YouSaid · the spoken record

Carl Kawaja

lines on the record: 101
first: 2021-07-27
most recent: 2021-07-27
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“And what I say to people when they join at Capital is that the river rafting analogy is very apt because you don't know what part of the river you got in at. You don't know where you dropped in on the river. And you might have dropped in right before the rapids. And if you did drop in right before the rapids, the odds that you're going to drop your ore or fall out in the boat are high. And you want to be in a boat where there are seven other people who've done it before and who are digging with their oars and pulling who importantly are going to go downriver and pull you out of if you fell out of the boat and put you back in. And sooner or later you will hit clear water. Like you will hit a long, smooth stretch of clear water and you will make your bones. And sometimes you join them January of 2008 and you went into the global financial crisis.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“You work hard and you keep an open mind and enter with certain attributes that we are really responsible for determining before you join or while you are here, things are basically going to work out pretty well here because we have a long-term time horizon. And some of the older former partners of Capitol used to like to take younger associates like myself on Riverrafting trips in the summer like we'd organize 20 or 30 of us to go on a river rafting trip in Idaho on one of the big river systems there like the snake or the middle fork or something like that. And if you've ever been on these river rafting trips, first of all they're a ton of fun and I'd highly recommend them. Second of all, I'd say they're like a little scarier than you might think. There are some rapids. There's some kind of waterfalls. People fall out of the raft. The water moves quickly. It's cold.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd love to. I joined Capital in 1991 out of business school. I shouldn't say this, but I'll admit that I kind of had a backup offer if it didn't work out because I really didn't know much about the firm and it was hard to learn much about it other than through the interviews. And I kind of thought I'll work there, but I know some other people in the industry, and if it doesn't work out, I'll go to some other place. And in fact, the other place that I could have gone to was going to pay me more than twice as much as I made for going to capital, which meant a lot to me coming out of business school with loans and everything else. But 30 years later, I'm still here. So I'm the lucky one overwhelmingly to still be here. Patrick is I feel, and of course everything's subject to change, but I feel that at this firm at least, if”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“And hold on to it, which is the kind of thing my mom would do. My mom would be like, Oh, that's a nice place by that and go there every summer. And you'll have a really happy life. Whereas my dad and I more, oh, well, there's that other place three blocks down. It's like a little bit closer to the beach. Isn't that look interesting this summer?”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“For me, probably... Holding on to things is harder because my nature is a bit reflective of my dad. I'm always looking for deals and bargains. And for me, everything kind of comes down to math. You're renting a house for the summer. And I always want to get the best deal, like the best location, the best road, the best view, the best layout, the best terms or something like that. My mind gravitates to that. I'm sure you're the same way, Patrick, but you want to build a spreadsheet, an algorithm, and like search me and V and find the best thing. And like, yay, you won. And sometimes it's like you won, you won, you won. And it's like short-term gratification. It's like social media or something. When really what you should have done was buy the house. Enjoy”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Much better to have higher prices, fewer customers, and make more money. My dad also used to say in this skill set like getting a good deal, but my dad used to say that when we were kids, he gave us 25 cents and told us to walk around the neighborhood and come back. And if we didn't come back with a dollar, we weren't his children. And kick us out of the home. But that buy side comes from that and you need a mix of them. In terms of what I think is harder, and sorry I segued a bit from your question.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“The buy well part from him because my dad is very numerate, very savvy, distinguished in school and knows a deal like the minute he sees it. I would go to a restaurant with my dad as a kid. My dad would say to me, what do you think of the prices on this menu and say, what do you think is underpriced on this menu? Do you think they're charging too little for the salad and too much for the drinks or vice versa? And then my dad for Watsworth, he's basically everything used to come down to raise the prices. If restaurants are full, it's because their prices are too low.