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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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“Capitalism can treat the retail sector. So three retail names in the portfolio include Nike, Lulu Lemon, and Ulta Beauty, the running joke when we were over in Montana a couple months ago was that if you really wanted to get Sean going, just bring up Lulu Lemon and you weren't shy to mention to me when I got to the airport that I was wearing a Viori sweatpants, which is one of their top competitors. The discussion around retail reminds me at one of the Berkshire meetings. Buffett mentioned that in the investment business, you don't have to do exceptional things to get exceptional results. He said whether you jump over a seven foot bar or a one foot bar, the ribbon they pin on you is the same regardless. So in the case of something like TSMC or NVIDIA, they're jumping over seven foot bars every single year trying to develop the next new technology. So he's really getting at this idea of not overcomplicating the game of investment.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“It's just like these types of margin levels are just out of this world and impossible for companies in previous generations. And when you combine high switching costs that are in place and the data, the value of the data they hold, it's just hard to not get attracted to some of these names. And in many cases, there's a feedback loop that becomes increasingly difficult to disrupt these companies. So if we look at a company like YouTube, for example, which is owned by Alphabet, every view, every like, every comment they receive feeds their algorithms and it helps them make their platform even better. And as those recommendations to viewers improve, users spend more time on the platform. It attracts more creators, more advertisers, generating more revenue and more data for YouTube to further refine their algorithm. So I also can't help but notice that there are a few retail names in the portfolio, which I must say is a bit of a bold move given how brutal”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Boardroom netsuite.ai TIP. All right, back to the show. Yeah, I definitely appreciate the consumer aspect of these being very much branded companies that consumers are familiar with. And I think there's also just something to be said with technology businesses being capital light. You know, once these platforms and ecosystems are built, incremental returns on invested capital can just be insanely high as they continue to spread a lot of these fixed costs out over more and more customers each year. And the margins on these businesses can just be ridiculous. So actually I invested in one of Robin Hood's peer companies, if we can call it that, is an interactive broker's and just recently covered it on the show, their gross margins are 82%. Their operating margins are 75%. We'll be talking about Adobe. Their gross margins are 89%.”
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
“Customers moving to competitors, then that would be a signal for me to consider as an investor. And again, that's using your consumer mindset to kind of frame how you think about things as an investor. And I think you can get advantageous early indicators by doing that. And so I really do believe it can be that simple in that by evaluating businesses that you're organically a consumer of, you put yourself in the best position to make investment decisions where you're not speculating on industry trends or going off of what others are saying, but actually just following your own intuition about the direction the business is heading in and how its value add is changing for better or worse. And that more authentic approach, at least for Daniel and I, we found works a lot better.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“So we didn't actually end up investing in Robin Hood despite kind of hyping it up there. But what we're really trying to do is use our consumer insights to frame our investment decisions. And that does not mean you invest in every company that you use as a consumer, but it's a great starting point. I've used both Spotify and Reddit for probably 12 years now. And I use them both more now than ever. And the question is, why is that? Well, that's the type of question I'd want to answer. And as we have looked into that on our show with many of these second layer tech companies, with consumer ecosystems, we've really come to appreciate just how powerful their business models are. Even with Adobe, you might say that, hey, that's not a consumer-facing business, but we've had insights into that company in the same way as we've had with Spotify and Reddit because we are a podcasting company and we actually use Adobe for nearly everything we do on the back end, which means that if I saw us as customers,”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“As the industry that faces the most change and changes the fastest, where therefore any existing competitive advantages are the most fickle and can erode away the most quickly. And so you contrast that with a business like Amazon, where it just feels like for, I don't know, the last decade, maybe 15 years, Americans can't live without it. And just personally speaking, I have only gotten more and more reliant on their ecosystem over time. And you can probably say the same for Apple. And look at Robin Hood. As Robin Hood has rolled out more and more value ads for its gold members. Again, I've only gotten more entrenched in their consumer ecosystem. And it does help that they're a digital first business without physical storefronts weighing them down. But again, it's. It's more about the fact that they have the best consumer interface and design, the most generous benefits, you know, kind of scaled economy shared. And combining all that together creates this incredibly sticky consumer ecosystem that makes me much more reliant on the business over time.