《随想杂谈》2025年2月：Libra、改变看法、幸运股与不幸股、亲自研究

This podcast is sponsored by AlphaSense. Let me tell you a story. A few years ago, I was looking at a company that offered discounting coupons. It had a really good product, and I couldn’t figure out why it wasn’t taking off. I was doing an expert call and talking to someone, and I said, “I can’t figure out why this company’s product isn’t taking off.” He said, “Are you aware of the loophole issues? Theoretically, you could use this company’s coupon plus three other coupons, and if you really search and put them all in the right order at the right time, you can get products for like 9% off.” But doing it would be really time-consuming and limited. Who wants to get ketchup for 10 cents? Cool, you get one; it took you two hours. What was the point? I told him that, and he said, “You don’t get it. This has happened before. A few years ago, it happened with a jar of mayonnaise, and you could get a jar of mayonnaise—I don’t remember if it was for a penny or a dime—but it happened. People were driving in from out of state, and people were filling up their garages with mayonnaise. The company took a huge bath because, guess what, people will buy 500 jars of mayonnaise if it’s available for basically free.” Is that a weird insight? Yes, but it explained why advertisers were so hesitant to use this company’s product, and it’s the type of insight that you can’t get without expert interviews. No management team is going to tell you about that mayonnaise problem. You’re never really going to be able to find it for yourself. You need people who’ve been in the trenches—experts—to tell you about that. Again, yes, it’s a funny story, but it’s the type of insight and power that you can only get from expert networks. AlphaSense is my favorite expert network. Now that they bought Tegus, there are over 150,000 transcripts, with 6,000 more going up every time, and extensive coverage of every public and private company. I’m a happy customer. They’ve been a longtime sponsor, and I’m really thrilled to have them. Go to AlphaSense.com/yav—that’s AlphaSense.com/yav—or follow the link in the show notes to start your free trial.

All right, hello and welcome to the Yet Another Value Podcast. I’m your host, Andrew Walker. If you like this podcast, it would mean a lot if you could rate and subscribe wherever you’re watching or listening to it. I’m looking at the YouTube video, and my hair is getting really long, so if you’re watching on YouTube, I’ll probably have to get a haircut before the next one you see. But it doesn’t matter.

Today is Saturday, February 22. I’m here for my monthly random ramblings. Before we get into that, a quick disclaimer: nothing on this podcast is investing advice. That’s always true, but particularly true today because I’m going to be rambling through a bunch of things. I don’t think I own any of the stocks or companies I’m going to talk about; if I do, I’ll try to disclose it as we go. I’m just a random guy rambling about things, so please consult a financial adviser, do your own work, do your own research, and all that type of stuff.

I have 4 topics—maybe 5, but 4 topics that I want to talk about today. The first topic is Libra and Argentina. The second topic is: What are some things you’ve learned or changed your mind on recently? The third topic is: Are there such things as lucky stocks or unlucky stocks? The fourth topic is doing hands-on research and personal experience.

The first thing I want to talk about is Libra and Argentina. For those who don’t know, I’m recording this on February 22. I think it was February 14—it might have been February 7—but on a Friday afternoon, Argentina’s president, Javier Milei, launched a memecoin, Libra, L-I-B-R-A. He pinned it to his Twitter profile and said, “Hey, invest in Argentina’s memecoin.”

The memecoin went straight up, and then, as memecoins do, there was a rug pull and it went straight down. I think investors overall—consumers and people who rushed into this memecoin craze—lost around $250 million, but insiders made around $180 million. I think Dave Portnoy lost millions of dollars from Barstool Sports and then maybe got it refunded by the insiders because he’s a big name, but I’m not sure.

The reason I mention it is that Donald Trump, right before he got into office—and love him or hate him, I think it was smart—launched a memecoin the weekend before he assumed the presidency. Unlike Milei, who appears to have been involved in some way, shape, or form while he was president, Trump did it before taking office. If you do it before the presidency versus while you’re in office, I do think that carries a different legal standard. I’m not a lawyer, so that’s not legal advice, but I think that’s correct.

You now have Milei launching a memecoin, or being in some way partnered with the launch of a memecoin, in Argentina. You had Trump right before he took office and Melania right before she took office launching memecoins. I just wonder: Is this where politics is headed?

We’re clearly going to a world where, if you have attention or if you’re famous, there’s a way to monetize it online. The B-, A-, and C-level reality stars of the late 1990s and early 2000s had their 15 minutes of fame, and then they were done. Today, if you’re a reality star, you can make a pretty nice career going on Instagram, hawking products, doing referral fees, and all that sort of stuff.

