three and a third percent investors because they could cause you some difficulties if they suddenly redeemed all their money. So we have to manage it on that side. And we haven't really had any really large investors come in who've kind of changed the sort of structure on the liability side. But a couple of times there's been a couple who've got close. So we've kind of put in some gating mechanism, just a very mild gating that would just help us a little bit if they needed to withdraw it all at once and they would get the money out in two or three months anyway, but it would just help if they needed to do that. So on the liability side. And then I guess on the asset side is, you know, again, it kind of comes down to liquidity if you're investing in S&P 500 stocks, then you could quite easily just liquidate with very little effect on the AV of the fund. So again, you've got to obviously have a portfolio of different names and kind of manage that, whether things are going well or badly with the stocks, you know, if stocks.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“And it is a tension when you're running a fund or managing other people's money that, yeah, you can't control what everybody wants to do or needs to do. And it can be independent of the market sometimes that somebody just needs to make a redemption for their own reasons. It can be things that are happening. It could be a business person who's having to generate some liquidity or whatever the reason. And it can be when the market is going down or it can be when, like you say, that the fund has done well or badly. you know, the timing of new investments and redemption doesn't necessarily come when you want it and when you're finding new ideas. So yeah, I think we kind of try and manage it holistically. So you don't have a single investor that's too large in the fund. So it's kind of the opposite side of the fund manager management side of the business that sometimes people don't talk very much about. I don't think. You've got to manage the liability side as well, that it's much better to have 100, ideally 1% investors or rather.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Because we're still building a position, but probably mention it early next year. But similar kind of thing where the kind of stocks that we like are inflection stocks where there's a change to the business or some strategic shift or something, it's kind of fundamentally affect the business or there's a new deal or some kind of interaction, some financial change that's going to kind of prove out that the strategy is working for a business and you kind of see it playing out. And that's kind of what we look for, ideas where the thesis has kind of already started to play out. I like those kinds of ideas that you don't have to predict that this competitor will do this or this market will do this or this product will work. It's already started to work, but maybe people haven't quite picked up on that fact and the tectonic plates of only just started to move. Those are some of the best ideas, I think, because you've got a lot more certainty and less risk than other ideas we're trying to predict markets that are very complex two to three years out. So yeah, that's kind of where the thing.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“People are going to start looking at that and start, why did that go 5%? And they realize there's a piece of news, and then it moves up another 5%, and then before you late, you've had a 20, 30, 40, 50% move. So, yeah, I started to observe that in different names. And it was kind of around the time, I think it was Cypher, pharmaceuticals. There was a little small piece in one of their calls where they just said that they'd obviously bought this new business line and the CEO kind of casually says, so this has doubled our revenue and earnings for next year. And nobody really picked up on that part of what he said as quickly as they maybe should have done. And the stock price moved just a little bit that day. And then more people noticed and it moved a little bit more, a little bit more. People realized there was this fundamental change to the business. It was already a very good business, but it was kind of reinforcing the fact that the CEO is doing very good stuff and had just made a big change to the business. And that's happened in lots of other places. There's a few stolts at the moment that we're looking at where this is also happening. And it's a few names that we're not going to mention.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, Glad picked up on that because not many people kind of wrote to us bath afterwards, but I thought it was a good example from my physics past, I guess, it kind of made me think of that. Yeah, so in earthquake physics, there's static and dynamic friction. So dynamic friction is less powerful than static friction. So you have tectonic plates rubbing against each other, the pressure and forces build up. Then it reaches a tipping point or point where the static forces can't stop the plates moving against each other anymore. So they start moving and they switch into the dynamic friction regime, which is a less strong force. And so they move a lot. So it's kind of an analogy where, yeah, when something starts moving, it's like anchoring in the case of stocks stops forcing the stock to stay where it is. And you can imagine why that might be in terms of psychological agent kind of theory that people are looking at stock prices. Well, stock hasn't moved to weeks and weeks, and then suddenly it goes up 5%. Everybody's going to start, you know, a lot.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Stay in your lane for all of a better phrase and do what you do and just, you know, keep following a process, I think, is one of the most important, yes.