YouSaid · the spoken record

Shawn O'Malley

lines on the record: 78
first: 2025-12-05
most recent: 2025-12-05
sittings or episodes: 1
sources: podcast

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“Can search for the intrinsic value podcasts and whatever podcast app you're using at this moment, or if you want to find our newsletter, you can just simply sign up using the link in our show notes below for this episode. And otherwise, a good default is to always just go to the investorspodcast.com and you'll find our podcasts and newsletter there as well.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Nobody will read, and you have no illusions of ever building a falling, I mean, that can still be one of the best ways to differentiate yourself and grow as an investor. Because I can promise you, most people on Wall Street don't have the time or the flexibility or the interest in writing 10 to 20 pages on their investment thesis in a post that nobody's going to read, right? They're trying to do what their manager says to do, or they're trying to just do something that looks good by the numbers. And so the fun part about recording all your thoughts and writing out your investment thesis is not only that it pushes you to be a smarter investor and to think things through more meaningfully, but down the road, you can go back and read all your old writing and see just how far you've come. And sometimes I go back and read some of the first newsletters we wrote just earlier this year and I cringe and I go, gosh, I've come a long way since then.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“And reading through sources and taking notes and trying to connect everything to this bigger picture that I'm starting to form as if almost as if I was writing a book on the company is really kind of what it feels like. I eventually get to a place where for starters, honestly, I just simply don't have time to go any deeper because we are doing episodes weekly. And because of that, I'll get maybe what I think is 80 to 90% of the key information from the first 40 hours of work. And then the returns beyond that I found, especially when you're looking for quality compounders, it's different with special situations. But the returns start to diminish on any incremental work after that because it just becomes almost too easy to overthink things. And you get bogged down by nuance. And so, yeah, I mean, ChatGBT, notebook LM, listening to earnings calls, reading quarterly filings, all that stuff is great. But again, anyone can do that. And it's really about how you build your critical thinking muscle, in my opinion, practicing writing, even if it's just once a month in a substack that you know that.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Think those traits are things I'm very much continuing to practice and are also much rarer from what I've seen in the investment world. And so the writing process is really not only part of my job, but it's become essential to how I've, I think, become skilled at relatively quickly appreciating the most important aspects of dozens of different businesses. And then all along the way, I'm using ChatGPT's advanced thinking models as something of a sparring partnering because inevitably as you're writing everything out and you're connecting the dots, these new questions will arise that you had never thought of before. And then I'll send them to ChatGBT and we'll go back and forth and get feedback from it, I think, oh yeah, why didn't DoorDash just acquire Lyft to compete with Uber? Or maybe they will? And should I expect that to happen? And sometimes I'll have this convo with ChatGPT where I'm going back and forth and I'm not relying on it to think for me, but I'm using it as a tool to progress my thinking even further. And after all of that back and forth.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Business and their competitors and the management team and anything else that's relevant, I eventually gain what is a whole new level of appreciation for all decisions that have been made along the way and really how they got to where they are. And so the thing is thinking and writing in that way are hard. Not to give myself a pat on the back because we do it a lot. But I mean, it's hard. Most people are not doing that. It really is. And that's why most people don't do it in investing. But I think it's one of the best advantages we could possibly have as individual investors because we certainly don't have access to the most data and raw information. So we have to take what we can win at and focus on that. And so anybody can look at PE ratios and best based on the numbers, but how many can actually see how all the puzzle pieces fit together and think like an owner and then make a capital allocation decision independently about whether to invest or not.