YouSaid · the spoken record

Paul Enright

lines on the record: 76
first: 2021-04-20
most recent: 2021-04-20
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

“To be single. Don't jump into a new relationship because your old relationship stinks. Don't take a new job that is mediocre because your old job stinks. Whatever you're doing, go and do it for what it is, not because of what the old thing wasn't. I love that advice, and I repeat it over and over again.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“His office, and I said, I'm thinking about making a change. This isn't for me, there's just something missing, and we walk through it. And he said, well, okay, well, what are you going to do? And I told him I was quitting to go work at a law firm doing the taxation of sale leaseback transactions for capital equipment. And he very astutely was like, you're doing that for the money. Those are the highest paid junior lawyers at any firm because it's the worst work. Go sit at your desk for six months, read, explore, do whatever you need to do, but do not leave this for what it isn't. Go to the next thing for what it is or you will spend the rest of your career jumping around from thing to thing. I repeat that advice as often as I can to people that are struggling with the same question. And I think about it in terms of relationships. I think about it, it's okay.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“As you know, I listened to your podcast a lot, so I've thought about this question. I've decided that kindness can't be something where it was mutually beneficial, right? Something that someone did for me. There are a lot of things in my career that were kind, but the other person benefited from it as well. So I've decided that the kindest thing that anyone's ever done for me in my career where they had zero upside for doing this was when I was back at PricewaterhouseCooper. And I was there right after the merger between Cooper's and Library and Pricewaterhouse. And so I was the first class that was not a legacy PW or a legacy Cooper's and Library in person, which is interesting because culturally those two firms were very different. And so I didn't have a specific team I was assigned to. And they used to sort of fight over who got the new analysts that came in. And the partner on the Coopers and Library side was a guy by the name of Rich Klein. And after a couple of years, when I went into”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Long short investing, you have to treat it like that. So I've just decided that I want to live more in the quadrant where everything is about growing and every situation is not meant to be at someone else's expense. It's a win-win. I am doing things and putting things out there where I don't know if I'm going to get paid. I don't have anything I'm trying to do. I'm just trying to get smarter. I'm trying to develop relationships that will last a long period of time. I'm trying to think about ideas that I want to do now and think I want to be able to continue to do 50 years from now. And I don't want to do anything. I don't want to put on a position in my portfolio that I know I'm going to sell for sure. That doesn't mean I won't sort of actively trim it or manage it, but I just want to be playing a long game and be playing this more infinite game of investing and learning.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“The college they want. Somebody's got to win the NBA championship. I get that, but there are certain things that could be more win-win and don't have to be zero-sum, but they're framed as zero sum. I just decided that I had spent so much of my career playing a zero-sum game and playing it quite well. Don't get me wrong and winning, but it's a bit of exhausting. It became a bit of a governing philosophy as I thought about what was going to be the next stage of my life and how I wanted to integrate work and raising my family and reclaiming parts of my health, frankly, that I traded for those zero-sum games. I just decided that entering in another series of zero-sum games, even if they were directed by me, even if I was the leader, if it was my fund, was not what I wanted to do because I do believe strongly to win in.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“They're two separate theories that I brought together and realized how well they encapsulate how I'm trying to think about my career and my life. And so I grew up a kid that had a fixed mindset. I was one of those kids that was like, oh, I'm good at this and I'm not good at that. I'm good at math. I'm not good at English. I can't spell. I can't do this right. I'm a good athlete at this, but I'm not particularly strong. I use that language. And then I read Carol Dweck's book. I read the art of learning by Josh Waiteskin. And I was like, I've been thinking about this all wrong. And so there was this pivot in my life where I realized you can grow this idea that you are who you are. People don't change. I don't believe that. I wished I had learned it sooner, but I learned it later. And then I learned about this zero-sum versus abundance mindset. And there are certain games and certain activities, certain careers, certain moments that are zero-sum and they have to be zero sum. Like only so many kids can get into.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Backhaul and things of that nature, but that's where the bottleneck is. So when you have five bars of service in a condensed crowded area and your email is not going through, it's usually not because there's traffic at the tower. It's because there's traffic at the bottom of the tower as everybody's trying to use the network at the same time. And the analogy that I like to use there is on-ramps and off-ramps of a highway everywhere. The on-ramp is the connection between your cell phone and the nearest tower. The tower is the highway and then the off-ramp is getting off the tower, off on the highway. And that's usually where the traffic jam is. And you get stuck there and you get hung up there. There needs to continue to be infrastructure and improvement there. Not sure it's a huge investable theme, which is interesting given how important it is for our mobile broadband communications.