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“For your delivery on ETS and discounts on rides. And they're trying to encourage people to use both apps and to use them more frequently. And the data around that has been very promising from an investor standpoint. But to me, again, that's just good business decision making logic. It's not rocket science and humanoid robots. They leverage technology to scale and diversify their business in ways not possible before the internet and mobile phones. But Uber is not a tech hardware company in the sense that they're constantly trying to make physical science or computing breakthrough. Not at all. And that's why companies like NVIDIA or TSMC do give me pause because they're at the cutting edge of technology, which is great when you're in the lead, but it leaves no other margin of safety such that as soon as someone else does make a breakthrough, you can be displaced more quickly. And semiconductors, after all, were literally the example that Clayton Christensen uses in his book, The Innovator's Dilemma.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Business capitalizing on its massive network effect. I think you can say something similar for Uber. Far from being a tech company, whatever that even means, they are tethered to the real world. Every time you book a book or food delivery through Uber, a real person in the real world has to get into a vehicle and deliver you or your food from one place to another. So really to me, it's a logistics business with membership subscriptions, network effects, and advertising layered over it that make it much more attractive than a traditional logistics company that just does interstate trucking or shipping or something like that. And on that point, they realize that if they can just get users to use both the Uber ridesharing app and the Uber Eats app at least once a month, that will increasingly turn into a habit. And as a result, users of both apps tend to spend three times more than users of just one app. And that's why they launched Uber One, which is the subscription that often”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“The crux of your question. What we really love about a handful of these kind of second tier tech businesses is that they're really consumer companies as much as they are tech companies. And I think that probably sounds a bit wonky to people. But famously, Buffett came to see Apple as something more like a consumer goods business, as opposed to truly being a tech company since he famously avoids tech. And I would think somewhat similarly here with Reddit, for example, you've got a platform that has served as the front page of the internet for over 20 years. But really, it's an advertising business. They have millions of people who log into the app every day or access it through Google after searching for some type of question. And then from Reddit's perspective, their business is about monetizing those eyeballs as effectively as possible and keeping them engaged on the app for as long as possible. But let's not pretend they're doing rocket science either. They're not inventing new types of battery chemistry. It's an app.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Is to say something along the lines of well, you're not an expert on everything Alphabet does. So, how can you invest there instead? And to me, the difference isn't being more of a consumer focused business rather than B2B. And as a consumer, I can understand exactly why people use YouTube and Google search or why Apple's product ecosystem is so unbelievably sticky without me needing to actually know how to build an iPhone. But when you're truly at the forefront of technology in the way that maybe Tesla and Nvidia are, you're competing only on performance. And you just don't have the same advantages like brand awareness and network effects that can help ease some of that competitive pressure. And so I don't have an opinion on NVIDIA either way, but that was sort of the thought process for why we've avoided it. And even as the stock has done incredibly well. And fortunately, I just think there are so many different ways to make money in investing. You don't have to play games you're not good at. And so to”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Seemingly has huge potential, and everybody else is yellowing into. And yes, I would probably reckon very, very few people actually understand semiconductors, which is the business area that NVIDIA is in. These are maybe the most complex pieces of technology humanity has ever created. And so fundamentally, NVIDIA is competing in incredibly advanced tech hardware, meaning the metric that matters most is performance, especially at the high end. And performance then is really all they're graded on. And that's a tough way to do business. And clearly, NVIDIA has done very well. But to me, without a degree in engineering and computer science, I'm just not sure how I could ever feel comfortable understanding the durability of their advantages. Are they going to continue to dominate the market for the next year or the next day?”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“We haven't entirely avoided the MAC 7, right? We do have alphabets one of our largest positions, but we're also very disciplined about just trying not to invest in things that we can't wrap our minds around. And Tesla, as a member of the Mag7, is sort of an easy one to avoid for us. You've got trillion dollar pay packages for CO, humanoid robots, and then the promise of self-driving vehicles, while changes in tax credits and tariffs and competition in China are wreaking havoc on the underlying business. That's a company we've just never even bothered to cover just because it's a stock that doesn't seem to be driven by fundamentals and there's just too much going on to understand. And I think in a similar but maybe different way, we never bothered with NVIDIA either. And you can say we missed out hugely, but I think that's okay. We'd rather earn satisfactory returns on companies that we understand and can buy with a margin of safety than roll the dice on a business that we don't understand.