Chris Pavese
@ChrisPavese
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Excited to share this year's summer reading list. A few highlights below along with a link to the full piece. 🧵🧵🧵
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Both GS and Apollo forecasting ten year $SPY returns of . 3% annually.
👀 GOLDMAN: "We estimate the S&P 500 will deliver an annualized nominal total return of 3% during the next 10 years (7th percentile since 1930) and roughly 1% on a real basis."
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Lessons learned from a one-man shop who's absolutely crushed it . and prefers to stay off the radar (let alone post his returns and portfolio to social media on a quarterly basis). Brutal honesty is hard to come by in this business. So is violent diarrhea.
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Ya think Mom is a little worried about leaving the boys home alone with Dad for a couple weeks?? 😅😂🤣
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Very interesting color on $WMT from Head of Last Mile Delivery at $AMZN. We are pretty worried about Walmart. Their systems have just become so much better than before. In the past, they had a lot of fulfillment issues. Now, they can turn all those physical footprints into.
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All the Tiger boys loading up on $PM. First noticed it in Q4. Back for more in Q1. - Lone Pine in for another ~ 3.7MM shares.- Viking in for another ~ 3.4MM shares.- D1 in for another ~ 2.5MM shares.- Maverick is a rounding error here.
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Companies that used the simplest language on earnings calls outperformed those using the most complex language by ~ 600 bps annually. If you know what you want to say, it's easy to express it clearly. If they have something to hide, people start to waffle.
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We are long $PYPL (small position). I am seriously reconsidering that decision after realizing that the OG of Electronic Payments, which helped facilitate the rise of E-commerce, still requires their customers to print and mail (or fax) a form to dispute a charge.
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Companies that used the simplest language on earnings calls outperformed those using the most complex language by ~ 600 bps annually. If you know what you want to say, it's easy to express it clearly. If they have something to hid…
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Would love to know how one would even begin to quantify this. 😶
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What are the best questions you ask of all management teams across industries? Why?.
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Private Equity shops (finally) getting some heat from the SEC for bogus performance reporting. These two excerpts from a recent SEC event are priceless. 1/3.
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Earnings contribution of the top ten stocks in $SPY has collapsed while their % of market capitalization has rocketed past all-time highs. Gonna be a great time for stock pickers as this unwinds . again.
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IPO's with negative earnings nearing late 90s levels for five years running! Treasure trove of data here:
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I was still in my 20s when I moved to NC 15 years ago. Wasted no time getting my first dog after being cooped up in an NYC apartment for almost 10 years. Today, I had to say goodbye to my best friend of almost two decades.
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Almost every single sector in the #SPY is trading at a premium to its 25 year average multiple ahead of the largest drawdown in economic growth in a century (give or take).
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$MO has returned 265 million percent in its 98 years listed. That equates to a $1 investment at inception worth some $2.65 million today.
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Baffled. Maybe the single best word to describe Elon and $TSLA
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"The temptation to form premature theories upon insufficient data is the bane of our profession." - Sherlock Holmes
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Love this response by @BrentBeshore to a hypothetical question: if you lost your memory, what would you write yourself to begin relearning?
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IT service providers - those at the top of the food chain - likely big AI Sleepers. $EPAM $GLOB.
Kind of wild that one of the companies with the most revenue from generative AI is a consultancy: Accenture. Over $600M booked this quarter, on track for up to $2.4B annualized 🤯
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Last year, the average [[IPO]] in the US traded for 23x sales. That figure never exceeded 12x in the prior two decades.
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Science is proving what we've always known intuitively: nature does good things to the human brain—it makes us healthier, happier, and smarter.
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Nordstrom Family Offers to Take Out All $JWN Minority Shareholders at . (checks notes) the Current Price.
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One of these ZYNs is not like the others. Think Mr. Market is throwing investors a fast ball right down the middle, with $PM trading below $90.