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“To believe that there's always something missing. And I don't think that's a bad thing, but it can be paralyzing if I don't feel like if I have the complete picture. And so the thing is, though, it's not usually a lack of information that's hindering my confidence. It's usually a lack of critical thinking. And so by being forced to try and tie all my notes together into a cohesive story for our newsletter and podcast, everything just suddenly becomes much clearer to me. And so the act of trying to explain things in written form dramatically advances my understanding in a way that I just think is not otherwise possible or at least it's something of a cheat code. And for context in high school, I come with this background of being something of a creative writer. I really believe in the poets and quants aspect to investing. It's just not all about numbers. And so just by spending a day writing, editing, and rewriting my thoughts until I've covered everything from the origins of the”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“I do what is then, in my opinion, the most important thing ultimately. And then it's trying to connect the dots. And so I can't tell you how many times I've had dozens of pages of notes on a company, but I'm sitting there looking at it going, like, gosh, I don't really understand what's going on at all. My understanding is completely fuzzy and disorganized. And my threshold is usually whether I could explain the business model and investment thesis to a fifth grader. And if I can't, that's a sign that I need a more fundamental understanding. And usually just by reading a bunch and consuming a bunch of information, I can't quite get to that level of clarity. But the incredible thing is that oftentimes, even without ingesting any new information, I can get what feels like an order of magnitude more clarity about a company by simply trying to tie all the bullet points in my notes together. And it's something I've had a lot of practice doing as a podcast host now. And so I have this tendency as an investor.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Right. I think it's probably besides how do you find companies to choose? How do you go about the research process is probably the most popular question we get? It was funny the first time I heard it. I was like research process. I don't know. I just kind of just do a bunch of stuff and then I bring it all together. You know, of course, there is a process there. And actually I had to take some time to really reflect and say, yeah, there are a number of different approaches that we take. And I'll just say, you know, one of the first things I always do is I'll go to the company's investor relations page and I'll download the last couple years worth of 10 queues and 10k filings along with transcripts from earnings calls. And then what I like to do is I'll dump all of that into notebook LM. That's a free ad for.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Argue that we're not feel like you're betting against that in some way and kind of the entropy that's unfolding in this industry. And while we think the fears around Adobe are overblown, again, it's something we're watching closely with Lululam and Nike, right? You can't be an active investor and just totally sit on your hands. It's a great kind of mental model of not reacting to everything, but at the same time, you have to be monitoring these risks. And so we're not blindly in love with any of these companies because they all face legitimate competitive challenges. It's just that we liked the risk return profiles at the prices we were able to get them at.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“by nearly another 20% to that margin of safety price target at $330 for sure. So yeah, we see the margin of safety is as being substantial at this point for what has been one of the highest quality businesses to ever exist and that we have a unique appreciation for working in the media industry. And so at current prices, we've been continuing to add to the position. And it's been a controversial name in our intrinsic value community. We've had a couple calls debating it. A couple members have invested in the company alongside us. And just strictly looking at the numbers and the implied growth rates at current prices, it's really hard, I'm biased, to not find the stock attractive. But it's also not the company we sleep easiest with and we know that there is a wide range of potential future outcomes that could fluctuate against us. And so, you know, AI image and image generation are improving very, very quickly. And it's scary to feel like even I would”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Whether you can actually buy the stock at a desirable enough price to yield a satisfactory return for you personally. And that does matter, that personal aspect. Some people try to buy many stocks that may only slightly outperform the market for short periods of times. And if they can get a price that suggests a 10% expected return, they're happy with that. Others have much higher hurdle rates, with a trade-off being that they probably have to sit on cash for much longer. And then it's not guaranteed that they will ever get the prices they desire on the stocks that they're watching. And that's probably much closer to the Warren Buffett approach to investing. And so Daniel and I think that a fair value for Adobe is north of $500 per share right now. And even with a 20% discount to that, which is our usual kind of margin of safety we look at, that's a $400 implied price per share. And the stock is still undervalued today.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Would agree. I mean, it's funny to call it intrinsic value because it sounds so objective. And we know that investing is not a hard science. And so at the end of the day, there is a lot of subjectivity baked into any estimate of intrinsic value. And so different expectations, for example, for future rates of returns just via the discount rate you were to use in, let's say, a DCF, those would generate different intrinsic values for different people. And it's kind of a funny concept to think of that a company's intrinsic value can actually to an extent vary based on the hurdle rate that you demand. And so obviously we all want as high of a return as possible. But we know that for the same future business growth, the price we pay will determine whether we earn a 10%, 12%, or 20% return. And again, everyone knows that. And so the two questions are whether your expectations for the future approximately come true.