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Is another way of saying they can spend less CapEx to get more capacity, which will give them the opportunity to offer better service. And there's real differentiation that can be had there. And I think that that will continue to evolve. I don't think 5G will be the end of it, but I think there'll continue to be innovation and upgrades on top of that. So I don't think anything structural needs to change inside our fixed infrastructure. I think our wireless infrastructure will continue to improve. And then the question really is where there's a bottleneck, where we need help is that if we start to see more and more data go through the wireless pipe and not over Wi-Fi, that goes to the fixed line, you need better infrastructure that goes from the tower that captures the signal back to the internet. And there's all sorts of satellite applications. You can do a whole bunch of research. We're going to send satellites up there that try to do fixed.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“By digging up the streets. But the problem is there's lots of places in this country, and the infrastructure bill that President Biden proposed last week has some elements in there to try to get broadband to rural communities. Because if you have broadband currently, it's pretty darn good and it's relatively affordable. The question is, to what extent do they flex their pricing power to stay out of the regulator's crosshairs? So I think on that side, I think you're fine. On the mobile side, we're going to undergo a major upgrade from 4G technology to 5G technology over the next several years. And I think that this is an example. A lot of people who are bullish on T-Mobile will get into the spectral efficiency of their two and a half G spectrum versus what Verizon and AT&T have.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's interesting. I'm more worried about the electric grid than I am worried about the internet drive around this country. And we're talking about flying electric vehicles and most electric wires are still above ground and literally nailed together or paperclip together on old 50-year-old poles that could go down at any point in time. I think there's more risk to disruption in the electrical grid than there is in the infrastructure grid at the moment. I think that for the most part, what we have is a little bit of inequality because where it was economical to build, you've dug up the ground already and you've laid fiber or coax that can support demand into the future in a meaningful way. And what is in supported currently can be upgraded through electronics. It doesn't need to be upgraded.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Utility or service that anybody has in their lives. If you take someone's internet access down, they would lose their mind. We couldn't be doing this conversation without the internet, right? And that wasn't always the case. We could always pick up a landline phone that was plugged into a wall. It is the most vital infrastructure in this country and in the world.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“The last mile of telephone infrastructure, what's at your house that goes to your local switch, the middle mile, what goes from the local switch all the way back to the central office, that's the long haul, which goes from your central office to your grandmother's central office all the way over in California when you're trying to make a phone call and said, we're going to unbundle each piece of that. And it led to just incredible, incredible deflation. But it also led to the modern infrastructure that we have in this country on which the internet is based. And if you didn't have the 1996 telecom act, you don't have the 2000 internet bubble and you don't have all these amazing businesses that ride on top of that infrastructure. And so we've had this unbundling of all the internet is, as a distribution mechanism, and it is built on top of the telecom network and its utility-like and its function, but it perhaps is the single most important.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“The reason why telecom was interesting to me was because it was the gateway for me to go from being a lawyer to getting to the sell side because the 1996 telecom act went into effect around 1998, 1999, and it was a large document and there was a lot of nuance in there having a law degree and being able to pour through that document as well as other regulatory filings because it was a regulatory paradigm. You took AT&T and you broke it up effectively back in 1984. And then in 1996, you basically deregulated every single piece of the telecom network. When you think about the example before I gave of Amazon of how Amazon came in and competitively unbundled the software stack, what the 1984 and 96 acts together did was they took this bundled concept of”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“And I want to find what the sell side or what other experts in the area, because there are some amazing experts on the internet now, like Ben Thompson, who isn't technically on the cell side, and figure out how does he think about things? How does he contextualize this company within a framework that maybe I'm not even thinking about? So I start at the bottom. I get a framework for one, and then I go and I get a framework for another, and then another. And then at some point, now I've got an industry view. And once I have the industry view, then I can flip it and invert it and look down from that industry view and say, this is the winner. And this is going to be the winner. If it's the winner today, great. I'm going to say that it's going to continue to be the winner. Or actually, number three is going to catch up and win for all of these different reasons. And I think where it becomes a little trickier is when it's not exactly clear who the competitors are.