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What changed here? . Why have investors suddenly decided $BTI deserves to trade at a ~ 25% discount to $MO?
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$GOOG reported that YouTube generated $15 billion in ad revenue in 2019, more than $FOX, NBC and ABC combined.
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“It is the mark of an educated mind to be able to entertain a thought without accepting it.” Aristotle.
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Household balance sheets in "great shape" . But for how long?
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Not a pretty picture for US tobacco manufacturers like $MO and Co.
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Ditto for many investors.
2000 Dotcom crash is 17-yr old. Entrepreneurs under 30 don't have direct memory or appreciation of its lessons, which is a dangerous thing.
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$QQQ has compounded at a whopping 3.5% annually for two decades. $SPY has crushed it coming in at a sweltering 4.7% for the past twenty years. Starting points matter. The price you pay is the single best predictor of the returns you get.
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Seems like a pretty solid trend to bet on (pun intended). $EVO
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The SEC was shown a version of Apollo’s annual report which said it had generated an annual IRR of 39.0% over the past 30 years. At that rate, a $1 billion investment would be worth $20 TRILLION over 30 years or roughly the GDP of the US. 2/3.
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The SEC was also shown a of KKR’s annual report, which said it had generated an annual IRR of 25.6% over the past 45 years. At that rate, a $1 billion investment would be worth $32 TRILLION over 45 years or almost half of the GDP of planet earth. 3/3.
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Threads like this are the reason I’m on Twitter. Incredible. Back in the day, I literally hoarded a library of S&P Industry Primers. Now. This.
Any favorite primers or company mgmt profiles or books on the spirits industry?.
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This one might sting a little. $AAP down ~ 20% pre-market after essentially slashing FY24 guidance in half. High end of the range at $4.25 moved all the way down to $2 at the low end of new guidance. No position.
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If students took the time to study each playlist at @googletalks they'd probably get a better education than what is provided by most undergraduate programs. And it's free!.
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$MO is currently trading at a 47% discount relative to the broader market on an FY21 P/E basis. This compares to a 16% discount to the market over the last 3-years and a 3% discount to the market over the last five years.
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@CostaVerdeCap @yesandnotyes @WTCM3 @BluegrassCap @LennyIce @LibertyRPF @LSValue @Greenbackd Pick up a copy of Merger Masters. It's worth the read if not only for "The View from the Other Side" - which is comprised of lengthy interviews with Bill Stiritz ($POST), Paul Montrone ($TMO) and Peter McCausland ($ARG). The Airgas story may be a good analogue here.
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BREAKING NEWS: In a study of EBITDA addbacks covering M&A and LBO transactions originated in 2017, S&P found that most issuers remain unable to even come close to achieving the earnings, debt and leverage projections presented in their marketing materials at deal inception.
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Claude Shannon's 1952 speech on "Creative Thinking" at Bell Labs is one of my favorites. The speech was one of many works that inspired my presentation, "Where Good Ideas Come From." Here are a few excerpts from that deck. [Claude Shannon](.
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“Be guided by beauty . it can be the way a company runs, or the way an experiment comes out, or the way a theorem comes out, but there’s a sense of beauty when something is working well, almost an aesthetic to it.” - Jim Simons.
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"Notice that the current level falls short of only the final two quarters of the market bubble that ended in 2000." @hussmanjp
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Retailers and brands in our coverage have material discrepancies in how they allocate costs to COGS and SG&A
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Probably not sustainable for $MO . If you are long the stock here, how do you not worry about this?
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Large biopharma spending continues to trend in the right direction. Should ultimately flow through to suppliers like $AVTR $DHR $TMO - see below for our detailed thoughts on the industry.
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Turns out ~ 60x earnings wasn't the right price for a makeup company. $EL
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“10,000 Hours With Claude Shannon: How A Genius Thinks, Works, and Lives” — Jimmy Soni
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So nice to see tobacco stocks acting like . tobacco stocks in a down market. Thanks, Santa. And for the record, I'm totally fine with a stocking full of $MO and $PM. Naughty or not.
