Antonio Linares
5 companies building world class moats:
1. $PLTR: the commercial offering is evolving into a platform, as the speed and ease of deployment increases exponentially with the introduction of AIP. As $PLTR onboards more customers in every industry, the platform's ability to cater to each specific industry increases in a manner that is very hard for competitors to imitate.
2. $HIMS: the pharmacy business is incredibly complex and $HIMS has managed to create a vertically integrated, automated and personalized pharmacy infrastructure to best cater for the needs of digital-native customers, while also printing positive cash from operations and outside of the traditional insurance-based system. This is a strong moat in itself, but as $HIMS treats more patients and picks up data all along the value chain, it is creating the world's first AI closed-loop.
3. $SPOT: although many think of $SPOT as a music app, the platform has no real competition and is well on the way to 1B MAUs. It knows better than anyone what its users want to listen to and as it ventures towards audio verticals beyond the traditional music business, it stands to become a $GOOG of audio of sorts. As the network gets bigger, the potential to create powerful AI models that solve problems for creators and consumers alike, in a way that competitors simply cannot.
4. $AMD: with the acquisition of Xilinx and Pensando and coupled with its $AMD expertise, $AMD is set up to tailor accelerated compute in a way that would be currently impossible for other players in the industry to do. With the launch of every product, $AMD's ability to personalize compute for its clients will increase, making it very hard for competitors to keep up.
5. $TSLA: although the market now sees $TSLA as a car company, $TSLA is building a platform that promises to combine cheap and abundant energy, with AI and hyper-efficient manufacturing. Each of the three components of this platform has an extremely high barrier of entry and the combination of the three is simply impossible to surmount. As time goes by and $TSLA deploys more cars on the road (and other hardware devices that it may create), the volume and quality of data that it generates will allow $TSLA to create un-replicable AI models.
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Giuliano
Charlie Munger said there are two types of knowledge in this world.

To explain it, he used to tell the following story:

Max Planck was the father of quantum mechanics. He was touring through Europe and, once, his chaffeur said to him:

"Would you mind, Professor Planck, if I gave the lecture this time? It's so boring to just sit there"

Planck said that he could. Then the chaffeur gets in front of everybody and gave the whole conference on quantum mechanics. It went perfectly, as he had memorized the speech.

After he finished, a Professor stood up in the public and asked something, to which the chaffeur replied:

"Well, I'm surprised that in an advanced city like Munich I get such an elementary question. I'm going to ask my chaffeur to reply."

The two types of knowledge are Planck's knowledge and the chaffeur's knowledge. Planck had paid the dues and knew the thing. The chaffeur had simply learned to 'prattle the talk'.

It's crucial to detect who has Planck knowledge and deposit confidence and value in them.
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Dimitry Nakhla | Babylon Capital®
A sober valuation analysis on $LULU 🧘🏽‍♂️

•NTM P/E Ratio: 25.14x
•10-Year Mean: 35.96x

•NTM FCF Yield: 3.09%
•10-Year Mean: 2.15%

As you can see, $LULU appears to be trading below fair value

Going forward, investors can receive ~43% MORE in earnings per share & ~43% MORE in FCF per share 🧠***

Before we get into valuation, let’s take a look at why $LULU is a good business

BALANCE SHEET✅
•Cash & Short-Term Inv: $2.24B
•Total Debt: $1.40B

$LULU has an excellent balance sheet

RETURN ON CAPITAL✅
•2020: 32.5%
•2021: 23.8%
•2022: 37.4%
•2023: 40.4%
•2024: 39.0%

RETURN ON EQUITY✅
•2020: 38.0%
•2021: 26.1%
•2022: 36.8%
•2023: 29.0%
•2024: 42.0%

$LULU has strong return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2014: $1.59B
•2024: $9.62B
•CAGR: 19.72%

