MONITOR REGULATORY SHIFTS

“I feel like some people will listen to this and feel like, okay, this is a rejection of Copart and TransDigm or some sort of implicit prediction that we don't think the businesses will do well, which is not the case at all. It's just a question of when we're managing our portfolio, if we can exchange two companies on the margins, that we have to do all the same amount of work to track and keep up with, for one company or a bigger bet on one company that we know we really, really like, it's just a lot easier to manage.”

“And one of the other advantages that Airbnb has is they have this degree of supply exclusivity. And so, a large part of Airbnb listings are exclusive to the platform. They're not on Vrbo, V-R-B-O, or booking.com. And that's especially true in newer markets like Latin America and the Asia Pacific region. And so, the vast majority of Airbnb hosts are individuals with one or two properties, and it's a side income for them. It's not their primary business.”

“The Switch 2 is the first console that embraced an ecosystem-like approach. And so one major difference being backward compatibility, which means that a new console could play games from older console generations. So if you own a Switch 1 and decide to buy the new Switch, then you can still play the same games on your Switch 2 without needing to buy a new version of the game or losing all of the progress within the game.”

“But I do think that as a stock price has fallen, Trade Desk has not necessarily gotten cheaper because the intrinsic value of the company has declined simultaneously. So yeah, it's just hard for me to argue that the Trade Desk has a clear moat. And so for context, in March, a major ad agency in France known as Publicis issued a memo advising clients to avoid working with the Trade Desk due to this failed audit on their fee structures that apparently happened.”

“Exor's net asset value, the total value of all of its investments minus any debt is somewhere around 33 billion euros. And the market cap of Exor itself is only 13 billion euros. So that means you're buying those assets at a 60% discount to what they're actually worth on paper in the public markets. And so if you just look at the Ferrari stake alone, which is about two-fifths of Exor's total net assets, it's worth almost the entire market cap of Exor because of that 60% discount.”

“The point being, if I have to choose between upgrading TransDigm and maybe Copart to full 5% positions or selling them and taking Amazon from 5% to, let's say, a 9% position, I would actually go for the latter.”

“I think that's why the data licensing business exists and AI companies need high quality human generated text to just train their models. Reddit's archive is one of the richest such datasets. Licensing that data has been another nice little boost to profits. It's not a huge thing. It's not the core business of Reddit, but I like it that with all these companies that are basically threatened by AI currently, with Reddit, you basically have somewhat of a hedge because they are so valuable to all of these LLMs.”

“I think what makes this business model so attractive from an investment standpoint is the cost structure. Because once you own the rights to a song, you essentially own a perpetual royalty stream with almost zero marginal cost of production. So you don't need to manufacture anything. You don't need to run servers. You don't need to reprint the music every single time that somebody plays it. And that's why their free cash flow conversion is so astronomically high.”

“But in mid-2025, the FHFA, the regulator that oversees Fannie Mae and Freddie Mac, officially approved Vantage Score 4 as an alternative scoring model for those government-backed loans. And Vantage Score is owned jointly by the three major credit bureaus for context. So that's Equifax, TransUnion and Experian. So the very institutions that used to distribute FICO scores now have a competing product that they would love to push themselves.”