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“You were maybe wrong in one of these thoughts. And then you have to then start agreeing with the herd. And yeah, maybe you have to sell out a position at a small loss or reduce the size of your position. Or sometimes you might miss out on an idea as well that omin, that's the sins of a mission, I guess, that there are some stocks you look at and you just can't quite get to grips with why they're cheap. And sometimes you're wrong. So, I mean, it's not, that's one of the least bad ways to be wrong, I guess, that you're then just missing out on making money rather than losing an ebo. You know, lots of times I read Thesis from different people. I don't quite, it doesn't quite fit into what we do, but it ends up doubling in a year's time. You go, okay, the guy was right and the analysis they did was right, but it's not the kind of thing that we'd normally do. So again, yeah, you have different kinds of crowds doing different things that, and I think you just have to kind of.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“That's a good point. It does happen, and it has happened, and it's often if the herd is right or, you know, some part of your thesis breaks or you were wrong, you're not always going to be right, then you just have to try again, forget the emotions a little that a bit and look at the analysis. So the X, Y, Z facts have just happened.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“What we're talking about at the beginning kind of comes in that, and that's the hardest thing to do, I think, is that you've got a position now in a company and maybe it's going through a kind of inflection point or the business has changed its strategy, which you think or estimates going to make XYZ changes in the future and push up if you're going long, the EPS or the free cash flow. And if that then starts to happen, it's roughly along the lines of what you were predicting, then that's very gratifying. And then people start to believe that. And I think the gold stocks based on what I'm estimating are in that kind of position now that unless gold kind of crashes off by a large amount of cash flows will keep coming in for these stocks. And people I think are starting to look at them a little bit more. And again, they're a bit like the McCoy example where they're not the kinds of stocks a lot of GAAP or value investors would look at because people don't like commodity stocks and I agree with them 99% of the time but this 1% I think maybe it's worth a look at.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think I actually am. Yeah, just in terms of the way I am, and you must be born. I think there are certain elements and traits of the way investors are kind of born with it or born with certain elements. I'm sure there are lots of elements I maybe don't have enough of. But the contrarian side of it, I've got that. Yeah, and it's almost being proven right, I kind of enjoy that more than being with the crowd. So if you see what I mean. Yeah, you pick an investment, nobody agrees with you or not many people agree with you, and then they start to join. Or sometimes a group of people who are investing in a particular Stockholm name who do agree with you, and then maybe the majority doesn't. So yeah, that's kind of happening in different ideas we've got at the minute. And then over time, you know, the stock price might start to go up. And the best part is really when what you have predicted or estimated will happen in the future. If that starts to happen, that's really kind of gratifying because that's really all kind of the estimation and analysis from.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Trying to stop that from bias what you're doing. I think you just have to look at the absolute level and say this is still cheap, this isn't still cheap. It's maybe a bit less cheap than it was yesterday or it's a little bit cheaper, but that shouldn't really bias you in terms of it's very hard to guess why a price has moved in any particular direction. I even remember one time, I think it was somebody on Twitter, I went back when it was Twitter, was arguing why a stock had moved. And it was literally because I sold it that day and they had pushed it down slightly. So I was arguing all these reasons why it would have gone down or up that day. And it was actually just because I'd sold the chunk. So yeah, you can kind of tie yourself up in knots in that. So I think it's, yeah, it's price movement rather than price level. I have to be careful off in terms of biases. But yeah, there are so many biases that you do have to kind of keep out. Your eye out for all of them and look inside. It's difficult to look inside your own emotions of what you're doing and why you're doing it, just trying to be rational, which is to fight down the emotional side of things.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think for me it's quite good at being contrarian and perverse if that's the right word, so I'm quite happy to disagree with everybody else. And if I find something that's really cheap, I'm quite happy to buy it if it's cheap. I'm not thinking there is often a reason why people aren't buying that stock. So it's good to find out. But then you've got to come to the conclusion you disagree with them for whatever reason. So we've been talking about gold stocks recently and I disagree with the market at the moment in terms of those that I don't agree with why they are as cheap as they are at the moment. But then I think the bias I personally have that to fight is kind of it's always price movement bias. So if a stock starts to go up or starts to go down, it's hard to kind of fight those animal spirits of, oh, you found a cheap stock and it's going up and you kind of, you know, you don't want to be stocked to panic by and chase the market up, especially if you're trying to build a position in something that's called a moderately liquid or, you know, it's going to take you a few weeks kind of build up a position if the price starts to move for you or against you.”
2025-01-19 · We Study Billionaires · TIP692: Reading the Signals: How To Identify Winning Investments w/ Andrew Martin · IDENTIFIED FROM THE TRANSCRIPT