FREE CASH FLOW✅
•2014: $171.93M
•2024: $1.64B
•CAGR: 25.33%

NORMALIZED EPS✅
•2014: $1.91
•2024: $12.77
•CAGR: 20.92%

SHARE BUYBACKS✅
•2014 Shares Outstanding: 146.04M
•LTM Shares Outstanding: 127.06M

By reducing its shares outstanding ~13%, $LULU increased its EPS by ~15% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 58.3%
•LTM Operating Margins: 22.9%
•LTM Net Income Margins: 16.1%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~43% MORE in EPS & ~43% MORE in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $LULU has to grow earnings at a 12.57% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2025 - 2026 EPS growth over next few years to be slightly below the (12.57%) required growth rate:

2025E: $14.20 (11.2% YoY) *FY Jan
2026E: $15.96 (12.4% YoY)

$LULU has a decent track record of meeting analyst estimates ~2 years out, so let’s assume $LULU ends 2026 with $15.96 in EPS & see its CAGR potential assuming different multiples:

27x P/E: $414.96💵 … ~10.8% CAGR

26x P/E: $414.96💵 … ~8.5% CAGR

25x P/E: $399.00💵 … ~6.2% CAGR

24x P/E: $383.04💵 … ~3.9% CAGR

23x P/E: $367.08💵 … ~1.5% CAGR

As you can see, we’d have to assume >27x earnings for $LULU to have attractive return potential

While this is below its 10-year mean, we must consider $LULU elevated multiple from 2018-2022 that skews its historical average much higher

More importantly, $LULU growth rate over the next couple years doesn’t justify mean reversion of the multiple

On top of all this, it’s difficult to maintain a strong competitive advantage (over long periods of time) in the athletic apparel space

Therefore I’d be willing to assume 24x - 25x earnings (I’ll pay slightly above 2G for the return metrics & balance sheet & strong history of growth — $LULU has grown its revenues ANNUALLY since 2007 🤯)

At 24x - 25x earnings, $LULU return potential isn’t attractive

I’d be willing to consider $LULU closer to $320💵 or at ~23x earnings (~10.3% below todays $357 price)

At this level, I can reasonably expect >10% CAGR while assuming 24x

#stocks #investing
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𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.

𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.

𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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Clark Square Capital
Just shared a new idea. Check it out at the usual place. [Link in bio] https://t.co/FAs6ga0uHw
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Giuliano
It's amazing how many profound insights Antonio shared in the conversation.

I genuinely suggest listening to the episode. https://t.co/3z7Grwp6Np
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Dimitry Nakhla | Babylon Capital®
Any professional money manager, or individual investor, would be wise to consider Warren Buffett’s Ground RULES ✅

“(6) I am not in the business of predicting general stock market or business fluctuations. If you think I can do this, or think it is essential to an investment program, you should NOT be in the partnership;

(7) I cannot promise results to partners. What I can and do promise is that:

(a) our investments will be chosen on the basis of VALUE, NOT popularity;

(b) that we will attempt to bring RISK of permanent capital loss (not short-term quotational loss) to an absolute MINIMUM by obtaining a WIDE MARGIN of SAFETY in each commitment and a diversity of commitments.”

Source: Berkshire’s 1963 Shareholder Letter (Ground Rules) 🗣️

#stocks #investing
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The Institutional Limited Partner
Following @carrynointerest thread. Some of you ask for more specific content about private equity secondaries.

I am starting a series of articles covering everything you need to know about it. Tell me if you prefer this format or if I should go back to traditional threads

https://t.co/so5WwXKuB8
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Giuliano
Reminder that I'm pausing Sunday articles until I finish this.

I think it will be worth it. https://t.co/SMrXj9uR9n
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Giuliano
At its core, the pricing mechanism resembles natural selection.

Nature has already created many of the processes to which I think society will tend.
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Antonio Linares
Hell is trying to be something you are not.
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Clark Square Capital
What are some of the most unique-looking 13fs you have seen?
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