In this episode of Excess Returns, we take a deep dive into value investing with our good friend Tobias Carlisle. We discuss the recent outperformance of small cap and value stocks, tackle the challenges of long periods of underperformance for value strategies, and examine how Tobias constructs his portfolios. We delve into his process for selecting stocks, including his focus on companies trading at discounts using the Acquirer’s multiple and his approach to portfolio diversification. Our conversation also touches on the dominance of large tech companies and whether their outsized returns can continue. Throughout our discussion, Tobias emphasizes the importance of patience, skepticism about growth projections, and prioritizing survival over maximizing returns when investing.
00:00 – Intro
01:30 – Starting with market trends and value investing
02:03 – Discussion on recent performance of value stocks
05:14 – Further insights into value vs. index performance
09:26 – Discussion about look-through earnings and portfolio construction
14:26 – Multiple expansion and market performance
21:13 – Fundamental investing and quality stocks
27:12 – Explanation of setting the investable universe and screening process
34:03 – Discussion on deep value investing and paying for quality
42:24 – Discussion on concentration vs. diversification in portfolios
50:52 – Discussion on sector concentration and its importance
57:24 – Discussion on large tech companies and their market impact
01:00:44 – Considerations on capital intensity and future returns
01:01:03 – Closing thoughts and next steps for listeners
01:01:38 – Information on where to find more about Tobias and his work
FOLLOW TOBY ON TWITTER
Tweets by Greenbackd
SEE LATEST EPISODES
https://www.excessreturnspod.com
FIND OUT MORE ABOUT VALIDEA
https://www.validea.com
FIND OUT MORE ABOUT VALIDEA CAPITAL
https://www.valideacapital.com
FOLLOW JACK
Twitter: https://twitter.com/practicalquant
LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094
FOLLOW JUSTIN
Twitter: https://twitter.com/jjcarbonneau
LinkedIn: https://www.linkedin.com/in/jcarbonneau
8 Comments
Warren Mosler
One argument against coal is that cola plants can burn iron powder instead of coal. This produces no CO2, and the iron powder becomes iron oxide. This iron oxide can then be turned back into iron powder using stranded or surplus renewable power. Sometimes renewable produces more power than what the grid can handle so storing it chemically as iron powder to be used in times of power generation deficit in coal plants.
What about Temu and Shein as emerging competitors for Amazon ?
Everything Tobias says makes sense, but both of his ETFs underperform SPY. Just goes to show: there's no free lunch, it's extremely difficult to have any alpha, and just how hard it is to beat a self adjusting list of the largest 500 companies listed in the US.
Doesn’t multiple expansion in value come from improving fundamentals. Like for example Dillards went up 10x. How do you decide how much came from improving fundamentals and multiple expansion? I’m sure most of the price appreciation came from improving fundamentals.
This is the best newfound channel of 2024. Some brilliant interviews. I am binging on your content.
Toby is always so interesting to listen to, although on his own podcast the gems are a little more sparse. So I prefer concentrated Toby on others podcasts
Big fan of Toby keep bringing him back to hold the record