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“My mother's influence. My mother is one of the all due respect to her, and hopefully she won't listen to this podcast. One of the most stubborn people I've ever met in my life. My mom has a point of view about the way kids should learn to ski, which is you start at the bottom of the hill and you sidestep your way up. And once you get good enough to sidestep your way up to the top of the hill, then you can ski down it. Not the most fun approach to learning how to ski, but one that you feel like is tried and true and safe and works well. And you're not going to convince her otherwise. And that part of me has helped me hold on to things, I guess. The part I'd say that buy well, and sorry to reference my parents, but my father was a finance professor, went to Columbia Business School, and then taught at UCLA and became an entrepreneur. And I feel like I looked”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Respect to whether it's harder to hold or harder to buy well, I think it kind of depends on your personality. And for me, I guess my personality in investing nature is partly formed not just by the left brain or something like that, but my childhood. The part that makes it hard to hold, I feel like I”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it partly depends on your personality. I do believe that this job is very, very idiosyncratic. We all learn from people in this job. I learn from you. And I'm not just saying this because I'm on your podcast, but I love listening to the podcast. I know lots of other folks who do. And I learned from your questions and I learned from the folks who speak. I'm informed by it. My grandmother used to say, like, to thy own self be true, and she ran a small general store and was a successful entrepreneur. And I felt like I learned a lot from her. And I do think you kind of need to bring, this is like a trendy comment for anyone who has kids in school, but you need to bring your whole self to it. But you sort of need to bring the things that make Patrick O'Shaughnessy, Patrick O'Shaughnessy, like in your case, your love of the woods and love of Whitman to your investing process because that makes you distinctive.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“With things that you'd like to maintain a little bit of that uncertainty too, because sometimes you start really loving with things that have done well and convincing yourself that they have a huge moat and that the CEO is great and so on. And then you blind yourself. So for me, that ambiguity and uncertainty is an important part of my own investment process, but supplemented by other folks here.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Miserable state of uncertainty is kind of a good place to be. I really learned a lot from that and I try to remind myself of that because I do think we have this post facto certainty that we say, gosh, it was so clear to me. I always love Jeff Bezos. I thought he was going to do so well. I remember the Amazon converts in 2001. I think they yielded 13%. You can look back on that and be like, well, I tried to buy every one I could then. And in fact, I do remember buying them then. Frankly, the only reason I bought them then is some other colleague of mine said to me, like, you idiot, you use Amazon all the time. Stocks down a bunch. They have this convert that yields 13%. Like, how can you not buy a little bit? And it's important to remember that when you did these things, you weren't quite certain. And it took a long time to develop certainty in them. And it's good even.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Friend and someone who I admire and have tried to learn from. And this quote is not exactly right or exactly true to Bill, but it's roughly right. I remember when Bill was with Legason Valley Trust and had that phenomenal track record that he put together, someone asked him how he felt about his portfolio. And it was at a time when he'd done incredibly well and was doing really well. And he said, I feel pretty terrible about it. He said, I have some stocks that have done well and they've gone up a lot and things are going their way. And he's like, I'm terrified of those. I'm really worried that they're overvalued and like all the good news is in them and they've had their run. And he said, man, I own some others and they've been real dogs and they look really cheap but looks like maybe they're just on their way to being a lot cheaper and have no terminal value. He said, usually when I feel that way, I do pretty well.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“That they would have a fair amount of operating margin compression. He still really liked it. And I did a little bit of that rough, simple math. And I said, they literally need to hire every computer PhD who has graduated in the United States for the last five years in order for them to grow expenses as much as you forecast. There's no way this is happening. So I built my own earnings model that was twice as bullish as his earnings model and he liked the stock plenty. I forwarded it to another colleague who was skeptical about Google and I said, well, here's why you're wrong. Here's my earnings model. He cleverly figured out that I had hacked Mark's model and was using it. But I didn't find his pushback convincing. He didn't convince me that I was wrong. And so that was an investment that I liked that I did. And I think that partly ties in a little bit to ambiguity, Patrick. Bill Miller is”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Investment idea, and some of them are totally wrong. For a while, I really like merchant power generators and Calpine and Miranda. For a while, it was very right. And then terribly, terribly wrong. But I sort of tried to convince a bunch of other people that these are great ideas at the firm. People came back to me with really good reasoned arguments about why I was misguided and wrong and stupid. And it kind of saved me a little bit from myself. I got this feedback and I wasn't able to convince them. And then there are other times when I've had an idea and I've shouted into the void. Maybe I didn't hear the echo come back. And I was like, oh, there's a long runway there. There's a long way to go. I remember when Google went public in 04, one of those same analysts, Mark Casey, he built an earnings model for Google that”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Think I could sort of bundle them together in a way. I have been at this same firm for 30 years. One of the reasons for that, of course, is that I enjoy it so much. I'm so grateful to the firm, but also I really think it helps me to be at a place like this. And I guess what I mean about echolocation is that a colleague of mine, Martin Romo, made up this term and he said, you're like a bat, basically, that