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Contracting profit margins because they were forced to reduce prices, to fend off competition. We would of course be watching all that and it would be very concerning. And we would probably have to reassess the position. But fortunately, so far we've seen nothing like that. And so when you combine those kind of anecdotes, the kind of qualitative logic, and then you just look at the numbers and you see a very different picture than what the market is portraying, that's how we start to feel good about the bet that we're able to make.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Better, but can they replicate that entire ecosystem and do so at a better price that justifies the massive switching costs? I would say probably not. And for as much as we joke about big companies being tied down by bureaucracy, they really do want to minimize it. Having one package of subscriptions to Adobe for your whole marketing team is so much more simpler than paying for a dozen different tools. And I'm just imagining some middle level manager at an office going, okay, I have to keep track of all these different expenses, a dozen different subscriptions. I'm speaking with the sales team at Adobe already, and we can just renew our existing contract. Why would I want to take on all that work to basically rebuild the ecosystem that Adobe already has in place for us? And so sometimes that kind of common sense logic can be really helpful. And so beyond maybe the anecdote of simply watching what our company does, if the financials did suddenly start to deteriorate, whether that be declining revenues or”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“To ask them whether they still use Adobe in the same way, whether they've explored new types of tools, and kind of similar questions to that. And every time I've asked our colleagues behind the scenes, at least so far, I've always been told that Adobe is invaluable. The team was trained on it in college and has used it for years. And the AI tools within it are getting better by the day. And there seems to be really no serious consideration of moving away from Adobe. If you know something internally that I don't, please let me know. But just as a business, we definitely have, I think other things to worry about, honestly. The convenience of the Adobe ecosystem is just unmatched. Every step in the creative creation process, distribution, marketing, and then performance analytics and tracking can all be done in Adobe's suite of tools. And then they can bundle those together and just make them more attractive to corporate customers with discounts. And so I'm sure there are plenty of startups that can do one narrow thing better than Adobe or a handful of things.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Really take seriously the idea of using our insights as consumers to tip us off as investors. And I'm sorry if I sound like a broken record, but it's just so integral to how we think about these kind of questions. And so just as an example, if the investors podcast were to substantially shift away from using Adobe's products like Lightroom and Illustrator and Photoshop and Audition and Frame I.O. and so on, then that would be an early indicator to me that many other companies are at least tempted to come to a similar decision. And actually, we have an opportunity to be sort of a canary in the coal mine because we're such a small company. We can make those changes sooner and more nimbly than these huge movie studios and marketing agencies of the world. So that gives us kind of an advantage in that sense. And it sounds a bit anecdotal. And of course, if there's industry data that's saying something similar, I would be concerned. But this is why, seriously, I check in with our behind the scenes team here.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“About the cutting edge, as I think technologists like to think they do. They just want something that works and that's simple and that's easy. And as a consumer of Apple, yeah, I'm happy with their phones. I don't care if they're some feature that Android has or they don't. If my phone and iPad and watch and headphones are all seamlessly synced together, that's pretty valuable. And so in Daniel and I've viewed, I think you could say really the same for Adobe and the corporate customers who use the whole suite of Adobe products that are linked together. And obviously the numbers financially have attested to the stickiness and quality of their products.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Ignore breakthroughs for too long. But what we like about alphabet is that they're not doing this at all. And if anything, they are leveraging all of their different apps and consumer touch points to make folks even more dependent on their ecosystem. And so I see it similarly with that Microsoft example. Even if a new spreadsheet app came out that was twice as good as Microsoft, I really think that Wall Street and really every corporation in the world would probably prefer to stick with Microsoft, which they've trusted for decades and just simply wait for the next Excel update to contain something similar. And I think it's kind of like how for years people talk about how Androids are more cutting-edged and have objectively better features than Apple. And yet, at least in the US, most people don't care. They just wait for Apple to eventually create their own version of these new features because that's so much simpler than switching. People actually, in many cases, don't care as much.