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Sometimes we like to play a little game called, "What's the right price?". Anybody want to take a shot at this one? Bonus points if you can identify the business and where it is actually trading today!
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Haven't had any trouble yet . Still long $PM and getting more interesting by the day.
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Making Money > Being Right
If you want exponential returns . replace the need to be proven right with the need to achieve the best outcome possible.
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We used to justify these multiples with rates pegged at zero. What’s our excuse with risk free rates north of 5% today?.
A P/E of 20-30x has become the new normal for average businesses or slightly above-average businesses and that just means we sit on our hands and wait. Because many of these multiples are just not justified by the math of ROIIC, expected earnings growth, and cost of capital.
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Stocks with EV/Sales ratios above 20x account for 23% of recent trading volume and nearly 9% of US equity market cap.
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GS: $MO is now trading at trough levels (at a FY21 P/E of 7.9x, or a 46% discount to the S&P 500 vs its 3-year historical discount of 15%), which could suggest very limited, if any, downside risk.
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We recently shared some thoughts on current market dynamics with investors. A few highlights below. 🧵🧵🧵
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Big news at Broyhill. Excited to have the site back up and running, with a new home for our research and writing. New and existing subscribers can update their subscription preferences on the site. Let us know what you think!.
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"Power Corrupts. PowerPoint Corrupts Absolutely." .- Edward Tufte, Yale Professor Emeritus. Highlights below from #StoryTellingWithData
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Happy to finally get this $AVTR write-up off my desk, where it's been sitting since February. A few highlights below, along with a link to the thesis.
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He's not wrong.
The return of economic idiocy is staggering and terrifying. Many things are debatable even if I or others may strongly differ. Tax rates are debatable. Transfer programs are debatable. Regulation is debatable (all within reason). But the return of politically driven idiocy that.
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It's funny because it's true.
The internet used to be where you would go to escape the real world. Now the real world is where you go to escape the internet.
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This divergence b/t fast food (i.e. $MCD) and fast casual (i.e. $CMG) seems to be getting a little out of hand .
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@patrick_oshag @maxolson See also: Jim Collins, Turning the Flywheel. A few of my notes on the concept here:.
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If there’s a better way to decompress after a long week than an afternoon in the forest solo, I’ve yet to find one.
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In 1995, you could actually buy a published book that listed every website in existence.
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$PM down on news that $BTI wrote down their US cigarette portfolio. PM doesn't have a US cigarette portfolio. Totally rational. Buy the dip.
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Highly recommend The Bit Player, a documentary about Claude Shannon and Information Theory. Pair with two engaging reads: A Mind at Play and The Idea Factory.
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Almost half of the NASDAQ has been chopped in half and earnings revisions are just getting started.
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The bar was set pretty high for this one, but a couple days in, and already blowing past expectations. #Galapagos
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Just a friendly reminder that cycles are real and all good things come to an end.
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Lots of good stuff here if you're short on weekend reading material.
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Record number of executives dumping stock. Meanwhile, US equity funds enjoying seven consecutive months of inflows (the longest streak since the '21 peak) culminating in the second largest haul on record last week. Gonna be quite the hangover .
'Record numbers of US executives are selling shares in their companies. The ratio of insider sales-to-insider buys has hit a record high for any quarter in two decades.'
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Broyhill feeling the love from CLT @CBJnewsroom.
Broyhill spun out from a family office in 2022, becoming an independent investment startup based in Charlotte.
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Past performance is no guarantee of future results. But it still has value. Past returns are negatively correlated with future returns.
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One of my favorite fund pitches . "The investment team has a combined 100 years (fill in any number you like) of investment experience.". What is this supposed to tell us? That they have one really old guy still reading Ks or that they have 100 kids building models?.
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Almost half of the FTSE World Index is trading for less than 10x.
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