runs around the cave kind of shrieking, which is not totally far from the truth about the way I am in the office sometimes kind of shrieking out ideas and kind of hearing how it sounds when the sound comes back to me and like finding my way through the cave. If the sound really hits me here, like I realize I got to go a little bit left or a little bit right. Often I will have a”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“If they continue to grow from here, how much of the world ad spend do they consume? I think world ad spend was like two and a half trillion at the time or something like that. And they were 10% of it, let's call it, or less. They grow incrementally as tough as people think. And my colleague Mark said to me more politely than this, but you idiot, the advertising market's a lot bigger than Procter& Gamble and Unilever. The advertising market is the local pizzeria around the corner that now gets one incremental customer by reminding you that they've got a special tonight or something like that or they're bundling cheese sticks with it and all those other merchants who have arrived in the giant ecosystem and the global advertising market was vastly bigger and also going to grow much more because there were a million folks who'd never really advertised before and had no”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“And add an insight like that with Google and Facebook once, where I was having an argument with one of our analysts who I really respect, a guy named Mark Casey, a fellow portfolio manager now. But I said to him, I said, what happens when the size of the business for advertising phishing becomes bigger than the fishing industry itself? When Facebook and Google are bigger than the advertising budgets of Procter& Gamble and Unilever and Coke and Nike, like is a business still successful? And I sort of did some of my rough quick simple math aided by another colleague.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“And we are going to do everything we can to avoid that eventuality and try to do well. I heard that and honestly it made me want to run out and buy all the Japanese banks subject to due diligence and meeting them and understanding the math. It was something that really made me think. I feel like I spend my year rooting through haystacks looking for like thin little golden needles that point me one way or the other. And sometimes it's something that a company said. I get an insight about the product or I think about the math a little bit differently than other people and you realize that the total addressable market is really 10 times bigger than you thought and not the size that everyone else thinks. I actually had an insight like that. I hope I'm not going on too much and giving you too many of these.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“CEO and having them say to me, be careful, you might not want to invest in our company because you might lose all your money because we might go bankrupt. That is kind of equivalent to an American company saying the world is on fire. We are exploding. We're being hit by a meteor from outer space.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“In one respect, which was that Japanese company meetings, and I lived and worked in Japan for capital. And he said, it was very interesting meeting because the chairman of, I think it was the chairman of MEFJ or a senior official there said to Hank Paulson, we're very honored to have you visit us. Thank you so much for coming. We've had this long and distinguished relationship that matters very much to us over and above money. And so before you make this investment with us, I think I have to warn you that we may fail to succeed as a firm. That wasn't news to the market. Stock was down a ton. Everyone knew they needed to raise money or not make it. He wasn't really telling him something new. But in the context of company meetings that I have had and hundreds and hundreds of, if not more than a thousand of them in Japan over the years, meeting a Japanese”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Fundraising mode. This is an unusual position to find themselves in because generally speaking, credit quality in Japan had been good. Obviously, there have been huge asset inflation leading into that, and they have very low cost of deposits. But nonetheless, they all found themselves capital short. MUFJ and Goldman had a long partnership stretching back to a predecessor company like in the early 1980s. And Hank Paulson, who I didn't have the good fortune to know but had a great reputation, was in Japan to see whether investing in MUFJ would be of interest to Goldman or partnering with them a little bit and given them inequity infusion of about a billion dollars or something like that. And I remember talking to David Atkinson about the meeting and I said, you know, how is the meeting? And he said, well, it's a very interesting meeting.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“I sometimes think that really only, I hate to say it, but only like two or three hours were the good ones. The other 1997 hours were looking around for the good hours. But when you find those good hours, and they're not hours, their minutes or something like that, they're golden and they're amazing. And you're in a meeting and you have an insight, it just resonates with you. And I'll tell you an example of a conversation I had like that, not even a meeting. This is a secondhand conversation, but I remember speaking to a Japanese bank analyst in the early 2000s, and he was a Goldman name was David Atkinson, and he'd been asked by Hank Paulson to be a translator of a meeting that Goldman had with Mitsubishi UFJ. And it was at a time when the big Japanese money center banks were in crisis.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“They might do great. And if so, Patrick O'Shaughnessy is going to own it and he's going to do well, but I will not. Another way I sometimes think about that math is let's say that there are 2,000 or more working hours in the year.