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“That historically, it does. But the point I'm making is that Microsoft, like Nike, Adobe, and many of the other companies we've talked about today is in a position to integrate tech breakthroughs into their existing products where customers already are and they have some time to do so before especially these corporate users who do have higher switching costs change their workflows. And so we were already seeing this with Alphabet and ChatGPT. Yes, ChatGPT caught them off guard and chatGPT took most of the market share in LLM usage, which I should say is a bit different from regular search. But now Gemini is the only competitor that's legitimately taking market share back from ChatGBT. And that's because Google has been able to embed the best of ChatGBT into these AI overviews directly in search or into actually AI mode in search as well. And so the problem is when incumbents”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“The same for us with Adobe Edition as a company, right? We know that it works. And so something would have to be either dramatically, dramatically better, or dramatically dramatically cheaper for us to even take on the risk that this might disrupt our basically workflows, which would be a much bigger opportunity cost than the price of”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“So, the example I like to use when thinking about switching costs is Microsoft Excel. And so you've got generations of workers on Wall Street who were trained exclusively on Excel for spreadsheets. And for new competition to enter, you're immediately going up against a massive amount of inertia. And I say that as somebody who used to work at S&P Global before I came to TIP. And I can promise you, there is an unbelievable amount of time and attention that goes into training their staff on the intricacies on specifically how to use, let's say, Excel in this example. And so if you have some new technology emerge, and let's just call it the chat GBT of spreadsheets, how quickly would these firms risk the efficiency and the quality of their internal operations by just immediately and kind of whimsically switching to some hot newcomer instead of sticking with what they actually know works? You could probably”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
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2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
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2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Watching the earnings And that increases our ownership of the business. And so, in fact, I would say we aren't even really bothered about the stock being down. Eventually, we wanted to recover, but what it really does is it gives management a chance to get more bang for their buck with these share repurchases. And so with the same amount of spending, if shares are lower priced, then you can retire more shares, which again is great for us as long-term shareholders. And so our views on companies are always subject to change as the realities of the competitive dynamics evolve here. And that is why we post weekly updates on our holdings and our intrinsic value newsletter. And that's the best place to keep up with how our thinking on these companies progresses. And our opinion could change, but Adobe has really looked attractive to us for a while now. And it only seems to be getting cheaper.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“That continue to swirl around it. And fundamentally, there's really nothing that you can look to in the numbers that would explain or justify the stock selling off by more than a third over the last year. And that's really just one of those reminders of being mindful of the purchase price that you enter a stock at. Because anytime you're entering a company at 50 times earnings, you take on this risk that even if the underlying business keeps doing well, the market narrative can change dramatically against it. And so when we're talking about Ferrari earlier, you could probably say, well, why not just if you like the business so much, why not just own it? And it's because, well, at the current PE ratio, there's just not enough flexibility. It's too fragile. The company could keep doing well, but if the market narrative turns on us, we could be really punished by it. And with Adobe, now we're at the other extreme where it'd be almost hard to imagine the stock getting any cheaper unless the business just completely falls apart. And so Daniel and I just keep buying more as the stock falls. And in the meantime, we've just been”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“The most commercially viable, which is not to say it's the best, but sometimes the most practical technology is what ends up winning. And so I think the center of the misunderstanding is that while generative AI has made it easier for anyone to play around with image creation and editing or even to make these short movies, that does not mean that the high-end clients, these really creative professionals that Adobe has are going to switch away from Adobe, right? It's really easy to see these viral videos on Twitter of like, oh my gosh, Adobe's dead. It's so over. But Pixar is not going to be using ChatGPT. I can tell you that with a lot of confidence. And so you can simultaneously have this proliferation and content creation driven by competitors without Adobe's core business being disrupted. And to me, that explains why the business has continued to deliver stellar results quarter after quarter, even as the stock keeps selling off because of these narratives.