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Approach the same formula for every business regardless of what it is. And I start at the top of the income statement and I work my way down. How do they make their money? What's the revenue driver? Is it a subscription-based business? Is it a velocity of unit business? Do they make a product or is it services? Okay. What are the main cost of good? What are their input costs? Then I go down and I think about the OPEX structure and keep going all the way down. The further you go down, then you get a real good sense, okay, these guys are a huge options issuer or shares are shrinking. What does the balance sheet look like? Is it efficient? Is it efficient relative to the type of business it has or not efficient relative to business it has? And then I step back and I say, okay, now I have a snapshot for this one company. I want to go and do the same thing for all of its competitors. And I want to understand and force rank them relative to each other. And then I want to dig in.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“There are a lot of great businesses that you can own for a really long period of time right now that you'd be pretty happy owning. And even if you bought them here, my philosophy is if you're not selling them here, you're buying them here. So I'm not selling them.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Risk. I think what you've seen from a few of these events over the past six months is that when you take that type of market structure on top of high leverage, so the lower liquidity, the difficult to find pockets of liquidity coupled with everybody's got leverage and crowded in names. And you have these fires that are going to pop up from time to time. Now, the good thing is they've all remained contained. And if that's the way this continues to play out, then that's fine. If you just get a fire here, a fire there, a fire there, and they keep getting put out, that's fine. The worry is that you get some sort of fire that then has real ripple effects and it hurts a lot of folks that are not really sophisticated and don't know what they're doing. And that would concern me. I'm not overly concerned about valuation or all of these other things out there. I think that there's a lot of great businesses and I think that there are individual stocks that are expensive, but I think for the most part.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“That definitely worries me. And then I would say the structure of the market, I have some concerns about because the way the market works, it used to be that if you needed to source liquidity, you could go somewhere. You could go to Goldman and you could say, I need to do X, Y, or Z. And that happened all the time. Block traders were a fixture at all firms. The idea of a block trader at a big bank now doesn't exist as much. And so much of the volume, so much of the transaction in the markets occurs in the dark pools. It occurs in the machines and in the systems behind this. And so much of the flows are passive. And when the trend is good, the flows are passive and the feeds into the trend. And when the trend turns negative, the flows go negative. And if we, and so I worry that we're getting whipped around here where that could create some sort of liquidity systemic.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“I'll take that out in two ways. One is the quality of businesses that are in the market and the opportunities you see to invest relative to value and then the structure of the market. And I think that there are more interesting businesses today than there were 10 years ago. And there will be even greater businesses 10 years from now than there are today. If I have a worry, my worry is that a lot of those businesses will come in the life sciences sector and I'm not an expert there. And so I have to get smarter. There's an area where I need to get smarter. And part of the reason why I love not being a fiduciary to others is because I get to figure out and expand. Whereas if I was managing other folks' money, I would feel nervous about getting outside my comfort zone. So it scares me that the world is going to move away from me and I'm not going to be able to keep up with it because I don't have that core expertise.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“We've talked about the funds and styles. I think that the people are extremely important. So you may have the world's greatest mentor inside of a fund that people may not think is the world's greatest fund. And that might be a much better experience and propel your career in a way that working for an atrocious mentor inside another large, well-established, highly respected fund. Mentors and portfolio managers in this space are so incredibly important. They will determine, forget about compensation because money doesn't matter as much during those first few years, but they will determine how you think about risk, how you think about analyzing. They will morph your style in some way. And these single most important thing I can think of in making that initial decision is who are you going to work for, not where are you going to work.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“The way to put yourself out there, and there are different ways you can do it. But you have to really love clients and really want to work with clients because that's a much bigger piece of the pie than it is with some of those other ones that we previously mentioned.