Politicians of the 1990s and 2000s were kind of there to be politicians. Yes, there were consulting gigs, but increasingly, if you’re a flamethrowing politician, the way to make your name is to be a flamethrowing politician, get a lot of media attention, and monetize that attention. I don’t think that’s great for politics, but as you do that, you’re gaining a name, and eventually you can monetize it with a memecoin.

I keep thinking that if you Google Barack Obama’s net worth, I think he’s worth around $70 million. Obviously, former presidents get great consulting deals and book deals. Obama gets to consult on and produce Netflix shows and Spotify shows. People complained about that for a long time, but I worry that, as you get more and more of this, you’ll see presidents starting to tilt their presidencies or their politics toward, “Hey, as soon as I’m out of office—or maybe while I’m in office—I can launch memecoins.”

The payday for being in office is potentially billions of dollars through memecoins and this type of stuff. I don’t know. People used to complain about the old system, but it seems like the new system creates a lot worse incentives.

In the old system, you at least had to have a good reputation to get the consulting deals and book deals. In the new system, and I keep saying president because it’s the highest-profile example, there are going to be high-profile senators and representatives across the board who can use memecoins and attention to monetize themselves. That’s a world that attracts flamethrowers instead of quiet, sophisticated types.

It’s a scary world. It’s weird, and it happened a week ago. I’m not an expert on everything Libra, but I was already worried about this after the Trump memecoins, and it seems like we’re going this way. It seems like a really slippery, scary world where the incentives start to align much more toward grabbing attention.

Public policy goals were already low down the list. They seem very low down the list when all you want to do is grab attention and then launch a memecoin or monetize it in some way. That’s something on my mind. Obviously, people have talked a little bit about memecoins, but I don’t think they’ve talked about it compared with the old system, so I wanted to mention that.

The second thing I want to talk about is something Charlie Munger said. He said, “Look, if you haven’t changed your mind on something big in a year, then you didn’t learn anything.” Obviously, you can change your mind about whether you prefer strawberry or grape jelly, but if you haven’t changed your mind on one big thing in a year, then you didn’t learn anything.

I didn’t do a January rambling, but when I was thinking about these, I was asking myself: What is something big you changed your mind about in 2024? I had a couple of thoughts, but one market-related thought was really interesting. I’m still developing it and floating it around, but I thought I’d throw it out there. I might write a post about it at some point.

If you had asked me in 2017 or 2018, “Andrew, if I put a proverbial gun to your head and said, ‘I want one repeatable strategy that you could employ over the course of your career—one repeatable type of trade strategy that you think would make a lot of alpha,’” I think I would have said buying merger targets after a deal breaks.

These are companies where, for example, Spirit Airlines was being bought by JetBlue in 2022 and 2023. The DOJ sued to block the deal, and eventually the DOJ won. Once that block happens, Spirit becomes a post-merger-breakup company.

For years, I would have told you that post-merger breakups were the best type of stock to buy. Why is that? Number 1, the board has already shown that they’re willing to sell. They signed a contract to sell and told investors, “Hey, we’re willing to fire ourselves to take a premium offer.”

Number 2, you’ve proved strategic or financial interest. You signed a deal with somebody who said, “Yes, I would like to pay, almost always, a premium—maybe a quite large premium—to take this company private.” So you’ve proved financial value and strategic value.

Number 3, during the merger, the company can’t buy back stock. It can’t really do anything. Once the deal breaks, almost always it’s getting a breakup fee from the buyer, so companies emerge from these deal breaks with absolutely pristine balance sheets.

Number 4, every merger arb and every event investor is out when the deal breaks. The day the merger breaks, there’s no longer an event and there’s no longer a merger situation. Maybe some event investors have more flexible mandates, but in general, people are getting out that day.

I would combine those 4 factors and say, “Hey, you’ve got great forced selling.” Even if you’re running billions of dollars, you can often take big positions because there are dozens of arbs just pounding the sell button on the first day that the deal breaks. You’ve got great balance sheets, everything is clean, and you’ve got a board that’s willing to sell.

A board that’s willing to sell is often important. Time Warner Cable, in the early 2010s, was being bought by Comcast. The DOJ blocked that, and the deal was scuttled. Then, 6 months later, Charter tried to buy it. The DOJ had said no to Comcast, but there’s often a buyer to whom they will say yes.

Maybe they won’t let you sell to Google, but they’ll let you sell to Bing. Maybe they won’t let you sell to the biggest player, but they’ll let you sell to a mid-tier player. You might not get quite the same premium that the biggest player was going to offer, but your balance sheet is much better, you’ve proved that you’re a strategic target, and you can get a deal through the DOJ.