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Seven bagger and just three years from as low in 2022. And that's just absolutely astounding to me. And again, it's proof not only in the value of patients and waiting for those market distortions, but you also don't have to look past large caps to find good investments sometimes. Many of these large tech companies are arguably some of the best businesses to ever exist in the history of capitalism. Daniel and I have come to appreciate that when we get chances to buy them on sale, that's a pretty simple bet to make that tends to work out well.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Per share at the low to as much as 290 per share. I mean, that's a double. And nothing about that sounds like an efficient market to me. It's something that Joel Greenblatt talks about a lot. And the point is sometimes folks think they have to go into these super obscure areas of markets to find attractive opportunities. And yet, perhaps the most well-known company in the world clearly looked undervalued. And that's not just the benefit of hindsight either saying that Daniel and I wrote about that in our newsletter for months, that we thought alphabet was undervalued before that rally took off. And you can say, I think something similar with meta back in 2022, which I know was talked about on this show a few different times. Daniel and I weren't doing our podcast then, but it's just really incredible to think that the company behind Facebook, WhatsApp, and Instagram, which are three of the most widely used apps in the world, could be almost”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“We use that as a chance just to have some common sense and say, yeah, we have an opportunity to build positions in some of our favorite companies that really are not going to be affected by tariffs at all. I mean, what do tariffs have to do with Adobe, Airbnb, Reddit, Alphabet, and Uber? I mean, you could find some sort of effect, but wiping out 20% of the market cap of the business seems sort of absurd intuitively. And so the reality, though, is that even the best companies in the world still hit 52-week lows by definition, right? That's just a statistical inevitability. So having some cash on hand gives us a chance to capitalize on really what are these inevitable opportunities that happen even with the best companies. And you might think that alphabet is this mega cap stock that's bound by the efficient markets hypothesis. And therefore rarely ever presents opportunities and is never mispriced because there's so many eyeballs in it. But in this past year alone, the stock has fluctuated from 146.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Well, and like I said, to drive that 10 total return, the bets that we have made have actually done much, much better than 10%, obviously. And so Reddit, for example, at one point was a triple for us. Uber's been up over 50% from when we first bought it. I think Newbank is up over 40%. And then Ulta, which is actually one of the first companies I ever covered on my podcast and also pitched on We Study Billionaires, has also done pretty well up 40% or so.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“And so people are always surprised when they see that so much of our portfolio is in cash. And actually, there's a really simple answer to that. On January 1st, 2025, we started at 100% cash. And it's taken us a good bit of time to allocate that over the last year. And if anything, in our view, allocating 70% of your portfolio in less than a year feels pretty ambitious to us. And in terms of how the portfolio has done, given that we've had this massive cash balance that has been a handicap, especially with the market continuing to hit new highs. But we're very satisfied with how it's done. At the time of recording, our entire portfolio, including cash, is up over 10% year to date. And again, I'll just emphasize for good chunks of the year, we had 90, 80%, 60% cash, and so on. And even now, we're down to one third cash. So for the total portfolio to do a double digit return, it's performed pretty”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“The process. And even with open AI, I think we're arguably too late to it. Getting that real hundred bagger is difficult. But yeah, to your question on the intrinsic value portfolio, that sort of long-term mindset, I think, has been really liberating for us because we can sit here and say, well, we're not trying to get into open AI just for to do well in the next 12 months. Honestly, I'm thinking on a 30, 40, 50 year time horizon. I'm thinking for the rest of my life. What are going to be the investments I can make today that I'll look back in hindsight as really being the best decisions I made and being the biggest wealth creators? And as you know, I mean, so many on Wall Street don't enjoy that privilege. I mean, they're judged by these quarterly results. And there's constant pressure to deliver, even if they know it would be better to actually focus on companies that are positioned to win long term, but just the nature of their work and expectations from investors pushes them to think on a much shorter time.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Just quickly on your point on alphabet, because I think that was so interesting on compounders. Daniel and I had the opportunity to invest in open AI in a private fundraising round. And I remember we were so excited about it. My wife thought we were crazy. He was like, how could you even be thinking? Like, of course we have to participate in this. And I just remember talking to Daniel thinking, okay, it's already valued at like $500 billion. And, you know, I mean, the revenue's growing, but it's absolutely unprofitable just burning cash. And it was that same kind of lens of with alphabet of you're thinking, okay, you would think that this sounds like something that would be a hundred bagger, but the amount of growth, I mean, it would have to be bigger than the entire global economy, I think, for open AI and chat GBT at that valuation to be anywhere close to 100 backer. With the point being, you know, even really, really great companies that seem like the next Google or literally with Google, even if unless you're very, very early.