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“The risk and put money behind that, then this is well suited for you. If you prefer to just analyze things, then maybe you want to be a consultant, right? If you like to have an opinion, but you don't really want to manage the risk, maybe the sell side's for you. If you want to be a part of being a player of putting things together, maybe you want to be a banker. One of the great ways that I've always thought about this is, do you want to be a revenue driver for an organization or do you want to be a profit center? Are you comfortable being out front and being responsible for generating the revenues of X, Y, or Z fund? Because on the sell side, equity research is a cost center. They're not really generating any money. The guys that make the money are the bankers. And if you're on the buy side, if you're on the investment staff, you have to make the money. That's one way to think of it. If you're comfortable doing that, then...”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Seen before, they're completely insane. They're like things that would never happen. And what your job is to go through the exam and your job is to issue spot. And every issue you spot, you approach with the same formula. You start with the conclusion. So you say right up front this person is going to jail and then you apply the rule they're going to jail because you can't commit murder. Then you do the analysis of everything that just happened and then you conclude and you say therefore they're going to jail. And that's kind of what investing is. You're out there, you're issue spotting. You're trying to find things that don't make sense. You're trying to find facts that don't match up with the narrative. You're trying to find information and do analysis that tells you that the numbers that are in print are too low. And if you can do that based on your skill set and make the bet that you can see what others don't and then actually take”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's interesting. I think that there are a whole bunch of different analogies you can use, but one of the tests that you have to screen for when you're recruiting really smart people is that they have had a history of going to the best schools that test you repeatedly over and over on what you know or what you've already learned. And if you're really good at getting a bunch of information and making a bet or analyzing it in a way that is uncertain, then you could be good at this. I found that the best signal for why I was going to be a good investor was the fact that I had gone to law school. And one of the things that I take with me is that when you are given law school exams, they're actually all open book and they're these random fact patterns that you've never”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Money, they grow tired of running that race, they move on, and then the other people continue to move on and you keep the cycle going. And I think the enemy of great is good in that context. But I think because there's so much capital that has flowed to the sector, you could probably be mediocre and die of blah over a much longer period of time than you used to be able to because the alternatives for where folks can go relative to the amount of capital that is allocated to managers is a lot. And that's tricky to do.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Where capital is not locked up and then you lose your LPs. So to be great, to be sustainable, you have to be thinking about this. The head of the fund that I used to wear, he used to call it the Tour de France. He would say, we're running the Tour de France every single year. And sometimes people don't want to get on the bike after they've just run the race. That was relatable to me because I got off the bike one last time and I was like, I don't want to do it again. I viewed it as a sprint and I look at it similar to pro sports leagues. You're trying to win the championship and then you're trying to win it again. And that's the approach that great funds have. And that will result in people coming in, having a career similar to an athlete. And then moving on. And I think that the best funds are constantly reinventing themselves because they bring in great talent at the bottom. They let them grow. They let them promote. The senior folks move on.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, there are four principles in my mind there's the culture of stock selection, how you teach that, how it's replicable, and the quality of your ideas. If you don't have quality ideas, you will die. Then number two is the portfolio management, the sizing of the positions around that. Number three is how well do you manage internal relationships? How well do you retain talent? How do you recruit talent? How do you treat people? How do you compensate them? And then number four is your management of external relationships. Who have you chosen to partner with? Who are your counterparties, et cetera, et cetera? And I think that great funds play zero-sum game to some extent. I think that it's a necessity to treat this as a series of one-year sprints. If you want to stay in this and you want to be great at it, if you get too far in the future, you could have a really poor run of performance at a time.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Team managers, no one got fired for using Cisco. No one gets fired for paying a little bit more fees than you want to to a safe, consistent, slightly underperforming large manager. And that just leaves gigantic wealth transfer from one group of people to another.