Finding Wide Moat Stocks with Yuri Khodjamirian
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- Опубликовано: 16 июн 2024
- In this episode of Excess Returns, we talk Moat investing with Yuri Khodjamirian, CIO of Tema ETFs. We discuss his unique approach to identifying companies with durable competitive advantages and how it differs from traditional Moat investing. We also look at the various types of moats, such as economies of scale, strong network effects, non-replicable physical assets, regulation, and high switching costs, and how these advantages apply to different industries. Yuri also shared insights on Tema's investment process, which blends quantitative and qualitative analysis to construct portfolios of these high-quality companies.
00:00 - Introduction
02:15 - Advantages of investing in companies with moats
04:30 - Tema's unique approach to defining moats
07:00 - Different types of barriers to entry
07:45 - Economies of scale
11:30 - Strong network effects
16:30 - Non-replicable physical assets
19:30 - Regulation as a barrier to entry
22:30 - High switching costs
25:00 - Blending quantitative and qualitative analysis in the investment process
31:00 - Cashflow return on invested capital (CFROI)
34:30 - Challenges to moats and monitoring risks
37:00 - Antitrust investigations and their impact on moat companies
41:00 - Balancing quantitative and qualitative factors in the investment process
44:30 - Moat companies and their performance during inflationary periods
46:45 - Valuation considerations for moat companies
50:30 - Portfolio construction and position sizing
56:00 - International exposure in the fund
1:01:00 - Closing question: The most important lesson for the average investor
1:03:00 - Where to find more information about Tema ETFs
1:04:00 - Closing remarks
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On the laying of new train tracks; lumber and mining companies frequently need to send their production either to ports or to city center and this means either new roads or new tracks. A railroad company that pays attention to these corporations can potentially help guide where these tracks will be laid so that these can still be used even when the production of these resources wind down if it makes sense to maintain transportation of goods or civilians on that line afterwards. The presence of such lines can help maintain boom towns in remote areas and the railroad company will benefit with a monopoly situation at least until roads can be built.
In principle, Intel's problem was management, not smartphones. They opted to not supply chips for Apple’s iPhone in 2007, believing there wouldn't be enough volume. By 2010, when Intel launched the Atom CPU for phones, the industry was used to using ARM. The mistakes let TSMC get more foundry volume than Intel, and volume drives learning and efficiency. That's far from being the whole story of Intel's decline, but maybe enough to show how better management could have turned smartphones into an opportunity. Are there cases where management rode a potentially disruptive wave? I think a good source is "The Disruption Machine" by Jill Lepore in the New Yorker, June 2014, where she challenges Christensen's Disruptive Innovation Theory.
Corporations are Creatures of Government.
When a Corporation acts, it is an Agent of the Government.
THIS IS NOT A BAD THING.
This is just reality - it’s how it works.
Once you understand that Corporations are Creatures of Government and Agents of Government, then you can understand what Regulations are.
Regulations are Protections.
Protections for the Creature of Government.
Protections for the Agent of Government.
Protections for the People, the Non-Government (that’s you and I).
Understand these truths.
it's the other way around. Corporations get the laws they need by financing politicians; frequently in the U.S lawmakers are handed from corporate donors already made texts of laws they want passed for their benefit. The Citizens United decision has also made corporate influence on the government easier for them.
@@HepCatJack nope
@@MichaeldeSousaCruz the oldest corporation of the United States is the Shirley Plantation founded in 1613 a full 176 years before the United States Government came into existence in 1789. Therefore the corporation is not a child of the government. You're going to have to do a lot better than nope.
@@HepCatJack in 1613, the Government for that business was England. The London Company received a charter from the English government to settle colonists in what eventually was to be called Virginia. You know what a charter is, yes?
@@MichaeldeSousaCruz In the 1600s, a "charter from the British government" granted by the monarch (king or queen) was essentially a permission slip and rulebook for establishing a company. It functioned in a few key ways for companies founded in the 1600s:
Legitimization and Monopoly: The charter granted official recognition and approval from the Crown, giving the company legitimacy and a certain prestige. In some cases, the charter might also grant a monopoly on trade with a specific region or product, giving the company an advantage over competitors.
Rights and Responsibilities: The charter outlined the company's purpose, rights, and obligations. It might specify:
The geographical area of operation
The types of goods the company could trade
The ability to raise funds through the sale of shares (in some cases)
The structure of the company's governance (e.g., board of directors)
Responsibilities to the Crown, such as tax payments or providing resources during times of war.
That said this bureaucratic act was not needed and the company could have existed without this process just as a lemonade stands have existed without any official acts. Buffett's own businesses as a kid of reselling cokes & gums and renting pinball machines existed without official acts of government.
Using regulations this way is not "natural" - these are manufactured monopolies. Criminal. Just criminal.
It's the difference between Capitalism and Crony capitalism. We're seeing some elements of this in Florida where oil and gas lobby are hindering people installing solar panels on their homes. Corporations are typically pro-Capitalist and want to be free of government intervention until they get disrupted. The Taxi system for example was a govt. enforced monopoly where only a few companies operated in any given cities with a fixed number of licenses to operate. Ride sharing companies along with cell phones have disrupted these industries. Taxi licenses once worth nearly as much as a house have quickly become worthless people counting on them to help finance their retirements are finding themselves in a bind. Its also a lesson on the risks of concentration with all due respect to Buffett & Munger.