My Favourite Media Content - August 2023
Here's a glimpse into my favourite media content from August 2023.
Note: Any feedback on these articles would be greatly appreciated. Do you like them? Do you skip over them? Do you like long-form summaries or shorter summaries? Any other feedback? I’m all ears!
Articles
1) The ‘apprenticeship’ culture that drives Australia’s biggest PE firm
A fascinating look into Pacific Equity Partners (PEP), one of Australia’s most recognised PE firms along with Quadrant Private Equity. The firm boasts an astonishing 41% IRR since inception and has doubled their investment on 12 of their last 13 deals. Worth a read.
2) The ‘Oppenheimer’ backlash proves the left has forgotten what art is
I’m not an overly political person but I agree wholeheartedly with this article. Oppenheimer was a classic biographical movie delving into one of the most significant and complex historical events of the 21st century. I personally didn’t think the movie unreasonably glorified Oppenheimer but rather depicted just how unsettled and troubled he was following the bombings in Japan.
3) What are GLP-1 receptor agonists like Ozempic? And who should take them?
This was a great primer for those interested in learning more about GLP-1 agonists which have exploded in popularity over the past 24 months.
I must admit, I’m sceptical about the long-term efficacy of GLP-1s (strong opinions, loosely held). In my opinion, people seem too eager to jump on the bandwagon with medical/pharmaceutical interventions before there’s high-quality long-term research on safety and efficacy. A basic principle of physiology is that any exogenous agent that changes something within a system leads to compensatory physiological responses - that’s why so many drugs lead to positive changes in one aspect (e.g., boosting mood with SSRIs) but lead to side-effects in other aspects (e.g., reduced sexual libido). There’s no free lunch in physiology, especially in the short-term … Particularly when people who stop taking Ozempic seem to gain the weight back straight away.
Podcasts
1) Asking My Friend How He Went From $0 to +$100M Before Age 30 (My First Million)
I love these entrepreneurial “rags to riches” case studies. Syed Balkhi ran Wordpress affiliate sites in his teens and used the income from those businesses to acquire 10+ gas stations throughout the US and a large commercial real estate portfolio. He bought all of those assets primarily with cash.
In this interview, they delve into his backstory, how he manages his HoldCo structure vs. individual P&Ls for his businesses, and his philosophy around spending money. One of my favourite interviews of 2023.
2) Nick Kokonas - Know What You Are Selling (Invest Like the Best)
Nick is a philosophy major turned derivates trader who now owns 3 of the most valuable restaurants in the world.
One of his early motivations for owning a restaurant was that all the restaurant owners he knew were the ones who had enough control of their time to be present at their kid’s soccer games. All the professional services workers (e.g., lawyers or bankers) were rarely present at those games.
He’s a very innovative thinker and pioneered several business concepts in the restaurant business to improve margins, including: (1) pre-selling restaurant reservations (i.e., paying in advance to reduce cancellations), (2) dynamically pricing restaurant reservations throughout the week (as opposed to a single flat rate regardless of the day of the week), and (3) prepaying for all food supplies to receive large discounts.
A good sign that an industry is earning super-normal profits is if the people in charge are cagey when discussing the economics of their job (e.g., book publishers being reluctant to discuss specific arrangements of their deals with authors).
3) Adam Grant: Give & Take, Think Again, and the Future of Work (In Good Company)
A precrastinator is the opposite of a procrastinator.
We are at risk of promoting narcissists in the workplace because it is easy to equate their confidence with competence.
Giving credit to other people is almost always a win-win situation because: (1) it boosts morale and (2) most people already know who contributed most to the positive outcome (so you get the recognition AND look humble doing it).
It’s important when raising kids to ask non-achievement-related questions, e.g., did you help anyone at school today? Otherwise, children can grow up believing their worth is dependent on achievement (a dangerous core belief to have).
Adam is one of the most productive people I’ve ever come across and was the youngest full professor at Wharton. He estimates he currently works around 60 hours/week, but would’ve worked up to 100 hours/week in the past. He felt working above 60 hours/week was counter-productive as it made him a boring person and massively reduced his creativity.
YouTube
1) I Was Homeless … Now I’m Worth $250 Million
I thought I would hate this video with the click-bait headline and cheesy YouTube thumbnail but it was actually a really interesting interview with an entrepreneur who built from scratch a $200m real estate portfolio in the US. Some learnings:
He shared several examples of getting big discounts on real estate deals because he was able to: (1) close quickly and (2) offer cash. This helped him get several deals at below market rates vs. other higher bidders who offered less certainty, were reliant on financing, had long timelines to complete due diligence, etc.
He thinks the easiest way to make $1m in real estate would be to find a commercial property with a large tenant, kick them out, and then sub-lease the space to multiple smaller tenants at higher rates.
He bought lots of US commercial real estate (mainly in Texas) from 2000-2007, but sold it all in 2007 because he sensed the market was getting overheated. He put all that cash into commercial grocery buildings with established grocer tenants with long lease agreements. Great market timing!
He appraises around 150 properties/month but only makes a single investment every 3-4 months, so he’s very disciplined (1 investment for every 450-600 opportunities).
He’s holding lots of cash right and waiting patiently as he thinks there’ll be a large wave of defaults in commercial properties over the next 2 years. I tend to agree with this perspective, as does Chris Joye.
2) Before the Mets, Steve Cohen Was The Hedge-Fund King (Frontline)
A fascinating documentary for those finance nerds out there about the insider trading allegations brought against SAC Capital, the hedge fund of New York Mets owner Steve Cohen (at least prior to he rebranded the firm to Point72). It’s pretty undeniable that insider trading would be rampant on Wall Street, particularly when investors speak with current/former employees or conduct “channel checks” with distributors/suppliers.
3) Inside a $54,600,000 Billionaires Row NYC Penthouse
An all-time favourite of mine for those luxury real estate junkies out there. The view is definitely the best I’ve ever seen for a NYC real estate video.
Twitter
1) There’s a $13 billion fund that you likely have never heard of that has tripled the returns of the average hedge fund over the last 20 years …
Companies I’m Researching
1) Baidu (NASDAQ:BIDU)
This is a company I’ve owned since 2019 and added more this month. Baidu is the “Google of China” with a dominant search business that prints cash like Google’s core search business. It’s also a leader in autonomous driving in China (you can order a Baidu self-driving taxi all throughout Beijing) along with a top 5 cloud business in China. Baidu has invested substantially in AI over the past few years and recently launched their own LLM model (“Ernie”) which I think has the potential to become the default LLM in China, like GPT-4 by OpenAI is in the US. I doubt the Chinese government will allow Chinese companies to have all their data flowing through OpenAI …
So, why do I like Baidu now?
The business has returned to growth, reporting 15% YoY revenue growth in the latest quarter.
Adjusted EBITDA margin is 27% and GAAP net income margin is 15%. This is a highly profitable business.
The business is screaming cheap, driven by investor scepticism about China. More than 50% of the $47b market cap is in cash with Baidu trading for a 13x NTM P/E and 7x forward EV/EBITDA multiple.
Management is buying back a ton of stock, which should see EPS increase materially over the coming years.
The above makes Baidu a highly attractive value play in my opinion and I’m aggressively adding to my position.
Another set of top recommendations