I would have said that was the area that generated the most alpha. Increasingly, I think it’s the area that generates the worst alpha. In fact, these days, I think we’ve seen a lot of buyers in broken deals who have done really well after the broken deal, while the merger target is just floundering around.

This is very unique, but let’s focus on the seller side. Recently, we’ve had Capri, whose merger with Tapestry got blocked. Capri’s stock has been a disaster, while Tapestry has done very well since then. Spirit’s merger with JetBlue got blocked, and Spirit is in bankruptcy. I think they’re about to emerge from bankruptcy, but the deal was essentially blocked and they went into bankruptcy.

There are some other examples. Rite Aid was going to be bought by Walgreens. They were always in distress, but that deal got blocked and Rite Aid went into distress. Several other situations have played out similarly.

Maybe this is an N of 1, but I’m not so sold on the buyer side. Increasingly, I’ve been thinking that there’s something different today than there was 10, 15, or 20 years ago, when my mind was focused on this. The world is moving much faster now, so if you’re a deal target and you’re in a deal while the world is changing around you, your merger agreement really precludes you from doing a lot of things.

You can’t do layoffs. You can’t make big changes to strategy. You can’t do anything outside the normal course of business. I wonder if one of the reasons these situations aren’t playing out the way I expected is that the world is changing faster than these companies can respond.

When they sign the merger agreement, they’re no longer able to respond to the environment in the way they need to keep the business functioning. Business might just be harder now. That’s what happens in evolutionary games: Things get harder and harder over time, and business in general has never been harder than it is right now, with instantaneous speed and AI taking off.

There may be other things there. Maybe it’s a small sample size. Maybe I’m just imagining the past 5 years. Maybe these were a particularly dodgy and vulnerable set of companies that were having their mergers break.

If you went back to 2014, AT&T tried to buy T-Mobile and that deal got blocked. AT&T had to give T-Mobile a huge breakup fee and a lot of spectrum, and that laid the groundwork for T-Mobile to become the best-performing telecom stock out there right now. That’s a counterexample, and I’m sure there are plenty of others.

When I look at the recent past of deal breaks, though, I see a lot more carcasses than I see T-Mobiles. Albertsons had a deal with Kroger that broke earlier this year—or maybe it was at the tail end of last year. If you look at Albertsons’ stock, it looks very cheap. I think they’ve laid out a really interesting plan.

I thought about trading it. I bought a couple hundred shares, had followed it for a long time, and then eventually sold. I don’t have a position currently; I’m talking about when the deal broke. The reason I sold was that I was thinking, “Hey, grocery is a fast-moving place. Albertsons has been under a deal for 2 years. Walmart has invested a lot, the technology is getting a lot harder, Amazon is coming for it. It looks cheap, and you have the strategic market, but who’s the buyer now? What’s their future?”

If you listen to the court case—and I had Michael Cohen on for several podcasts about that court case—it didn’t sound like Albertsons was investing a lot in the standalone business. It looked really cheap, but that’s just one in-the-moment example.

That’s one thing that’s really changed for me. It’s an area I’ve thought about, and I’d love to continue that conversation if people have other examples of breaks that have gone wrong, breaks that have gone right, or things they’re thinking about. Tapestry is very unique, but the Capri deal broke and that stock has been an absolute screamer because Tapestry got out of overpaying for Capri and the business was humming.

I wonder if Tapestry not only got out of overpaying for Capri, but also benefited from the fact that, if you believe the FTC in this case, Capri and Tapestry would have been a monopoly. Tapestry, on the one hand, because they weren’t under the merger agreement, could operate in the normal course. They could be as competitive as they wanted, make strategic shifts, conduct layoffs—whatever they needed to do. Capri couldn’t.

The merger breaks, and then you’ve been operating completely unencumbered while your merger partner has been operating with both hands tied behind its back. That’s something that’s really changed for me. Maybe I’ll write it up at some point.

Let’s quickly go to stocks that are unlucky and lucky. I have no anecdote and no data here, but I do wonder whether there are 1 or 2 companies where, every time it seems like things are going their way, they step on a rake.

Things are going so well—oh, gosh, the plant had a gas leak and we have to shut it down for 4 months. Things are going so well—oh, gosh, there was an explosion at the plant. Things are going great—oh, Facebook just entered the market, or Google changed the SEO terms and now all of our organic traffic is going down.

I’ve been wondering whether there are just 2 or 3 companies where, every 6 months, someone reaches out to me about the company. I’ll talk to them and think, “I’ve followed this company for 5 years. They’re screwed. They’re always screwed. It never works for them.”