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Superior information about what that one thing is. Like, do I have a differentiated point of view? If you meet all three of those characteristics, then it's promising. Then you should do more.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“The other thing I would say, Patrick, is I often find in successful investments really just one thing mattered. You spend a lot of time trying to understand 30 different things. Do I like the CEO? Does the CFO honest? Is the tax rate going to go up a lot in Japan? Is the new variant of the product not coronavirus variant, but the new model of the product and a sell well? Is Apple going to compete with them, whatever. But usually only one thing ends up being important. And what I try to do is figure out what is that one thing. And if I don't know what that one thing is, it's kind of like paying poker. You're the dumb guy at the table and you should stop playing that game and let the person who knows what that one thing is play. And then is that one thing likely to be very determined in terms of how the investment works? And then do I have”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Unit level understanding of the economics, yeah, and also in my own head, how do I make money on the stock from here? What are the expectations? Are they going to sell a lot more phones? Is the price of soybean oil going to go up? Is the cost of advertising going to go down? A rough understanding of the metrics for myself”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“And I was like, oh, really? People are using phones for that. Turned out, people are using phones for that a lot. And now, of course, we watch NBA playoff games on our phone. We watch Netflix on our phone. Phones became all about data and voice became a commodity. But he explained to me that actually it's a great deal for AT&T to be selling these phones because they are getting these very valuable data hungry users who will stay with them. the net present value of acquiring those customers is worth much more than the subsidy of getting them. I guess that's what I think about Patrick when I talk about simplicity of a business.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“But it was like 200 photos, and you're like, oh my God, who's ever going to take more photos than that? I was like, now we all come back from vacation. It's like there are 300 photos on it from the trip. So he was able to explain that to me and explain to me why I work for customers. Then another one of our analysts, a guy named Andre Murashanu, gave me this great insight where at the time, initially, the iPhone was only available on AT&T. It was not also available on Verizon because AT&T subsidized the phone a bit to get it in the hands of consumers. And people said, well, this is not that competitive a phone because AT&T needs to lose money to sell this phone and they're only doing it because it's a hot phone and they're trying to get customers, but it's a bad business idea. And our analyst Andre said to me, well, the thing people are missing is people are buying voice plans with the phone, which is pretty much what most of us used phones for back then. He said, and they're also buying these data plans, and it turns out that they're texting a lot and they're downloading.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Better product for customers. People are going to get this and hang on to it and not give up on it, and they're going to put photos on it. And if you remember back then, I can't remember how many photos you could store in.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“And one of our analysts, a guy named Craig Beacock, who I work with, did this great work where from memory in my memory's little foggy, but at the time Apple was not recognizing all of the revenue of the iPhone up front because there was some concern that there'd be some cost of churn and replacement of the phones and so on. And they weren't quite sure how people would use it. And he was able to explain to me that in fact no one was going to give up their iPhones. And that's obvious to you and me now. But back then, that was like the Nokia Ericsson Sony and Apple was a new entrant to it. And I was like, you kept your phone for a little while. And then if there was another one that was better, you junked it and you got another one because if the Ericsson phone had a better, cooler look or something like that, you just switched your phone number to it and it was no big deal. He was able to explain to me, gosh, this is a much better”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Ways that we bought on the low day of the year in question. The reality is not quite that true. But I do remember buying Apple kind of around 2007, 2008, a few years after the iPhone had been introduced. And the iPhone was introduced in 2005.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“What is the cost of a bushel of soybeans, which I think is 12 or 13 bucks, and then do the math and figure out how they make money? And so I like being able to explain to myself on a business here are the simple metrics that drive it. So when I go visit them and they say, oh gosh, the price of soybean oil has fallen from 70 cents to 15 cents, it means something to me. And I kind of quickly do the math and understand it. And I also like understanding the math of why their product works for customers and why it is compelling to customers. And a good example for me like that in terms of simplicity, if I may state another one, would be Apple, which sadly I do not own anymore, but I bought, I feel like our memory is always.