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Special opportunities and understand them. But you're working a lot smarter than harder, in my opinion. And I'd rather try to be right once and find a company that can keep making great decisions on my behalf for the next decade, then try to get really a great idea every few weeks. And I know that's ironic because we do on our show look at a different company weekly, but we're really doing that through the perspective of trying to find companies that we'd want to own for a minimum of five years. So we're not looking at all these ideas, you know, thinking, oh, let's trade this ahead of the earnings report. It's really totally antithetical to our approach. And even if you seldom swing, I just think you've got to be constantly looking for those opportunities because you don't want that once in a decade investment to just pass you by.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“They can really do that for you. You know, you buy it at a reasonable price, they're compounding their intrinsic value at 20% a year by reinvesting into their own business. That is going to be infinitely less work and also less room for error as you're focusing all your attention on making one hugely”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Great investment decision a year. I mean, for Buffett, he was making one great decision a decade. And so there's this kind of cliche about swinging only on fat pitches and even just a year or two ago. I was, you know, despite having read Buffett and Graham still tempted to make these relatively short-term trades where you're swinging at a lot of pitches. And I think, oh, XYZ is happening. So we'll drive oil prices up. And so therefore, I should be betting on oil to go in some way. I've just given up on that completely because the thing is, even if you make a bet that goes up 20%, the question is then what? You have to keep doing that across your entire portfolio consistently for years. And that's just a very high frequency of bets to be right on with a lot of work going into each one. And it's just like I said, it's just swinging at a ton of pitches. But if you can find one exceptional business.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Parts of your net worth can be scary, but as I've gotten more practice myself, even with just a paper portfolio at times, rather than simply reading about the investing legends who run these concentrated portfolios, I've increasingly felt comfortable doing that myself. And I've had a great colleague in Daniel helping push me to do that. So I guess you could say I've changed my mind a bit on just how risky individual stock investing can be if it's approached carefully and intelligently. The other thing I'd say that I've had a real epiphany on is around this idea of finding 100 baggers. And I know we both loved Chris Maer's book on the topic. Whether I'm actually looking only for companies that can 100X, I don't know, but I've come to appreciate that investing is a pursuit where hard work is required, but there's not a linear payoff to it. And so Manish Paprai talks about how in Buffett's career, there are really just five of these investments that explain the bulk of his returns. And when you look at it through that lens, you don't even have to make one.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“To kind of change your mind on. And I'm not saying anything against the value of reading, as you know, but really what I mean is that if you are like me, you could probably spend years learning about investing without ever really gaining the confidence to act on it. And maybe the comparison I would make is like staying in academia forever and never actually working in a job outside of it. And I just had this imposter syndrome and I never felt qualified to make big bets on individual stocks. It felt too risky to me. It just felt like I wasn't equipped to do it. And so I would read about the art of stock picking. And then after all that, I would just go buy an ETF. And through hosting the intrinsic value podcast, though, I really was pushed out of my comfort zone. If you are going to be researching companies the way we do and try to find ones that you like, I mean, how could anybody take you seriously if you're not investing in the meaningful yourself? And that was honestly the push I needed. Investing in individual stocks with significant”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“It's such a good question. At this point, we've spent something like 40 hours a week breaking down a different company over 50 times. So there's really been this incredible opportunity to build up my intuition and experience as an investor. And along the way, I feel like I've gone maybe from one extreme to another. For years, I spent most of my time just reading books and shareholder letters and maybe listening to podcasts like this one. And I had this very passive role as an investor. But at some point, without any actual practical experience, the marginal returns on that information just diminished. I mean, I was probably spending 95% of my time learning, only 5% of my time actually getting my hands dirty, digging into specific companies. And over the last year, that dynamic has just completely shifted for me. And I think it's been a game changer. I'm reading a lot less because I'm spending so much time trying to apply the lessons. I've learned from years of reading and investing generally. So I don't know if that counts as something.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT
“Doing great. I just got back from 10 days in Portugal speaking at an investment conference. So there are worse things in life.”
2025-12-05 · We Study Billionaires · TIP774: Being Greedy While Others are Fearful w/ Shawn O'Malley · IDENTIFIED FROM THE TRANSCRIPT