On the other hand, there are 1 or 2 companies where I’m always skeptical, but it always seems like management and the company are pulling a rabbit out of their hats. I’ve been wondering whether there are companies that are always going to be lucky.

I understand that luck isn’t real, but I wonder whether there’s something about the company, middle management, the culture, or its relevance within America that makes 1 or 2 companies more likely to be lucky than others. Maybe there’s some type of luck effect.

Again, I’m just rambling. I have no data or anything, but I will tell you that there are a handful of companies I’ve followed over the years that have been screwed so frequently by things outside their control that I could never bring myself to touch them. I’ve always wondered: Is it them? Is there something particular about them? Are these companies just cursed? I don’t know.

The last thing is doing hands-on research and relying on personal experience. This is something I’ve thought about a lot. There was a recent story about Warren Buffett looking at a company in the 1960s. I think he hired someone to sit in a parking lot and watch the trucks go in and out.

The guy called him and said, “There’s a truck going in every 5 minutes. This company is doing business. They’re extremely busy.” It was absolutely confirmatory. That also brings you to the famous billionaire stories of people breaking into warehouses to see whether the inventory is sitting there, moving, or whatever.

That’s on-the-ground personal research. In the warehouse example, that’s material nonpublic information—you could go to jail for that. In Buffett’s example, it’s completely fine to sit outside a company’s warehouse, watch trucks go in and out, and make your own conclusions.

Today, people have taken that to the extreme with satellite tracking of parking lots and measuring how full they are. In Buffett’s case, though, that was going the extra mile in a fundamental way.

To use some examples, and I don’t think any of these are above and beyond for fundamental investors, if you’re going to take a big, concentrated position in Full House, which I’m long—that was my idea of the year for 2025—you can go visit the casinos. Obviously, I’m going to visit the casinos when I’m taking a position. That’s table stakes.

You go visit a casino, and it becomes clear that something is wrong. It’s not material nonpublic information, but you can make or break a thesis based on something that isn’t in the filings. You have to go out and visit the business.

There are other, much better examples of that. I’ve been looking at franchisors a lot recently. If you’re really looking at a franchisor, I have a few friends who do great work on them. You go to the franchisee conference and talk to the franchisees.

You say, “Hey, you own a McDonald’s franchise. How’s your McDonald’s franchise doing? Would you open more? Would you open less? What are you hearing from other people? What are your worries about the future?”

You ask a lot of franchisees, and that can give you a fundamental view of the company that you’re not going to get in spreadsheets. Maybe you can get it through cold-calling, but actually going in and experiencing it gives you a different level of research.

You keep going up and up, and there are ways to get better and better research. Obviously, that eventually tops out, but recently there was a company looking at a government contract. A lot of people were saying it was 50/50, but you could call the government regulator and talk to them, and they would tell you, “Oh, yeah, this is happening.”

That’s an example of how, if you’re willing to pick up the phone and call a few different people, you can get insights that the average market participant may not have. You can imagine all different ways to do that.

I’ve been thinking about going the extra mile, and there are 2 places I wanted to explore. One is quick-service restaurants. I mentioned going to a QSR franchisee conference as an interesting way to build a view of the company, but I wonder whether there’s an extra mile beyond that.

If you’re a $20 billion fund, if you’re Ackman and you have a huge stake in Restaurant Brands International, the parent company of Burger King, would buying a Burger King give you a differentiated view? Would buying and actually operating a Burger King franchise give you a differentiated view?

You’d get your hands dirty and see what was going on, but you’d also have weekly results, so you could see how things were fluctuating in real time. I think you’d have more insightful conversations with other franchisees than if you just went to them and said, “Hey, I’m an investor. I just want to talk.”

Instead, you could say, “Hey, I own the unit out in the middle of Ohio, and we’re really struggling to hire minimum-wage workers. What are you guys doing? What are you seeing?” I think you’d get different insights into the operation.

If you’re managing a $2 billion stake, buying a $500,000 Burger King is nothing. I wonder whether there are examples of people who have done something similar, where they bought or operated something in order to get more insight into the overall company.

It’s hard for me to think of things outside of QSR franchising. Meyer Neimark has been on the podcast several times and pitched IWG. They’re starting to franchise or manage a lot of locations. What about buying an office building and having IWG franchise that office building for you?

Would that give you differentiated insight into the business? Would it give you unique access to talking to other people in the business? I don’t know. I think it’s a really interesting example.

I mention it for 2 reasons. One, I’m interested to know whether anyone has done, or knows of anyone who has done, something similar—where you buy or operate something in order to get more insight into an overall company.