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“AI, and everybody loves to debate whether we're in a bubble. I would say it's equally pessimistic about anything that doesn't seem to obviously be an AI winner. And that's where the nuance really comes into play. And for starters, Adobe does have its own AI model called Firefly, integrated into its ecosystem, which is unlike any other AI model, actually, trained entirely on data that they've certified to be legally licensed. And that's a huge deal. Adobe's customers are these major marketing agencies for brands like Coca-Cola and Hollywood movie studios. And so those kind of customers cannot be using generative AI for movies or commercial production because it just opens them up to these major copyright violations that can be very, very costly to settle in court. So that's how we start to think, wow, not only is there no evidence of mass defections from Adobe yet, the numbers still look great, they're actually creating an AI integration that appears to be hands down.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“PE ratio more broadly. And so despite all the narratives and pessimism floating around the stock for years now, the business has kept pushing along unbothered net income and revenues are up by a total of nearly 50% since 2021 in both are still growing at double digit percentages year over year. And you also have a company that has majority of its revenues coming from corporate customers who in many cases have been using products like Photoshop and Acrobat in a commercial capacity for decades now. So it's about as ingrained into their workflows as possible. 95% of Adobe's revenues come from recurring subscriptions. And I couldn't even imagine higher quality earnings in that, honestly. It literally does not get better than that. And so to me, what I see is a company that has been arbitrarily labeled an AI loser potentially. And for us wildly optimistic as the market has gotten about.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Because of generative AI and these competitors for Adobe at the lower end of graphic design with brands like Canva. And so the thing is, this is maybe a cop-out. Maybe it's a straw man argument, but there's a bear case for every stock in the world. And if you can't think of what could go wrong, then I think you don't know the investment well enough. And I kind of say that tongue-in-cheekly because I do think Adobe has made mistakes. They seeded the lower end of the creative design market for casual creators to Canva. And then AI is progressing so rapidly. It is entirely credible to worry about the company's earnings power. And for that reason, I would never argue that it should be trading at 50 times earnings like it was. But does that then mean with this track record of just continuous compounding that they've had, that this stock should be all the way down to a PE of 20, which is for context, about a one-third discount to the S&P 500?”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Politics to see what makes us so bullish is just a little charting. And I would encourage anyone to look up the growth in Adobe's earnings per share over, let's say, the last five years or so and the contraction in their valuation ratio over that same time. And so if you look back to December 2019, Adobe has compounded its earnings per share at 18% a year, while the PE ratio on its shares have fallen by 14% a year. I mean, think about that different. It's just astounding. And I actually cannot think maybe of a better definition of a stock not tracking its fundamentals. And as we know from basically really every study on the stock market, long term, what matters is growth and earnings per share. And eventually stocks will follow that. And so, of course, the market knows that too. And what's happening is they're afraid that earnings per share in the future will dramatically decline.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“And being a part of the brand, and that is a formula for excellent returns, the shares have compounded at something like 24% a year since 2016. And that's not necessarily unsustainable either because earnings per share have grown at a similar rate. Well, you've also had operating profit margins inflect from 20% of revenues to 30% at the time of recording. And so I think it's just pretty fair to say that Ferrari remains at the top of our watch list actually.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Is a company that Guy Spear loves, and so sometimes you have to clone the grates a little bit. And it's not in our portfolio at the time of recording, but we've gotten really close to adding it in. So what an incredible business and brand it is. They are the epitome of pricing power, honestly, right? You could probably go across a lot of college storm rooms in this country and there are a lot of 18-year-olds with Ferrari posters on the wall. And that is, that's brand power. And I was pretty shocked to learn about just how much of a compounder they've actually been. With the shares down, a pretty decent bit this year, it certainly looks more appealing than it originally did when we first looked at it, but Daniel and I are, I don't know how it sounds, but we are fairly conservative investors. And so we actually would need probably a larger margin of safety before we pull the trigger. And what we love is that they have this colt-like following of ultra high net worth customers who take immense pride.