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Taken in order to justify those fees. Management fees scale width, size of AUM. So there are all sorts of reasons why hedge funds are arguably overearning. And I would say that you saw this in the active mutual fund industry where the cost of alpha was going up. And what you got was disruption from Vanguard and passive flows. And that scales like immediately. And the problem is the alternative to hedge funds that are alpha generators that are pure they don't scale. And that's tricky. So if you're a $40 billion endowment and you have to figure out how to allocate that money, you need someone you can write a nine-figure check to and keep the money there. And so if you overpay a little, you feel okay. It's kind of like Cisco back in the day when you talk to IT.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Being offered for what's being exchanged. And I always think about that when it comes to hedge funds because we know what the LPs are paying. We know the fee structure, but we don't know, and it's not specifically delineated, what are the hedge funds supposed to do to get that? They get paid for absolute performance.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Places where you're seeing this enormous compensation, either they've added a ton of value and created enormous wealth for somebody and they took a percentage of it, in which case good on you, or they are working at a fund that just has enormously favorable fee structures on enormously outside scaled assets. And there's a lot of money to go around, just the nature of it. So the question is TED Society is a friend of ours in common has this great line where he says the hedge fund model is not an asset class. It's just a contractual arrangement. That's always struck with me. I heard him say that a number of years ago. And it reminds me of when I was in law school and the contracts professor was this classic larger than life figure. Most law school contracts professors are. And he used to always say every contract needs a quid pro quo. We would do case law and he would say, what's the quid for the quo? What's the quid for the quo? What is”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Not sure I have the best answer for that, but I would say that it is true that some of the smartest minds that are best universities are producing over the last 20 years have migrated towards this space and away from places where they could perhaps make a bigger impact on the world. And I think that's partially because the fee structures is so favorable to the firms. Take a step back. The investment management industry used to be you pick a lane. You're either an alpha generator or you're an asset gatherer. And if you're an asset gatherer, you're going to have enormous scale, but your fee structure is going to be relatively low. You'll get rich if you do it for generations like Fidelity. But can you really scale? Can you be an alpha generator at major size? And I think that most of”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“As you can get even something like software with huge margins that everybody thought was going to be the best business forever gets disrupted and pivots and it becomes great still as an industry, but in a different way and for different winners and different players.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Software is a great business, right? But we are pivoting to a world where a lot more is going to be done vertically and where somebody like Amazon came in and said historically within the software industry you have these different layers and that is all owned on premise we're going to Barksdale's famous quote we're going to unbundle the stack and we're going to give you this layer and then we're going to let everybody else build on top of it. So there are horizontal software plays out there or things that benefited from the stack being bundled together that come under pressure. IBM at one point people would have thought IBM was one of the best companies in the world. Now it's under pressure. CA similar. Oracle's done a better job of pivoting and diversifying their base, but they have certain parts of their business that are under pressure. So I would say that that's about as relatable of an example.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Expert on the sector and then decide who's the best within this good sector. And that's how I determine whether it's a good business because we've seen what we used to think of as good businesses get torn down and go away all the time.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's going to be Uber competitive for a really long period of time, which leads to the second thing, which is whether or not a business is good or bad in and of itself, usually hard to determine. The market structure of where the business operates is usually more important than the business itself. If you have a really interesting, fast-growing secular tailwind inside of an industry with a few pretty protected players, no new entrants coming in, then it just comes down to, well, which one has the better product and which one has the better management and which one allocates capital the best? And when you find something like that, that's what everybody's looking for. And then you just own them for as long as you possibly can. I would say those are the two big things for me. I like to think about and learn about the underlying sector and become an”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“I think there are a couple of things. One is there capital flowing in or capital flowing out? Because that to me is a reflection of whether competitors and investors fund these types of businesses have given up. So there hasn't been a new well-funded search company since 2005, 2006, because Google won search. So the question then becomes with Google, the regulatory question and a capital allocation question. Are they going to take 80% gross profit dollars, 90% gross profit dollars, and allocate them in a way that destroys value over time or adds value over time? To me, that's the first and most important thing. Shame on me. I made the mistake of investing in Uber late, just as everybody else in the world was flowing capital dollars into some other ride sharing or food delivery kind of company. That doesn't necessarily mean it's a bad business. It just means...”