Two, it brings me to my next point. When I’ve looked at franchises, I’ve talked to people who were long or short them and asked why. They might say, “I’m short McDonald’s because my aunt owns a McDonald’s, and the past few years have been a disaster for her. She’s losing money, she can’t retain employees, and inflation is killing her.” So they’re short McDonald’s on that thesis.

Or they might say, “I’m long Popeyes because my dad started a Popeyes and it’s doing gangbusters. It put me through college, so it’s a great franchise system.”

I worry about taking this approach into the stock market in general. I’m always trying to weigh how much personal experience to put into your stock market picks. I know a friend who refuses to invest in gyms. Why? He built a home gym for $1,000, and he says, “The equipment is better than anything at a gym, I don’t have to travel to it, and I have a home gym I love.” So he thinks basically every gym is a short.

That’s one of the issues facing gyms as a stock and as a concept in general. There is an opportunity cost: If you’re going to the gym every day to walk on a treadmill and the gym raises its prices too much, you can buy a treadmill and put it in your house.

But I was also telling him, “You are putting your experience, where you have no kids and have the money to buy weights and everything else, against the average person’s experience. You own a house and turned your garage into a gym. What about me? I have an apartment and nowhere to put a gym. I have to go to a gym if I want to lift weights.”

What about somebody who has 3 young kids? They might only be able to go at lunchtime while they’re at work, so they can’t have a home gym because they’d have to go back home. The gym offers a lot of different services that, because you have a unique experience, you’re ignoring.

That doesn’t make your experience invalid. Over the past 10 years, if you loved Instagram and bought Facebook, you did great. If you loved Tesla and bought Tesla stock, you did great. A lot of people have done well with that approach.

Historically, though, I do think there’s something to the idea that, if you love the product, it’s often a hype cycle. How many restaurant chains have traded for 100 times earnings because they did well in a local market and people loved them?

They go public, people say, “This is the next McDonald’s. This is the next Burger King. This is the next Denny’s.” Then it turns out that the concept was really loved in that market, but as it expands, it faces a lot of issues.

I’ve seen plenty of restaurant companies trade for hundreds and hundreds of millions of dollars and ultimately get sold to private equity for $20 million when the concept tries to expand, all the expansion fails, and the company becomes a disaster.

That’s what I’ve been thinking about: How do you incorporate personal experience? How can you get more personal experience and more unique insights into a business? But how do you manage those unique insights and your personal experience when you’re trying to invest in a company?

To bring it back to McDonald’s, I’ve never run a McDonald’s before. If I bought a McDonald’s 6 months from now, I’d come on the random ramblings and say, “Guys, this McDonald’s thing is a disaster. We’ve got to short the stock to oblivion. My McDonald’s can’t make any money. Employees are leaving left and right, and labor costs are out of control.”

You’d say, “Guess what, dummy? Maybe that’s true, but, man, you’re also a terrible manager. You’ve never worked in fast food before, a day in your life. The reason your McDonald’s is doing terribly is not because of McDonald’s; it’s because of you.”

There’s a very vivid example where I could come to you with a straight face and say, “This franchise is going terribly,” and the conclusion would be wrong. The conclusion would be, “McDonald’s is bad,” when the real answer would be, “No—and get a haircut. You’re terrible. You’re a terrible manager.”

Anyway, those are my four random ramblings. Quite random. I kept my voice down a little bit because my background’s blurred for the people on YouTube, but the baby is napping in the room in the background, so I’m trying not to keep her up. Maybe I was a little slower and a little lower than normal. Look, as always, I appreciate you listening to the podcast. I look forward to doing a random rambling in March. I always appreciate feedback, so please feel free to leave me a comment, shoot me a note, and all that type of stuff. I have some great podcasts lined up for the next few weeks, so I’m looking forward to talking and hearing from you then. We’ll chat soon.

This podcast is sponsored by AlphaSense. If you’re unfamiliar with AlphaSense, it’s a market intelligence platform with the world’s premier library of proprietary expert insights. For years now, I’ve used Tegus for their expert call transcript library, and with AlphaSense’s acquisition, the depth and breadth of market research content available has expanded significantly, with unparalleled expert insights across 150,000 proprietary expert transcripts and growing by 6,000 per month, covering 24,000 public and private companies; comprehensive market intelligence on 450 million-plus documents, including company filings, analyst research, expert interviews, and more; and AI-powered research at scale, complete with qualitative research, 5 to 10 times faster with advanced generative AI. Take a free trial and see the difference for yourself. Just go to AlphaSense.com/yav—that’s AlphaSense.com/yav—or see the link in the show notes.

A quick disclaimer: nothing on this podcast should be considered investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial adviser. Thanks.