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Foreman. I don't want to talk about Uber too much because I know the last time I was on, we went into them pretty in detail.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Entered in the mid 80s and thought it was expensive at that price just felt unbelievably unrealistic to put it charitably. So we trimmed it back to our initial position size of about 2% after it had risen to more than 5% of our portfolio. And if we do get some more attractive prices again, I'm sure we'll add to the position. I think Daniel would probably say the most undervalued pick in our portfolio is PayPal. And I don't necessarily disagree, but Daniel's the payment expert of the two of us. We're also very bullish on Uber. Even after the stock has jumped this year because we still think that the market has some lingering concerns about the effects of autonomous vehicles on the terminal value of that business. While we actually differ in our view and see maybe an opportunity for them there with you have the core business, you continue to compound dramatically at the same time while also a chance to improve the business as an integrated autonomous vehicles more onto the platform.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Is it a cop out to say almost all of them? I mean, naturally, we like all of them and any that we don't like would be out of the portfolio or trimmed. And so, I mean, it's probably easier to say which ones were least excited about currently. And we just talked about Nike a bit. And given the run that Ulta has taken since I first pitched it to Stig and Toby and a mastermind episode earlier this year, we think that company is getting pretty close to being fully priced. We've taken some gains there and Reddit is actually the only other position we've trimmed, but only because at its peak, I mean, it was just almost impossible for us to justify the valuation. And so you've got to be mindful of not trimming the flowers to water the weeds, as they say. But at some point, you also have to have a sanity check on how much you're willing to let an investment run before you lock in some of your profits. And so for us with Reddit, the implied growth at $250 a share after we first”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Plus some returning to this playbook of success that's worked for them in the past, then reinstating their previously great CEO, Elliot Hill, after he retired. I see a lot of reasons to be optimistic that the market is too pessimistic on Nike. And it felt like the risk and rewards have just really been in our favor with the stock down over 50% since 2020. And we think the market is clinging a little too much to the mistakes of the past that Nike has made without fully appreciating Nike's ability to recover from them. And with all of that said, though, Nike is only a 2% holding in our portfolio. And we actually normally aim for positions of 5% size. So it's not our highest conviction bet by any means. Just to be fully transparent. Because as you've said, retail is the structurally very difficult business. And they are going through this sensitive period in the turnaround. And so depending on how that continues.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Heart has, I think it is easier to make up for lost ground after mistakes. Those mistakes can be less damning. And just to give kind of a tangible illustration, with $46 billion in revenue in this past year, Nike could spend only 1% of its total sales to do $500 million in R&D to develop the highest quality sneakers and sporting gear in the world. Whereas smaller competitors might have to spend 10% of their revenues on R&D or more just to match what Nike's able to spend. And the point there is at their scale, they can be structurally more profitable than most of their competition, and they can ramp up research and development or spending on brand partnerships as needed to rejuvenate the brand at a scale that really nobody else can match. And so that's what I mean when I say I wouldn't bet on any turnaround, but when you take qualitatively what we know about Nike's branding and the financial advantages they have,”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Actually, returning to their playbook for success historically. And so even with the mixed results over the last decade, they still managed to generate what's a really incredible 25% return on invested capital on average over the last five years. And that does illustrate to me that they have competitive advantages. And anytime you can continue to generate excess returns on capital more than twice that of the market average, then yeah, that's a sign of an excellent business, an excellent brand. And what got them in trouble for context was that their CEO at the time, a couple years ago, just got way too ambitious in the kind of pandemic era and thought they could sell first party through their own stores. And they started moving out of these other retailers that we now know are really essential to the business. And it was maybe one of the worst business mistakes I've ever seen made, honestly. And now they're in the process of trying to fix it. And when you're a company of Nike size and with the brand”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“I do tend to think it's Nike. And when