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that the way that the style of fundamental long short hedge funds has changed over the past 10 years at least and maybe 20, if you go back that far, it's a little maybe gray, but everybody wants to own great businesses and short bad ones. We are, if you believe Carlotta Perez, we're in, what, year 30 of a technological revolution and we have at least 30, 40. I don't know, Gavin Baker might say 60 years to go.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Talk about number five versus number one. And if they don't mention six or seven, then you know you've at least locked in on the five that are the most important. If you're talking to somebody who's covering telecom and they can only mention T-Mobile, then don't ask them for their second, right? And a lot of this comes about organically. And so then the question becomes, if you've got one, you now start figuring out how do I size T-Mobile relative to those five internet ideas. You start from the bottoms up, you get the best ideas you can from each analyst, you aggregate them all together, and then you rank them amongst themselves. So the way that we found and where I found still, the way that you get the best portfolio is organically from the bottoms up, you get the analyst to generate the best idea that they have to continually ask them for something that could be better until it's clear that there's nothing else, aggregate them all together, and then you figure out how to force rank them amongst each other.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“When I covered two sectors, I had four great ideas, right? I had two great longs in each idea and I had three to four shorts in each sector. My portfolio would just naturally get broader as we added more sectors. As I grew out, covered more of TMT and then covered all of consumer. It was always concentrated within each sector, but it became a little bit bigger over time. And then if you look around Viking, Viking style was similar. Each analyst generally had their two or three best ideas in the portfolio and their handful of favorite shorts in the portfolio. That's, I think, a function of our style of this having this force ranking mechanism where you say to somebody, you're an analyst, you cover internet. What are your three favorite ideas? And you watch them struggle to come up with three because they have five. So then you say, okay, let's.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Think good portfolio constructions, whatever works for the person who's managing the portfolio. If looking at the index and then just subtracting away what you don't want to own is your way of constructing a portfolio, that's fine. If owning one stock and being highly convicted in that stock and doing all the work that you could possibly think about is the way you want to run your portfolio, that's fine. I don't know that I would consider that a portfolio, but I think one of the most amazing things about working at Viking, and there's a lot of amazing things about there is that they teach you how to be a portfolio manager. A lot of firms teach you to be an analyst and an investor. And if you want to become a portfolio manager, you kind of need to figure it out on your own. And so over time, you have to learn to adjust as the firm gets bigger, as your universe expands. And I think that I've always been someone”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Him saying it's like the stock is up 30, but my numbers need to go up 70. And I was like, I got it and ran out of the office, and I went and we bought a zillion dollars of Facebook. But that's compelling. That's simple. You don't need to give me 10 paragraphs on why it's interesting. One sentence summed it up right there.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Mobile, and they couldn't figure out and adapt their product quick enough. Because of that, they went public at a really difficult time in that transition. And they felt it for the first six months of being public. And it was in this bucket of innovators dilemma. Someone else is going to come, someone's going to usurp them. It's over. They fix the mobile problem and boom, the rest is history. And now I didn't mention a number in any of those because I don't remember it, but just telling that story is compelling. And then when you layer in on that, oh, by the way, there was a point in time in the summer of 2012, I think, if I'm remembering this correctly, where Facebook was up 30% on the day of earnings. And it was a buy because numbers needed to go up 70%. And I remember the analyst I was working with at the time, I went into his office like, oh, this is such a bummer that we missed this. And he was like, we have to buy this right now. And I was like, wait, why? And that was the only sentence I remember.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Nokia was a hardware company with a software problem. Hardware companies have a hard time figuring out software problems. Apple was always selling hardware products, but they were doing it within a vertical software solution. And the market had Nokia in this bucket for a really long period of time of they'll figure it out. We were thinking, no, they're in the bucket now that they can't figure it out. And Microsoft came in and bought that handset business, which was not a good decision for Steve Balmer. That's a classic kind of situation. I'll give you a more recent one, which was Facebook comes out and goes public. And during the roadshow, they're missing numbers. And people are really starting to be confused and not really understanding what's going on there. And really, Facebook was a desktop company at the time with a mobile problem. They had a desktop product and the world was pivoting.