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Company the other day. This is a soybean crush company called Bungi. Our analyst said to me, well, here's how you think about their business. He said, a bushel of soybeans weighs 60 pounds. And when you crush it, it produces 44 pounds of soybean meal and 11 pounds of soybean oil. And I think four pounds of hulls and a pound of waste or something like that. Hopefully that adds up to 60. Soybean oil sells for about 60 or 70 cents. Soybean meal, I think, goes for $450 a ton. And I think they're 2,000 pounds a ton. So that's 22 cents or so, 23 cents a pound. And in my simple mind, I can say, okay, how much meal and oil does this produce? What is the revenue for them?”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I'll start with simplicity. I find I do better as an investor in businesses that I understand, to be honest, sometimes I invest in businesses that I don't understand. I don't invest in them. I try to invest in businesses that I understand, but what I sometimes find is that I didn't understand them after the fact, and something surprised me. I like businesses that I understand and I like it when I can explain to myself a couple of the key metrics of the company and for what it's worth when I meet analysts internally, and we have a very big research team here at Capitol that I feel blessed to have access to, but also folks in the outside world, folks on the south side and so on. I like it when people can kind of lay it out for me and say, for example, I was looking just coincidentally at another Brazilian.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Ago, I went to see Amazon, which is another company that you know, Patrick. I like and admire a lot. I was at their new headquarters when they were actually just building the spheres. So I took a couple pictures, all the building that was going on for posterity. And of course, I love Amazon, had a great meeting and was struck by it. But it also came back and I was like, look, Amazon's this incredibly cool company that is very virtual and e-commerce in the new age. And guess what they're buying a ton of?”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's ubiquitous, and someday we'll all return to the office, hopefully. And when we do, we'll take elevators up to the 38th floor or the 82nd floor. And the reason that you can live and work in tall buildings is because of steel. There's no one who listens to this call who lives in a tall building made out of wood or brick or plaster or carbon fiber. Everybody who lives in a building that basically is over 10 stories lives in a building that depends on steel. And tragically, of course, there was an accident in Florida where I think one of the reasons was that the rebar had rusted inside of it. Steel makes so much of the world possible, makes cars possible, planes possible, tall buildings possible, cities possible. It's been around a long time and nothing's come along to displace it. So I think the odds are very good that nothing will. Actually, I remember several years”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“From here to China in vast quantities for 220 dollars a ton. Like it's a long way to send something and they do it very efficiently and then their own cost is obviously a fraction of that, so they're very profitable. And I really like the dynamics of the iron ore market because basically there are three significant producers in Australia. There's one significant producer in Brazil and they basically control the global seaborne traded iron ore market. Although I love companies like Google and Amazon like others do who speak on your call and I love a company like TSMC as well. I actually suspect that Valle's competitive advantage is more durable than any of those companies. I know that's heresy to say that and Facebook has an incredible moat and I love Facebook and love the stock and management and all that.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Actually, it was possible in Azer, but they had picked this basil in their garden and they blended it in to the pasta sauce and they blended in a little bit of parmesan. It made it amazing. It was delicious. And of course, I could buy the meat at the market and I could buy the tomatoes at the market. But they had this ingredient that made it better. And basically that's what valle does. And it really only exists. It's a cornered resource on a large body of water. in a country that has a significant infrastructure. So they have found iron ore in other places in Brazil and Anglo-Americans spend a lot of money on a mining development there. But it turned out it was too far from the water. Because although the iron ore price has gone up a lot, I actually find it very affordable for what it is. Currently the iron ore price is around $220 a ton, not that long ago, $60 a ton. But I challenge you to ship anything.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“And turn into steel. So they need to import Brazilian iron ore to enrich the quality of their iron ore. And I dinner at a friend's house last night and they made this pasta pomodoro from their garden. And I'm sorry I'm going with all the cooking.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's nothing like what TSMC does. But what is distinctive about Vale is that iron ore in the quantities and of the grade at which they find it really primarily only exists significantly in two places in the world, in Brazil, in the Amazon, where CVRD, where Valle is based, and then also in Western Australia, in Perth. And the nice thing about the iron ore that Vale finds is that it is has a very high ferrous content. The high ferrous content makes it fantastic iron ore to blend with your domestically sourced iron ore. And the biggest iron ore consumer of seaborne traded iron ore in the world, not surprisingly is China, where most building occurs. And China has plenty of domestic iron ore, but it's low quality iron ore that is expensive to smell.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“18.5% a year. But interestingly to me, the other company that I've really liked is this Brazilian iron ore producer. And it has also compounded, believe it or not, in dollars at about 18% a year. Why is that? What is unique about that? Iron ore is a commodity. You can type it in to Bloomberg and get the price every day. And iron ore actually is prevalent around the world. I'm not a geologist, but I think it's probably fair to say that iron ore exists in every country in the world in some quantity. And lots of countries mine iron ore. And iron ore has been around since the Iron Age. So it's not a new invention. And in fact, the process of mining iron ore is not incredibly, I mean, it's complicated and I don't think you and I should go into the business, but”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, yeah, and it's very durable. And for me, it's hard to hold on to stocks for a long period of time. A few central grounding principles that keep me in it are very helpful. And of course, there were times when I guess I could have optimized returns by selling it and then buying it back at the low. And, you know, I've done the little trimming and adding here or there over the years, but it's kind of tough to hang on to something unless you have some core belief that what they do is special and you remind yourself of it or are reminded of it over time. And then, of course, if it changes and goes away and you were wrong, then you should sell it. But I believe this is roughly true, Patrick. Looking at the course of the last 22 and a half years, I believe that the all country world index has compounded about seven and a half or eight percent a year. Over that time period, Taiwan Semiconductor has compounded at about”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Did that incredibly well, but then customers came along who said, Oh, I'd like chicken. I'm allergic to cashews. I'd like the chicken with peanuts, please. And they said, well, that's going to cost you 50% more. That's a big change. And people went to TSMC. And TSMC got good enough at all the different variants that eventually they were the biggest chicken and nuts purveyor in the world and their cost of chicken and nuts and their ability to make chicken in any kind of nuts fell precipitously relative to everyone else and gave them value added. Okay, hopefully I've in a long-winded way given you a feel for why I think TSMC is special and why I've liked it.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“The lettuce is going to be hot, the steak's going to be cold. I'm going to bring the beer like two hours later, the dessert is not going to be finished. Somehow she's able to logistically put a bunch of different things together. And TSMC is extraordinary in that way. And another analogy I thought at TSMC kind of reminds me of those restaurants that I used to go to when I was a kid, often like a Chinese restaurant where the menu feels like it's a 40 page menu and there's chicken with cashews, chicken with peanuts, chicken with pistachios, walnuts, pecans, almonds. And they do this incredible job of satisfying all these different small preferences. And in my view, a mistake that Intel and perhaps Samsung or others made is they were incredibly good at the most popular chicken, call it chicken with cashews, spicy cashews.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“And an analogy, a very simple analogy, and I'm proud to those apologies, but one that I like is I love my mother's cooking probably every son does, but I think my mom's great at cooking. And my mom is also great at making dinner for 14 people and having a conversation with you at the same time. And somehow like everything is warm that is supposed to be warm and everything that is cold is supposed to be cold is cold and everything kind of arrives on the same time. And I know all my mom's recipes. I've seen her in the kitchen a million times, but if I have you and like 12 friends over for dinner.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“That they do have a core competence at doing something that is so difficult like that. Although ironically, perhaps that is not the most difficult thing that TSMC does. And for me, the insight that I had about TSMC and the reason I've owned A long time, or one of the things that has kept me in it. Has been that TSMC is actually able to do something. So difficult is that. Also, at the same time, to satisfy the needs of multiple customers. Intel obviously has formidable manufacturing expertise. IBM did, Samsung does Global foundries. Perhaps Chinese government has thrown tens of billions into semiconductor manufacturing. Without much success. It's both kind of a brute force problem and a science problem. Also, there's an element of art to it”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Lasers, they shoot a laser through a drop of liquid tin and it shards into. Inner beam of light and Is a line that is. Really, really hard stuff to do, incredibly hard to do. And I guess one of the reasons that I have owned TSMC for a long time.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“90% of people or more would say that it's Taiwan semiconductor. And I would agree with that they do do something that is really hard to do and incredibly distinctive. They are the world's leading. We conduct our manufacturer. Obviously, supply a variety of fabulous companies like NVIDIA and AMD and so on. You've looked into semiconductor manufacturing at all, which I know you have a little bit. They operate at incredibly Precise specifications for manufacturing. So clean rooms, you can't have any foreign particles. Believe this is true that the mirrors inside the ASML EUV machines are Balance Such precision that if one of the mirrors in one of those boxes were the size of the state of Germany. Eastern part of Germany would have to be within one millimet Of the western part of Germany, so just extraordinary.”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source
“Taiwan Semiconductor Manufacturing and Vale, the Brazilian Iron Ore Producer. Say those are two really different businesses. And I think that if you sort of ask. Average person Which one is more distinctive or does something harder”
2021-07-27 · Invest Like the Best · Carl Kawaja - Wisdom from Decades of Investing - [Invest Like the Best, EP. 236] · IDENTIFIED FROM THE TRANSCRIPT · source