I think about using my own consumer insights too, inform my thinking personally, I don't wear Nike much anymore, but I also probably would wear it again. I could easily see that with the right marketing. Nike could be cool with our demographic. And so what I'm trying to say is I don't think the damage to the brand is permanent. It's more like they're in limbo right now. You're almost betting for better or worse that things can't get any worse for them. And so that does not mean that they will succeed, but with some of the”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Of our lives and our integrated deeply into our mobile phones. But the best friends are also not always these tech companies. And so I was very skeptical of Nike at first too. And I think the reason we both are is actually because of where we live and our age, Nike has lost a lot of relevance in the US. It's just not as cool as it was when we were both growing up, I think. But Daniel has really helped me to understand and appreciate that Nike is a global brand. And in Europe, it's still very trendy. So there is something to be said for that kind of global diversification to their business. Speaking to how strong the brand is still. And the other thing is I would generally agree that we should be skeptical about turnarounds because, in fact, most turnarounds are just bad businesses selling an optimistic narrative about the future. But again, if there was any company that had a brand credibility and the status to deliver a turnaround,”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Daniel and I aren't in the game of trying to predict specifically where earnings will be. And we take more of the reverse DCF model where we like to see what kind of growth rates are implied by the current market pricing. And so when we think about Nike, I mean, Nike is, in my opinion, not going anywhere. And if we can get it at a multi-year low as opposed to buying it at a 10-year peak, then that is part of what makes the investment more attractive to us where we feel the odds are more so in our favor that if anybody has the brand credibility and power and resources to even just have a modestly successful turnaround that would spark a much bigger rally in the stock, it would be Nike. And so I would say more than anything, what we love is strong and enduring brands. And oftentimes the best brands are these kind of second tier tech companies or top tier tech companies that we talked about earlier that feel almost like essential part.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Retail really outside of luxury. And that gives them a ton of leeway to turn things around. They're not guaranteed to do so. And maybe it's not a business you want to own for a decade or 20 years. And maybe the same with Lulu. But I can very much see why both could do very well over the next five years based on just how bad expectations currently are despite the strengths of the underlying brands.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Priced very richly since, but at the right price, we would love to own it. And for better or worse, you do need companies to face some genuine uncertainty for these really attractive opportunities to arise. And to me, it is easy to understand why consumers love Lulu and why it's been such a durable brand. And it's even easier to understand why Nike has done great historically. So many of us grew up idolizing Michael Jordan. And now the brand is synonymous with so many great stars. And that's been part of their strategy. And I would say yes, Nike has squandered some of those brand advantages in the past years. Maybe to an impressive extent, honestly. But the benefit of being such a wide-moded business is that you also have a lot of room for error before competition can permanently take market share. And that's why we're actually willing to pay a higher PE for Nike, because we believe the business has arguably the strongest brand in all of”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“That we do feel very confident in their ability to chug along and kind of anchor our portfolio. So the question then is still, why even bet on Lulu at all? And I don't think I have a great answer. But the simple answer is that from the prices we entered at, we think the returns over the next five years can be as attractive as any of those other businesses that maybe seem like surer bets. But Daniel and I like to remind people that, again, investing is this iterative process. You have to try different things and give yourself room to have big successes and hopefully make limited mistakes because otherwise you'll never actually progress and you'll just be destined for mediocre returns where you're really just owning an index and owning what's popular. And that's not what we want to do. And so we're experimenting really as we go. And to your point on visa, unfortunately, the market also knows that it faces few competitors and it's typically priced to reflect that, right? It was so at the time. We looked at it and it has been.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“It looks attractive, but we're watching it closely. We're not married to the idea. And if sales are suddenly weaker than expected, especially internationally, while the company leans more to discounting or continues to flop with new releases, I'd be the first to say we should reconsider it. It could easily be a value trap. And if it does prove to be a value trap where the business looks cheap only because the trailing resulting results look good while their future results actually fall off, then that would be a great learning opportunity for me. And also the reason you maintain a certain amount of diversity in a portfolio is for that reason, right? I would never tell anyone to bet 100%, 50% or even 20% of their portfolio on a company like Lulu or really any other retail brand for that matter. But for us, 5% of our portfolio felt reasonable because we know that we do have these more typical quality compounders like Alphabet and Adobe and Airbnb, Uber, Berkeley.