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“That goes back to a little bit what I was saying before, which is I think that there are no original theses. I think that everybody that gets bogged down in the, well, this does this and it's specific for this. You can abstract that and you can generalize exactly what it is. For instance, if you go back way back, this is probably my favorite one to always use, but when the iPhone was coming out and people were wondering how big the iPhone was going to be and whether it can take on traditional incumbent cell phone carriers everyone had this view of Nokia that they had iterated over their 70 years. They weren't always a cell phone maker either, right? They were always well run. They always figured it out. And what people didn't realize is that every time they iterated, it was a hardware company. And hardware companies pivoting to hardware decisions, generally good outcomes.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Able to take the conviction that you feel and to transfer that into the body of the person who's making the decision. And a lot of people tell this great story. They lay it all out in math, but they're wishy-washy on it. And you can sense that they're uncertain because they don't know what to do. And that sometimes translates to a portfolio manager too. So the very best pitches have this mix of narrative plus math and then come through with the confidence and the conviction to make you believe that they know exactly what they're talking about. You can have it all there and you can be limp about it and it's just going to fall flat.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“There's three elements to it. One is you have to have a narrative and be able to tell a story about where the world is currently placing the company that you're interested in. What bucket is it in? How does everybody think about it? And how is that reflected in the numbers and the stock price? And then you've got to be able to step back from that narrative and you've got to be able to take the story and convert it into math in a way that is crystal clear. Sometimes I think about it as that first part is you have to have the consistency and conciseness of a poet in your ability to communicate, but then quickly pivot and have the analytical rigor of an accountant. And then you have to finish it up. And this is where some people really lose it. You have to own it. You have to be.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“Fell victim to that as well. I learned to normalize all of these different pitches across different sectors. So now when I hear a pitch, I am able to abstract it and think about it and decide in a way that is universal across all ideas and is not specific to that one idea. Now, if you were to take the knowledge that I have now and the way I process information now and go back and make me an analyst, I'd probably be just fine. And I do that a lot now in my new role. I do a lot of research myself. I leverage the digging of a lot of people that I know, but I am making decisions more directly related to my own analysis than I was at the time. But I think that I lack that skill set and it took being a portfolio manager and not doing the day-to-day digging for me to get that little bit of distance that I needed to gain the perspective. And I think that some people do it automatically. For me, it was just difficult.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that when you are so close to an idea, you start to think about it solely in the lingo of the sector or the company that you're looking at. We can use an example. I've been public that I'm positive on T-Mobile. Analysts that know T-Mobile really well will give you a pitch that is so bogged down in T-Mobile's specific language and telecom specific language that if you were just a generalist or if you were just a random person off the street, you would have no idea what they were talking about. Whereas I have learned to listen to the information and process it and think, well, this is a top line story because they have a competitive advantage on their share of gross ads in the market. It's going to be greater than their actual current market share and they've got lower churn than their competitors. Therefore, mathematically, they will grow faster than the industry and blah, blah, blah, blah. You can continue all the way down. And I think that I...”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source
“For a while. And the information is the information. It's out there, and you can keep digging to try to figure out how tough the comps are going to be. But some people are going to analyze it in a way, looking at the stock and how the stock's performed and looking at what is baked in the price and have a view, I don't care because we're almost through it. And on the other side of this, this is amazing. And other people are going to say, no, you don't understand. This is not something that is just going to be a one-quarter tough comp. Here's how the second derivative works. Here's how the deceleration is going to work over a multi-year period of time. And this is going to turn out to be the peak. And those different nuances and the different analysis you do with those same information often determines whether you make an amazing investment or you sit something out or maybe you even short it.”
2021-04-20 · Invest Like the Best · Paul Enright - The Buy Side Primer - [Invest Like the Best, EP. 222] · IDENTIFIED FROM THE TRANSCRIPT · source