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“While I would say that retail can be trickier at the median level as a lot of brands can surge into popularity for a few years, become publicly traded, and then fall off the map, kind of like what happened to all birds if anyone remembers that brand. But again, that doesn't mean that there are no quality compounders in retail. And in hindsight, just looking at all birds, I think it'd be easy to say that the brand was a fad, but I also never would have invested in a retail brand that had such a short track record of consumer loyalty. That's really how I think about it. And what I'm trying to say is that, yes, on average, most retail brands are terrible businesses, but the best of the best can endure for decades, as with many other compounders in different industries. And so the bet I'm hoping to express is that Lulu is more durable than the market is giving a credit for. And I've been willing to make that bet because the current valuation is so favorable based on the recent financial.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“To work out, it's really just trying to make investments with favorable odds. And to me, it's a question of trying to consistently stack those odds in your favor across a lifetime as much as possible. And so it's just funny to me because at this valuation, Lulu actually looks like a one foot hurdle. And now maybe that will age very poorly. And you're right that competition in retail is incredibly tough. But I would say Lulu has been an industry leader for 15 years now. And Nike is going on, what? four decades of dominance. And so there's been plenty of competitors along the way. But just like with Coca-Cola, the power of a strong brand can go a long, long way in any consumer-facing business, whether that be with beverages, sneakers, or yoga pants. And so I caveat that with saying there are definitely some industries that are uninvestable. I've never really heard of an airline, for example, that was adorable.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“You and Daniel have not been shy to remind me about just how brutal capitalism is. And if I do prove to be wrong about Lulu, it would really be an illustration of how using consumer insights can let you down. It's not a bulletproof strategy. But intuitively, though, when I'm still wearing the brand daily, most of my friends are, most people at the gym are, most people at the see, you know, a ton of people at the airport are wearing at. And then from just kind of an income statement level for the entire company, sales aren't even actually declining. And then yet the stock is down 50% in a year to a PE below 12, despite very strong growth prospects internationally, especially in China. Then you have this aggressive share buyback program. I look at all of that together and get this kind of mosaic where I start to feel pretty good about the risk return profile being at least skewed in our favor. And that doesn't mean that every investment you make will be guaranteed.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“What you'd expect from looking at the stock chart, which has just been really ugly the last year. As far as premium retail goes, this is a brand that has industry leading rates of customer loyalty, meaning customers keep coming back to buy more over time while relying much less on discounting than other brands do to drive those sales. And so finding good sales at Lulu is mostly pretty rare. And that's on purpose for protecting the brand. They sell everything first party, so they've complete control over pricing. And while it would be tempting to boost earnings in the short term by offering discounts during periods where maybe some of their styles are falling flat with consumers, I'm actually glad that they don't do that. And to me, it's not a question of whether a brand like Lulu can regain their trendiness, but really can they avoid the temptation to destroy the brand while trying to do so with, like I said, maybe excessive discounting.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Which is why he did so well with bets like Coca-Cola and Apple that were relatively easy for him to understand. So carrying this over to the discussion on retail and to just play a little bit of devil's advocate here. In my mind, why spend time investing in businesses like Lulu and Nike that faced a never-ending list of competition when you can instead invest in, say, something like Visa, which faces little to no competition? Gosh, I've gotten teased so much about Lululemon. And it's not just because the investment has been struggling, but I do tend to be very passionate about the brand. I have some close friends actually who, just to give me a hard time, they go out of their way to wear Viori or Nike or Aloe whenever they're around me. And definitely not anything from Lululemon. But I just think their clothes are incredibly high quality. And even though competition has arisen, I don't think their brand power has completely fallen off a cliff, at least not in the”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT